Banking Laws Amendment Bill: Rajya Sabha Approves New Rules for Nominations and Bank Governance
The Rajya Sabha recently passed the Banking Laws Amendment Bill, aiming to enhance governance in the banking sector and streamline financial processes for depositors. This amendment, already approved by the Lok Sabha, introduces several key reforms to improve banking regulations and reporting.
New Nomination System for Depositors
One of the most notable provisions of the bill allows depositors to nominate up to four individuals for their bank accounts or fixed deposits, replacing the previous system that permitted only a single nominee. This change aims to simplify the process of fund distribution after the account holder’s death, a challenge that became evident during the COVID-19 pandemic. Additionally, depositors can choose between simultaneous nomination, where specific percentage shares are assigned, or successive nomination, where nominees inherit in a predefined order.
Changes to Bank Governance and Regulations
The bill also proposes significant changes to bank governance. It raises the threshold for substantial interest in bank directorships from ₹5 lakh to ₹2 crore, a figure that had remained unchanged for nearly six decades. Furthermore, it grants banks more flexibility in determining the remuneration for statutory auditors and updates regulatory reporting deadlines, moving them to the 15th and last day of each month instead of the previous second and fourth Fridays.
Finance Minister Nirmala Sitharaman, while presenting the bill, emphasized the government’s ongoing efforts to combat wilful defaulters and highlighted the continuous reforms aimed at modernizing the banking system.
