On 29-7-2025, the Ministry of Finance appointed 1-8-2025 as the date on which certain provisions of the Banking Laws (Amendment) Act, 2025 will come into force.
The amendments in the following sections of the following Acts which were brought vide Banking Laws (Amendment) Act, 2025 notified:
-
In Banking Regulation Act, 1949:
- Section 5 relating to Interpretation;
- Section 10-A relating to Board of directors to include persons with professional or other experience;
- Section 16 relating to Prohibition of common directors;
- Section 38-A relating to Court Liquidator;
- Section 41 relating to Preliminary report by official liquidator;
-
In Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970:
- Section 10 relating to Closure of accounts and disposal of profits;
- Section 10-B relating to Transfer of unpaid or unclaimed money:
-
In Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980:
- Section 10 relating to Closure of accounts and disposal of profits;
- Section 10-B relating to Transfer of unpaid or unclaimed dividend to Unpaid Dividend Account.
The above-mentioned provisions which are brought into force aims to:
- Redefine the threshold of ‘substantial interest’ from ₹5 lakh to ₹2 crore, revising a limit that has remained unchanged since 1968;
- Align director tenures in cooperative banks with the 97th Constitutional Amendment by increasing the maximum tenure from 8 years to 10 years (excluding the chairperson and whole-time director);
- Public sector banks (‘PSBs’) will now be permitted to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund, bringing them in line with practices followed by companies under the Companies Act, 2013.
- The amendments also empower PSBs to offer remuneration to statutory auditors, facilitating the engagement of high-quality audit professionals and enhancing audit standards.
Banking Laws (Amendment) Act, 2025:
- This Act brought amendments in 5 legislations:
- The Banking Laws (Amendment) Act, 2025 aimed to improve governance standards in the banking sector, ensure enhanced protection for depositors and investors, improve audit quality in public sector banks, and increase the tenure of directors (other than the chairperson and whole-time directors) in cooperative banks.
