On December 3, 2024, the Lok Sabha approved the Banking Laws (Amendment) Bill, 2024, marking the first legislative measure passed during the Winter Session after a prolonged deadlock. The Bill, introduced by Finance Minister Nirmala Sitharaman, was passed through a voice vote.

Key Provisions of the Bill:

1. Nominee Increase: Bank account holders will now have the option to nominate up to four individuals per account.
2. Redefining “Substantial Interest”: The Bill proposes increasing the monetary threshold for “substantial interest” in directorships from ₹5 lakh to ₹2 crore.
3. Tenure of Directors: Directors (excluding chairpersons and whole-time directors) in cooperative banks may now serve a tenure of 10 years, up from the current 8 years, aligning with the Constitution (Ninety-Seventh Amendment) Act, 2011.
4. Board Membership: It allows directors of Central Cooperative Banks to hold positions on State Cooperative Bank boards.
5. Statutory Auditors' Remuneration: Banks will have greater autonomy in determining the compensation for statutory auditors.
6. Regulatory Compliance Dates: Reporting deadlines for banks are redefined to the 15th and last day of every month, replacing the current practice of reporting on the second and fourth Fridays.

During the debate, Ms. Sitharaman emphasized that, “The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors.” She further added that, “The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome.” Under the new provisions, depositors will be entitled to successive or simultaneous nomination facilities, while locker holders will only have successive nomination rights.

Opposition’s Criticism:

During the debate, opposition members raised several concerns regarding the Banking Laws (Amendment) Bill, 2024. Congress MP Gaurav Gogoi criticized the Bill, particularly in the context of the strained relationship between India and China, and questioned the government's policies, including its decisions on demonetization and the introduction of electoral bonds. Rani Srikumar of the Dravida Munnetra Kazhagam (DMK) expressed concern over the growing fees for basic banking services, such as ATM withdrawals and SMS alerts, while also highlighting the increasing vulnerability of senior citizens to cyber fraud. Additionally, Supriya Sule, representing the Nationalist Congress Party (NCP), advocated for a more stringent approach to financial fraud, suggesting that perpetrators should be required to compensate victims before serving prison sentences. Congress MP Karti Chidambaram also criticized the government's economic management, noting the current exchange rate of ₹84.73 for the Indian Rupee against the US Dollar, a growth rate of 5.4% in quarter two of FY25—the lowest in seven quarters—and inflation at 6.21%. He warned that when inflation surpasses economic growth, it leads to stagflation, pointing out the challenges facing the Indian economy while questioning the timing of the Banking Laws Amendment Bill.

The passage of the Banking Laws (Amendment) Bill, 2024, reflects the government’s intent to bolster governance in the banking sector while addressing investor protection and customer convenience. However, opposition voices underscored key economic and policy-related concerns, suggesting the need for a more holistic approach to financial reforms.