The Banking Laws (Amendment) Bill, 2024 got the green light from Lok Sabha on Tuesday. The bill will allow bank account holders to name up to four nominees for their accounts.

It also proposes changing the definition of ‘substantial interest’ for bank directors. The new limit would be Rs 2 crore, up from the old limit of Rs 5 lakh, which has been in place for almost 60 years.

The Bill, presented by Finance Minister Nirmala Sitharaman, was passed by a voice vote. During the debate, she explained that depositors will be able to choose either successive or simultaneous nominations for their accounts. However, locker holders will only be allowed to have successive nominations.

Sitharaman said that since 2014, the central government and the Reserve Bank of India (RBI) have taken great care to ensure that banks remain stable. She said, "The goal has always been to keep our banks safe, stable, and healthy, and after 10 years, we are seeing positive results."

The Bill also aims to extend the tenure of directors (other than the chairman and whole-time director) in cooperative banks from 8 years to 10 years, to comply with the Constitution (Ninety-Seventh Amendment) Act, 2011.

As soon as the bill passes, it will allow a director of a central cooperative bank to also serve on the board of a state cooperative bank. It also seeks to provide banks with more flexibility in setting the remuneration for statutory auditors.

It also allows to change the regulatory compliance reporting dates of banks to the 15th and last day of each month, replacing the current practice of the second and fourth Fridays. Sitharaman, while moving the Bill, said, "These amendments will enhance governance in the banking sector and improve customer convenience concerning nominations and investor protection."