Major Changes in Bank Account and FD Rules: Banking Amendment Bill 2024 Passed in Lok Sabha

The Lok Sabha has passed the Banking Amendment Bill 2024, introducing significant changes for bank account holders and the banking sector.

Finance Minister Nirmala Sitharaman presented the bill, which includes 19 amendments aimed at enhancing customer convenience and simplifying the banking system.

Add Up to 4 Nominees to Your Account or FD

With this bill, account holders can now add up to four nominees to their bank accounts and fixed deposits (FDs), instead of the previous limit of one.

Option 1: Allocate specific portions of the account or FD to multiple nominees.

Option 2: Add nominees in a sequential order, where funds will be transferred to each in turn.

This change is intended to ensure unclaimed amounts reach the rightful heirs. As per RBI data, approximately ₹78,000 crores were lying unclaimed in bank accounts as of March 2024.

Expanded Role for Central Cooperative Bank Directors

Directors of Central Cooperative Banks can now serve in State Cooperative Banks as well.

The tenure for cooperative bank directors has been extended from 8 years to 10 years, except for chairpersons and whole-time directors.

Changes to RBI Reporting Rules

Banks are now allowed more flexibility in reporting to the RBI.

Reports will be submitted every 15 days, monthly, or at the end of the quarter, instead of the previous weekly (every Friday) requirement.

This aims to streamline reporting processes.

Unclaimed Funds to be Transferred to IEPF

Funds such as unclaimed dividends, interest, and matured bonds, which remain unclaimed for seven years, will now be transferred to the Investor Education and Protection Fund (IEPF).

New Powers for Public Sector Banks

Public sector banks can now determine auditor fees and

Recruit top-level talent independently.

How Will These Changes Impact Customers?

Increasing nominee limits ensures easier access to funds for families.

The banking process becomes more transparent and customer-friendly.

Better management of unclaimed funds improves efficiency.

Conclusion

The Banking Amendment Bill 2024 is set to bring a wave of improvements to the Indian banking sector. It aims to enhance customer convenience, streamline banking operations, and make the financial system more efficient and transparent.