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Amendment has been brought as banking sector has evolved over years, and seeks to improve bank governance.
- Bill proposes to amend RBI Act, 1934, Banking Regulation Act, 1949, SBI Act, 1955, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
Key Provisions of Bill
- Increased Nominees: Allows depositors to nominate up to four nominees simultaneously (With proportion of their shares specified) and successively.
- Successive nomination: Several nominees listed in specific order, nominees would be contacted for claiming funds according to order.
- Investor education and protection fund (IEPF): Enables transfer of unclaimed dividends, shares, and interest or redemption of bonds to IEPF when they remain unclaimed for seven consecutive years.
- Bill allows individuals to claim transfers/refunds from IEPF.
- Substantial interest in shareholding: Threshold in shareholding has been increased from Rs 5 lakh to Rs 2 crore for directorships.
- Provision for Cooperative Banks:
- Extends tenure of directors in cooperative banks from 8 years to 10 years.
Significance
- Provide consistency in reporting to RBI.
- Reduce unclaimed deposits (over ₹42,000 crore in march 2023) by increasing nominee number.
- Unclaimed deposits are balances in savings/current accounts that are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity.
Investor Education and Protection Fund (IEPF)
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