Understanding the Implications of the Banking Law (Amendment) Bill 2024 on Bank Account Nominations

The Banking Law (Amendment) Bill 2024 aims to streamline banking operations and align them with contemporary financial practices, reflecting the government’s commitment to improve bank governance and enhance investors' protection.

The Banking Laws (Amendment) Bill 2024 is scheduled to be introduced in the Lok Sabha. The introduction of the key bill is being delayed due to a ruckus in the Parliament. However, the government is hopeful to introduce the bill in the ongoing Winter Session.

With consistent reforms in the financial sector and innovative use of technology, financial markets in India have strengthened. With Banking Law (Amendment) Bill 2024, the government wants to capitalise the situation to boost the banking sector. 

Earlier this year, the Union Budget 2023-24 aimed to strengthen the financial sector further. While presenting the Union Budget 2023-24 in Parliament, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman stated, “Our vision for the Amrit Kaal includes a technology-driven and knowledge-based economy with strong public finances, and a robust financial sector.”

In alignment with the government's dedication to reforming the banking sector, the government introduced the Banking Laws (Amendment) Bill 2024, which aims to amend several key banking laws to modernize and enhance the regulatory framework of the banking sector. 

Which are laws to be amended by the bill- 

• Reserve Bank of India Act, 1934

• Banking Regulation Act, 1949

• State Bank of India Act, 1955

• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

Bill also seeks to increase options for nominees 

The Banking Laws (Amendment) Bill, 2024 also seeks to increase the option for nominees per bank account to four, from existing one, among others.

Here are the other key provisions in the proposed bill:

• Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago.

•  The Bill also seeks to give greater freedom to banks in deciding the remuneration to be paid to statutory auditors.

• The Bill also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.

• A Central Processing Centre (CPC) is proposed to be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.