Banking Laws (Amendment) Bill 2024: Key Reforms Unveiled

Banking Laws Amendment Bill passed in Lok Sabha. Now, Bank account holders can now nominate up to four individuals for their accounts, with two options: simultaneous or successive nominations. This aims to resolve inheritance complexities and reduce legal complications for legal heirs.

Nomination Flexibility and Inheritance Simplification

Recently, Banking Laws Amendment Bill passed in Lok Sabha.
Bill proposed by Finance Minister Nirmala Sitharaman
Bank account holders can now nominate up to four individuals for their accounts

Two nomination options available:

- Simultaneous nomination: Nominees can be assigned specific percentage shares
- Successive nomination: Nominees inherit in a predefined order
For safety lockers, only successive nominations will be permitted
Aims to resolve inheritance complexities, especially post-COVID-19 pandemic
Reduces potential legal complications for legal heirs
Makes fund distribution smoother and more transparent

Broader Banking Sector Perspectives

Finance Minister Nirmala Sitharaman highlights banking sector robustness

Amendments cover five key Acts:

- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1955
- Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980

Addresses concerns raised by opposition members:

- Cybersecurity considerations
- Simplified KYC processes
Acknowledges declining bank deposit share in household savings
Aims to make banking more customer-friendly and technologically adaptive

Governance and Regulatory Amendments

Redefining "substantial interest" for bank directorships
- Threshold increased from ₹5 lakh to ₹2 crore
- First update in nearly six decades
Increased director tenure in cooperative banks from 8 to 10 years
Allows directors of Central Cooperative Banks to serve on State Cooperative Bank boards
Provides banks greater autonomy in:
- Deciding statutory auditor remuneration
- Regulatory reporting deadlines
New reporting dates set to 15th and last day of every month
Focused on improving banking sector governance and consistency

Expert Recommendations

Legal experts suggest ensuring alignment between will legatees and nominees
Industry professionals recommend developing a standardized transmission process similar to securities market
Potential for creating unique identifiers to streamline inheritance claims

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