(Bhaskar Vishwajeet, Senior Editor at IELR)
The Union Government has recently introduced the Banking Laws (Amendment) Bill, 2024 (Amendment Bill), in the Lok Sabha. Among the proposed administrative changes, the Amendment Bill has suggested redefining “substantial interest” under the Banking Regulation Act, 1949, increasing the threshold for shareholding of a beneficial interest by an individual (primarily bank directors) from five lakhs to two crore rupees. This revision has been proposed as the same was last fixed in 1968.
Furthermore, the Amendment Bill has proposed that unclaimed dividends, shares and interest or redemption of bonds will be transferred to the Investor Education and Protection Fund (IEPF) if they remain unclaimed for seven years. Individuals can claim transfers/refunds from the IEPF.
The Amendment Bill is a positive step on the path to reform governance in the Indian banking system. Increasing the threshold for “substantial interest” is in line with the increase in relative purchasing power and present values and doing so will help attract experienced professionals to guide Indian banks.
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