Finance Minister Sitharaman Proposes 19 Amendments In Banking Laws (Amendments) Regulation Bill

Union Finance Minister Nirmala Sitharaman proposed 19 amendments in the Banking Laws (Amendments) Regulation Bill 2024 in the lower house of Parliament on Tuesday, in a bid to improve banking governance and enhance investors' protection.

The Finance Minister moved the bill to propose 12 amendments under the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

Improvements to bank governance and enhancement of investors' protection by making certain amendments were mentioned while presenting the latest budget, Sitharaman said during the session in the Lok Sabha on Monday. "To achieve the same, amendments to the following acts are proposed," she said.

One amendment was made under the Reserve Bank of India Act, 12 were made under the Banking Regulation Act, two were made under the State Bank of India Act and two each under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

The amendments seeks to improve on governance standards, provide consistency in reporting, ensure better protection for depositors and investors, improve audits in public sector banks and increase the tenure of directors other than chairperson and wholetime directors in cooperative banks, she said.

A few of the amendments made under the Banking Regulation Act include:

• Revision to the reporting date for the submission of statutory reports by banks to the RBI, from reporting every Friday to the last day of fortnight, month or quarter.

• Propose to allow four nominees for depositors.

• Propose to extend the tenure of non-wholetime directors from eight years to 10 years.

• Propose to redefine the definition of substantial interest.

• Value of shareholding to be raised from Rs 5 lakh to Rs 2 crore to be substantial interest.

• Propose to provide public sector banks the discretion in remuneration paid to auditors.