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Economy, Polity & Governance
Mahesh

12/08/24 08:10 AM IST

Government introduces Banking Laws (Amendment) Bill in Lok Sabha

In News
  • The Government introduced the Banking Laws (Amendment) Bill, 2024 which seeks to increase the option for nominees per bank account to four, from existing one, among others.
Major provisions
  • The Banking Laws (Amendment) Bill of 2024 aims to enhance the nomination process by allowing depositors to nominate up to four nominees simultaneously and successively.
  • This proposed change seeks to provide increased flexibility and convenience for depositors and their legal heirs, particularly concerning deposits, articles in safe custody, and safety lockers.
  • The intention is to streamline and simplify the process of nominating individuals who will have rights to these assets in the event of the depositor's demise.
  • Successive nomination refers to the procedure in which several nominees are listed in a specific order.
  • If the primary nominee is unable to claim the funds, the alternate nominees would be contacted accordingly, starting from the second nominee and subsequently moving down the list.
  • The Bill suggests the allocation of unclaimed dividends, shares, interest, or redemption of bonds to the Investor Education and Protection Fund (IEPF).
  • This action enables individuals to request transfers or refunds from the fund, ensuring the safeguarding of investors' interests.
  • A notable amendment in the Bill aims to raise the threshold defining a 'substantial interest' in shareholding from the existing Rs 5 lakh, established in 1968, to Rs 2 crores.
  • A significant alteration highlighted in the Bill involves adjusting the deadlines for banks to submit statutory reports to the Reserve Bank of India (RBI).
  • The proposed change suggests moving the reporting deadline from the current 'reporting Friday' to the final day of the fortnight, month, or quarter. This amendment is intended to promote uniformity in reporting procedures.
  • The Bill seeks to amend section 38A of the State Bank of India Act,1955, section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980:
  • To enable the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thus safeguarding investors' interests.
  • Amendments to sections 18, 24, 25, and 56 of the Banking Regulation Act and section 42 of RBI Act: 
  • It will revise the reporting dates for the submission of statutory reports by banks to the RBI from reporting Friday to the last day of the fortnight, month, or quarter. This change will ensure consistency in reporting.
  • To align with the Constitution (97th Amendment) Act, 2011, it’s proposed to amend clause (i) of sub-section (2A) of section 10A of the Banking Regulation Act, extending the tenure of directors (excluding the chairman and whole-time directors) in cooperative banks from 8 years to 10 years.
  • The Bill presents significant provisions related to cooperative banks. In line with the Constitution (97th Amendment) Act, 2011, the Bill suggests modifying clause (i) of sub-section (2A) of section 10A of the Banking Regulation Act.
  • The proposed change aims to increase the service tenure of directors, with the exception of the chairman and whole-time directors, in cooperative banks from eight years to ten years.
Source- The Hindu

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