Government Introduces Banking Laws Amendment Bill 2024 to Boost Banking Reforms

The Banking Laws (Amendment) Bill, 2024, introduced by Minister of State for Finance Pankaj Chaudhary, seeks to increase the number of bank account nominees, redefine 'substantial interest' for directorships, and provide banks greater freedom in setting statutory auditors' remuneration. Congress member Manish Tewari opposed the Bill.

In a significant move to reform the banking sector, Minister of State for Finance Pankaj Chaudhary introduced the Banking Laws (Amendment) Bill, 2024, in the Lok Sabha on Friday. The Bill aims to allow customers to increase the number of nominees per bank account to four, up from the existing one, among other changes.

One notable amendment involves redefining 'substantial interest' for directorships. The threshold could be raised to Rs 2 crore from the current Rs 5 lakh, which has been in place for nearly six decades. Congress member Manish Tewari opposed the introduction, arguing that cooperative societies fall under state jurisdiction.

Finance Minister Nirmala Sitharaman defended the Bill, stating the relationship between banking regulation and cooperative banks necessitates these amendments. The Bill also proposes granting banks more flexibility in determining statutory auditors' remuneration and revising regulatory compliance reporting dates. The Union Cabinet had approved the Bill last week.

(With inputs from agencies.)