Parliament passes Banking Laws Bill

Parliament has passed the Banking Laws (Amendment) Bill 2024 with the Rajya Sabha approving it today. The Lok Sabha has already passed the bill. The bill seeks 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 Undertaking) Act 1980. 

The Bill seeks to increase the option for nominees per bank account to four, from the existing one. The bill also proposes to redefine substantial interest for directorships, which could increase to two crore rupees instead of the current limit of five lakh rupees. The Bill empowers banks to decide the remuneration of their auditors.

Replying to a debate, Union Finance Minister Nirmala Sitharaman said the government has undertaken several reforms to strengthen the banking sector in the country. She said that in 2014, the banks were under stress, and when Narendra Modi came to power, it took steps and put in place a robust banking governance framework so that the financial condition of banks remains strong. She said that the public sector banks have recorded the highest ever net profit of 1.41 lakh crore rupees in the last year. 

She added that the government has deepened financial inclusion, taken banking to the last citizen and ensured citizen-centric banking services. Ms Sithraman further informed that over 55 crore Jan- Dhan accounts have been opened so far and of them over of 55 percent accounts are of women. Quoting the 2023 Global Partnership for Financial Inclusion report, the Finance Minister said that by leveraging Digital Public Infrastructure, India achieved over 80 percent bank account penetration. She said it is a journey that would have otherwise taken 47 years through traditional means.

Mrs Sitharaman said that non-performing Assets – NPAs of banks have reduced drastically, and the government is committed to taking stringent recovery action against willful defaulters. The Finance Minister said that the Enforcement Directorate has successfully restored properties worth 22,280 crore rupees to the victims or rightful claimants. She further informed that during the last five years, the Directorate of Enforcement has taken up around 912 cases related to bank frauds, including those pertaining to willful default. She said that in these cases, nearly 44



thousand 204 crore rupees of proceeds of crime have been attached or seized.

She said, under Fugitive Economic Offenders Act, action has also been taken against economic offenders who fled abroad. She added that till December last year , nine individuals have been declared as Fugitive Economic Offenders and assets worth around 750 crore rupees have been confiscated. Ms Sitharaman said that action is going on relentlessly against the defaulters.

Earlier, initiating the discussion on the Bill, Shaktisinh Gohil of Congress said that it was the Congress government under nationalization of banks took place. He said that in the bill, the government has proposed an amendment to increase the tenure of the director in the Cooperative Bank from eight years to 10 years. Arun Singh of the BJP said that the banking system is the backbone of the country’s economy and this Legislation is intended to improve governance in the system. He said that since the Narendra Modi government took over, it focused on financial inclusion and provided banking facilities in the remotest parts of the country. He said that currently, there are 54 crore bank accounts operational in the country, and the account holders are provided with accidental insurance and RuPay Card facility. The BJP leader added that the legislation will streamline financial reporting.

Taking part in the debate, K R N Rajesh Kumar of DMK lauded the Tamil Nadu government saying it has brought a separate budget for farmers and also launched various welfare schemes for them. Raghav Chadha of Aam Aadmi Party said that 50 per cent of rural India is still away from the banking system and 30 per cent of rural households are still unbanked. He said incidents of Cyber fraud and digital arrests have increased in the country, and last year 2.92 lakh such cases were reported. Mr Chadha also talked about hidden charges levied by the banks. 

Participating in the discussion, M. Thambi Durai of AIADMK accused the DMK government of not fulfilling the promises made to farmers and students. Saket Gokhle of TMC has said that today, bank deposits have gone down, and bank loans have gone up. He also claimed that unsecured loans in the country have increased.

Later, after the completion of the business, the Deputy Chairman of the Rajya Sabha, Harivansh ,adjourned the House for the day.