Bank Account New Rules: Union Cabinet has approved several changes in banking laws, including allowing up to four nominees in every deposit account and introducing “successive and simultaneous” nominations.
Bank Account New Rules: The Union Cabinet has approved several changes in banking laws, including allowing up to four nominees in every deposit account and introducing “successive and simultaneous” nominations. The aim of making these changes is to address the growing problem of unclaimed deposits and reduce difficulties for customers.
At present, only one nominee is allowed for savings bank and fixed deposits, which is being proposed to be increased. Along with withdrawals from insurance and HUF accounts, successive and simultaneous nominations will allow joint account holders and heirs to receive money even after the death of the account holder.
The Central Government-run Public Provident Fund can have more nominees. The details of the provisions will be clear only when Finance Minister Nirmala Sitharaman introduces the bill in Parliament. The government and officials are tight-lipped about the scheme.
Nirmala Sitharaman had several months ago described unclaimed deposits and funds as a matter of concern and asked banks, mutual funds and other financial services companies to transfer money to the rightful claimants but despite banks launching a campaign to settle claims, unclaimed deposits exceeded Rs 78,000 crore by the end of March 2024. Separately, there is also a proposal to amend the law to allow transfer of dividends and bonds to the Investor Education Protection Fund (IEPF) if money is lying unclaimed. Today, only shares of banks are transferred to IEPF.
Apart from this, shareholders with stake up to Rs 2 crore will be considered to have substantial interest, while the current limit is Rs 5 lakh, which was fixed about six decades ago.
The bill will seek to redefine the reporting dates for regulatory compliance for banks to the 15th and last date of every month instead of the second and fourth Fridays. Also, if the bill is passed, cooperative banks will be able to appoint directors for up to 10 years and other directors other than the full-time chairman.
