The Banking Laws (Amendment) Act, 2025 – Key Highlights and Reforms

🔹 Overview

The Banking Laws (Amendment) Act, 2025 came into effect on 1 August 2025, introducing reforms to improve governance, auditing, and depositor protection in India’s banking sector.

🔹 Scope and Implementation

Covers 19 amendments across:

Reserve Bank of India Act, 1934

Banking Regulation Act, 1949

SBI Act, 1955

Banking Companies Acts, 1970 & 1980

Notified in the Official Gazette in July 2025

🔹 Substantial Interest Redefined

Threshold for ‘substantial interest’ raised from ₹5 lakh to ₹2 crore

Modernises eligibility for bank directorship

🔹 Cooperative Bank Director Tenure

Director tenure (excluding chairpersons/whole-time directors) increased from 8 to 10 years

Aligned with the 97th Constitutional Amendment

🔹 Unclaimed Amounts to IEPF

Public sector banks can now transfer unclaimed shares, interest, and bonds to the Investor Education and Protection Fund (IEPF)

Aligns with Companies Act practices

🔹 Audit Reforms

PSBs empowered to remunerate statutory auditors

Aims to improve audit quality, transparency, and accountability

🔹 Reporting Timeline Revised

Banks now report to RBI fortnightly/monthly/quarterly, instead of every Friday

Reduces reporting burden

🔹 Legislative History

Introduced: August 2024

Passed Lok Sabha: December 2024

Passed Rajya Sabha: March 2025

Final Approval: April 2025