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Banking Laws Amendment Bill 2024, Features, Benefits, UPSC Notes

04-12-2024

09:30 AM

Banking Laws Amendment Bill 2024.webp

The Banking Laws Amendment Bill, 2024 was introduced in the Lok Sabha on August 9, 2024. The amendment bill amends Reserve bank of India Act, 1934, Banking Regulation ACT, 1949 and State Bank of India Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings Act, 1980. 

Banking Laws Amendment Bill 2024 Features

Banking Laws Amendment Bill 2024 has the following key features- 

  1. Provision of Nomination: The bill allows bank holders to provide upto four nominations instead of one. These nominees can be appointed simultaneously or successively. However in the case of bank lockers, nominees can only be added successively. 
  2. Substantial Interest: Depending on current economic conditions, “substantial interest” for directorships is proposed to be increased from Rs. 5 lakh to Rs. 2 crore. 
  3. Tenure of Directors: The tenure of Directors in Cooperative banks will extend from eight years to ten years in accordance to the provisions mentioned in Constitutional Act, 2011.
  4. Merged Directorships: The Bill allows directors of Central Cooperative banks to serve on the boards of state cooperative banks as well.
  5. Auditor Remuneration: Banks will be provided with the flexibility of choosing the remuneration for statutory auditors which was being regulated by RBI and central Government earlier.
  6. Reporting dates: Reporting dates for regulatory complaints will be shifted from second and fourth Friday to 15th and last date of every month. 

Banking Law Amendment Bill 2024 Benefits

The new Banking Law Amending Bill 2024 was introduced for the following benefits: 

  1. Improved Governance: The new amendments improve the audit quality in public sector banks eventually leading to strengthening the governance standards within banks. 
  2. Customer Convenience: the multiple nominees feature simplifies the inheritance process and reduces the instances of unclaimed deposits.
  3. Alignment with constitutional provisions: increased director tenures align with the constitutional amendments that govern cooperative societies. 
  4. Regulatory compliance efficiency: Changes in reporting dates are expected to improve compliance efficiency allowing banks to align their reporting practice with regulatory frameworks.

The Banking Amendment bill should focus on addressing the root causes of economic challenges while ensuring that the banking sector thrives towards financial stability.

Banking Laws Amendment Bill 2024 FAQs

Q1. What are the new rules for banking in 2024?
Ans. The 2024 banking amendments focus on enhanced regulatory compliance, governance improvements, and customer protection.

Q2. What is the RBI Amendment Act 2024?
Ans. The RBI Amendment Act 2024 updates statutory reporting requirements and redefines financial thresholds to align with current economic conditions

Q3. What is banking law in India?
Ans. Banking law in India governs the operations of banks through acts like the RBI Act, 1934, and the Banking Regulation Act, 1949, ensuring financial stability and depositor protection.

Q4. What is the Banking Regulation Act amendment?
Ans. The 2024 amendment includes redefining "substantial interest" in banking, updated tenure for co-operative bank directors, and expanded provisions for unclaimed dividends

Q5. What is the banking law of UPSC?
Ans. Banking laws are significant for UPSC, covering topics like the Banking Regulation Act, RBI functions, and financial reforms relevant to governance and the economy.

Q6. What is the Banking Amendment Bill 2024?
Ans. The Banking Laws (Amendment) Bill 2024 strengthens regulatory frameworks, governance, and customer convenience while aligning banking practices with economic realities

Q7. Who is the father of banking law?
Ans. M. Narasimham is the founder of banking law in India.