The Lok Sabha has passed the Banking Laws (Amendment) Bill, 2024, making important changes in the banking statutes. Among the notable changes, banks are now empowered to determine the remuneration of their statutory auditors, a departure from the existing practice where such decisions were made by the Reserve Bank of India ( RBI ) in consultation with the central government.
Introduced on August 9, 2024, the Bill amends five major legislations, including the RBI Act, 1934; the Banking Regulation Act, 1949; the State Bank of India Act, 1955; and the Banking Companies Acts of 1970 and 1980. These amendments cover a broad spectrum of banking operations, from cash reserve requirements to governance and unclaimed funds management.
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Key provisions include redefining the “fortnight” used for calculating cash reserves, concurring it with a bi-monthly structure, and extending the tenure of directors in cooperative banks from eight to ten years.
Additionally, exemptions on directorship in cooperative banks have been expanded to accommodate central cooperative bank directors serving on state cooperative bank boards.
The Bill also raises the threshold for “substantial interest” in a company from ₹5 lakh to ₹2 crore, enabling greater investment flexibility. In another customer-friendly measure, deposit holders can now nominate up to four successors for deposits, articles in custody, or bank lockers, with clear rules for simultaneous and successive nominations.
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The legislation also introduces a framework for handling unclaimed funds. Funds such as unpaid dividends, unclaimed shares, and bond interests, if left untouched for seven years, will now be transferred to the Investor Education and Protection Fund (IEPF). Claimants, however, retain the right to seek refunds from the IEPF.
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