Andhra Pradesh, India, December 10, 2024: The Indian legal system is as old as other systems and changes regularly as society progresses. However, the changes to existing laws are not an easy affair in our country. The bills have to be prepared and presented to both houses of parliament, and the required majority to give assent to the bills. Finally, the acceptance and accord of the President of India gives the necessary kick-start to implement the new law or the necessary changes in the existing law. In this direction, many laws underwent changes; every change had to be incorporated through an amendment.
Accordingly, many laws were passed through amendments, and now the time has come for another law, i.e., the Indian Banking Law. Indian Banking Law consists of The Banking Regulation Act, 1949, The Reserve Bank of India Act, 1934, The State Bank of India Act, 1955, The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970; and The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 and many other piecemeal legislations in this direction requires a dire need for amendments.
In this direction, The Banking Laws (Amendment) Bill 2024 was initially introduced in the Lok Sabha on August 09, 2024. In a significant move by the Central Government, the Union Government passed amendments to Banking Laws on December 05, 2024.
The Assistant Professor and HOD of the Department of Commerce, at Paari School of Business, SRM University (Andhra Pradesh) shares some of the crucial amendments in this direction:
- Introduction of Multiple and Successive Nominations:
The existing amendment for nominations concerns customers being allowed to provide up to four nominees’ names either successively or simultaneously; this will facilitate the reduction of unclaimed deposits and allow the inheritance system to be active. However, in the case of safety – lockers, only successive nominations are allowed.
- Increase in the Threshold for “Substantial Interest”:
The bill increases the “substantial interest” threshold from five lakh rupees to two crore rupees. These changes reflect inflationary adjustments and the need to align the threshold with contemporary market valuations last set in 1968. The amendment will affect the calculation of beneficial ownership and may impact shareholder rights and corporate governance in the banking companies.
- Other Amendments:
The tenure of directors other than chairman and whole-time director in cooperative banks from 8 to 10 years also allowed a director of a central cooperative bank to serve on the board of a state cooperative bank. Further, it has also been amended to revise the reporting dates for the submission of statutory reports by banks to RBI for uniformity in report submission dates.
Though the amendments look nice, we need to see at ground level the implementation of these changes at the bank level and from understanding and utilising these avenues from the customers’ angle. If not meticulously done, the nomination details may also lead to other legal complications. However, it could be said that these amendments are indeed a welcoming one given the existing economic and global scenario of digital banking. It can be hoped that the Indian Banking Sector will embark on new horizons with these amendments.
