Banking Laws (Amendment) Bill 2024 Passed by Parliament

The Banking Laws (Amendment) Bill, 2024 has been passed by both Houses of Parliament, with the Rajya Sabha approving it by voice vote. The Lok Sabha had already passed the bill in December 2024. This amendment introduces several key changes aimed at improving banking operations, regulatory compliance, and customer convenience.

One of the major provisions allows bank account holders to register up to four nominees. While joint nomination will be permitted for cash and term deposits, only single nomination will be allowed for locker facilities.

Another significant change is the redefinition of the term "substantial interest" in banking operations. The bill also proposes to increase the tenure of directors in cooperative banks (excluding the Chairperson and full-time directors) from 8 years to 10 years, aligning with the 97th Constitutional Amendment Act, 2011. Additionally, it enables directors of central cooperative banks to serve on the boards of state cooperative banks.

Responding to the debate in Rajya Sabha, Finance Minister Nirmala Sitharaman emphasized the government's commitment to taking strict action against wilful defaulters despite a significant decline in non-performing assets (NPAs). She stated that the Enforcement Directorate (ED) has taken up 112 cases related to bank frauds in the past five years.

She clarified that writing off loans does not mean loan waiver, and that banks continue their efforts to recover dues. Sitharaman also informed the House that public sector banks recorded their highest-ever profit of ₹1.41 lakh crore in the last financial year and expressed confidence in even higher profitability by 2025–26.

The bill also grants banks greater autonomy in deciding the remuneration of statutory auditors. Furthermore, it revises reporting dates for regulatory compliance to the 15th and last day of every month, replacing the previous second and fourth Fridays.

Sitharaman noted that the amendments affect five different Acts, making this reform unique. She also mentioned that eight expert teams worked on the amendments to meet the goals outlined in the Union Budget speech.

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