Lok Sabha passes The Banking Laws (Amendment) Bill 2024

Bill aims to enhance governance in the banking sector and enhance investor protection

The Lok Sabha has passed The Banking Laws (Amendment) Bill 2024 with 19 amendments on 03 December 2024 aiming to improve banking governance and enhance investor protection. The bill was introduced in Lok Sabha on 9 August 2024.

The Banking Laws (Amend) Bill 2024 proposed changes under the RBI Act 1934, the Banking Regulation Act 1949, the SBI Act 1955, the Banking Companies (Acquisition & Transfer of Undertakings) Act 1970 and the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1980.

The Bill changes the definition of fortnight to the period from the first day to fifteenth day of each month or sixteenth day to the last day of each month.

Under the bill, the tenure of non whole-time directors is extended from eight years to 10 years. The bill allows a director of a Central Cooperative Bank to also serve on the board of a State Cooperative Bank.

It allows bank account holders to have up to four nominees in their accounts.

Redefining the definition of substantial interest, the 'substantial interest' for directorships is raised to Rs 2 crore from the current limit of Rs 5 lakh or 10% of paid up capital.

The Bill empowers banks to decide the remuneration of their auditors.

Replying to discussions on the Banking (Amendment) Bill, Finance Minister Nirmala Sitharaman said, "all public sector banks are turning profitable. Since 2014 we have been extremely cautious, so that banks remain stable. The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome."

The Finance Minister highlighted that the public sector banks are being professionally run today. The metrics are healthy so they can go to the market and raise bonds, raise loans & run their business accordingly.

About 53 crore Jan Dhan accounts have been opened so far, which have attracted total deposits of Rs 2.37 lakh crore and average balance per account has increased to Rs 4,397 from Rs 1,065 in 2014.

About 68% of all PM MUDRA Yojana loans and 44% of PM SVANidhi loans go to women. These are all collateral-free loans.

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