Banking Laws (Amendment) Act, 2025 comes into force
Why in the news
The Banking Laws (Amendment) Act, 2025 came into effect on 1 August 2025. Lok Sabha had passed it in December 2024 and Rajya Sabha in March 2025. It updates the legal and governance framework of Indian banks.
Key facts
- 19 amendments across 5 banking laws.
- Substantial interest threshold raised from Rs 5 lakh to Rs 2 crore; the old figure had stood since 1968.
- Cooperative bank directors may now serve 10 years instead of 8, in line with the 97th Constitutional Amendment Act, 2011. Chairpersons and whole-time directors are excluded.
- IEPF transfer: public sector banks can send unclaimed shares, interest and bonds to the Investor Education and Protection Fund, matching Companies Act, 2013 provisions.
- Audit pay: banks can decide and pay remuneration to statutory auditors, meant to attract better audit talent.
Laws amended
| Law | Year |
|---|---|
| Reserve Bank of India Act | 1934 |
| Banking Regulation Act | 1949 |
| State Bank of India Act | 1955 |
| Banking Companies (Acquisition and Transfer of Undertakings) Acts | 1970 and 1980 |
About substantial interest
The term describes a director’s or officer’s significant financial stake in a firm, which can create a conflict of interest. The higher limit reflects how money values have changed since 1968.
Exam angle
- Remember the numbers: 19 amendments, 5 Acts, Rs 5 lakh to Rs 2 crore, 8 to 10 years.
- The 10-year tenure links to the 97th Amendment, which dealt with cooperative societies.
- Expect statement-based questions on which Acts were amended.