Banking Laws (Amendment) Bill: Can Customers Nominate 4 Nominees Per Bank Account? Find Out

Banking Laws (Amendment) Bill, 2024: One of the significant amendments proposed in the bill is the redefinition of 'substantial interest' in bank directorships

Banking Laws (Amendment) Bill 2024: The Minister of State for Finance, Pankaj Chaudhary, introduced the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha on Friday. The bill seeks to implement several key changes in the banking sector, including allowing customers to nominate up to four nominees per bank account, up from the current limit of one.

One of the significant amendments proposed in the bill is the redefinition of 'substantial interest' in bank directorships. The threshold for substantial interest is proposed to be raised to Rs 2 crore from the existing Rs 5 lakh, a limit that has remained unchanged for nearly six decades.

The bill's introduction faced opposition from Congress member Manish Tewari, who argued that the power to legislate on cooperative societies lies with state governments. In response, Finance Minister Nirmala Sitharaman clarified that the relationship between the Banking Regulation Act and cooperative banks necessitates amendments through this legislative route. She highlighted that the government is not undermining cooperatives but ensuring that cooperatives with banking licenses adhere to the necessary regulations.

The bill also aims to grant banks greater autonomy in determining the remuneration for statutory auditors. Additionally, it seeks to revise the reporting dates for banks' regulatory compliance to the 15th and last day of every month, replacing the current practice of reporting on the second and fourth Fridays.

Approved by the Union Cabinet last week, the bill proposes amendments to several key pieces of legislation, including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.

The announcement of these amendments was first made by Finance Minister Nirmala Sitharaman during her 2023-24 Budget speech, where she highlighted the need to improve bank governance and enhance investor protection through amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act.