The Banking Laws (Amendment) Bill, 2024, which Union Finance Minister Nirmala Sitharaman introduced in Parliament on Friday, proposes extending the tenure of cooperative bank directors (except the chairman and whole-time directors) from eight to 10 years.
The Bill also modifies clause (ne) of Section 5 of the Banking Regulation Act of 1949 to redefine "substantial interest." This would raise the ownership requirement for significant interest from Rs 5 lakh to Rs 2 crore, reflecting the current value, as the previous level was set in 1968.
In addition, the Bill proposes transferring unclaimed dividends, shares, and interest, as well as bond redemption, to the Investor Education and Protection Fund. Individuals will be allowed to request transfers or refunds from the fund, ensuring the protection of investors' interests.
Furthermore, a crebile souce reported on April 7, 2024, that the finance ministry is considering amending the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, which governs Public Sector Banks (PSBs), to allow PSBs to transfer shares to the IEPF if dividends on such shares go unclaimed for seven consecutive years. The Bill also authorizes the director of a central cooperative bank to sit on the board of a state cooperative bank.
Another notable change proposed in the Bill is the adjustment of the reporting periods for banks to submit statutory reports to the Reserve Bank of India (RBI). The Bill proposes changing the reporting deadline from the current reporting Friday' to the final day of the fortnight, month, or quarter. This amendment seeks to establish uniformity in reporting processes.
The Bill also changes sections 45ZA, 45ZC, and 45ZE of the Banking Regulation Act to enable up to four candidates. The Banking Laws Bill, 2024, increases the tenure of co-operative bank directors to ten years.
The Banking Laws (Amendment) Bill, 2024, which Union Finance Minister Nirmala Sitharaman introduced in Parliament on Friday, proposes extending the tenure of cooperative bank directors (except the chairman and whole-time directors) from eight to 10 years.
The Bill also modifies clause (ne) of Section 5 of the Banking Regulation Act of 1949 to redefine "substantial interest." This would raise the ownership requirement for significant interest from Rs 5 lakh to Rs 2 crore, reflecting the current value, as the previous level was set in 1968.
In addition, the Bill proposes transferring unclaimed dividends, shares, and interest, as well as bond redemption, to the Investor Education and Protection Fund. Individuals will be allowed to request transfers or refunds from the fund, ensuring the protection of investors' interests.
Business Standard reported on April 7, 2024, that the finance ministry is considering amending the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, which governs Public Sector Banks (PSBs), to allow PSBs to transfer shares to the IEPF if dividends on such shares go unclaimed for seven consecutive years.
The Bill also authorizes the director of a central cooperative bank to sit on the board of a state cooperative bank.
Another notable change proposed in the Bill is the adjustment of the reporting periods for banks to submit statutory reports to the Reserve Bank of India (RBI). The Bill proposes changing the reporting deadline from the current reporting Friday' to the final day of the fortnight, month, or quarter. This amendment seeks to establish uniformity in reporting processes.
The Bill also changes sections 45ZA, 45ZC, and 45ZE of the Banking Regulation Act to enable up to four candidates.
"This includes provisions for simultaneous and successive nominations, offering greater flexibility and convenience for depositors and their legal heirs, especially concerning deposits, articles in safe custody, and safety lockers," the bill's proposer wrote. The Banking Laws (Amendment) Bill, 2024, seeks to update and revise banking rules so that they are more in line with modern financial practices while also increasing depositor and investor safeguards.
