Lok Sabha passes Banking Laws (Amendment) Bill 2024

The Banking Laws (Amendment) Bill, 2024, was passed by voice vote in the Lok Sabha on December 3, 2024. Union Finance Minister Nirmala Sitharaman unveiled the bill, which intends to make significant changes to improve banking governance and customer ease.

The measure allows account holders to nominate up to four people for their bank accounts, with the option of making consecutive or simultaneous nominations. Locker holders, on the other hand, will be limited to consecutive nominations, resulting in more transparent account succession processes.

The definition of “substantial interest” for directorships has been amended, raising the threshold from Rs.5 lakh to Rs.2 crore, allowing for greater transparency in governance.

Directors in cooperative banks (except chairpersons and whole-time directors) shall have a 10-year tenure, in accordance with the Constitution (Ninety-Seventh Amendment) Act of 2011, to promote banking sector stability.

Directors of Central Cooperative Banks can now serve on the boards of State Cooperative Banks, promoting more collaboration within the cooperative banking system.

The measure provides banks with greater latitude in calculating statutory auditor remuneration, allowing for better conformity with market standards.

Regulatory reporting dates will change from the second and fourth Fridays to the 15th and final day of each month. This measure is expected to reduce supervisory procedures and improve the efficiency of banking operations.

Finance Minister Nirmala Sitharaman highlighted that the amendments will strengthen banking sector governance, make nominations more convenient for customers, and give investors with enhanced protection.

The passing of the bill is a critical step toward modernizing the banking system and increasing transparency and accessibility for both clients and banking organizations.