Bill to provide up to four nominees to a bank account introduced in LS

A bill seeking to provide for four nominees by a bank account holder was introduced in the Lok Sabha on Friday to ensure better protection of depositors and enhance customer convenienceIntroduced by Minister of State for Finance Pankaj Chaudhary in the Lower House the Banking Laws Amendment Bill 2024 has a provision for simultaneous and successive nominations to bank accounts lockers etcAs per the provision of the bill a bank account holder can nominate up to four personsThe bill also seeks to transfer of unclaimed dividends shares and interest or redemption of bonds to the Investor Education and Protection Fund IEPF allowing individuals to claim transfers or refunds from the fund thus safeguarding investors interestsAs the banking sector has evolved over the years and with a view to improving bank governance and investor protection it has become necessary to make certain amendments to five Acts according to the Statement of Objects and Reasons of the BillThe Bill which was approved by the Union Cabinet last week proposes to amend the Reserve Bank of India Act 1934 the Banking Regulation Act 1949 the State Bank of India Act 1955 the Banking Companies Acquisition and Transfer of Undertakings Act 1970 and the Banking Companies Acquisition and Transfer of Undertakings Act 1980The proposed bill seeks to improve governance standards provide consistency in reporting by banks to the Reserve Bank of India ensure better protection for depositors and investors improve audit quality in public sector banks bring customer convenience in respect of nominations and to provide for increase in the tenure of the directors in cooperative banksTherefore it was felt necessary to amend the said enactments and for that purpose to introduce the Banking Laws Amendment Bill 2024 in ParliamentAnother proposed change relates to redefining substantial interest for directorships which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh which was fixed almost six decades agoCongress member Manish Tewari opposed the introduction of the Bill saying the power to legislate with regard to cooperatives vests with state governments RSP member N K Premachandran opposed amending five legislations through one bill while TMC member Saugata Roy termed the bill superfluous saying the the amendments proposed in the bill could have been done through administrative decisionsResponding to the oppositions remarks Finance Minister Nirmala Sitharaman said the various amendments done in Banking Regulations Act with respect to cooperative banks are not just one or two but severalSimple understanding is we are not touching any aspect of the cooperatives other than that which claims under the name of bankingthe sections which have been brought in for amendments as also the court verdicts have repeatedly reinforced the point that Banking Regulation Act and the Cooperative Banks do have this relationship and therefore it has to be taken through this route she saidOtherwise there is no attempt to undermine the cooperatives particularly cooperatives dealing with everything other than banks she said defending the BillThe bill proposes to increase the tenure of directors excluding the chairman and wholetime director in cooperative banks from 8 years to 10 years so as to align with the Constitution NinetySeventh Amendment Act 2011Once passed the bill would allow a director of a Central Cooperative Bank to serve on the board of a State Cooperative BankThe bill also seeks to give greater freedom to banks in deciding the remuneration to be paid to statutory auditorsIt also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth FridaysWhats the rationale behind it The current reporting Friday sytem has several limitations that impact the accuracy and effectiveness of the reporting of dataThese limitations are incomplete coverage of monthly data seasonal fluctuations in banking activity which lead to inconsistent reporting and the need for adjustment every 11th year which introduces complications and inconsistencies That is why in order to address the issue it is proposed to amend the legislation she saidThe announcement about amendments to the Banking Regulation Act was made by the Finance Minister in the 202324 Budget speechTo improve bank governance and enhance investors protection certain amendments to the Banking Regulation Act the Banking Companies Act and the Reserve Bank of India Act are proposed she had saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever