Lok Sabha passes Banking Laws (Amendment) Bill, 2024

Key Points:-

• The Lok Sabha has passed the Banking Laws (Amendment) Bill, 2024.
  • It was approved by voice vote.
• It proposes to amend the following laws-
  • Reserve Bank of India Act, 1934
  • Banking Regulation Act, 1949
  • State Bank of India Act, 1955
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
  • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
• This bill was introduced by Finance Minister Nirmala Sitharaman.
• The amendment aims to keep banks safe, stable and healthy.
• It has made banking easier for customers.
• It promotes reforms in the banking system and investor protection.
• This will simplify the distribution of wealth to families and reduce procedural delays.

Its important provisions:

• This will allow account holders to nominate up to four people for their bank account or FD.
  • Earlier there was a provision to nominate only one nominee.
  • There will be two ways to nominate a nominee.
    • One is to give a fixed share to all the nominees at once.
    • Second, keep the nominees in a sequence
      • This will allow one nominee to receive the money one after the other.
  • It is up to the account holder to decide which option to choose.
• Another provision of this bill is related to redefining 'substantial interest' for director posts.
  • This will increase the current limit of Rs 5 lakh, fixed about six decades ago, to Rs 2 crore.
• Depositors will have the option of sequential or simultaneous nomination facility.
  • Customers availing locker facility will only have the option of sequential nomination.

Important changes made in relation to government banks:

• The bill proposes to increase the tenure of directors (except chairman and full-time director) in cooperative banks from 8 years to 10 years.
  • This amendment has been made to make it in line with the Constitution (97th Amendment) Act, 2011.
    • The 97th Amendment of the Indian Constitution provided special rights and protection to cooperative societies.
• After the law is enacted, the director of the central cooperative bank will get approval to be appointed on the board of directors of the state cooperative bank.
• It also provides for giving more freedom to banks in deciding the remuneration of statutory auditors.
• It talks about changing the dates for banks to report financial data for regulatory compliance to the 15th and last date of every month.
  • At present, banks have to send this information on the second and fourth Fridays of every month.