Lok Sabha Passes The Banking Laws (Amendment) Bill 2024

The Lok Sabha on Tuesday passed 19 amendments in The Banking Laws (Amendment) Bill 2024 in a bid to improve banking governance and enhance investors' protection.

Finance Minister Nirmala Sitharaman moved the bill to propose 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.

Opposition members in the Lok Sabha on Tuesday fiercely criticised the bill. Karti Chidambaram of the Congress said the government had claimed in its 100-day agenda that it will bring 'majestic reforms' but the bill lacks that majesty.

The amendments seek 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 chairpersons and whole-time 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 the fortnight, month, or quarter.

• Propose to allow four nominees for depositors.

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

• Propose to redefine the definition of substantial interest.

• The value of shareholding is 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.

The announcement of amending the Banking Regulation Act was made by the finance minister in the budget speech of 2023-24. The bill was introduced in Lok Sabha on Aug. 9, 2024.