India Passes Banking Laws (Amendment) Bill 2024: New Nomination Rules and Key Reforms
India's Parliament passes the Banking Laws (Amendment) Bill 2024, allowing up to four nominees for bank accounts and fixed deposits. This reform simplifies fund transfers and enhances governance in the banking sector.
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The Banking Laws (Amendment) Bill 2024 passed by the Indian Parliament introduces significant changes aimed at improving banking operations and simplifying the inheritance process for account holders. Here are the key aspects:
Key Highlights:
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Multiple Nominees Allowed:
- Account holders can now nominate up to four individuals for their accounts and fixed deposits.
- Types of Nominations:
- Simultaneous nominations: Funds can be divided equally or according to the account holder's wishes among nominees.
- Successive nominations: Funds are inherited in a specific order.
- For lockers, only the successive nomination system is allowed.
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Benefits of Nomination:
- Ease of Transfer: Simplifies fund transfers to nominees, eliminating the need for succession certificates or court orders.
- No Legal Hurdles: Ensures a smooth process while protecting the rights of the successors.
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How to Nominate:
- Nomination can be added when opening an account or later by submitting a nomination form.
- For joint accounts, one collective nominee can be assigned.
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Updating or Cancelling Nominations:
- Account holders have the flexibility to update or cancel nominations at any time by submitting an updated form to the bank.
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Rights of Nominees:
- A nominee acts as a trustee, holding the funds until they are distributed to legal heirs, unless the nominee is also a legal heir.
- Nomination does not override wills or inheritance laws.
Additional Reforms:
- Tenure for Cooperative Bank Directors: The term for directors has been extended from 8 to 10 years in line with the Constitution's 97th Amendment.
- Statutory Auditors' Remuneration: Banks now have greater discretion in deciding the fees for auditors.
- Reporting Updates: Banks are required to report on the 15th and last day of the month, replacing earlier reporting schedules.
Finance Minister's Statement:
Finance Minister Nirmala Sitharaman emphasized that these reforms aim to empower depositors while strengthening the stability and safety of the banking system. She noted the success of previous reforms over the past decade and highlighted that the changes would lead to improved efficiency, compliance, and governance in the banking sector.
This amendment is seen as a progressive step towards improving the ease of transferring assets to legal heirs and ensuring better governance within India’s banking infrastructure.
Source: Input Social Media.
