Finance Minister Nirmala Sitharaman Announces Safer Public Sector Banks

Finance Minister Nirmala Sitharaman has declared that public sector banks (PSBs) are now safe, stable, and healthy, showcasing 'exceptional performance' following the Lok Sabha's approval of crucial amendments to banking laws. These amendments, among other provisions, allow for up to four nominees in all bank accounts, ensuring that successors of account-holders or those with fixed deposits are not inadvertently locked out.

Depositors can now choose between simultaneous nomination, where nominees are assigned specific percentage shares, or successive nomination, where nominees inherit in a predefined order. Additionally, the Banking Laws (Amendment) Bill, 2024, seeks to redefine 'substantial interest' for directorships, potentially increasing the limit to Rs 2 crore from the current Rs 5 lakh. Among the 19 amendments, there is a plan to transfer unclaimed dividends, shares, and bond interests to the Investor Education and Protection Fund for easier reclaim by rightful owners.

Sitharaman emphasized that the proposed amendments will enhance governance in the banking sector and improve customer convenience with respect to nomination and investor protection. She also highlighted the increase in the number of branches of scheduled commercial banks to 1.6 lakh by the end of September, compared to under 1.2 lakh in March 2014, with 3,792 branches added since September 2023. The minister attributed the current stability to careful policy measures implemented since 2014 that have allowed banks to operate professionally and leverage market opportunities.

However, the bill also faced criticism from the opposition. TMC MP Kalyan Banerjee alleged that the bill was a 'covert step towards privatising public sector banks' by potentially reducing government stakes. Other concerns raised included the necessity for advanced fraud detection systems and transparency of banking fees.