Finance Minister Nirmala Sitharaman Introduces Banking Laws (Amendment) Bill 2024 in Lok Sabha
New Delhi [India], August 9: Finance Minister Nirmala Sitharaman introduced the Banking Laws (Amendment) Bill 2024 in the Lok Sabha on Friday. The bill aims to amend several existing laws to improve governance standards, reporting consistency, depositor protection, and audit quality in banks.
Key Amendments
The bill proposes several key changes:
- Increasing the number of nominees in a bank account from one to four.
- Requiring lenders to share credit information reports every fortnight instead of every month.
- Allowing individuals to claim unclaimed dividends, shares, interest, or redemption of bonds transferred to the Investor Education Protection Fund (IEPF).
- Extending the tenure of directors in cooperative banks from 8 years to 10 years.
- Allowing a director of a central cooperative bank to serve on the board of the state cooperative bank.
- Raising the threshold for substantial shareholding interest from Rs 5 lakh to Rs 2 crore.
Statements from the Finance Minister
Finance Minister Nirmala Sitharaman highlighted the limitations of the current reporting system, stating, “The current reporting system has several limitations that impact the accuracy and effectiveness of data reporting.” She emphasized that the new rule of reporting every fortnight will apply to all institutions regulated by the Reserve Bank of India (RBI).
Sitharaman also mentioned that the amendments aim to increase efficiency in the working of cooperative banks, stating, “The various amendments to the Banking Regulation Act with respect to cooperative banks are several and aim to improve their efficiency.”
Doubts Revealed
Finance Minister -: The Finance Minister is a person in the government who is responsible for managing the country’s money, including taxes and spending. In India, this role is currently held by Nirmala Sitharaman.
Nirmala Sitharaman -: Nirmala Sitharaman is an Indian politician who is the current Finance Minister of India. She is responsible for the financial and economic matters of the country.
Banking Laws (Amendment) Bill 2024 -: This is a proposed change to the existing laws that govern how banks operate in India. The amendments aim to make banks work better and protect people who have money in the banks.
Lok Sabha -: The Lok Sabha is one of the two houses of India’s Parliament. It is where elected representatives discuss and make laws for the country.
governance -: Governance refers to the way an organization, like a bank, is managed and controlled. Good governance ensures that the organization runs smoothly and ethically.
reporting consistency -: Reporting consistency means that banks need to provide information in a regular and uniform way. This helps in comparing and understanding the information easily.
depositor protection -: Depositor protection means making sure that people who put their money in banks are safe and their money is secure.
audit quality -: Audit quality refers to how well the financial records of a bank are checked and verified. Good audit quality ensures that the bank’s financial statements are accurate and reliable.
nominees in bank accounts -: Nominees in bank accounts are people who are chosen to receive the money in the account if the account holder passes away.
credit information reporting -: Credit information reporting is when banks regularly share information about loans and credit with credit bureaus. This helps in assessing the creditworthiness of borrowers.
unclaimed dividends -: Unclaimed dividends are profits that a company has decided to share with its shareholders, but which have not been collected by the shareholders.
cooperative bank directors -: Cooperative bank directors are people who manage cooperative banks, which are banks owned and run by their members.
substantial shareholding interest -: Substantial shareholding interest means owning a large portion of a company’s shares. The bill raises the threshold, meaning it changes the amount considered to be a large portion.
