Banking Laws (Amendment) Bill, 2024

The Lok Sabha passed the Banking Laws (Amendment) Bill, 2024 via a voice vote.

About Investor Education and Protection Fund (IEPF)

Establishment: The IEPF was established under the Companies Act, 1956, as amended by the Companies (Amendment) Act, 1999.

Aim: To promote investor awareness and ensure the protection of investors’ interests.

Administrative Authority: The Investor Education and Protection Fund Authority (IEPFA), operating under the Ministry of Corporate Affairs, is responsible for administering the IEPF.

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Key Changes under Banking Laws (Amendment) Bill, 2024

Feature	Earlier Provision	New Provision
Nominees	Up to 2 nominees	Up to 4 nominees, with option for simultaneous or successive distribution
Substantial Interest in Shareholding for Directorship	₹5 lakh	₹2 crore
Tenure of Directors in Co-operative Banks	Maximum 8 years	Maximum 10 years
Common Directors in Co-operative Banks	Not allowed	Allowed for central co-operative bank directors on state co-operative bank boards
Unclaimed Amounts	Unclaimed for 10 years transferred to IEPF	Unclaimed for 7 years transferred to IEPF
Claiming from IEPF	Limited to legal heirs	Individuals can directly claim transfers or refunds
Auditor Remuneration	RBI approval required	Bank’s decision
Definition of Fortnight	1st-15th and 16th-end of month	1st-15th and 16th-end of month (clarified)

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About Nominee

A nominee is a person designated to receive benefits or assets on behalf of another individual. This person is often chosen for convenience, privacy, or legal reasons.
A nominee could be:
- Family Members: Spouses, children, or parents are common choices.
- Trusted Friends: Close friends can be nominated if they’re reliable.
- Legal Entities: Trusts or companies can be nominated.
Common Uses of Nominees
- Financial Accounts: To simplify account management and ensure smooth transfer of assets in case of the account holder’s demise.
- Insurance Policies: To designate a beneficiary who will receive the policy’s proceeds.
- Property Ownership: To hold property on behalf of another, often for tax or privacy reasons.
- Company Directorships: To appoint a person to represent the company’s interests.
Legal Implications: Nominee agreements should be clear and legally binding.
Tax Considerations: Nominating a foreign entity might have tax implications.
Privacy Concerns: While nominees can provide privacy, it’s essential to balance this with transparency.
Regulatory Compliance: Nominee arrangements must comply with relevant laws and regulations.
Legal Provisions for Nominees in India: Indian Contract Act, 1872 governs the legal relationship between the account holder and the nominee.
- Various other acts, such as the Banking Regulation Act, Insurance Act, and Companies Act, also contain provisions related to nominations.

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