Finance Minister Nirmala Sitharaman Introduces Banking Laws Amendment Bill 2024 in Lok Sabha
News Mania Desk/Agnibeena Ghosh/9th August 2024
Finance Minister Nirmala Sitharaman presented the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha on Friday, marking a significant step towards modernizing banking regulations in India. This comprehensive bill proposes changes to several key banking laws, including the Reserve Bank of India Act, the Banking Regulation Act, and the State Bank of India Act.
One of the notable amendments included in the bill is the increase in the number of nominees allowed per bank account. Currently, account holders are permitted only one nominee, but the bill proposes raising this limit to four. This change aims to provide greater flexibility and choice for individuals managing their bank accounts, ensuring that they can designate multiple beneficiaries.
The bill also addresses the criteria for ‘substantial interest’ in bank directorships. It proposes raising the threshold for what constitutes substantial interest from the existing limit of Rs 5 lakh to Rs 2 crore. This adjustment updates a regulation that has remained unchanged for nearly six decades, reflecting the need for a more contemporary approach to bank governance.
Another significant provision of the bill is the revision of rules concerning the compensation of statutory auditors. By granting banks more autonomy in determining auditor pay, the bill introduces increased flexibility in financial management, potentially enhancing operational efficiency within the banking sector.
Additionally, the bill aims to revise the reporting schedule for regulatory compliance. It suggests shifting from the current reporting dates of the second and fourth Fridays of each month to the 15th and the last day of every month. This adjustment is intended to streamline compliance processes and align reporting practices with modern operational needs.
The proposed legislation also includes provisions for the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF). This measure ensures that investors can claim their unclaimed assets or receive refunds from the fund, thereby enhancing investor protection and accountability.
Furthermore, the bill introduces a new provision allowing the director of a central cooperative bank to serve on the board of a State Cooperative Bank. This change is expected to improve governance and operational synergy between different levels of cooperative banking institutions.
The introduction of this bill follows Finance Minister Sitharaman’s commitment to banking sector reforms highlighted in her 2023-24 Budget speech. The proposed amendments are aimed at strengthening governance structures within banks, improving financial management, and safeguarding the interests of investors.
Overall, the Banking Laws (Amendment) Bill, 2024 represents a significant overhaul of existing banking regulations, designed to enhance flexibility, modernize governance practices, and protect investor interests. As the bill progresses through the legislative process, it is expected to bring about substantial improvements in the functioning and regulation of the banking sector in India.
