The Banking Laws Amendment Bill, 2011

What is it ?
It governs all public sector and private sector banks. Important features of this amendment -
RBI Related

• RBI can remove the entire board of a bank (instead of CEO or one-two directors) in the event of not obeying rules and regulations
• RBI will be able to prevent Connected Lending by inspecting other business arms of the bank
• Unclaimed Accounts - Depositor Education and Awareness Fund - Committee to look after this
• If anyone wants to buy more than 5% of shares of any bank, then he or she needs to acquire a license from RBI subject to some conditions
• If primary cooperative societies want to continue with banking activities, they need to obtain a license from RBI
• RBI will be able to conduct special audits of cooperative banks as they are more prone to collapse and frauds
• If a bank fails to maintain a minimum prescribed CRR, then it has to pay penalty to RBI

Public Sector Banks (PSBs) Related

• Consolidation of Banks should be encouraged by simplifying the procedures in Banking Companies Acquisition and Transfer of Undertakings Act
• M&As will only need approval from RBI (no scrutiny from Competition Commission of India (CCI) anymore)
• PSBs can issue shares worth more than Rs. 3000 crores (current limit) with Bonus Shares and Rights Issue bu with approval from RBI and Union Govt.
• Voting rights of shareholders will