The Banking Laws (Amendment) Bill, 2024 has introduced significant reforms, providing greater flexibility and security for bank account holders. Among the key changes, customers can now add up to four nominees to their accounts, enhancing financial security for their families.

Key Banking Law Reforms in 2024

The Banking Laws (Amendment) Bill, 2024 was recently passed in Parliament, receiving approval from the Rajya Sabha through a voice vote after being passed in the Lok Sabha in December 2024. This law introduces multiple customer-centric improvements, ensuring more streamlined banking operations and stricter compliance measures.

Major Changes for Bank Customers

1. Increase in the 'Substantial Interest' Threshold

   • Previously, a person with an investment of Rs 5 lakh in a bank was considered to have substantial interest.

   • The new law raises this threshold to Rs 2 crore, reflecting the changing economic landscape.

   • This adjustment was made as the previous limit had remained unchanged for nearly 60 years.

2. Stricter Loan Recovery Policies

   • Finance Minister Nirmala Sitharaman emphasized that the government is committed to cracking down on willful defaulters.

   • The Enforcement Directorate (ED) has investigated over 112 bank fraud cases in the last five years.

   • Sitharaman clarified that a "write-off" does not mean a loan waiver—banks will continue their recovery efforts.

Public Sector Banks Record Highest Profits

• Public sector banks reported record-breaking profits of Rs 1.41 lakh crore in the last financial year.

• The government expects even higher profits in the 2025-26 fiscal year.

New Benefits for Cooperative Banks and Auditors

• The tenure of directors in cooperative banks (excluding chairpersons and full-time directors) has been extended from 8 years to 10 years.

• This change aligns with the 97th Constitutional Amendment Act of 2011.

• Directors of central cooperative banks can now also serve on the boards of state cooperative banks.

Banks Gain More Independence

• Banks now have the freedom to decide the salaries of their statutory auditors.

• Reporting procedures have changed—banks must now submit financial data on the 15th and last day of each month, instead of the second and fourth Fridays.

Nomination Rules Updated

• Account holders can now nominate up to four individuals in their savings accounts, fixed deposits, and lockers.

• This rule brings banking policies in line with insurance policies and other financial schemes.

• These changes ensure better financial planning and security for customers and their families.

How the Law Was Formulated

• The bill impacts five different banking laws, making it a historic reform.

• The government assembled eight teams to carefully draft the necessary amendments, ensuring comprehensive improvements in the banking sector.

Final Thoughts

The Banking Laws (Amendment) Bill, 2024 is a landmark reform that modernizes India’s banking system, enhances customer convenience, and strengthens financial security. With stricter loan recovery measures, increased nomination flexibility, and more autonomy for banks, these changes will reshape the country’s financial landscape for years to come.