New Banking Laws Allow up to 4 Nominees per Account and FD
Lok Sabha passed the Banking Laws (Amendment) Bill 2024, simplifying the transfer of funds to nominees and allowing account holders to have up to 4 nominees for their bank accounts & FDs.
On 3rd December 2024, the Lok Sabha passed the Banking Laws (Amendment) Bill 2024, which aims to simplify the transfer of funds to nominees of bank account and Fixed Deposit (FD) holders. The bill, introduced by Finance Minister Nirmala Sitharaman, was approved by a voice vote during the session.
Key Amendments
The bill includes 19 amendments to several important banking laws:
- Reserve Bank of India Act, 1934 (1 amendment)
- Banking Regulation Act, 1949 (12 amendments)
- State Bank of India Act, 1955 (2 amendments)
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (2 amendments)
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1978 (2 amendments)
Focus on Nominee Benefits
One of the main goals of the bill is to make it easier for bank account holders and FD holders to transfer their funds to their nominees. The bill will allow account holders to have up to 4 nominees for their accounts and FDs.
Account holders will also have the option to decide how their money will be divided among their nominees. They can either split the amount equally or set a specific order for the distribution of funds after their death.
Empowering Depositors
Finance Minister Nirmala Sitharaman explained that this bill will empower depositors and simplify the process of transferring funds, ensuring there are no legal complications.
Account holders will still be able to change or cancel their nominations at any time by submitting a fresh nomination form to the bank, just like they could do previously.
Growing Unclaimed Deposits
The amendment comes in response to the increasing number of unclaimed deposits. According to the Reserve Bank of India (RBI) annual report, unclaimed deposits rose by 26% from ?62,225 crore in March 2023 to ?78,213 crore in March 2024.
When Will It Be Implemented?
While the exact date for the implementation of the Banking Laws (Amendment) Bill 2024 is not yet confirmed, reports suggest that it will come into effect soon, bringing a smoother and more efficient process for transferring funds to nominees.
This move is seen as a step forward in improving banking services and protecting the interests of depositors.
