Lok Sabha passes Banking Laws Amendment Bill; Sitharaman says public sector banks are turning profitable

Replying to the debate in Lok Sabha on the Banking Laws (Amendment) Bill, which was later passed by the House, Sitharaman said Indian banks have performed exceptionally well in recent years.

"Highest-ever net profit of Rs 1.41 lakh crore was achieved in 2023-24 and Rs 85,520 crore in the first half of 2024-25. Today, all the Public Sector Banks have turned profitable. As a sector, profitability of all scheduled commercial banks is the highest in multiple decades, with the Return on Assets at 1.3% and Return on Equity at 13.8%," she said.

She said when PM Jan Dhan Yojana was launched in 2014, a lot of questions were asked about how will the zero-balance accounts be maintained.

"At that point of time, it was termed as a useless exercise (by critics). Today, we have Rs 2.37 lakh crore deposited in the PM Jan Dhan Accounts. In March 2025, the average balance of the PM Jan Dhan Accounts was Rs 1,065. It has now increased to Rs 4,397. The intention of the nationalisation of the banks was to reach the rural areas. In its true sense, that objective was achieved in the last 10 years through the PM Jan Dhan Yojana," Sitharaman said.

"All public sector banks are turning profitable. Between 2014 and today, the total bank branches of all scheduled commercial banks have increased by 3792 in a year to reach 1,65,501 in September 2024," she added.

Sitharaman also took a veiled dig at Congress-led UPA government for the bank lending norms during its rule.

"Since 2014 we have been extremely cautious, so that banks remain stable. The intension is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome. Total bank branches of scheduled commercial banks have increased by 3792 in a year to reach 16,55,001 in Sept 2024. Out of this 85,116 branches are of public sector banks," she said.

"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," she added

Sitharaman, who faced interruptions from opposition members, targeted and Congress and DMK over some apparent remarks concerning her felicity in Hindi.

Referring to Congress, she said it should ask its ally in Tamil Nadu about its stance against teaching of Hindi.

Targeting DMK over its stance of "imposition of Hindi", Sitharaman said she wanted to learn Hindi but could not do so properly as DMK "imposed" its views on those wanting to learn the language.

"You are imposing (your views) on me, denying my fundamental right to learn language I want to learn," she said.

She also said that PM Modi had taken Tamil language to United Nations.

"Tell me one prime minister who has taken Tamil to the UN...Narendra Modi. Tell me one PM who quotes Tamil repeatedly...because he respects that language. Tell me one PM with whom DMK has been in alliance with, where the PM quoted Tamil," she said.

Speaker Om Birla said it is good to know more languages.

Opposition members including Congress and DMK objected to BJP member Sambit Patra's references to former Prime Minister Indira Gandhi in context of Nagarwala case and demanded that these should be expunged.

"I think while Mr Sambit Patra was speaking, he actually crossed all the limits. Indira Gandhi ji was assassinated. She fought against Pakistan and won the war. Entire India remembers her as a mother....But what language did Mr Patra use? He said that she actually called the bank manager. I want to ask him if he was present there to witness this?" Congress member KC Venugopal said.

Amid ruckus, Parliamentary Affairs Minister Kiren Rijiju objected to slogans by opposition members against the Chair.

The Speaker also said that aspersions should not be cast on Chair and urged members to stick to the subject

Congress member Gaurav Gogoi alleged that the banking system today is unfair, and it is broken.

"It underwent nationalization, with the objective of opening bank branches in remote areas and making banking accessible to the poor and SC/STs. But that has stopped happening today. What is happening with farmers? Farmers who want their KCC loans to be renewed are not getting them because their credit ratings are not being corrected by the banks. Students who want student loans and who are from SC/ST communities and are first-generation learners, they are not getting these loans. What is happening to young startups?" he asked.

"People who are coming from the poor and middle classes, who don't have land as collateral but want to open up a startup, are not getting bank loans. MSMEs and SMEs who want to expand their bags have to run around banks, CEOs, and managers," he added.

He alleged that people from poor and middle classes keep going knocking on requisite doors, "but they still don't get the requisite funds to expand their projects".

"Middle-class people today are investing in the SBI primarily because of SBI's solid reputation, but then the investor must know how much exposure SBI has to companies undergoing investigation, whether inside India or outside. Similarly, penalties for companies that are failing to disclose their unfair practices, their penalties must be higher. Our recommendation is that we increase the penalties for companies that don't follow shareholding disclosure norms," he said.

The Congress member also said that SEBI should be given more teeth.

"It wants to investigate, but it has no power over CBI, Income, and ED. Why? Because CBI, Income Tax, and ED are all busy after opposition politicians and CMs," he alleged.

In his remarks, Congress member Karti Chidambaram said Indian rupee against the US dollar today is at Rs 84.73, and the growth rate in this last quarter is 5.4 per cent, the lowest in seven quarters, and the inflation is at 6.21 per cent.

"Whenever inflation is greater than economic growth, and if that continues, it will lead to stagflation. In this backdrop, this government has brought about the Banking Laws Amendment Bill. The Prime Minister, when he was parroting the slogan, "400 Par," held a cabinet meeting and said that when he comes back to power, he will have a 100-day agenda where they will bring about majestic reforms. I'm sorry to say, Sir, if these are the reforms that the government talks about, this is hardly majestic. This is merely tinkering on the margins and is an innocuous change that they have brought about," he alleged.

Sitharaman replied to the allegations made by opposition members in her reply.

Earlier, moving the bill for consideration and passing in the House, Sitharaman said it will strengthen governance in Indian banking sector besides enhancing consumer's and customer's convenience with respect to nominations and protection of investors.

The Banking Laws (Amendment) Bill, 2024 seeks to improve governance standards and provide consistency in reporting by banks to the Reserve Bank of India. The amendments will also ensure better protection for depositors and investors and will also improve the quality of services in the public sector banks.

Once the bill is passed, the Banking Regulation Act will allow up to four nominees for depositors. This includes provisions for simultaneous and successive nominations, offering greater flexibility and convenience for depositors and their legal heirs, especially concerning deposits, articles, safe custody and safety lockers.

The proposed amendments seek to increase the tenure of directors other than the chairperson and full-time directors in cooperative banks from eight years to ten years.A total of 19 amendments are proposed in the Banking Laws Amendment Bill 2024.

To ensure consistency in reporting by banks, the bill provides for reporting to RBI on the last day of every fortnight instead of Fridays.Under the RBI Act, scheduled banks must maintain a certain level of average daily balance with the RBI as cash reserves.

This average daily balance is based on the average of the balances held by banks at the closing of business of each day of a fortnight.A fortnight is defined as the period from Saturday to the second following Friday (including both days).

The Bill changes the definition of a fortnight to the period from the first day to the fifteenth day of each month or the sixteenth day to the last day of each month.It also changes this definition under the Banking Regulation Act where non-scheduled banks are required to maintain cash reserves.

The bill redefines substantial interest in a company, currently it refers to holding shares of over Rs 5 lakh rupees or 10 per cent of the paid up capital whichever is less, this has been proposed to be hiked to Rs 2 crore.

The central government is also empowered to alter the amount through a notification.Another major provision in the proposed bill allows a director of a central cooperative bank to serve on the board of a state cooperative bank.

Currently, directors can hold positions in only one institution and not more.The structure of the cooperative bank necessitates this as unless a person is elected to one layer of the cooperative, they can't get into the next layer and as a result, they will necessarily have to hold a position at more than one place.

The bill also provides that any person whose shares or unclaimed/unpaid money is transferred to the Investor Education and Protection Fund (IEPF), he can claim the transfer or refund. Currently if money in any account remains unpaid or unclaimed for seven years, it is transferred to the IEPF.

Earlier during the question hour, the opposition members including those from DMK and Trinamool Congress (TMC) clashed with the government over the disbursal of funds under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

TMC MP Kalyan Banerjee alleged that West Bengal government is yet to receive some due funds under the central scheme.

Responding to the TMC MP's allegations, Union Rural Development Minister said that if the amount was not spent for the specified purpose, it can be stopped. He alleged that ineligible people were made eligible in the state.

The Parliament resumed its normal functioning on Tuesday after a week's deadlock over opposition demands including discussion on Adani issue, Manipur situation and Sambhal violence. (ANI)