The amendment to the Banking Regulation Act, 1949, has changed the definition of ‘substantial interest’ for a bank director.

The current act considers a person holding ‘substantial interest’ if the value of the shareholding held by the person, including his or her family, exceeds ₹5 lakh or 10 per cent of the paid-up capital of the bank, whichever is less. The threshold was fixed in 1968.

This is now proposed to be hiked to ₹2 crore.

The tenure of directors of co-operative banks has been raised to 10 years from eight.

The Bill also proposed to revise the reporting dates for submission of statutory reports, that includes the amount of cash reserve ratio (CRR) and the particulars of deposits, to the Reserve Bank of India (RBI).

At present, such reporting is done on the second and fourth Fridays. The bill seeks to change this to last date of the fortnight or month.

Besides the Banking Regulation Act, the Banking Laws (Amendment) Bill, 2024, presented by minister of state for finance Pankaj Chaudhary on Friday, proposes to amend five acts: the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949 and the State Bank of India Act, 1955.

It will also amend the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

One of the key provisions of the bill involves the transfer of unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF).

It proposes to increase the freedom of banks in determining the remuneration of statutory auditors, ensuring that banks can attract and retain high-quality
professionals.