NEW DELHI: The Indian government is set to introduce the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha, which aims to bring significant changes to banking regulations. One of the key proposals in the bill is to increase the number of nominees allowed per bank account from the current limit of one to four. This change is designed to provide more flexibility and options for account holders in managing their finances.

Another major amendment involves redefining the concept of 'substantial interest' for individuals holding directorships in banks. The new bill proposes raising the financial threshold for substantial interest from the existing Rs 5 lakh, set nearly sixty years ago, to Rs 2 crore. This change reflects the economic realities of the present day and aims to ensure that directorship positions are held by individuals with significant financial stakes.

The bill also includes several other important revisions. Notably, it proposes changes concerning cooperative banks, though specific details have not yet been disclosed. Additionally, the bill seeks to grant banks greater autonomy in determining the remuneration of statutory auditors, allowing them to make decisions that best suit their financial situations and governance structures.

Another significant change in the bill is the redefinition of reporting dates for regulatory compliance. Instead of the current requirement to report on the second and fourth Fridays of each month, banks will now be required to submit their reports on the 15th and the last day of every month. This adjustment is intended to streamline the reporting process and enhance regulatory oversight.

The Banking Laws (Amendment) Bill, 2024, was approved by the Union Cabinet last Friday and is set to amend several key banking-related laws, including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and both the 1970 and 1980 Banking Companies (Acquisition and Transfer of Undertakings) Acts.

This initiative was first announced by Finance Minister Nirmala Sitharaman during her Budget speech for the 2023-24 fiscal year. "To improve bank governance and enhance investors' protection, certain amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are proposed," she had stated, highlighting the government's commitment to strengthening the banking sector.

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