Union Finance Minister Nirmala Sitharaman moved the Banking Laws (Amendment) Bill in the Lok Sabha on Tuesday. She said the changes proposed through the Bill will strengthen governance in the sector and enhance customer convenience.

The minister said 19 amendments are being proposed to bring changes in 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.

The bill proposes to allow a bank account holder to have up to four nominees in his/her account. It also seeks to transfer 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’ interests.

It also seeks to transfer 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.

In her speech at the Parliament, Sitharaman said the total bank branches of scheduled commercial banks have increased by 3792 in a year to reach 1655001 in Sept 2024. Out of this 85,116 branches are of public sector banks.

The  Banking Laws (Amendment) Bill also 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 provide an increase in the tenure of the directors in co-operative banks.

Another 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 ago.

With regard to cooperatives operating in the banking space, Sitharaman said the amendments in the Banking Regulations Act would apply only to cooperative banks or that part of the cooperatives which are operating as banks.