Lok Sabha Passes Banking Laws (Amendment) Bill Allowing 4 Account Nominees

The Lok Sabha on Tuesday passed the Banking Laws (Amendment) Bill, 2024, which allows bank account holders to have up to four nominees in their accounts.

Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago.

The Bill piloted by Finance Minister Nirmala Sitharaman was approved by a voice vote.

Replying to the debate on the Bill, Sitharaman said depositors will have the option of successive or simultaneous nomination facility, while locker holders will have only successive nomination.

She also said that since 2014, the Government and the RBI have been extremely cautious, so that banks remain stable.

"The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome," Sitharaman said.

The bill proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.

Once passed, the bill would allow a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank.

The bill also seeks to give greater freedom to banks in deciding the remuneration to be paid to statutory auditors.

It also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.

"The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors," Sitharaman said while moving the bill for consideration and passing.

Opposition members fiercely criticised the bill with TMC MP Kalyan Banerjee describing it as a "donkey passage towards privatisation of the Indian banking sector".

While the bill ostensibly seeks to improve bank guarantees and investor protection, its real intent is to reduce the government's minimum holding in public sector banks from 51 to 26 per cent, he argued.

Banerjee also flagged cybersecurity concerns, emphasising the need for robust IT systems to detect fraud and ensure strict adherence to data privacy regulations.

Congress Member Karti Chidambaram also raised the issue of rising cyber frauds in the country and wanted to know what the government was doing to stop that.

Chidambaram also said that the tyranny of KYC should be stopped as multiple calls are being received by people from their banks in a year for updating the KYC details even though nothing has changed.

"In order to make life easier for the customer they must simplify and mandate that if there is no change (in KYC) there is no reason to update your KYC multiple times in a year," he said.

Konda Vishweshwar Reddy (BJP) said that among the Bill aims to improve governance and all parties should support it.

Arun Bharti of LJP (Ram Vilas) said that education loan in Bihar should be made cheaper and collateral free.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)