Banking Laws (Amendment) Bill, 2024: Major Overhaul Proposed

Finance Minister Nirmala Sitharaman introduced the Banking Laws (Amendment) Bill, 2024, in the Lok Sabha, which proposes significant changes including increasing the number of nominees per bank account and redefining 'substantial interest' for directorships. The Bill also seeks to enhance bank governance and investor protection.

Finance Minister Nirmala Sitharaman on Friday introduced the Banking Laws (Amendment) Bill, 2024, in the Lok Sabha. The proposed legislation aims to offer customers the option to increase the number of nominees per bank account from one to four, among other changes.

One significant amendment redefines 'substantial interest' for bank directorships, proposing an increase to Rs 2 crore from the existing Rs 5 lakh, a limit set almost six decades ago. Congress member Manish Tewari opposed the Bill, arguing that legislation concerning cooperative societies falls under state jurisdiction. However, Sitharaman emphasized the need for a unified rule for banks and cooperative banks with banking licenses.

The Bill also proposes greater freedom for banks in determining statutory auditors' remuneration and changing the reporting dates for regulatory compliance. Approved by the Union Cabinet last week, the Bill aims to amend multiple acts including the Reserve Bank of India Act, Banking Regulation Act, and the State Bank of India Act, among others. Sitharaman had announced these amendments in her 2023-24 Budget speech to improve bank governance and enhance investor protection.

(With inputs from agencies.)