Page 58 - Banking Finance February 2025

FEATURES

LS passes amendment bill to improve

bank governance

I n a bid to improve bank governance and enhance and interest or redemption of bonds to the Investor

investor protection, the government passed an
Education and Protection Fund, allowing individuals to claim
transfers or refunds from the fund, thus safeguarding
amendment bill in the Lok Sabha that brings about
changes to five banking laws.
The proposed changes in banking laws also revises the
Finance minister Nirmala Sitharaman said the Banking Laws investors' interests.
(Amendment) Bill will strength bank governance, provide reporting dates for the submission of statutory reports by
consistency in reporting by banks to the Reserve Bank of banks to the RBI from reporting every Friday to the last day
Bank of India (RBI), ensure better protection for depositors of the fortnight, month or the quarter.
and also for investors, improve audit quality in public sector "So this change will ensure consistency in reporting and that
banks, and also increase the tenure of directors other than will make it easier for even those who want to observe the
the chairperson and full-time directors in cooperative banks. Indian economy or the way in which banks follow statutory
The minister said that through the bill a total of 19 reporting," said the finance minister.
amendments were being undertaken to bring changes in the
Another proposed change is to redefine 'substantial interest'
Reserve Bank of India Act, 1934 (one amendment), the for directorships, which could increase to Rs. 2 crore instead
Banking Regulation Act, 1949 (12 amendments), the State of the current limit of Rs. 5 lakh, which was fixed almost six
Bank of India Act, 1955 (2 amendments), the Banking decades ago.
Companies (Acquisition and Transfer of Undertakings) Act,
On cooperatives operating in the banking space, Sitharaman
1970 (2 amendments) and the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1978 (2 said the amendments in the Banking Regulations Act would
amendments). apply only to cooperative banks or that part of the
cooperatives which are operating as banks.
Among the major changes proposed through the bill are
amendments to the Banking Regulation Act that will allow The bill proposes to increase the tenure of directors
bank account holders to have up to four nominees in his/ (excluding the chairman and whole-time director) in
her account. cooperative banks from 8 years to 10 years, so as to align
with the Constitution (97th Amendment) Act, 2011.
"This includes provisions for simultaneous and successive
nominations, offering of greater flexibility and convenience Once passed, the bill would allow a director of a Central
Cooperative Bank to serve on the board of a State
for depositors and their legal aids, especially concerning
Cooperative Bank. The bill also seeks to give more freedom
deposits, articles in safe custody," Sitharaman said.
to banks in deciding the remuneration for statutory auditors.
The bill also seeks to transfer unclaimed dividends, shares Replying to the debate on the bill, Sitaraman said that since
and interest or redemption of bonds to the Investor 2014, the government has been extremely cautious, so that
Education and Protection Fund, allowing individuals to claim banks remain stable. "The intention is to keep our banks
transfers or refunds from the fund, thus safeguarding safe, stable, healthy, and after 10 years you are seeing the
investors' interests. outcome," she said observing that banks are being
The bill also seeks to transfer unclaimed dividends, shares, professionally run today. (Source: Mint)

52 | 2025 | FEBRUARY | BANKING FINANCE