The Finance Minister, Nirmala Sitharaman, introduced a Bill in Parliament on Friday that would increase the eight-year term limit for cooperative bank directors, excluding the chairman and whole-time directors, to ten years.
Clause (ne) of section 5 of the Banking Regulation Act, 1949 is amended by the Banking Laws (Amendment) Bill, 2024, to redefine “substantial interest.” As a result, the barrier for possessing a significant stake in shares would rise from Rs 5 lakh to Rs 2 crore, representing the current value, as it was last established in 1968.
The Bill also suggests that shares, unclaimed dividends, interest, and bond redemptions be transferred to the Investor Education and Protection Fund (IEPF). After that, people would be able to request transfers or refunds from the fund, guaranteeing the interests of investors were preserved.
According to Business Standard, the Finance Ministry is considering amending the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, which governs public sector banks, to make appropriate provisions for allowing PSBs to transfer shares to the Investor Education and Protection Fund (IEPF) when dividends on such shares go unclaimed for seven years in a row.
The Bill also allows the director of a central cooperative bank to sit on the board of a State Cooperative Bank.
Another major change outlined in the Bill is the revision of the reporting dates for the submission of statutory reports by banks to the Reserve Bank of India (RBI). The Bill proposes shifting the reporting date from the current ‘reporting Friday’ to the last day of the fortnight, month, or quarter. This amendment aims to ensure consistency in reporting practices.
The Bill proposes amendments to sections 45ZA, 45ZC, and 45ZE of the Banking Regulation Act to allow for up to four nominees.
“This includes provisions for simultaneous and successive nominations, offering greater flexibility and convenience for depositors and their legal heirs, especially concerning deposits, articles in safe custody, and safety lockers,” it said.
The Banking Laws (Amendment) Bill, 2024, aims to update and refine banking regulations to better align with current financial practices, while also improving protections for both depositors and investors.
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