Up to 4 nominees for bank accounts proposed as part of banking law tweaks

A bill seeking to improve governance standards in banks, allowing nominations of up to four persons by an account holder and ensuring the protection of depositors and investors has been introduced in the Lok Sabha.

The Banking Laws (Amendment) Bill, 2024, which was introduced by Minister of State for Finance Pankaj Chaudhary, proposes to raise the threshold for ‘substantial interest’ for directorships, which could increase from Rs 5 lakh to Rs 2 crore. The threshold was last fixed in 1968. The proposed bill allows a bank account holder to have 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, sources said.

It also seeks to enable the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thus safeguarding investors’ interests.