NEW DELHI: The Lok Sabha has passed the Banking Laws (Amendment) Bill, 2024, introducing significant banking reforms to governance and customer convenience:
Nomination flexibility: Bank account holders can now nominate up to four individuals for their accounts. As part of the new banking reforms, for deposit accounts, simultaneous or successive nomination is allowed, while locker holders will have the option for successive nominations only.
Governance enhancements: The tenure for directors (excluding the chairman and whole-time director) in cooperative banks will be extended from 8 years to 10 years, aligning with the Constitution (Ninety-Seventh Amendment) Act, 2011.
Directors of Central Cooperative Banks will now be eligible to serve on the boards of State Cooperative Banks.
Modernisation
Reporting dates: Regulatory compliance reporting dates will shift to the 15th and last day of every month, replacing the current practice of using the second and fourth Fridays, as part of the new banking reforms to be established through the new bill.
Auditor remuneration: Banks will have greater autonomy in deciding remuneration for statutory auditors.
โSubstantial interestโ redefined: The definition of โsubstantial interestโ for directorships in banks will be revised, increasing the threshold from Rs5 lakh to Rs2 crore, reflecting inflationary adjustments after nearly six decades.
Cybersecurity and investor protection: The bill emphasises stronger IT systems to combat cyber frauds and ensure data privacy, while also seeking to reduce the frequency of Know Your Customer (KYC) updates for account holders.
Finance Minister Nirmala Sitharaman highlighted that the amendments aim to strengthen governance, enhance convenience for customers, and protect investors while ensuring stability and safety in the banking sector.
While supporters praised the new banking reforms as a step toward modernising banking, opposition members raised concerns about potential risks of privatization and cybersecurity vulnerabilities. The debate also touched on related customer issues, including KYC processes and affordability of education loans.