Parliament passes Banking Laws (Amendment) Bill to allow 4 nominees in bank account

New Delhi: Parliament on Wednesday passed the Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees, with the Rajya Sabha approving it by a voice vote.

Lok Sabha had passed The Banking Laws (Amendment) Bill in December 2024.

Another change in the bill relates to redefining of term 'substantial interest' of a person in a bank. The limit is sought to be enhanced to Rs 2 crore from the current Rs 5 lakh, which was fixed almost six decades ago.

The bill was passed by a voice vote in the upper house.

Replying to a debate on the bill in Rajya Sabha, Finance Minister Nirmala Sitharaman said that even though NPAs have decreased drastically, the government is committed to taking stringent action against wilful defaulters.

She said in the last five years, the Directorate of Enforcement has taken up around 912 cases related to bank fraud, including those pertaining to wilful defaulters.

Responding to issues regarding bad loans raised by opposition members during the discussion, the Finance Minister said "Write-offs do not mean waiving off loans", and the banks will continue to make efforts to recover the funds." She informed the House that public sector banks posted the highest ever profit of about Rs 1.41 lakh crore in the last fiscal, and exuded confidence that the profitability would further increase in 2025-26.

The bill also seeks to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Once it comes into effect, the 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 greater freedom to banks in deciding the remuneration to be paid to statutory auditors.

The amendment is also aimed at redefining the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.

Sitharaman said the amendments will impact five different acts, making it unique.

"It is also unique as eight teams worked on amendments, ensuring all necessary changes to achieve the budget speech's purpose," she said.

As per the amendment, simultaneous nomination will be permitted for cash and fixed deposits.

However, in the case of lockers, only simultaneous nomination is allowed. This is already being used in insurance policies and other financial instruments.