The government is set to introduce two key Bills in the Lok Sabha during the week starting August 5. One of these, the ‘Banking Laws (Amendment) Bill 2024,’ aims to bring substantial changes to banking regulations.
The Union Cabinet approved the introduction of the ‘Banking Laws (Amendment) Bill 2024’ on Friday.The Bill is expected to redefine substantial interest for directors, increase the number of nominees for bank accounts, and change reporting dates, among other alterations.
Currently, under Section 45ZA of the Banking Regulation Act, a depositor can nominate one person to receive the deposit in case of their death. The new proposal aims to increase this number to four nominees, a move intended to reduce unclaimed deposits in banks. As of March 31, 2023, unclaimed deposits in public and private sector banks combined had risen to over Rs 42,000 crore from around Rs 33,000 crore a year earlier. These unclaimed deposits are transferred to the Depositor Education and Awareness (DEA) Fund maintained by the Reserve Bank of India, although depositors can still claim them later with interest.
Interest for directorships
Another key amendment involves redefining ‘substantial interest’ for directorships. The current provision defines substantial interest as holding a beneficial interest in shares exceeding Rs 5 lakh or 10% of the company’s paid-up capital, whichever is less. The proposed change will increase this limit to Rs 2 crore or 10% of paid-up capital.
The Bill also proposes changes to the reporting dates for banks, shifting the current requirement from the second and fourth Friday of every month to the 15th and 30th day of the month. Additionally, it seeks to limit the tenure of directors in co-operative banks to 10 years.
These changes aim to enhance the efficiency and transparency of banking operations, addressing issues such as unclaimed deposits and updating regulatory thresholds and reporting requirements. The introduction of these amendments reflects the government’s ongoing efforts to strengthen the banking sector.
