Introduction
The Banking Laws (Amendment) Bill, 2024 introduces sweeping reforms to modernize India’s banking sector. This landmark legislation amends five key banking laws to strengthen governance, enhance customer convenience, and align regulations with global standards.
Key Legal Amendments & Their Impact
1. Multiple Nominees for Accounts & Lockers
- New Change: Permits up to 4 nominees (previously only 1)
- Options: Percentage-wise distribution or order of preference
- Benefit: Simplifies inheritance and reduces legal disputes
2. Revised ‘Substantial Interest’ Threshold
- New Threshold: ₹2 crore stake (up from ₹5 lakh)
- Impact: Reduces compliance burden for small investors while increasing scrutiny of major stakeholders
3. Extended Tenure for Cooperative Bank Directors
- New Rule: 10-year term (previously 8 years)
- Rationale: Ensures leadership stability in cooperative banks
4. Dual Directorship in Cooperative Banks
- New Provision: Allows directors to serve in both central and state cooperative banks
- Advantage: Improves coordination in rural credit systems
5. Standardized ‘Fortnight’ for CRR Calculations
- New System: Fixed 1st-15th and 16th-month-end periods
- Benefit: Simplifies reserve compliance and auditing
6. Unclaimed Funds to IEPF
- New Rule: Transfers unclaimed shares/bonds after 7 years to Investor Education Fund
- Purpose: Better fund utilization while protecting owner rights
7. Banks to Decide Auditor Remuneration
- Change: Banks now set audit fees (previously RBI-controlled)
- Goal: Promotes transparency and competitive audit practices
Legislative Journey
- Introduced: August 9, 2024
- Lok Sabha Passed: December 3, 2024
- Rajya Sabha Passed: March 26, 2025
Stakeholder Reactions
Government View:
✔ Strengthens depositor confidence
✔ Modernizes banking governance
✔ Aligns with global standards
Opposition Concerns:
- Potential privatization risks
- Need for stronger depositor safeguards
- Questions about audit independence
Conclusion
This reform represents a significant step forward for India’s banking sector by:
🔹 Simplifying succession planning
🔹 Improving cooperative bank governance
🔹 Standardizing compliance procedures
🔹 Enhancing depositor protection
Need Banking Law Expertise?
B S Makar, Advocate
📞 +91-9878131111 | 🌐 www.makarlaws.com
📍 Specialist in Banking Regulations & Financial Disputes
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