The government introduced a bill on Friday to amend banking laws, including changes to the nomination facility to make it more consumer-friendly but left the floor on its holding unchanged to ensure that the Centre retains the majority stake in public sector banks, implying that stake sales in state-run banks will not be pursued.
The government had declared plans to privatize two PSBs, including IDBI Bank, but signs are that just a share sale in the financial institution-turned-retail lender will take place. According to reports on important measures published on August 3, after the cabinet approved the plans. The law proposes allowing a bank account holder to nominate up to four candidates, as well as extending the capability to bank lockers.
The Banking Laws (Amendment) Bill, 2024, which was introduced in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary, allows for simultaneous and consecutive nominations. This indicates that the initial nominee's nomination will take effect when the depositor or accountholder dies. It suggested that the nomination of the second nominee become valid only after the first's death.
"Where the order of nomination is not mentioned, persons shall be deemed to have been nominated in the order in which their names appear in the nomination," according to the law. The reform in the nomination method is viewed as critical to ensuring that deposits do not go to waste, since banks are known to make it difficult to transfer cash to heirs, resulting in about Rs 78,000 crore remaining unclaimed with private and state-run players.
The measure also intends to transfer unclaimed dividends, shares, and interest, as well as bond redemption proceeds, to the Investor Education and Protection Fund, allowing individuals to obtain transfers or refunds from the fund, therefore protecting investors' interests. Another suggested reform concerns redefining' substantial interest' for directorships, which might be increased to Rs 2 crore from the present ceiling of Rs 5 lakh, which was set over six decades ago.
The Central Government proposes a Banking Laws Amendment Bill that aims to change several banking regulations!
Manish Tewari, a Congress member, opposed the bill's introduction, claiming that the right to legislate on cooperatives was reserved for state governments. RSP member N K Premachandran opposed modifying five legislations with a single bill, while TMC member Saugata Roy called the measure "superfluous" and stated the revisions suggested could have been accomplished by administrative decisions. Responding to the opposition's allegations, FM Nirmala Sitharaman stated that the multiple adjustments made to the Banking Regulation Act with regard to cooperative banks were not one or two, but several.
