Context
The Banking Laws (Amendment) Bill 2024 was introduced in Lok Sabha seeking to increase the option for nominees per bank account to four, from existing one, among others.
About
- The creation of Banking Laws (Amendment) Bill 2024 follows the declaration throughout the 2023-24 Budget speech, emphasizing the need for reforms in the banking area to strengthen governance and guard investor interests.
- The proposed amendments align with the government’s large imaginative and prescient of facilitating banking area reforms, which includes the privatization of public sector banks.
- The Banking Laws (Amendment) Bill 2024, seeks to amend numerous legal guidelines, such as the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
- Its primary goal is to enhance governance, give a boost to investor protection, and enhance regular banking practices.
Proposed Amendments
- Nominees per Bank Account: Currently, each financial institution account will have only one nominee. However, the proposed modification pursuits to increase this limit to four nominees per account.
- It offers more flexibility and choice to account holders.
- Redefining ‘Substantial Interest’: The bill seeks to redefine the concept of ‘big interest’ for bank directorships. The existing threshold of Rs five lakh might be raised significantly to Rs 2 crore.
- It shows an extended-overdue adjustment to a limit that has been in place for nearly six decades.
- Flexibility in Statutory Auditor Pay (Autonomy for Banks): The bill intends to give banks more flexibility in figuring out the pay for statutory auditors.
- It recognises the importance of strong auditing practices in preserving financial balance and transparency in the banking region.
- Tenure of directors of co-operative banks: The Banking Regulation Act, 1949 prohibits the director of a bank (except its chairman or full-time director) to keep office for more than 8 years consecutively.
- The Bill of 2024 seeks to increase this period to 10 years for co-operative banks.
- Reporting Dates: The invoice proposes a shift in reporting dates for regulatory compliance. Instead of the contemporary schedule (2nd and 4th Fridays of each month), the new reporting dates would be the 15th and last day of every month.
- Broader Reforms: These changes are part of a broader attempt to improve bank governance and investor protection.
- The amendments also impact the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
Conclusion
- The Banking Laws (Amendment) Bill 2024 represents a massive step towards modernizing India’s banking framework.
- By increasing nominee options, redefining giant hobby, and granting more autonomy to banks, the invoice goals to create a much better and investor-friendly banking environment.
Source: The Indian Express