Finance Minister Sitharaman Introduces Banking Laws (Amendment) Bill In Lok Sabha

Finance Minister Nirmala Sitharaman introduced the Banking Laws (Amendment) Bill 2024 in the Lok Sabha on Friday. The bill provides for amending the Reserve Bank of India Act, 1934, Banking Regulation Act 1949, State Bank of India Act, 1955, Banking Companies (Acquisition and Transfer of Undertakings) Act 1970, and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

The bill seeks to improve governance standards, provide consistency in reporting by banks to the RBI, ensure better protection for depositors and investors, improve audit quality in Public Sector Banks, and provide for an increase in the tenure of the directors (other than chairperson and whole-time director) in cooperative banks.

Among the various amendments, the bill seeks to raise the number of nominees in a bank account from the current one to four especially concerning the deposits, articles in safe custody, and safety lockers. As per the bill the lenders will now have to share credit information reports for regulatory compliance every fortnight instead of every month.

Finance Minister Nirmala Sitharaman says the current reporting system has various limitations.

"The current reporting Friday system has several limitations, that impact the accuracy and effectiveness of reporting of Data, these limitations are incomplete coverage of monthly data, seasonal fluctuations in banking activity which lead to inconsistent reporting and the need for adjustment every eleventh year which introduces complications and inconsistency," said Sitharaman

The new rule of reporting every fortnight will apply to all institutions including banks, cooperative banks, RRB's and NBFCs which are regulated by the Reserve Bank of India (RBI)

The bill also has a provision for individuals to claim their unclaimed dividends. Shares, interest or redemption of bonds transferred to the Investor Education Protection Fund (IEPF) for no claim can be claimed back by individuals

Other provisions of the bill include, increasing the tenure of directors of cooperative banks can be from eight years to ten years. The bill also allows a director of a central cooperative bank to serve on the board of the state cooperative bank

The bill asks for increasing the threshold for shareholding of substantial interest from Rs 5 lakh to Rs 2 crore. Finance Minister Nirmala Sitharaman said the bill provides for various amendments to increase efficiency in the working of cooperative banks

"The various amendments which have been done to the Banking Regulation act with respect to the Cooperative banks are not just one or two, they are several."

While introducing the bill and on queries of members Sitharaman adds, "Repeatedly the sections which have been brought in as amendments and also the court verdicts have repeatedly reinforced the point that the Banking Regulation Act and the Cooperative Banks do have this relationship and therefore it has to be taken to this rule. Otherwise, there's no attempt to undermine the cooperators, particularly cooperatives with everything other than banks" (ANI)