Lok Sabha Introduces Bill to Reform Banking Laws
The bill seeks to update governance standards in banks and bolster investor protection.
image for illustrative purpose
On Friday, the Lok Sabha introduced the Banking Laws (Amendment) Bill, 2024, presented by Minister of State for Finance Pankaj Chaudhary. The bill seeks to update governance standards in banks and bolster investor protection.
Key Provisions
Increased Directorship Threshold: The threshold for ‘substantial interest’ for bank directorships will rise from ₹5 lakh to ₹2 crore, an adjustment not made since 1968.
Expanded Nomination Options: Account holders can now nominate up to four individuals, enhancing flexibility for deposits and safety lockers.
Unclaimed Funds Transfer: Unclaimed dividends, shares, and bond redemptions will be moved to the Investor Education and Protection Fund (IEPF), simplifying claims and refunds.
Extended Director Tenure: Cooperative bank director tenures (excluding chairpersons and whole-time directors) will be extended from 8 to 10 years.
Directors of central cooperative banks may also serve on state cooperative bank boards.
Improved Audit and Reporting: The bill seeks to enhance audit standards in public sector banks and standardise their reporting procedures to the Reserve Bank of India (RBI).
Amendments to Existing Laws
The bill proposes amendments to:
- Reserve Bank of India Act, 1934
- Banking Regulation Act, 1949
- State Bank of India Act, 1970
- Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
