Union Finance Minister Nirmala Sitharaman introduced the Banking Laws (Amendment) Bill, 2024 in the Lok Sabha during the Parliament session on Friday, aiming to make significant changes to key banking regulations. The bill seeks to modernize and streamline various aspects of the banking sector, reflecting the government’s commitment to financial stability and inclusivity.
One of the key changes proposed by the bill is increasing the number of nominees allowed per bank account from the current one to four. This amendment will provide greater flexibility and security for account holders, allowing them to designate multiple beneficiaries for their funds.
Another significant amendment involves redefining ‘substantial interest’ for directorships. The current threshold of ₹ 5 lakh, established nearly 60 years ago, is being proposed to be raised to ₹ 2 crore. This change aims to reflect the changing economic landscape and ensure a more relevant definition of substantial interest for directorships.
Furthermore, the Bill aims to provide banks with more flexibility in determining the pay for statutory auditors. This change is expected to improve transparency and efficiency in the auditing process.
The Bill also proposes to change the regulatory reporting dates for banks from the second and fourth Fridays of each month to the 15th and last day of each month. This adjustment aims to streamline reporting processes and improve data accuracy.
Approved by the Union Cabinet last Friday, the Bill seeks to amend several critical laws, including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
In a separate development, the Lok Sabha cleared the tax proposals presented in the Union Budget for FY25, including amendments proposed by FM Sitharaman. These amendments include the restoration of inflation adjustment benefit in taxing gains from property sales.
FM Sitharaman highlighted that the amendments to the Finance Bill reflect the government’s commitment to broad-based consultation and ensuring that the budget aligns with the aspirations of the common man. She proposed that when a long-term capital asset of land or building acquired before July 23 is sold, taxpayers can choose between two options: compute the tax on capital gains under the new scheme at 12.5% without indexation or under the old scheme at 20% with indexation, paying the tax which is lower of the two. This measure aims to provide taxpayers with greater flexibility and ensure fairness in taxation.
