Banking Laws Amendment Bill 2024 introduced In Lok Sabha: What’s new in law?

Finance Minister Nirmala Sitharaman on Friday introduced in the Lok Sabha the Banking Laws (Amendment) Bill, 2024, which seeks the following changes in existing laws.

“To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are proposed,” FM said while introducing the bill.

• The bill aims to to give customers an option to increase the number of nominees per bank account to four, from the existing one, among others.
• The amendment to the bill aims to redefine ‘substantial interest’ for directorships, potentially raising the threshold from the current ₹5 lakh, set nearly 60 years ago, to ₹2 crore.
• The bill proposes to give banks more flexibility in determining the pay for statutory auditors.
• The bill proposes changing the regulatory reporting dates for banks to the 15th and last day of each month, replacing the current second and fourth Fridays.
• The Bill seeks to amend several laws, including the Reserve Bank of India Act, of 1934, the Banking Regulation Act, of 1949, the State Bank of India Act, of 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 which was approved by the Union Cabinet last Friday.
• The Bill proposes the allocation of unclaimed dividends, shares, interest, or redemption of bonds to the Investor Education and Protection Fund (IEPF). This action enables individuals to request transfers or refunds from the fund, ensuring the safeguarding of investors’ interests.

Congress member Manish Tewari opposed the introduction of the Bill saying the power to legislate about cooperative societies vests with state governments. In reply, Mrs.Sitharaman said that the Banking Regulation Act and the cooperative banks do have a relationship and hence any amendment has to be taken through this route. “There is no attempt to undermine the cooperatives, particularly cooperatives dealing with everything other than banks. Banks, and cooperatives with a licence for banking will have to have a rule and therefore we have shown this.”There is no attempt to undermine the cooperatives, particularly cooperatives dealing with everything other than banks. Banks, and cooperatives with a licence for banking will have to have a rule and therefore we have shown this,” She added.