Banking Laws (Amendment) Act, 2025: key provisions notified to take effect from 1 August 2025
By Gazette notification S.O. 3494(E) dated 29 July 2025, the Centre appointed 1 August 2025 as the date on which key provisions of the Banking Laws (Amendment) Act, 2025 come into force.
Summary
The Central Government, by Gazette notification S.O. 3494(E) dated 29 July 2025, appointed 1 August 2025 as the date on which sections 3, 4, 5, 15, 16, 17, 18, 19 and 20 of the Banking Laws (Amendment) Act, 2025 (16 of 2025) come into force. The Act was notified on 15 April 2025 and carries 19 amendments across five laws: the RBI Act, 1934, the Banking Regulation Act, 1949, the SBI Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. The 'substantial interest' threshold rises from ₹5 lakh, unchanged since 1968, to ₹2 crore. The maximum tenure of directors in cooperative banks (other than the chairperson and whole-time director) rises from 8 to 10 years, in line with the 97th Constitutional Amendment. Public sector banks may now transfer unclaimed shares, interest and bond redemption amounts to the Investor Education and Protection Fund (IEPF) and may pay remuneration to statutory auditors.
Key facts
- Notification
- S.O. 3494(E), 29 July 2025
- In force from
- 1 August 2025
- Sections commenced
- 3, 4, 5, 15-20 of Act 16 of 2025
- Act notified
- 15 April 2025
- Amendments
- 19, across 5 laws
- 'Substantial interest'
- ₹5 lakh (since 1968) to ₹2 crore
- Co-op bank director tenure
- 8 to 10 years (97th Amendment)
- PSB unclaimed amounts
- Can go to IEPF
Practice MCQs 4 questions
Under the Banking Laws (Amendment) Act, 2025, whose key provisions took effect on 1 August 2025, the threshold for 'substantial interest' was raised from ₹5 lakh to:
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Correct answer: A — ₹2 crore
PIB (30 July 2025): the 'substantial interest' threshold was redefined from ₹5 lakh to ₹2 crore, a limit unchanged since 1968.
The maximum tenure of directors (other than the chairperson and whole-time director) in cooperative banks was raised from 8 years to 10 years to align with which Constitutional Amendment?
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Correct answer: C — 97th Amendment
PIB: the change aligns director tenures in cooperative banks with the 97th Constitutional Amendment.
Consider the following statements about the Banking Laws (Amendment) Act, 2025: 1. It contains 19 amendments across five legislations. 2. It was notified in the Gazette on 15 April 2025. 3. All its provisions came into force on the date of its notification. Which of the statements given above is/are correct?
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Correct answer: B — 1 and 2 only
PIB: 19 amendments across five laws; notified 15 April 2025. Provisions come into force on dates appointed by the Centre; S.O. 3494(E) appointed 1 August 2025 for specific sections, so statement 3 is wrong.
Under the amended law, public sector banks may transfer unclaimed shares, interest and bond redemption amounts to which fund, in line with companies under the Companies Act?
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Correct answer: D — Investor Education and Protection Fund (IEPF)
PIB: PSBs can now transfer unclaimed shares, interest and bond redemption amounts to the Investor Education and Protection Fund (IEPF), bringing them in line with companies.