4th December 2024 (16 Topics)
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Banking Laws (Amendment) Bill, 2024
Context
The Banking Laws (Amendment) Bill, 2024 was passed in the Lok Sabha on December 3, 2024, marking the first bill to be approved after the end of the week-long parliamentary logjam. The bill, which was introduced by Finance Minister Nirmala Sitharaman, aims to strengthen governance in the banking sector and improve customer convenience.
Key Provisions of the Bill:
- The Banking Laws (Amendment) Bill 2024 aims to improve banking governance and enhance investors' protection.
- The amended law would strengthen governance in the banking sector and enhance customer convenience.
- Amendments are proposed in the:
- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1955
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
- Nomination Facility: The bill allows bank account holders to have up to four nominees for their accounts, providing more flexibility in case of the account holder’s demise. Locker holders will have successive nominations, meaning that only one nominee can be appointed at a time, but it can be updated as needed.
- Redefining ‘Substantial Interest’ for Directorships: The bill proposes increasing the cap for ‘substantial interest’ for directorships from Rs 5 lakh to Rs 2 crore, a threshold that had remained unchanged for nearly six decades.
- Tenure of Directors in Cooperative Banks: The tenure for directors (excluding the chairman and whole-time directors) in cooperative banks will be extended from 8 years to 10 years, bringing it in line with the Constitution (Ninety-Seventh Amendment) Act, 2011.
- Additionally, directors of Central Cooperative Banks will now be allowed to serve on the board of State Cooperative Banks, which could improve the coordination and management of cooperative banks.
- Freedom in Remuneration of Statutory Auditors: The amendment seeks to give greater flexibility to banks regarding the remuneration of statutory auditors, allowing them to set the pay structure as per their needs.
- Changes to Reporting Dates: The bill proposes to change the reporting dates for banks for regulatory compliance to the 15th and last day of each month, instead of the previous system of the second and fourth Fridays.
- Enhancing Investor and Customer Protection: The amendments would strengthen banking governance and enhance investor protection, particularly through improved nomination processes for depositors and safer banking practices.
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