Banking Laws Amendment Bill gets Rajya Sabha's nod; depositors can nominate four members for bank accounts or FDs

Banking Laws Amendment Bill, moved my Finance Minister Nirmala Sitharaman, was passed by the Rajya Sabha on Wednesday, set to bring significant changes to banking regulations.

This bill was passed in the Lok Sabha in the Winter Session, that is December of last year. It seeks to improve governance standards and ensure consistency in banks' reporting to the Reserve Bank of India (RBI).

The Finance Minister, in her address, highlighted several achievements of the banking system in the country and also highlighted that action is going on relentlessly against wilful bank defaulters.


"We are not lying low," she said.

What are the provisions of Banking Laws (Amendment) Bill?

Among its key provisions, the Bill allows depositors to nominate up to four individuals for their bank accounts or fixed deposits, replacing the current single-nominee system. The move aims to simplify fund distribution after the death of an account holder, a problem which arose during the COVID-19 pandemic..

The Bill permits depositors to opt for either simultaneous nomination, where nominees are assigned specific percentage shares, or successive nomination, where nominees inherit in a predefined order. This change is expected to make fund access smoother for families while also reducing procedural delays.

Other significant reforms in the Bill include redefining substantial interest for bank directorships by raising the threshold from Rs 5 lakh to Rs 2 crore, a figure unchanged for nearly six decades. It also grants banks greater freedom in deciding the remuneration for statutory auditors and modifies regulatory reporting deadlines to the 15th and last day of every month, replacing the existing second and fourth Fridays.

Finance Minister Nirmala Sitharaman moved the Bill further 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, 1980, for consideration and passing.