The Banking Laws (Amendment) Bill, 2024, was passed by the Lok Sabha on Tuesday through a voice vote.The bill aims to improve governance in the banking sector and enhance customer convenience. The bill includes amendments to 19 existing laws, along with provisions for better regulation of multi-state cooperatives offering banking services.

Finance Minister Nirmala Sitharaman, while moving the bill for consideration and approval, stated, “The proposed amendments will strengthen governance in the banking sector and improve customer convenience, particularly with regard to nominations and investor protection.”

Key provisions of the bill include allowing bank account holders to nominate up to four individuals for their accounts, with the option for either successive or simultaneous nominations. However, locker holders will be limited to successive nominations only.

The bill also revises the definition of “substantial interest” for directorships, increasing the threshold from ₹5 lakh to ₹2 crore. Additionally, the tenure for directors (excluding chairpersons and whole-time directors) in cooperative banks will be extended from 8 to 10 years, in line with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Directors of Central Cooperative Banks will also be allowed to serve on the boards of State Cooperative Banks. Another amendment is the flexibility provided to banks in determining the remuneration for statutory auditors. 

Additionally, the reporting dates for regulatory compliance will shift from the second and fourth Fridays to the 15th and last day of each month, aiming to streamline the oversight process.

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Finance Minister Sitharaman to move Banking Laws Amendment Bill in LS today