The Government of India has officially notified key provisions of the Banking Laws (Amendment) Act, 2025—enacted in April—will become effective from August 1, 2025. The changes span amendments to the Banking Regulation Act, 1949, and the SBI Act and Banking Companies Acts of 1970 and 1980, touching governance, investor protection, and audit standards across the banking sector.
Sections 3, 4, and 5 raise the threshold for 'substantial interest' from ₹5 lakh to ₹2 crore, marking the first update to this measure since 1968. The amendments also extend maximum director tenure in cooperative banks from 8 to 10 years, aligning with the 97th Constitutional Amendment and clarifying governance definitions for cooperative institutions.
Under Sections 15–20, public sector banks (PSBs) gain the power to transfer unclaimed dividends, interest, and bond redemption proceeds to the Investor Education and Protection Fund (IEPF), bringing banking law in line with corporate practices under the Companies Act, 2013. This move standardizes investor protection mechanisms across the financial sector.
A significant operational change allows PSBs to remunerate statutory auditors directly—a shift aimed at enhancing audit quality and strengthening financial oversight. Previously, such compensation was constrained, potentially limiting audit depth and effectiveness.
