While the Act has received Presidential assent on April 15, 2025, the date of implementation for its various provisions will be notified separately.
The government has notified the Banking Laws (Amendment) Act 2024, which allows bank account holders to have up to four nominees in a bank account, among other provisions. However, the date for implementation of various provisions will be notified later.
“The act has received the assent of the President on April 15 2025,” the notification said. The act prescribes amendments to the Reserve Bank of India Act, the Banking Regulation Act, the State Bank of India Act, the Banking Companies (Acquisition and Transfer of Undertakings) Act and the Banking Companies (Acquisition and Transfer of Undertakings) Act. The government has already clarified that amendments to all these Acts have nothing to do with the lowering of government holding or privatisation of PSBs
With the help of the new law, deposit holders or locker holders can name up to four persons as nominees for payment of depositors’ money, release of contents of safety lockers and return of articles kept in safe custody with banks. Currently, only one nominee is permitted. The change will come with some conditions. In case of deposits, four nominees will be permitted with two options. Either the primary holder(s) has to give priority to all four or mention the share of each nominee. In case of priority, the nomination shall be effective only in favour of one person in the order of priority.
This means the first nominee’s nomination will be effective if she/he survives the person(s) who made the nomination. After the death of the first, second, or third nominee, the next nominee will become effective. The priority mechanism will also be made available for nominations made in case of lockers and safe custody.
Balances in savings/current accounts not operated for 10 years or term deposits not claimed for 10 years from the date of maturity are classified as ‘unclaimed deposits.’ This could be because of many reasons, including the death of the primary holder and no nomination. Banks transfer these amounts to the RBI’s Depositor Education and Awareness Fund. The depositors are, however, still entitled to claim the deposits later from the bank(s) where such deposits were held along with interest, as applicable.
The higher number of nominees for depositors’ money aims to reduce unclaimed bank deposits. Over ₹45,000 crore worth of “unclaimed deposit” was transferred by public sector banks to the Depositor Education and Awareness Fund between 2019-20 and 2024-25 (until December 31, 2024).
Tenure revision for cooperative bank directors
The act also seeks to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years to align with the Constitution (Ninety-Seventh Amendment) Act, 2011. ऊhe amendment would allow a director of a central cooperative bank to serve on the board of a State cooperative bank.
It also seeks to give banks greater freedom in deciding the remuneration to be paid to statutory auditors. The amendment also aims to reschedule the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.
More Like This
Published on April 16, 2025