Parliament has approved the Banking Laws (Amendment) Bill. This will allow account holders to have up to 4 nominees. The Rajya Sabha gave its approval on Wednesday.
The Bill seeks to strengthen governance in India’s banking sector. It also aims to improve convenience for consumers. The amended bill will enable depositors the option to choose successive or simultaneous nominations. However, locker holders can only have successive nominations.
The Bill also enables the transfer of unclaimed dividends and shares. Interest or redemption of bonds will also be transferred. These will go to the Investor Education and Protection Fund (IEPF). Individuals can claim transfers or refunds from this fund. They will go to the unpaid dividend account of the corresponding new bank. This will safeguard investor’s interests..
Another change involves a review of “substantial interest”. Moreover, the threshold for a shareholding of substantial interest has been increased. It has risen from ₹5 lakh to ₹2 crore. This reflects the present value. The previous limit was set in 1968.
The Finance Minister has stated that the government is committed to taking stringent action against wilful defaulters. In the 5 years leading up to January 29, 2025, the Enforcement Directorate has handled around 912 cases of bank fraud. This includes cases involving wilful default. In these cases, approximately ₹44,204 crore of proceeds of crime were attached, seized, or frozen.
In 8 cases, assets amounting to ₹22,276 crore were restituted. This belonged to banks, legitimate claimants, and victims of money laundering.
With the Bill’s approval, the tenure of directors in cooperative banks can be extended. This excludes the chairman and the company’s whole-time director. It can go from 8 years to 10 years. This aligns with the Constitution (Ninety-Seventh Amendment) Act, 2011.
Once the amendment takes effect, directors of central cooperative banks will have more flexibility. They will be able to serve on the board of a state cooperative bank.
The amendment also gives banks greater freedom. They can now decide the remuneration for statutory auditors. Additionally, the Bill redefines reporting dates for banks. For regulatory compliance, the dates are now the 15th and the last day of each month. Previously, it was the second and fourth Fridays.
Sitharaman informed lawmakers about the profitability of public sector banks. They posted their highest ever profit in the last fiscal year. The profit was about ₹1.41 lakh crore. She expressed confidence that profitability would increase further in 2025-26.
Parliament’s approval of the Banking Laws (Amendment) Bill brings significant changes. It enhances convenience for account holders and strengthens investor protection. The bill also addresses governance issues in the banking sector.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Mar 27, 2025, 10:09 AM IST
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