Government Proposes New Amendment Bill to Allow Four Nominees to a Bank Account

The Government introduced the Banking Laws Amendment Bill in Parliament on August 09, which will help depositors and investors gain access to unclaimed cash.

Among the important highlights, the Bill proposes to raise the number of bank account nominations from one to four. As per sources, this is expected to improve services for depositors, bank locker holders, and their nominees.

The Bill establishes the Investor Education and Protection Fund to receive unclaimed dividends, shares, and interest, as well as bond redemptions. Individuals may request transfers or refunds from this fund in order to protect the interests of investors.

The Bill proposes to redefine ‘substantial interest‘ for individuals, which would be enhanced to Rs.2 crore from the present Rs.5 lakh, as agreed in 1968.

The Bill seeks to alter the reporting deadlines for banks’ filing of statutory reports to the RBI. This is suggested to be changed from Friday to the last day of the fortnight, month, or quarter to maintain consistency in reporting across all banks.

The proposed revisions also seek to provide public sector banks the freedom to determine auditor remuneration. This is likely to increase audit quality by allowing banks to attract top staff.

The Union Cabinet approved the Bill last Friday, which will amend the Reserve Bank of India Act of 1934, the Banking Regulation Act of 1949, the State Bank of India Act of 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1980.

In her FY24 Budget speech, Finance Minister Sitharaman stated that “to 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.”