Parliament Passes Banking Laws (Amendment) Bill, 2024 – Key Changes Introduced

On March 26, 2025, Parliament passed the Banking Laws (Amendment) Bill, 2024, which introduces several key reforms in India’s banking sector. The bill, approved by the Rajya Sabha through a voice vote, was earlier passed by the Lok Sabha in December 2024. A major amendment allows bank account holders to have up to four nominees, providing greater flexibility in financial planning. Additionally, the bill redefines ‘substantial interest’ in a bank by increasing the limit from ₹5 lakh to ₹2 crore, a change made after nearly six decades. It also extends the tenure of directors in cooperative banks, revises statutory auditor remuneration policies, and modifies bank reporting dates for regulatory compliance.

Key Highlights

Up to Four Nominees

• Bank account holders can now appoint up to four nominees instead of just one.
• Applies to cash and fixed deposits.
• For lockers, only simultaneous nominations are permitted.

Redefining ‘Substantial Interest’

• The financial threshold for substantial interest in a bank is increased from ₹5 lakh to ₹2 crore.

Cooperative Banks’ Governance

• Directors (excluding chairman & whole-time director) can now serve for 10 years, up from 8 years.
• Directors of Central Cooperative Banks can now be on the board of State Cooperative Banks.

Banking Sector Oversight & Compliance

• Banks can decide auditor remuneration with more flexibility.
• Regulatory reporting dates changed from the 2nd and 4th Fridays of the month to the 15th and last day of each month.

Stringent Action Against Wilful Defaulters

• Finance Minister Nirmala Sitharaman emphasized the government’s commitment to reducing NPAs (Non-Performing Assets) and punishing wilful defaulters.
• 112 bank fraud cases handled by the Enforcement Directorate in the last five years.

Public Sector Banks’ Performance

• Highest-ever profit of ₹1.41 lakh crore recorded in the last fiscal year.
• Expectations of further profitability growth in 2025-26.

Comprehensive Banking Reform

• The amendments impact five different banking laws, making it a landmark reform.