Finance Minister will present Banking Laws Amendment Bill for Approval in Winter Session of Parliament, Know Key Features of Bill

The Banking Laws Amendment Bill is set to be presented in Parliament during its Winter Session, beginning November 25. This Bill, introduced in the previous Monsoon Session, carries significant amendments to existing banking laws. It aims to modernize banking services, safeguard depositors’ and investors’ interests, and improve governance within the banking sector. Click here to download Banking Laws Amendment Bill 2024 PDF.

Objectives of the Bill

The primary goals of the Banking Laws Amendment Bill include:

1. Improving depositor services by allowing flexibility in account management and enhancing nomination options.
2. Addressing unclaimed funds to ensure investors can access dividends, shares, and bonds left unclaimed.
3. Streamlining compliance and reporting for banks to align with evolving financial practices.
4. Promoting autonomy in managing banking operations, especially in public sector banks.

Download PDF: Click here to download Banking Laws Amendment Bill 2024 PDF

Key Provisions in Detail

1. Increase in Nominations for Bank Accounts

• The Bill proposes raising the limit of nominations for individual bank accounts from one to four.
• Impact: Depositors and bank locker holders can nominate multiple family members or dependents, ensuring a fair and transparent distribution of assets.

2. Transfer of Unclaimed Funds

• Enables the transfer of unclaimed dividends, shares, and bond-related amounts to the Investor Education and Protection Fund (IEPF).
• Individuals will have the right to claim these funds or request refunds directly from the IEPF.
• Significance: This provision ensures that unclaimed funds are protected and remain accessible to rightful claimants while promoting financial transparency.

3. Redefinition of “Substantial Interest”

• Revises the outdated financial threshold for determining “substantial interest” in banking institutions.
• Raises the limit from ₹5 lakh (set in 1968) to ₹2 crore to reflect modern economic realities and larger transaction volumes.
• Implications: This change aligns banking definitions with current market practices, reducing ambiguities.

Download PDF: Click here to download Banking Laws Amendment Bill 2024 PDF

4. Revised Reporting Timelines

• The Bill proposes changing the statutory reporting deadlines for banks to the RBI. Reports will now be due:
  • On the last day of the fortnight, month, or quarter, instead of the current Friday deadlines.
• Why it Matters: The change introduces uniformity in banking operations, ensuring streamlined compliance across the sector.

5. Autonomy in Auditor Payments

• Public sector banks will be given the authority to determine the remuneration of their auditors.
• Expected Outcome: This flexibility will enable banks to attract top auditing talent and improve the quality of financial audits.

Legislation Covered

The Bill amends several significant laws:

1. Reserve Bank of India Act, 1934: Governs the central bank’s role and regulatory powers.
2. Banking Regulation Act, 1949: Regulates banking operations in India.
3. State Bank of India Act, 1955: Governs India’s largest public sector bank.
4. Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 & 1980: Addresses nationalized banks and their operations.

Download PDF: Click here to download Banking Laws Amendment Bill 2024 PDF

Implementation and Legislative Journey

• Approved by the Union Cabinet in August 2024, the Bill reflects the government’s emphasis on improving financial governance.
• During the FY24 Budget speech, Finance Minister Nirmala Sitharaman stressed the need for these amendments to:
  • Enhance banking governance.
  • Strengthen depositor and investor protection.

Conclusion

The Banking Laws Amendment Bill is a progressive step towards modernizing India’s banking ecosystem. By addressing outdated provisions, enhancing depositor and investor safeguards, and empowering banks, the Bill demonstrates the government’s commitment to fostering a robust financial system. If implemented effectively, it could streamline operations, ensure transparency, and build trust among stakeholders in India’s banking sector.

• Click here to download Banking Laws Amendment Bill 2024 PDF
• Click here to download various Banking Acts