Finance Minister Nirmala Sitharaman proposed 19 amendments to existing banking laws in the Banking Laws (Amendments) Regulation Bill, presented in the Lok Sabha. The bill aims to reinforce India’s banking sector, safeguard investor interests, and enhance customer convenience.
The amendments seek to revise key legislation, including the Reserve Bank of India Act, 1934; the Banking Regulation Act, 1949; the State Bank of India Act, 1955; and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
‘The proposed amendments will only strengthen governance in Indian banking sector besides enhancing consumer’s and customer’s convenience with respect to nominations and protection of investors.’
Watch: Smt @nsitharaman‘s full opening remarks on ‘The Banking Laws (Amendment)… pic.twitter.com/Xd2Q8FxNfQ
— Nirmala Sitharaman Office (@nsitharamanoffc) December 3, 2024
Key Features of the Bill:
- Account holders can now have up to four nominees for their bank accounts.
- Unclaimed dividends, shares, and bond interests will be transferred to the Investor Education and Protection Fund (IEPF), ensuring individuals can claim refunds.
- The bill enhances governance standards in banks, improves audit quality, and ensures consistent reporting to the Reserve Bank of India (RBI).
- Directors (excluding chairpersons and whole-time directors) of cooperative banks may now serve up to 10 years, up from the current 8 years.
- Banks will have greater freedom in deciding remuneration for statutory auditors.
- The threshold for “substantial interest” in directorships will increase from ₹5 lakh to ₹2 crore, addressing inflation and current economic realities.
- Regulatory compliance reporting dates for banks will shift to the 15th and last day of each month, replacing the second and fourth Fridays.
The bill also includes provisions allowing directors of central cooperative banks to serve on State Cooperative Bank boards, streamlining governance structures.
Sitharaman emphasized the amendments’ potential to enhance investor protection and align with modern banking needs. “These reforms will ensure stronger governance and better customer experience,” she stated while presenting the bill.
