- Overview:
Lok Sabha passes Banking Laws (Amendment) Bill, 2024: How it will enhance customer convenience; here’s all you need to know
The Banking Laws (Amendment) Bill, 2024 was passed on Tuesday in the Lok Sabha during the winter session of Parliament, proposing significant changes to banking regulations.
Parliament has just passed two important amendments in banking act and we all must be aware of it for Financial Literacy.
The Bill permits depositors to opt for either simultaneous nomination, where nominees are assigned specific percentage shares, or successive nomination, where nominees inherit in a predefined order. This change is expected to make fund access smoother for families while also reducing procedural delays.
Other significant reforms in the Bill include redefining “substantial interest” for bank directorships by raising the threshold from Rs 5 lakh to Rs 2 crore, a figure unchanged for nearly six decades. It also grants banks greater freedom in deciding the remuneration for statutory auditors and modifies regulatory reporting deadlines to the 15th and last day of every month, replacing the existing second and fourth Fridays.
Now you can have up to four nominees in your bank account instead of 1 earlier. On your death, money will go to these nominees based on 2 methods.
You can add them as “successive” or “simultaneous” nominees.
What’s the difference?
- In Successive nomination: – The second nominee can take out money only if first nominee is not available. If second is not there then the rightful heir will be the third nominee. Then the fourth.
- In Simultaneous nomination: – All 4 nominees can take out money as they like. Everyone has equal right without an order rank of nomination.
However, in bank lockers, only successive nomination will be allowed. The rank of nominees will be followed. One after another.
- Here are the advantages of these amendments:
- Multiple nominees:
Now, multiple nominees can be appointed for a single deposit account, allowing for more representation and reducing potential conflicts among legal heirs.
- Nomination for non-individuals:
Nomination facilities have been extended to non-individuals, such as trusts, societies, and companies, providing them with similar benefits.
- Variation or cancellation of nomination:
Account holders can now vary or cancel a nomination during their lifetime, giving them greater control over their assets.
- Overriding effect of nomination:
The amended laws clarify that a nomination overrides other legal claims, such as those under the Succession Act or the Hindu Succession Act, reducing potential disputes and litigation.
- Can this nomination be a mini will?
As per the amendment, the share of nominees can indeed be unequal.
The depositor can now appoint up to four nominees for deposits, lockers, and other custodial items, with the option to declare a specific proportion for each nominee.
This flexibility allows depositors to distribute their assets more equitably among multiple beneficiaries, according to their wishes.
Comparing these amendments to a simplified will is reasonable, (for bank deposits) especially in cases with four or fewer legal heirs. The nomination facility provides a straightforward way to distribute assets after the account holder’s demise, avoiding lengthy and costly legal procedures.
However, it’s essential to note that nominations are not a substitute for a comprehensive will.
In summary, the recent amendments to the nomination laws offer greater flexibility, convenience, and control for account holders and their nominees.
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CS Pramodkumar R. Ladda
Company Secretary & Insolvency Professional
Tel: +91-20-24570055 | Office Cell: +91- 9404923393, 8624919609, 9175395604 |
Personal Mob.: +91- 9922735476, 9595271145 | Skype id: pramodladda
Ladda Bhutada & Associates I Company Secretaries
Address: Office No. 106, B- Wing, Sr No. 55, Sukhniwas, 15th August Chowk,
Mangalwar Peth, Pune – 411011, Maharashtra, India.
laddacs@gmail.com | http;//www.csladda.com
