The Banking Laws (Amendment) Bill has been tabled in the Lok Sabha on August 9 by MoS Finance, Pankaj Chaudhary, aimed at initiating changes in several banking regulations.
The Banking Laws (Amendment) Bill proposes to amend the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, said Pankaj Chaudhary on the floor of the House.
Sources have told Moneycontrol that the proposed Bill seeks to improve governance, ensure consistency in reporting by banks to the RBI, ensure protection of depositors and investors and improve audit at PSU Banks.
Key Amendment Proposals
Among the proposals, it is learnt that the government may refine 'substantial interest' for directorships, raising it to Rs 2 core from the current limit of Rs 5 lakh. This limit has remained unchanged for nearly 60 years.
Another provision is the option of adding four nominees per bank account, as against the existing practice of one. This provision will have the option of simultaneous and successive nominations, offering convenience to depositors and their legal heirs.
The Bill may also allow greater freedom to banks in deciding the remuneration for statutory auditors.
The amendments also provision for the transfer of unclaimed dividends, shares and interest to the Investor Education and Protection Fund (IEPF), which allows individuals to seek transfers or refunds from the fund.
The Banking Amendment Bill also proposes to revise the dates of statutory reporting by banks to the RBI to the last day of the fortnight, month, or quarter, will ensure consistency.
Another amendment being proposed is the extension of tenure of directors in cooperative banks from 8 years to 10 years, excluding that of the chairman and whole-time directors.
Another proposed amendment in Banking Regulation Act, once approved, will allow a Director of a Cooperative Bank to serve on the board of a State Cooperative Bank.
Finance Minister Sitharaman had announced this plan in her Budget speech in July 23, aimed at improving 'bank governance and enhance investors' protection.'
No Rush for Divestment
The proposal to reduce government shareholding in the PSU banks is not part of the amendment bill, CNBC-Awaaz reported citing the bill copy which it has reviewed, possibly implying Centre may not wish to step on the gas when it comes to divesting shareholding in PSUs. This provision was previously part of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
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