Banking Laws Amendment Bill

Context:

The Lok Sabha passed the Banking Laws (Amendment) Bill, 2024, following a week-long deadlock in the Winter Session. Introduced by Finance Minister Nirmala Sitharaman, the Bill aims to amend key banking laws to modernize operations and regulations, impacting Acts like the Reserve Bank of India (RBI) Act, 1934, Banking Regulation Act, 1949, and others.

Key Amendments of the Banking Laws (Amendment) Bill, 2024:

1. Redefinition of "Fortnight" for Cash Reserves:

   • New definition: 1st to 15th and 16th to last day of the month.
   • Affects how banks maintain cash reserves with the RBI.

2. Tenure of Directors in Co-operative Banks:

   • Directors' tenure extended to 10 years (from 8 years).

3. Exemption for Common Directors:

   • Directors of central co-operative banks can also serve on state co-operative bank boards.

4. Threshold for Substantial Interest:

   • Increased from ₹5 lakh to ₹2 crore for substantial interest in a company.

5. Nomination Rules for Deposits and Lockers:

   • Up to four nominees allowed. Nomination for lockers can be successive.

6. Settlement of Unclaimed Amounts:

   • Expands scope to include unclaimed shares and unpaid bond interest for seven years.

7. Auditor Remuneration:

   • Banks can now set their auditor fees independently.

Key Takeaways:

The Banking Laws (Amendment) Bill, 2024 introduces important changes aimed at enhancing governance, efficiency, and customer protection in the banking sector. Key highlights include:

• Simplified regulations for cash reserves and director tenure.
• Flexibility in nominations and provisions for unclaimed funds.
• Empowerment of banks to set auditor fees.