The central government recently passed the Banking Laws (Amendment) Bill, 2024 in Parliament, bringing significant changes for bank account holders.
The Rajya Sabha approved the bill through a voice vote, after it was passed in the Lok Sabha in December 2024.
Key Changes for Customers
One of the most notable changes is that bank account holders can now add up to four nominees to their accounts.
This new provision aims to make it easier for account holders to manage beneficiaries in case of unfortunate events.
Another major change is the revised definition of “substantial interest.” Previously, if a person invested Rs 5 lakh in a bank, it was considered “substantial interest.”
The new law raises this limit to Rs 2 crore, reflecting a change that was needed as the previous figure had been in place for nearly 60 years.
Stricter Action Against Defaulters
Finance Minister Nirmala Sitharaman emphasized the government’s commitment to taking strong action against wilful defaulters.
Over the past five years, the Enforcement Directorate (ED) has investigated over 112 cases related to bank fraud.
She clarified that “write-off” does not mean loan waiver and assured that banks would continue their efforts to recover these loans.
Historic Profits for Public Sector Banks
Sitharaman also highlighted that public sector banks had achieved their highest-ever profit of Rs 1.41 lakh crore in the last financial year.
She expressed optimism that these profits would continue to rise in 2025-26.
Changes for Co-operative Banks and Auditors
The bill also introduces new provisions for cooperative banks and auditors.
The tenure of directors at cooperative banks (excluding the chairman and full-time directors) has been extended from 8 years to 10 years, aligning with the 97th Constitutional Amendment Act of 2011.
Additionally, a director of a central cooperative bank will now be able to serve on the board of a state cooperative bank.
Increased Freedom for Banks
Banks will now have more freedom to decide the salary of their statutory auditors.
Moreover, banks will be required to submit their data for reporting on the 15th and last day of each month, a change from the previous practice of submitting it on the second and fourth Fridays.
Nomination Rules Updated
A key update in the new law is the ability to add multiple nominees for both cash and fixed deposits.
The same rules will apply to bank lockers, in line with how insurance policies and other financial schemes handle nominations.
Sitharaman noted that this bill affects five different laws, marking it as a special and comprehensive change.
Eight teams worked together to ensure that all necessary amendments were made.
These changes aim to simplify banking processes, improve customer convenience, and bring greater clarity to the sector.
