Lok Sabha passes banking laws (Amendment) Bill, 2024: Key changes introduced

The Lok Sabha on Tuesday approved the Banking Laws (Amendment) Bill, 2024, introducing several reforms aimed at enhancing customer convenience and improving governance in the banking sector. Among its key provisions, the legislation allows individuals to nominate up to four successors for bank accounts, fixed deposits, and other financial instruments.

The Bill, introduced by Finance Minister Nirmala Sitharaman, was passed via a voice vote. Highlighting the government’s efforts since 2014, Sitharaman highlighted the importance of maintaining the stability and safety of banks.

The revised rules offer depositors flexibility by enabling either simultaneous nomination, where specified percentage shares are allocated to each nominee, or successive nomination, which follows a predefined inheritance sequence. This change aims to address issues where heirs often face challenges in accessing funds due to unclear or absent nomination details.

Another critical reform involves extending the tenure of directors in cooperative banks, excluding chairpersons and whole-time directors. The permissible duration will now increase from 8 years to 10 years, aligning with the provisions of the Constitution (Ninety-Seventh Amendment) Act, 2011. Directors of Central Cooperative Banks will also be permitted to serve on the boards of State Cooperative Banks under the new provisions.

The bill proposes adjustments to regulatory reporting deadlines. Instead of the existing schedule of the second and fourth Fridays of each month, banks will now be required to submit reports on the 15th and last day of the month. This change is intended to streamline compliance processes and enhance transparency.

Banks will also gain greater autonomy in deciding the remuneration of statutory auditors. The move is expected to promote better governance and accountability in the banking sector.