The Indian Parliament recently passed the Banking Laws (Amendment) Bill, 2024, marking a significant overhaul of the country’s banking regulations. This bill was introduced on August 9, 2024, and passed by the Lok Sabha on December 3, 2024. Now it will be an ACT when the president signs it.

Key Changes Proposed –

Definition of Fortnight: The bill revises the definition of “fortnight” under the Reserve Bank of India (RBI) Act, 1934.

Previously, a fortnight was defined as the period from Saturday to the second following Friday. The new definition splits the month into two fortnights: from the 1st to the 15th day, and from the 16th to the last day of the month.

Nomination Rules: One of the most notable changes is the introduction of clearer rules on nominations for bank deposits and lockers.

Previously, depositors could appoint a single nominee for their deposits and lockers. The new amendment allows up to four nominees, who can be appointed either successively or simultaneously.

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When it comes to bank nominations, successive and simultaneous nominations offer different ways to designate beneficiaries for your accounts and lockers. Here’s how they differ:

Successive Nomination

Definition: In successive nominations, multiple nominees are appointed in a specific sequence. If the primary nominee cannot claim the asset due to death or any other reason, the next nominee in the sequence becomes eligible.
Process: The asset passes from one nominee to the next in the order specified by the account holder.
Example: If you nominate Person A as your primary nominee and Person B as the successor, Person B will only become the nominee if Person A is unable to claim the asset.

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Simultaneous Nomination

Definition: In simultaneous nomination, multiple nominees are appointed at the same time, and they share the asset equally or according to specified proportions.
Process: All nominated persons can claim the asset together without any sequence.
Example: If you nominate Person A and Person B simultaneously, both will have the right to claim the asset either equally or based on the proportions you have specified.

Key Differences Between Successive Nomination & Simultaneous Nomination

Order vs. Equality: Successive nominations follow a specific order, whereas simultaneous nominations allow all nominees to claim the asset together.
Flexibility: Successive nominations provide a backup option in case the primary nominee cannot claim the asset. Simultaneous nominations offer flexibility by allowing shared ownership.
Complexity: Successive nominations can be more complex to manage as they involve a sequence. Simultaneous nominations are straightforward, with all nominees having equal or specified shares.

In bank lockers, only successive nominations will be allowed.

In summary, successive nominations provide a fallback mechanism. It ensures that if one nominee cannot claim the asset, the next in line can. Simultaneous nominations allow for shared ownership, giving equal rights to all nominees at the same time.

This change ensures that the nominee can access the deposit, articles, or locker in case of the depositor’s death. It provides greater flexibility, standard process and security for families.

In conclusion, the Banking Laws (Amendment) Bill, 2024, represents a major step toward modernizing India’s banking regulations. By introducing clearer rules, the bill aims to create a more transparent, efficient, and secure banking sector. As these changes take effect, they are expected to benefit both banks and customers. It will foster a more robust financial system in India.