The Banking Laws (Amendment) Bill, 2024, has been passed in the Lok Sabha with the objective of improving governance in the banking sector, enhancing investor protection, and ensuring better customer convenience. The bill proposes significant reforms that will strengthen the regulatory framework and improve the operational efficiency of Indian banks, with a special focus on transparency, accountability, and ease of doing business for customers.
Key Features of the Bill:
Investor Protection: One of the most notable provisions in the bill is the transfer of unclaimed dividends, shares, interest, or bond-related redemptions to the Investor Education and Protection Fund (IEPF). This move aims to safeguard investors’ interests by ensuring that unclaimed assets are not lost. The bill also provides a mechanism for individuals to claim these transferred assets from the IEPF, ensuring they are not left stranded due to oversight or inactivity.
Governance Improvements: The bill includes measures to enhance governance within the banking sector. It sets higher standards for transparency in reporting by banks to the Reserve Bank of India (RBI), ensuring that information is accurate, timely, and consistent. This will also improve the quality of audits in public sector banks, which is critical for maintaining investor confidence and ensuring financial stability.
Customer Convenience: The bill focuses on improving the customer experience, particularly in the area of nominations. It aims to simplify the process for nominating beneficiaries for accounts and deposits, making it easier for customers to ensure that their assets are passed on according to their wishes in case of their death. This measure is expected to benefit millions of bank account holders across the country.
Cooperative Banks: Another important provision in the bill is the proposal to extend the tenure of directors in cooperative banks. This change is intended to bring more stability and continuity in the management of these banks, allowing for better decision-making and governance.
FM Sitharaman’s Statement: Finance Minister Nirmala Sitharaman expressed confidence in the government’s efforts to maintain the stability and health of the banking sector since 2014. She noted that the reforms had paid off, with Indian banks performing exceptionally well in recent years. In FY 2023-24, the Indian banking sector recorded its highest-ever net profit of Rs 1.41 lakh crore, and public sector banks, in particular, have turned profitable. Sitharaman also highlighted that the return on assets (ROA) and return on equity (ROE) in the banking sector are at their highest in decades, signalling strong financial health.
