Lok Sabha Clears Banking Laws (Amendment) Bill, 2024

Key Objectives of the Bill

• Strengthening Governance in Banking: Enhances regulatory oversight and governance in banks, particularly public sector and cooperative banks.
• Better Protection for Depositors & Investors: Introduces new measures to safeguard depositors’ interests.
• Enhanced Reporting & Audit Standards: Improves compliance, audit quality, and transparency in financial reporting to the Reserve Bank of India (RBI).

Major Amendments Introduced

• Increased Nomination Flexibility:
  • Account holders can now include up to four nominees for deposits and articles in safe custody.
  • Allows simultaneous and successive nominations for better legal and financial planning.
• Transfer of Unclaimed Assets to IEPF:
  • Unclaimed dividends, shares, and interest/redemption on bonds will be transferred to the Investor Education and Protection Fund (IEPF).
  • Depositors and investors can claim refunds from the IEPF.
• Revised Banking Report Submission Dates:
  • Banks will now submit statutory reports to the RBI at the end of a fortnight, month, or quarter instead of every Friday.
• Updated ‘Substantial Interest’ Definition for Directorships:
  • The threshold for defining substantial interest will be raised from ₹5 lakh to ₹2 crore to reflect modern financial realities.
• Governance Changes in Cooperative Banks:
  • Amendments in the Banking Regulations Act will only apply to cooperative banks engaged in banking activities.
  • Tenure of directors (excluding chairpersons and full-time directors) increased from 8 years to 10 years to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Next Steps

• The bill will now be sent to the President for final approval before becoming law.
• Once enacted, these reforms are expected to enhance stability, transparency, and governance in the banking sector.

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