Banking laws Bill extends tenure of cooperative banks' directors to 10 yrs
New Delhi, Aug 9, 2024
It proposes transferring unclaimed dividends, shares, to Investor Education and Protection Fund
A Bill that Finance Minister Nirmala Sitharaman tabled in Parliament on Friday proposes extending the tenure of directors (excluding the chairman and whole-time directors) of cooperative banks from eight to 10 years.
The Banking Laws (Amendment) Bill, 2024, makes an amendment in clause (ne) of section 5 of the Banking Regulation Act, 1949 to redefine "substantial interest." That would lead to an increase in the threshold for shareholding of substantial interest from Rs 5 lakh to Rs 2 crore, reflecting the present value, as the same was last fixed in 1968.
Additionally, the Bill proposes the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF). Individuals would then be able to claim transfers or refunds from the fund, ensuring the protection of investors' interests.
Business Standard reported in April that the Finance Ministry is considering amending the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, which governs public sector banks, to make suitable provisions for allowing PSBs to transfer shares to the Investor Education and Protection Fund (IEPF) when dividends of such shares remain unclaimed by the investors for seven consecutive years.
The Bill has also allowed the director of a central cooperative bank to serve on the board of a State Cooperative Bank.
Another major change outlined in the Bill is the revision of the reporting dates for the submission of statutory reports by banks to the Reserve Bank of India (RBI). The Bill proposes shifting the reporting date from the current 'reporting Friday' to the last day of the fortnight, month, or quarter. This amendment aims to ensure consistency in reporting practices.
The Bill proposes amendments to sections 45ZA, 45ZC, and 45ZE of the Banking Regulation Act to allow for up to four nominees.
“This includes provisions for simultaneous and successive nominations, offering greater flexibility and convenience for depositors and their legal heirs, especially concerning deposits, articles in safe custody, and safety lockers,” it said.
The Banking Laws (Amendment) Bill, 2024, aims to update and refine banking regulations to better align with current financial practices, while also improving protections for both depositors and investors.
[The Business Standard]
