The Banking Laws Amendment Bill 2024 is a new proposal by the Indian government to update important banking rules. Here’s a simple breakdown of the main changes it introduces:
- More Flexibility with Nominees: Bank customers can now name up to four people as nominees for their accounts, lockers, or safe custody items. Before, they could only name one. These nominees can be set up to inherit the assets either all at once or in a specific order, giving the account holder more control over what happens to their assets after they pass away.
- Updated Financial Interest Rules: The Bill raises the amount considered as a ‘substantial interest’ in a bank from ₹5 lakh to ₹2 crore. This adjustment is meant to account for inflation since the original rule was set almost 60 years ago.
- New Reporting Deadlines for Banks: Banks will now have to report on the 15th and last day of each month, instead of on the second and fourth Fridays. This change aims to streamline the reporting process for banks.
- Protection for Investors: Any unclaimed dividends, shares, or bonds will be moved to the Investor Education and Protection Fund (IEPF), where investors or their heirs can later claim them.
Overall, the Bill aims to modernize banking practices, offering more options for customers and clearer rules for banks. However, some are still concerned about how certain situations, like disputes over nominees, will be handled.
Controversy and Opposition
Congress member Manish Tewari opposed the Bill, arguing that state governments should be in charge of making laws about cooperative societies. However, Finance Minister Nirmala Sitharaman clarified that the Bill focuses on banking rules and does not aim to control cooperative banks that already have banking licenses.
About the Reserve Bank of India Act
The Reserve Bank of India (RBI) was created by the RBI Act in 1934 and began operating on April 1, 1935. Its primary role was to manage currency and ensure monetary stability in the country. The Act allows the RBI to issue currency notes (except one-rupee notes) and regulate foreign exchange and inflation through its monetary policies. The RBI Act has been amended 60 times to include new financial regulations, reflecting the evolving role of the central bank in managing India’s economy. The first Governor of the RBI was Osborne Smith.
