Bank Privatization Update: Banking Laws Bill Amended, Check what happened

On August 9, 2024, the government took a significant step towards banking sector reform by introducing the Banking Law Amendment Bill in the Lok Sabha. A lot of people are curious to know about the bank privatization – did the government introduce anything about privatization?

The Banking Laws (Amendment) Bill, 2024, is now in the hands of the Parliamentary Standing Committee, according to PRS Legislative Research. This bill, introduced in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary, is set to bring several important changes to the banking sector. Let’s break down what this bill means and what you need to know.

Key Changes Proposed by the Bill

1. More Nominees for Your Bank Account:
   One of the main highlights of this bill is the proposal to allow up to four nominees per bank account, up from the current limit of one. This change aims to give customers more flexibility in choosing who can inherit their bank accounts in case something happens to them.
2. Redefining ‘Substantial Interest’:
   The bill also suggests updating the definition of ‘substantial interest’ for individuals holding directorships in banks. The current limit of ₹5 lakh has been in place for nearly 60 years. The new proposal would increase this limit to ₹2 crore, reflecting changes in the financial landscape and making it more relevant to today’s standards.
3. Banking on Auditor Freedom:
   Banks will get more leeway in deciding how much they pay their statutory auditors. This change is meant to give banks the flexibility to negotiate auditor fees more freely, which could help streamline operations and potentially reduce costs.
4. Changing Reporting Dates:
   The bill proposes altering the reporting dates for banks to the 15th and the last day of each month. This is a shift from the current schedule of the second and fourth Fridays of the month. The new dates are intended to simplify compliance and reporting processes for banks.