The Lok Sabha on Tuesday passed Banking Laws Amendment Bill after a discussion. It was the first day that the parliament could function, after one week of disruptions, as Opposition and the government reached an agreement over holding discussions on several issues in the house.
Under the new legislation, bank account holders can have upto four nominees in their accounts. Another proposed change relates to redefining 'substantial interest' for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago. The bill also proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011. The bill also allows a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank.
Finance Minister Nirmala Sitharaman speaking in the house said that Indian banks have remained healthy, adding that we can not afford to have struggling banks. She said the credit for this should go to the Reserve Bank of India and the Finance Ministry for the banking system to not have collapsed.
“Since 2014, we have been extremely cautious that banks remain stable. Our intention is to keep our banks safe, stable and healthy, and in the 10 years everyone is seeing the outcome which in turn is benefitting the economy. Today, India should take pride that banks are being professionally managed and run, their metrics are healthy and they can go to the market and raise funds, Sitharaman said.
"Banks have collapsed in countries having a sound system too," said Sitharaman
Talking about the expansion of the bank network in the country, the finance minister said that total branches of the Scheduled Commercial Banks have increased by 3,792 in the last year to reach 1,65,501 in September, 2024. Out of this, 85,116 branches are those of the Public Sector Banks.
“The branches are expanding in rural areas, providing facilities within every 5 kilometres. There were 41,855 branches in Rural areas in March 2014, as of September 2024, the number is 55,372. In Semi-Urban areas, the number of branches were 32,504 branches in March 2014, now it is 45,314. In Urban areas, there were only 21,007 branches in March 2014, now the number is 29,276”.
Sitharaman referred to the benefits passed to women through the official schemes, saying that 68 per cent of all PM MUDRA Yojana loans and 44 per cent of PM SVANidhi loans go to women. These are all collateral-free loans, the FM said.
Referring to the questions raised by the MPs, Sitharaman said "Banks do not come to the government to say recapitalise me as they are now capable of raising capital and issue bonds."
Sitharaman also talked about student loans, saying that total student loans have increased from Rs 71,000 crore in 2017-18 to Rs 1.04 lakh crore (outstanding) in 2023-24. There has also been an increase of student loans to Rs 1.3 lakh crore as on October 2024, which is an increase of 17.6 per cent over October 2023.