This Bill seeks to amend several key banking laws, including: (i) the Reserve Bank of India (RBI) Act, 1934, (ii) the Banking Regulation Act, 1949, (iii) the State Bank of India Act, 1955, (iv) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and (v) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
Redefining the Fortnight for Cash Reserves:
Under the RBI Act, scheduled banks are required to maintain an average daily balance with the RBI as cash reserves, calculated based on the average of daily balances at the close of business each day over a fortnight. Currently, a fortnight is defined as the period from Saturday to the second following Friday (inclusive). The Bill redefines a fortnight as either: (i) the first day to the fifteenth day of each month, or (ii) the sixteenth day to the last day of each month. This revised definition also applies under the Banking Regulation Act, which governs cash reserve requirements for non-scheduled banks.
Tenure of Directors in Co-operative Banks:
The Banking Regulation Act currently limits the tenure of directors in banks (excluding the chairman or whole-time directors) to a maximum of eight consecutive years. The Bill proposes to extend this period to 10 years specifically for co-operative banks.
Prohibition on Common Directors in Co-operative Banks:
Under the Banking Regulation Act, a director of a bank is prohibited from serving on the board of another bank, except for directors appointed by the RBI. The Bill extends this exemption to include directors of central co-operative banks, allowing them to serve on the board of a state co-operative bank if they are members.
Substantial Interest in a Company:
Currently, under the Banking Regulation Act, “substantial interest” in a company is defined as holding shares worth over five lakh rupees or 10% of the company’s paid-up capital, whichever is lower. This applies to an individual, their spouse, or minor child, either individually or collectively. The Bill raises this threshold to two crore rupees and allows the central government to adjust this amount through a notification.
Nomination Provisions:
The Banking Regulation Act allows deposit holders, whether single or joint, to nominate a person to access their deposit in case of death. This nomination can also apply to items left in a bank’s custody or in a hired locker. The Bill expands the nomination provision to allow up to four nominees for these purposes. For deposits, nominees can be appointed either successively or simultaneously, with simultaneous nominees being effective in a declared proportion. In the case of successive nominations, the nominee listed higher in order will have priority.
Settlement of Unclaimed Amounts:
The State Bank of India Act and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 mandate that unpaid or unclaimed dividends be transferred to an unpaid dividend account, which is then transferred to the Investor Education and Protection Fund (IEPF) if unclaimed for seven years. The Bill expands the scope of funds transferable to the IEPF to include: (i) shares where dividends have not been paid or claimed for seven consecutive years, and (ii) any interest or redemption amounts on bonds unpaid or unclaimed for seven years. Individuals whose shares or unclaimed funds are transferred to the IEPF can claim the transfer or request a refund.
Auditor Remuneration:
Currently, the RBI, in consultation with the central government, fixes the remuneration of bank auditors. The Bill grants banks the authority to determine the remuneration for their auditors independently.
 the Reserve Bank of India (RBI) Act, 1934, (ii) the Banking Regulation Act, 1949, (iii) the State Bank of India Act, 1955, (iv) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and (v) the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980...){kind=link}