Lok Sabha clears Banking Laws Amendment Bill that seeks to resolve issues of unclaimed deposits

The Lok Sabha on Dec 3 passed the Banking Laws (Amendment) Bill, 2024 by a voice vote.

Piloted by Union Finance Minister Nirmala Sitharaman, the legislation introduces significant changes aimed at improving governance in the banking sector and enhancing customer convenience.

"The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors," Sitharaman said while moving the bill for consideration and passing.

Key provisions include allowing bank account holders to nominate up to four individuals for their accounts, with an option for successive or simultaneous nominations. Locker holders, however, will be restricted to successive nominations.

The bill also proposes a revision to the definition of "substantial interest" for directorships, raising the threshold from ₹5 lakh to ₹2 crore. Additionally, the tenure of directors (excluding chairpersons and whole-time directors) in cooperative banks will increase from 8 to 10 years, aligning with 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. Another notable amendment is the flexibility granted to banks in determining remuneration for statutory auditors.

Reporting dates for regulatory compliance will shift from the second and fourth Fridays to the 15th and last day of every month, streamlining oversight processes.