Minister of State for Finance, Pankaj Chaudhary, introduced the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha on Friday, as part of the ongoing Budget Session. The proposed legislation aims to bring significant changes to banking regulations in India, affecting the Reserve Bank of India (RBI) Act, the Banking Regulation Act, and the State Bank of India (SBI) Act, among others.
The key provisions of the Banking Laws (Amendment) Bill, 2024 include:
- Increase in Nominee Limits: The bill proposes increasing the number of nominees allowed per bank account from one to four. This change aims to facilitate better estate planning and ensure smoother succession processes for account holders.
- Threshold Adjustment for ‘Substantial Interest’: The amendment seeks to raise the threshold for ‘substantial interest’ for directorships from ₹5 lakh to ₹2 crore. This limit, which has been in place for nearly sixty years, will now better reflect current economic conditions.
- Bankers’ Discretion on Auditor Remuneration: The bill grants banks greater discretion in setting remuneration for statutory auditors. This move is expected to align auditor compensation with market conditions and improve the quality of audits.
- Revised Reporting Deadlines: The bill proposes changing the reporting deadlines for regulatory compliance from the current second and fourth Fridays of each month to the 15th and the last day of each month. This adjustment aims to streamline regulatory processes and improve compliance efficiency.
The bill also includes amendments to the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. These changes, which were initially outlined by Finance Minister Nirmala Sitharaman in her 2023-24 Budget speech, are designed to enhance bank governance and investor protection.
Finance Minister Nirmala Sitharaman addressed these concerns, asserting that the bill does not seek to undermine cooperatives. “There is no attempt to undermine the cooperatives, particularly those dealing with everything other than banks. Banks and cooperatives with a banking license will have to adhere to these new regulations,” Sitharaman stated.
Industry reactions to the bill have been mixed. While some industry experts and stakeholders have welcomed the proposed changes as necessary for improving governance and investor protection, others have raised concerns about the implications for cooperative banks and state jurisdiction.
The Banking Laws (Amendment) Bill, 2024 was approved by the Union Cabinet last Friday and is expected to undergo further scrutiny and debate in the Parliament. As the legislative process progresses, the bill’s impact on India’s banking sector and its regulatory framework will continue to be closely watched.
