Bankers likely to get cover from Lokpal Act

India is eyeing a significant revamp of the banking laws that includes ringfencing bankers from the Lokpal Act, stock options for state-owned banks’ employees, and review of the entire scheme of board constitution including composition and selection methodology.

“We are examining all these aspects. In some cases, discussions with stakeholders are at an advanced stage,” a government official aware of the deliberations told.

Finance minister Nirmala Sitharaman in her FY 24 budget speech proposed amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act to improve bank governance and enhance investors’ protection.

The final amendments to the various legislation including Banking Regulations Act may be done after getting the sectoral regulator, the Reserve Bank of India, on board, said the official quoted above.

The changes in the Banking Regulations Act and Banking Companies Act may protect bankers from the Lokpal, and going forward, the Lokpal may not directly refer the vigilance cases against bank employees to investigating agencies like the Central Bureau of Investigation, or CBI.

“Banks have demanded that all vigilance cases be routed through the Advisory Board for Banking and Financial Frauds (ABBFF),” the official said.