In a landmark move aimed at bolstering India’s financial ecosystem, the Central Government will enforce key provisions of the Banking Laws (Amendment) Act, 2025, starting August 1.
The reform package, notified through the Gazette on July 29, introduces 19 targeted amendments across five major banking legislations, reshaping governance norms and audit practices within public and cooperative banks:
- The Act revises the definition of ‘substantial interest’ from ₹5 lakh to ₹2 crore, updating a decades-old threshold from 1968.
- Tenure for cooperative bank directors—excluding chairperson and whole-time directors—extended to 10 years in line with the 97th Constitutional Amendment.
- Public Sector Banks are empowered to transfer unclaimed funds to the Investor Education and Protection Fund (IEPF).
- Statutory auditors in PSBs can now be compensated directly, enhancing audit quality and oversight.
The Banking Laws (Amendment) Act, 2025 signals a strategic shift towards more transparent, inclusive, and accountable banking governance.
As these provisions take effect, stakeholders across sectors will likely witness enhanced confidence in India’s banking institutions.
