The Lok Sabha on Tuesday passed the Banking Laws (Amendment) Bill, 2024, which includes several key provisions aimed at improving the banking sector and enhancing customer convenience. The Bill, which was piloted by Finance Minister Nirmala Sitharaman, was approved by a voice vote.
One of the significant amendments in the Bill is the provision allowing bank account holders to nominate up to four individuals for their accounts. This change is expected to offer greater flexibility and convenience to depositors. Additionally, the Bill proposes a revision of the definition of ‘substantial interest’ for directorships in banks, increasing the threshold from the current Rs 5 lakh—set nearly six decades ago—to Rs 2 crore.
In her speech during the debate, Sitharaman explained that the Bill provides depositors with the option of either successive or simultaneous nominations for their bank accounts. However, locker holders will only be able to make successive nominations. She also highlighted that since 2014, both the government and the Reserve Bank of India (RBI) have prioritized the stability of banks, ensuring their safety and health over the years. “The intention is to keep our banks safe, stable, and healthy, and after 10 years, you are seeing the outcome,” she said.
The Bill further proposes extending the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from eight years to ten years, aligning with the Constitution (Ninety-Seventh Amendment) Act, 2011. Additionally, it will allow directors of Central Cooperative Banks to serve on the boards of State Cooperative Banks. The Bill also provides banks with more flexibility in deciding the remuneration for statutory auditors and proposes a change in reporting dates for regulatory compliance, shifting them to the 15th and last day of each month.
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While the Bill aims to strengthen governance in the banking sector, opposition parties raised concerns about its potential impact. Trinamool Congress (TMC) MP Kalyan Banerjee criticized the Bill, calling it a “donkey passage towards privatisation of the Indian banking sector.” Banerjee expressed fears that the Bill’s real intent was to reduce the government’s stake in public sector banks from 51% to 26%. He also raised concerns about cybersecurity, urging the government to strengthen IT systems to combat fraud and ensure data privacy.
Congress MP Karti Chidambaram echoed concerns over rising cyber frauds and questioned the government’s efforts to address the issue. He also criticized the frequent requirement for customers to update their Know Your Customer (KYC) details, suggesting that such updates should only be necessary when there are actual changes.
Supporting the Bill, BJP’s Konda Vishweshwar Reddy emphasized that the amendments would improve governance in the banking sector, urging all parties to back the legislation. Meanwhile, LJP’s Arun Bharti called for cheaper, collateral-free education loans in Bihar.
