The key provisions of the Banking Laws (Amendment) Act, 202

 Here are the key provisions of the Banking Laws (Amendment) Act, 2025 that will come into force on 1 August 2025, as officially notified by the Government of India via Gazette notification S.O. 3494(E) dated 29 July 2025 

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🏛️ 1. Scope of Applicability — Affected Legislation

Sections 3, 4, 5, 15, 16, 17, 18, 19 and 20 of the Act are in force from August 1. These amend the following Acts:

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  

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2. 💼 Banking Regulation Act, 1949 (Sections 3–5)

• Substantial Interest Threshold

The definition of “substantial interest” has been raised sharply from ₹5 lakh (set in 1968) to ₹2 crore (or such other amount notified by the Central Government)  .

• Director Tenure in Co-operative Banks

Maximum service tenure (excluding chairperson and whole‑time director) has been extended from 8 to 10 years to align with the Constitution (97th Amendment) .

Directors of central co‑operative banks may now serve on boards of state co‑operative banks in which they are members .

• Reporting Terms & Cash Reserve Scheduling

Terminology has been modernised: references such as “alternate Friday” have been replaced with specific calendar dates (e.g. “last day of fortnight/month”) for regulatory filings and CRR/SLR submission schedules .

The RBI’s submission window for CRR averages has been reduced from 7 days to 5 days .

• Nomination for Deposits and Lockers

Depositors may now nominate up to four nominees—either simultaneously (with specified proportions) or successively—for bank deposits and lockers (though lockers only permit successive nomination) .

Successive nomination follows a priority order; simultaneous nomination applies pro rata. Invalid nominations are treated as if never made .

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3. 🏦 State Bank of India Act & Nationalised Banks (Sections 15–20)

• Investor Protection via IEPF Transfers

Public sector banks (including SBI and nationalised banks under the 1970/1980 Acts) are required to transfer unclaimed dividends, shares, bond interest or redemption amounts that have remained unpaid/unclaimed for 7 years to the Investor Education and Protection Fund (IEPF), per Companies Act, 2013 protocols .

• Auditor Appointment & Remuneration

Auditor appointments in PSBs are to be made under the Companies Act, 2013 (section 141), with fees fixed by the bank itself—enhancing audit independence and aligning practices with corporate norms .

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Why These Changes Matter

Capital Governance Strengthening: Raising the “substantial interest” threshold and matching cooperative bank director tenures to constitutional norms improves governance resilience.

Stronger Investor Safeguards: Transfers of unclaimed assets to the IEPF ensure that public funds are not stagnated but appropriately managed and claimable.

Modernised Compliance: Calendar-specific reporting dates and reduced submission windows streamline operational requirements.

Nomination Flexibility: Allowing up to four nominees simplifies succession for depositors and locker holders.

Audit Quality Enhancement: PSBs fixing auditor fees under the Companies Act opens the door to better transparency and professional independence.

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📅 Timeline Recap

President’s Assent: 15 April 2025

Gazette Publication: 15 April 2025

Notification of Enforcement Dates: 29 July 2025 (S.O. 3494(E))

Enforcement Begins: 1 August 2025 for Sections 3, 4, 5, 15–20 

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Summary Table

Area Key Change

Substantial Interest Threshold Raised from ₹ 5 lakh → ₹ 2 crore

Co‑operative Bank Directors Tenure extended to 10 years; dual membership allowed

Nomination Rules Up to 4 nominees; sequential or simultaneous

Reporting & Cash Reserve Dates Calendar-based fortnight; CRR report window reduced to 5 days

IEPF Transfers for PSBs Unclaimed funds after 7 years moved to IEPF

Auditor Appointment in PSBs Managed by Companies Act; fees decided by the banks