Banking Amendment Bill 2024: A Game-Changer for Account Holders
On December 3, 2024, the Banking Act Amendment Bill 2024 was passed in the Lok Sabha, bringing significant changes to the banking framework in India. This landmark bill aims to enhance banking services, improve depositor security, and simplify nominee management for account holders.
Key Provisions of the Banking Amendment Bill 2024
Four Nominees Per Account
- The most notable change introduced by the bill is the provision to add up to four nominees to a single bank account.
- This move is designed to ensure smoother withdrawal of funds by the legal heirs in case of the account holder’s demise, minimizing disputes and delays.
Protection for Dormant Account Holders
- Previously, accounts with no transactions for seven years were transferred to the Investor Education and Protection Fund (IEPF).
- With the new amendment, account holders can claim refunds from the IEPF, ensuring their dormant funds remain accessible when needed.
Substantial Interest Redefined for Bank Directors
- The bill also updates the definition of substantial interest for bank directors.
- The monetary threshold has been raised from ₹5 lakh to ₹2 crore, aligning with the current economic environment and fostering better governance.
Reporting Changes for Banks
- Banks are now required to submit reports to the Reserve Bank of India (RBI) on the last day of every fortnight, replacing the earlier system of weekly submissions on Fridays.
- This change is aimed at streamlining compliance and improving regulatory oversight.
Finance Minister’s Insights
Finance Minister Nirmala Sitharaman, while presenting the bill, emphasized its focus on safeguarding depositor interests and improving the efficiency of private banks. She stated:
“The amendments in this bill address long-standing concerns of depositors and aim to provide flexibility and transparency in banking operations.”
Benefits of the Amendment
- Enhanced Security for Depositors:
- The ability to claim refunds from the IEPF ensures that dormant accounts are no longer a liability for account holders.
- Improved Nominee Management:
- Adding four nominees provides flexibility and reduces complications for families during inheritance processes.
- Strengthened Banking Governance:
- Raising the substantial interest threshold ensures more robust and accountable leadership within private banks.
Public Reaction
The move has been widely appreciated by depositors and financial experts. The flexibility in nominee additions and reclaiming dormant funds are seen as progressive steps to empower bank customers.
