Union Finance Minister Nirmala Sitharaman Announces Key Amendments in Banking Laws to Benefit Customers and Businesses

Baby Chakraborty |  KalimNews  |  December 4, 2024 | New Delhi : Union Finance Minister Nirmala Sitharaman has outlined a series of significant reforms in the banking sector following the passing of the Banking Law Amendment Bill in the ongoing winter session of Parliament. Speaking after the bill's passage, Sitharaman emphasized that the amendments aim to enhance banking services for customers and address key regulatory concerns. "Five laws need to be amended to improve banking services for customers. Major changes will come in several rules after the new regulations come into effect," she said.

The Banking Law Amendment Bill, introduced in the Lok Sabha on Tuesday, includes 19 proposals that amend five key banking laws. The amendments are set to bring major changes in areas like nominee rules, banking operations, and reporting requirements.

Key Amendments in the Banking Law:

Nominee Rules Expanded:

One of the most important changes introduced by the amendment is the expansion of the nominee system for bank accounts. Previously, a maximum of one nominee could be appointed for both bank accounts and lockers. Under the new law, account holders can now designate up to four nominees for their accounts. Additionally, the percentage share of the inheritance that each nominee will receive can be specified in advance. However, this provision does not apply to locker nominees. In the case of lockers, items deposited by the account holder will be returned to the nominee gradually following the account holder's death.

Increased Limits for Private Companies:

The new amendments also benefit private companies by raising the maximum interest they can receive on bank deposits. Prior to the amendment, private companies could receive a maximum of Rs 50 lakh in interest. The amendment increases this limit to Rs 2 crore, providing companies with more flexibility and benefit in managing their finances.

Extension of Reporting Deadlines:

Another key aspect of the bill is the extension of the deadline for banks to submit their monthly reports to the Reserve Bank of India (RBI). This will allow financial institutions more time to comply with regulatory requirements, potentially improving operational efficiency and reducing administrative burdens.

Aiming for Greater Transparency and Customer Convenience:

The Banking Law Amendment Bill is designed to improve transparency and convenience for account holders. By allowing multiple nominees with clear inheritance percentages, it aims to streamline the process of asset transfer in the event of an account holder's death. The change in nominee rules also reflects a growing need to adapt banking services to the evolving needs of customers, especially those planning their estates.

Additionally, the increased limits for private companies are expected to create a more favorable environment for businesses, offering them greater financial flexibility and access to larger sums for investment and operations.

Looking Ahead:

The amendments are a part of the government's ongoing efforts to modernize India's banking sector, ensuring that it remains efficient, customer-friendly, and in line with global best practices. These changes are expected to benefit a wide range of stakeholders, from individual customers to large companies, contributing to the overall growth and stability of India's financial system.

As the new rules come into effect, the banking sector will likely experience a shift in how customers manage their accounts and inheritance, while businesses may benefit from the enhanced provisions tailored to their needs.