Nirmala Sitharaman has proposed key changes in banking regulations and taxation to change the nature of how the country’s economy functions and is centered around the common man’s aspirations. It was previously also noted that the Financial Budget introduced this term by Ms Sitharaman highlighted the socialist nature of the nation.
The Bill aims to amend the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act, among others.
Proposed Changes in the Banking Bill
The Bill aims to increase the number of nominees for a bank account from the current limit of one to four. This move will provide greater flexibility and choice to account holders as well as their legal heirs particularly concerning deposits, articles in safe custody, and safety lockers. It also streamlines and simplifies the process of nominating individuals who will be the legal heirs in the event of the depositor’s demise. Successive nomination refers to the process in which more than one nominee is listed for a particular order. In the case that the primary nominee is unable to take responsibility for the funds or assets, it gets passed on to the second nominee and subsequently moves down the list.
The Bill has also redefined ‘substantial interest’ for directorships, raising the threshold in shareholding from the existing Rs 5 lakh, as established in 1968, to Rs 2 crore reflecting the present value of the same since it was last fixed in 1968 and the economic situation has changed since then. (Amendment in clause of section 5 of the Banking Regulation Act, 1949).
Another significant modification highlighted in the Bill involves changing the regulatory reporting dates to the Reserve Bank of India for the commercial banks. The Bill suggests moving the current deadline of ‘reporting Friday’ to the final day of the fortnight, month or quarter. This is said to promote uniformity in the reporting procedures. (Amendments to sections 18, 24, 25, and 56 of the Banking Regulation Act and section 42 of RBI Act).
Moreover, the Bill also suggests allotting unclaimed dividends, shares, interest or redemption of bonds to the Investor Education and Protection Fund (IEPF). This alteration also safeguards the investors’ interests by enabling individuals to request for economic claims from the fund in the form of refunds and transfers. (Amendment of section 38A of the State Bank of India Act,1955, section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980).
Finance Bill 2024
This Wednesday, the Lower House of the Parliament passed the tax proposals presented in the union budget for the fiscal year of 2025 along with other revisions as proposed by Ms Sitharaman, which included reestablishment of inflation adjustment benefit in taxing profits from property sales.
