Union Finance Minister Nirmala Sitharaman on Friday (August 09) introduced the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha. A provision has been made in this bill that every bank account holder will be able to register up to four ‘nominees’ for an account.
Till now there is a rule to mention only one nominee in a bank account. If this bill is passed by the Parliament, then now the nominee can be increased to four. However, this will be an optional provision. Another big change has been talked about in the proposed bill. Under this, the substantial interest of the directors of the company has been redefined and under this the current limit of Rs 5 lakh has been increased to Rs 2 crore, which was fixed almost six decades ago.
Some opposition members in the Lok Sabha opposed the introduction of this bill in the House. Congress’s Manish Tiwari said that the states have the right to amend the laws related to cooperative societies and cooperative banks. He also talked about the ambiguity regarding legislative rights in this regard. He said, “There is a contradiction on whether the Center can control cooperative societies or not.”
NK Premachandran of RSP said that the government is trying to amend four laws at once and this is against the traditions of the House. He said that bills are introduced only for laws related to inter-related subjects. Saugata Roy of Trinamool Congress also objected to amending four laws through one bill.
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Finance Minister Nirmala Sitharaman dismissed the objections of the opposition members and said that the law related to multi-cooperative banks has already been amended through this House and this has provided relief to small account holders. She said that we could have brought four bills but when there are laws related to similar functioning, we are bringing an amendment bill.
She said there is a connection between the Banking Regulation Act and cooperative banks and any amendment will have to be brought through this route. Sitharaman said, “There is no attempt to weaken cooperative institutions, especially those that do everything other than banks. There should be a rule for cooperative societies that have a license for banks and banking activities and that is why we have taken this step.” After the minister’s reply, the House approved the introduction of the bill by voice vote.
The bill also provides for greater freedom to banks in deciding the remuneration to be paid to statutory auditors. The bill also seeks to redefine the reporting dates for regulatory compliance for banks to the 15th and last day of every month instead of the second and fourth Fridays.
This bill was approved by the Union Cabinet last Friday, under which amendments are proposed in the Reserve Bank of India Act, 1934, Banking Regulation Act 1949, State Bank of India Act 1955, Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act 1980.
This was announced by the Finance Minister in his 2023-24 budget speech. He had said, “Some amendments are proposed in the Banking Regulation Act, Banking Companies Act and Reserve Bank of India Act to improve bank governance and enhance investor protection.” (With language inputs)
