Banking Laws (Amendment) Bill, 2024

Context:
The Lok Sabha has passed the Banking Laws (Amendment) Bill, 2024, aiming to strengthen governance, enhance customer convenience, and improve the stability of the banking sector.

Objectives of the Bill

1. Strengthening Governance:
   • Enhances transparency and operational efficiency in banking practices.
2. Improving Customer Convenience:
   • Introduces measures to provide flexibility and ease of use for account holders.
3. Protecting Depositors:
   • Aims to bolster depositor trust and ensure the safety of their funds.
4. Ensuring Sector Stability:
   • Aligns banking practices with robust governance frameworks to enhance resilience.

Key Provisions of the Bill

1. Increased Nominees for Accounts:
   • Allows up to four nominees for bank accounts.
   • Permits successive nomination for lockers, adding flexibility in asset access and management.
2. Redefining ‘Substantial Interest’:
   • Increases the eligibility threshold for directors from ₹5 lakh to ₹2 crore, ensuring stronger financial accountability.
3. Cooperative Bank Directors:
   • Extends the tenure of directors from 8 years to 10 years.
   • Allows Central Cooperative Bank directors to serve on the boards of State Cooperative Banks, promoting continuity and expertise.
4. Statutory Auditor Remuneration:
   • Empowers banks to independently decide the remuneration of statutory auditors, increasing operational autonomy.
5. Revised Reporting Dates for Compliance:
   • Changes reporting dates to the 15th and last day of every month, ensuring consistent compliance and oversight.

Implications of the Act

1. For Customers:
   • Provides greater flexibility with multiple nominees for accounts.
   • Offers enhanced clarity regarding compliance and reporting norms.
2. For Banks:
   • Strengthens governance frameworks and operational independence.
   • Aligns eligibility criteria for directors with modern banking standards.
3. For Sector Stability:
   • Reinforces depositor confidence in the banking system.
   • Enhances the overall resilience and reliability of the banking sector.