FM Nirmala Sitharaman Pitches For Banking Law Amendments In Parliament - Top Points

Finance Minister Nirmala Sitharaman, on Tuesday, tabled the amendments to Banking Laws and proposed multiple changes to streamline the functioning of the banking sector in the country. Speaking during the ongoing Winter Session of the Parliament, Sitharaman said - "These changes will make it easy for people to track how banks operate." 

What Were The Proposed Amendments

• Moving the bill for consideration and passing in the Lok Sabha, the Minister said a total of 19 amendments are being proposed to bring changes in the Reserve Bank of India Act, 1934.
• The bill proposes to allow a bank account holder to have up to four nominees in his/her account. The bill also seeks to transfer unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thus safeguarding investors' interests.
• The Finance Minister said that she is proposing 19 amendments to the existing Banking Regulation 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.She spelt out some of the key amendments the government is looking to execute. 
• As the banking sector has evolved over the years and with a view to improving bank governance and investor protection, it has become necessary to make certain amendments to five Acts, according to a statement of Objects and Reasons of the Bill.
• Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago.
   

Sitharaman On Banks And Cooperatives

• Sitharaman proposed aligning the Banking Regulation Act consistent with cooperatives, only with respect to the banking areas in cooperatives. She clarified, "Only in their banking activities will their activities be regulated", while all other activities are outside the proposed amendments and will be amended as per the law that deals with them.  The bill proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.
• It also seeks to redefine the reporting dates for banks for regulatory compliance to the 15th and last day of every month instead of the second and fourth Fridays.
  "These proposed amendments will enhance the banking sector," Sitharaman said in her closing remarks.