Banking Reforms in India is a regular and continuous process in order to ensure a strong and vigorous Financial System and also for supporting in the Sustainable Growth of the nation.
These reforms are making the banking sector transparent ,more competitive which is contributing in the Economic Growth of the nation.
NEW AMMENDMENTS IN BANKING SECTOR
MINISTRY : FINANCE
INTRODUCED IN LOK SABHA on 9th AUGUST 2024
Banking Laws ( amendment ) Bill,2024 was being introduced in the Lok Sabha on 9th of August 2024 . It has now amended the old banking laws .
The amended new Banking Laws are listed below :
- Reserve Bank of India (RBI),Act, 1934
- Banking Regulation Act, 1949
- State Bank of India (SBI)Act, 1955
- Banking Companies ( Acquisition and Transfer of Undertakings ) Act, 1970
- Banking Companies ( Acquisition and Transfer of Undertakings ) Act, 1980
OBJECTIVE OF THE BILL
Basically it aims in building up the banking governance in India by enhancing the reporting consistency to the RBI .
It is also improving the security of the depositors and the investors.
The bill also seeks to upraise the audit quality in the public sector banks.
It is also extending the tenure of the directors in the cooperative banks (except the chairman or whole-time director ) .
These changes have been made in order to enshrine a better accountability within the banking sector in India.
MAJOR CHANGES
Fortnight for cash reserves
The scheduled banks have to maintain certain levels of daily average balance with RBI ,as cash reserves , under the Reserve Bank of India Act.
The daily average balance is based upon the average of the balances which is held by the banks at closing of each day of fortnight.
Changes in tenure of the directors of the cooperative banks ?
The director of the bank ( except chairman or whole-time director ) is prohibited to uphold the office more than eight consecutive years ,under the Banking Regulation Act .
The new bill has increased it up-to 10 years ,for the cooperative banks.
The Cooperative Banks may have the common directors or not ?
Under the Banking Regulation Act , any director serving on the banks board cannot serve for the board of another bank, but this is not applicable to the directors who are appointed by the Reserve Bank of India.
Now the new bill has extended this exemption to the central cooperative banks, and this exemption will be applied where they are elected for the board of a state cooperative bank in which they are the members .
What is the amount of substantial interest in a company ?
As per the Banking Regulation Act, it refers to the holding shares over Rs. 5 Lakh or 10% of the paid up capital of the company or whichever is the lesser one.
It may be held either individually or collectively or by any individual , his spouse or minor child.
Now the new bill has amended this to increase this to two crore rupees. The amount may be altered by the central government through a notification.
NOMINATION
To appoint a nominee for their deposit, under the Banking Regulation Act ,banks only allows single or joint deposit holders.
In case of death of the person who appointed the nominee, he/she will have all the access to the deposits, articles or locker .
Now according to the new bill, four nominees can be appointed for these purposes . For a consecutive nomination ,the nominee who has been named higher will be given the priority.
SETTLEMENT OF UNCLAIMED AMOUNT
Banking Companies ( Acquisition and Transfer of Undertakings ) Act, 1970 and 1980 and State Bank of India Act is there for transferring the unpaid or unclaimed dividend to an unpaid dividend account.
If the money will stays in the account unpaid and unclaimed for a time period of seven years it will be transferred to the IEPF.
This money can be claimed for refund or transfer if the money is unclaimed or unpaid.
REMUNERATION OF AUDITORS
Presently remuneration being paid to the auditors of the respective banks is decided by the Reserve Bank of India , with a consultation with the Central Government.
The new bill have empowered the banks to decide the remuneration amount of their auditors.
