NEW DELHI: Finance minister Nirmala Sitharaman Tuesday said public sector banks are now safe, stable, healthy, and showing “exceptional performance”, as Lok Sabha passed crucial amendments to banking laws, which among other things provides for up to four nominees in all bank accounts.
The move is meant to ensure that successors of an account-holder or someone with a FD are not locked out as is often the case. Depositors can opt for either simultaneous nomination, where nominees are assigned specific percentage shares, or successive nomination, where nominees inherit in a predefined order.
In addition, Banking Laws (Amendment) Bill, 2024, also seeks to redefine “substantial interest” for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh. Among the 19 amendments is plan to transfer unclaimed dividends, shares, and bond interests to Investor Education and Protection Fund for easier reclaim by rightful owners.
“The proposed amendments will strengthen governance in banking sector and enhance customer convenience with respect to nomination and protection of investors,” Sitharaman said while moving the bill.
Responding to debate on the bill, she said the number of branches of scheduled commercial bank has increased to 1.6 lakh, at end of Sept, compared to under 1.2 lakh in March 2014, with 3,792 branches added since Sept 2023. “Banks are being professionally run today. The metrics are healthy so they can go to the market and raise bonds, raise loans and run their business accordingly,” the FM said, while stressing the role of banks in national growth. She attributed the current stability to careful policy measures implemented since 2014 that have allowed banks to operate professionally and leverage market opportunities.
The bill also invited criticism from opposition. TMC MP Kalyan Banerjee alleged that the bill was a “covert step towards privatising public sector banks” by potentially reducing govt stakes. He raised concern over cyber security and the necessity for advanced fraud detection systems. Samajwadi Party’s Rajeev Rai brought up the plight of borrowers facing credit issues due to poor communication from banks, while DMK’s Rani Srikumar questioned transparency of banking fees. Congress MP Karti Chidambaram spoke against the bill for not living up to govt’s promise of “majestic reforms”.
TDP’s D Prasada Rao praised support public sector banks provide to small businesses, crediting BJP-TDP alliance. Sena UBT’s Anil Desai noted a trend of investors moving towards alternative investments, and NCP (SP)’s Supriya Sule advocated for stronger measures against financial frauds.