Banking Laws (Amendment) Bill 2024, Important Provisions, Benefits

The Banking Laws (Amendment) Bill, 2024 is a new law introduced to update and improve India’s banking rules. It amends key acts like the RBI Act 1934 and the Banking Regulation Act 1949 to make banking more modern, flexible and depositor-friendly. One major change is allowing up to four nominees in bank accounts and lockers instead of one, helping families after a depositor’s death. The bill also aims to strengthen governance in banks, protect depositors and investors, and update outdated rules like reporting deadlines and shareholding limits. These changes are part of broader efforts to make the banking system stronger and more efficient.

Important Provisions of Banking Laws (Amendment) Bill 2024:

1. Multiple Nomination Facility

The Bill allows bank customers to appoint up to four nominees for bank accounts, fixed deposits, and lockers. Earlier, only one nominee was permitted. Customers can choose nominees together with fixed shares or in a sequence of priority. This provision makes transfer of money and valuables easier after the account holder’s death and reduces family disputes and legal delays, ensuring quick settlement of claims.

2. Increase in Substantial Interest Limit

The Bill increases the limit of “substantial interest” in a company from ₹5 lakh to ₹2 crore. This amount had become outdated due to inflation and economic growth. The change reduces unnecessary restrictions on bank directors and improves corporate governance. It modernizes banking laws to match current financial conditions and simplifies compliance for banks and business groups.

3. Changes in Cooperative Bank Governance

For cooperative banks, the Bill extends the maximum tenure of directors (except chairperson and full time directors) from eight years to ten years. It also allows directors of central cooperative banks to serve on state cooperative bank boards. This ensures better continuity in management, improved decision making, and stronger leadership in the cooperative banking sector.

4. New Reporting System to RBI

Earlier banks submitted statutory returns on specific Fridays each month. The Bill replaces this with a simpler system requiring reports on the 15th and the last day of every month. This makes compliance easier and more uniform. It improves RBI’s monitoring of banks and helps in better financial supervision and quicker regulatory action when required.

5. Transfer of Unclaimed Amounts to IEPF

The Bill allows unclaimed dividends, interest, shares, and redemption money to be transferred to the Investor Education and Protection Fund after a fixed period. This prevents idle money from remaining unused. At the same time, rightful owners can still claim it later through proper procedure, ensuring safety and proper use of unclaimed financial resources.

Benefits of Banking Laws (Amendment) Bill, 2024:

1. Easier Settlement for Families

The multiple nomination system allows customers to appoint up to four nominees for bank accounts and lockers. This makes transfer of money and valuables smooth after the account holder’s death. Families no longer need lengthy legal procedures to claim funds. It reduces disputes among relatives and saves time and cost. This provision ensures financial security and quick access to savings during difficult situations.

2. Stronger Safety of Deposits

The Bill improves governance standards in banks by updating old legal provisions. Better management rules increase transparency and accountability. When banks are well regulated, the risk of fraud, misuse of funds, and failures decreases. This strengthens public confidence in the banking system and ensures depositor money remains safe and protected.

3. Updated and Practical Banking Rules

Many old limits and procedures were no longer suitable for today’s economy. By increasing financial thresholds and simplifying compliance, the Bill makes banking laws modern and practical. Banks can operate more smoothly without unnecessary legal burdens. This improves efficiency and reduces delays in daily banking operations.

4. Improved Cooperative Bank Management

By extending director tenure in cooperative banks, the Bill provides stability and continuity in leadership. Experienced directors can plan long term growth and improve financial performance. Stronger cooperative banks mean better services for farmers, rural customers, and small traders who rely heavily on them.

5. Better RBI Monitoring

The new reporting system helps RBI receive timely and regular financial information from banks. This improves supervision and early detection of problems. RBI can take quick corrective steps to prevent losses and financial crises. Strong monitoring protects both banks and customers.

6. Useful Handling of Unclaimed Funds

Instead of remaining idle, unclaimed money is transferred to the Investor Education and Protection Fund. These funds are used for public awareness and investor safety programs. At the same time, rightful owners can still claim their money when needed. This ensures proper financial management.

7. Overall Improvement in Banking Services

With simpler laws, stronger governance, and better supervision, banks can focus more on customer needs. This leads to faster services, better digital banking, safer transactions, and wider financial inclusion. The Bill helps create a more reliable and modern banking system in India.