Bank Account Holders Can Now Choose Up to 4 Nominees: New Laws

The Lok Sabha approved the Banking (Amendment) Bill, 2024, on Tuesday, allowing bank account and fixed deposit holders to select up to four nominees, as opposed to the current limit of one nominee.

According to the provisions of this bill:

1.Unclaimed dividends, interest on shares, bonds, and withdrawal funds will now be transferred to the Investor Education and Protection Fund.

2.The term of office for directors (except the chairman and whole-time directors) of co-operative banks will be extended from 8 years to 10 years.

3.If the bill comes into force, the director of a Central Cooperative Bank will be allowed to serve as a member of the Board of a State Cooperative Bank.

4.Banks will have more flexibility in determining the remuneration of statutory auditors.

5.The deadline for submitting reports on regulatory compliance by banks will change from the second and fourth Fridays to the 15th and the last day of each month.

6.The limit for substantial interest in directorships will be raised from the current Rs. 5 lakh to Rs. 2 crore. It’s worth noting that the Rs. 5 lakh limit was set nearly six decades ago.

Additionally, Finance Minister Nirmala Sitharaman highlighted during the debate on the bill that the public sector banks are safe, stable, and strong.

They have consistently performed well, with a profit of Rs. 85,520 crore in the first six months of the current financial year. As of September this year, the total number of commercial bank branches in the country reached 16.55 lakh, with 85,116 branches belonging to public sector banks.

The banking system plays a crucial role in the country’s growth, and the government has taken several measures since 2014 to strengthen it.