Formerly, a bank account had only one person as a nominee. However, the new amendment allows the bank account to have up to 4 nominees. However, the new amendment allows account holders to nominate up to four individuals. This change aims to simplify the process of distributing funds after the death of an account holder. Particularly in cases where multiple beneficiaries are involved.
The bill also proposes several other improvements as follows:
- Increased the threshold for determining “substantial interest” in a company from Rs 5 lakh to Rs 2 crore. This intention is that it will encourage higher participation of professionals and entrepreneurs in the banking sector.
- Increasing tenure of directors in cooperative banks: The tenure of the directors of cooperative banks, other than the chairman and whole-time director, has been increased from 8 years to 10 years. This move aims at bringing the tenure of cooperative bank directors on par with the tenure of directors in other financial institutions.
- More flexibility for the banks in deciding remunerations for statutory auditors: The bill grants more flexibility to banks to decide on the amount of remuneration that is to be made to their statutory auditors. This is seen to attract more qualified auditors to the banking industry.
The Banking Laws (Amendment) Bill, 2024, was piloted by Finance Minister Nirmala Sitharaman.
“The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors,” Finance Minister, Ms. Sitharaman said while proposing the Bill for consideration and passing. “The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome,” she added.
The opposition proceeded with the deputy leader of the Congress in the Lok Sabha, Gaurav Gogai questioning the rising imports from China when relations between the countries were tense. He also questioned the ruling party over demonetization and electoral bonds.
Rani Srfikumar from the Dravida Munnetra Kaxhagam asked about the fees for basic banking services like ATM withdrawals and SMS alerts and expressed apprehension over the vulnerability of senior citizens and cyber frauds.
The leader of the Nationalist Congress Party Supriya Sule suggested a stricter approach to tackling financial fraud. she suggested that perpetrators should compensate victims before prison sentences.
Congress MP Karti Chidambaram opposed this by adding that the Indian rupee against the US dollar today was at ₹84.73. The growth rate in the quarter of FY25 was 5.4%, the lowest in seven quarters, while inflation was 6.21%. She said it would lead to stagflation.
Despite the opposition, the bill was passed in the Lok Sabha by a voice vote. The bill is now expected to be presented to the Rajya Sabha for approval.
In conclusion, the Banking Laws (Amendment) Bill, of 2024, will be a stepping stone towards modernizing India’s banking sector and improving the convenience of banking services for customers.
