The Banking Laws (Amendment) Bill, 2024, proposed by Finance Minister Nirmala Sitharaman on Tuesday, is set to enhance governance in the banking sector and improve customer convenience. The Bill includes 19 amendments across five key Acts, including the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act.
One of the key changes proposed in the Bill is the allowance for bank account holders to have up to four nominees. This amendment aims to provide greater flexibility and ease for customers when managing their accounts.
The Bill also seeks to improve investor protection by transferring unclaimed dividends, shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF). Individuals can later claim these amounts from the fund, ensuring the safeguarding of their investments.
As the banking sector has evolved, these amendments aim to improve governance, enhance customer convenience, and ensure better protection for both depositors and investors. Sitharaman emphasized that the proposed changes would improve reporting standards by banks to the Reserve Bank of India and enhance audit quality, particularly in public sector banks.
The Bill also proposes redefining 'substantial interest' for bank directorships. The threshold for this term would rise from Rs 5 lakh to Rs 2 crore, a limit that has not been updated in nearly six decades.
For cooperative banks, the Bill suggests increasing the tenure of directors (excluding the chairman and whole-time directors) from 8 to 10 years, aligning with the Constitution (Ninety-Seventh Amendment) Act, 2011. Additionally, it proposes allowing a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank.
The Bill would also provide banks with more flexibility in setting remuneration for statutory auditors and redefine regulatory reporting deadlines to the 15th and last day of each month, rather than the previous system of the second and fourth Fridays.
These amendments were initially announced in the Finance Minister’s 2023-24 Budget speech and are part of ongoing efforts to modernize and strengthen the banking sector.
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