Big changes in banking rules. You can now nominate four individuals instead of just one in your bank account. The Banking Laws (Amendment) Bill, 2024, which the Lok Sabha approved on Tuesday, includes this provision. As a result, customers are allowed to designate four individuals as nominees not just for bank accounts but also for lockers or other banking services held at banks.
Banking Laws (Amendment) Bill, 2024
Introducing the bill, Finance Minister Nirmala Sitharaman stated that its aim is to enhance the management of the nation’s banking system and offer improved service to ordinary customers. The legislation aims to empower bank management further. For instance, banks will now have the ability to determine their auditors’ fees, among other things, on their own.
The Finance Minister announced the introduction of this bill during his budget speech in July 2024. In this manner, the government has concurrently altered multiple clauses of the RBI Act of 1934, the Banking Regulation Act of 1949, the SBI Act of 1955, and the Banking Companies Acts from 1970 to 1980. As per the existing regulation, a single individual can be nominated for bank accounts; however, following the significant number of fatalities during Covid, numerous legal disputes have emerged involving banks, where many individuals have asserted their claims to a bank account. Subsequently, it was believed that the account holder ought to have greater rights to allocate the funds in the account to his loved ones as he desires.
The account holder has the authority to determine the share for the individuals he designates. This will simplify the distribution of funds deposited into the bank account. The amendment has also paved the way for significant modifications in the governance of cooperative banks in the nation. The term of directors in cooperative banks has been extended from eight years to ten years. The Cabinet has sanctioned the selection of Directors of Central Cooperative Banks to serve as members of the Board of Directors for State Cooperative Banks.
The government claims that this choice will result in improved collaboration between the central and state cooperative banks. Another significant alteration for banks is that the duration for determining their cash reserves has been modified. Until now, banks needed to determine their cash reserves on the Saturdays of the second week. This calculation will now take place based on the first day of each month, starting from the 15th and 16th until the month’s final day.