The Rajya Sabha on Wednesday passed the Banking Laws (Amendment) Bill 2024, which allows account holders to have up to four nominees and grants more freedom to lenders to decide on remuneration of its auditors. The Lok Sabha had passed the bill in December last year.
Replying to a debate on the bill in the house, finance minister Nirmala Sitharaman said even though non-performing assets of banks had come down drastically, the Union government was committed to taking stringent action against “wilful defaulters”. She further said the proposed amendments would strengthen governance in the banking sector and enhance customer convenience with respect to nomination.
Responding to issues raised by some lawmakers on loan write-offs, she said that writing off a loan did not mean letting a borrower off the hook. “Write-offs do not mean waiving off loans and the banks continue to make efforts to recover the funds,” the minister said, adding that defaulting borrowers continue to face legal consequences for recovery of amounts owed to banks.
The bill, which was passed through a voice vote, allows bank account holders to have up to four nominees in their accounts and also proposes changes related to redefining “substantial interest” for directorships, whose limits could increase to ₹2 crore instead of the current limit of ₹5 lakh, a threshold fixed six decades ago.
It also seeks to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from eight years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.
Sitharaman further said: “As on January 29, 2025, ED (enforcement directorate) has taken up 912 cases related to bank frauds including those pertaining to wilful defaulters. In these cases, ₹44,204 crores worth of proceeds of crime have been attached, frozen or seized.”
Intervening in the debate, Trinamool Congress MP Saket Gokhale criticised the bill for not addressing some “grave concerns”, saying the country was facing a liquidity crisis as deposits in scheduled banks had fallen to critical levels.
In her reply, Sitharaman said public sector banks had posted the highest ever profit of about ₹1.41 lakh crore in the last fiscal and profitability would increase even more during 2025-26.
