Outlook Business Desk
The Banking Laws (Amendment) Bill, 2024, was debated in the Lok Sabha on December 3, 2024, under the leadership of Union Finance Minister Nirmala Sitharaman. The bill aims to improve the governance and operational efficiency of India's banking sector.
The proposal allows bank account holders to designate up to four nominees for their accounts, providing greater flexibility in succession planning. Additionally, locker holders will be permitted to make successive nominations. This change benefits depositors by offering more options for ensuring smooth process and the management of their accounts.
The proposal increases the limit for 'substantial interest' in a bank's directorship from Rs 5 lakh to Rs 2 crore, a limit that had been in place for nearly six decades. The rationale behind this change is to strengthen governance in the banking sector
The proposal extends the tenure of directors (except the chairman and whole-time director) in cooperative banks from 8 years to 10 years, in line with the Constitution (Ninety-Seventh Amendment) Act, 2011. The objective of this change is to enhance the continuity of leadership and strengthen governance within cooperative banks
The proposal allows a director of a Central Cooperative Bank to also serve on the board of a State Cooperative Bank. This change enables greater cross-collaboration between different levels of cooperative banks, thereby strengthening their overall functioning and improving coordination within the sector
The amendment seeks to grant banks greater freedom in deciding the remuneration of statutory auditors. This change will enhance the autonomy of banks in managing their internal operations and budgeting, allowing for more flexibility and efficiency in financial decision-making
The proposal changes the reporting dates for banks regarding regulatory compliance from the second and fourth Fridays to the 15th and last day of every month. This new reporting structure aims to streamline the compliance process, providing greater clarity and consistency in meeting regulatory requirements
TMC MP Kalyan Banerjee and Congress MP Karti Chidambaram raised concerns over the bill, warning it could lead to banking privatization. They stressed the need for better cybersecurity and fraud detection, criticizing frequent KYC updates as burdensome
Finance Minister Nirmala Sitharaman defended the bill, stating that the proposed amendments were designed to strengthen governance in the banking sector and improve customer convenience by making India’s banking system safer, more stable, and healthier, pointing to the positive outcomes achieved over the past decade