{"id":60614,"date":"2025-12-04T19:10:55","date_gmt":"2025-12-04T13:40:55","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=60614"},"modified":"2025-12-05T13:29:30","modified_gmt":"2025-12-05T07:59:30","slug":"banking-laws-amendment-act-2025","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/04-12-2025\/banking-laws-amendment-act-2025","title":{"rendered":"Banking Laws (Amendment) Act, 2025"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India&#8217;s banking sector has undergone a remarkable transformation, and Banking Laws (Amendment) Act, 2025 is a step towards strengthening governance standards in the banking sector.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Banking Laws (Amendment) Act, 2025<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It contains a total of <strong>19 amendments<\/strong> across<strong> five legislations;&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li>The Reserve Bank of India Act, 1934,&nbsp;<\/li>\n\n\n\n<li>Banking Regulation Act, 1949,&nbsp;<\/li>\n\n\n\n<li>State Bank of India Act, 1955 and&nbsp;<\/li>\n\n\n\n<li>Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Need for the Banking Amendment Act, 2025<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Rising Unclaimed Deposits:<\/strong>&nbsp; A substantial amount in banks remains unclaimed due to the absence of nominees. The Act addresses this challenge by establishing a structured, seamless succession mechanism.<\/li>\n\n\n\n<li><strong>Expanding Financial Inclusion:<\/strong> As more households enter the formal banking system, the complexity of services rises.\n<ul class=\"wp-block-list\">\n<li>Modern frameworks are needed to handle the scale, technology adoption, and increased transaction volumes.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Clarity and Uniformity in Banking Operations:<\/strong> Establishes uniform terminology for smoother integration with emerging technologies.\n<ul class=\"wp-block-list\">\n<li>Reduces disputes between banks and depositors by formalising asset succession rules.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key reforms under Banking Laws (Amendment) Act, 2025<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Modernised Nomination Framework (Sections 10 &#8211; 13): <\/strong>Depositors can nominate up to four persons for their bank accounts via either simultaneous or successive nominations\n<ul class=\"wp-block-list\">\n<li>Simultaneous nominations allow percentage-wise allocation totalling to 100%.<\/li>\n\n\n\n<li>Successive nominations ensure seamless succession in case of a nominee\u2019s death for articles in safe custody and safety lockers<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Redefinition of \u2018Substantial Interest\u2019 (Section 3): <\/strong>Threshold increased from \u20b9 5 lakh (1968 limit) to \u20b9 2 crore. This regulatory change is designed to revamp governance standards.<\/li>\n\n\n\n<li><strong>Governance in Co-operative Banks (Section 4 &amp; 14): <\/strong>Align director tenures in cooperative banks with the <strong>97th Constitutional Amendment<\/strong> by increasing the maximum tenure from 8 years to <strong>10 years <\/strong>(excluding the chairperson and whole-time director). Tenure for directors in other banking companies remains unchanged.<\/li>\n\n\n\n<li><strong>Audit Reforms in PSBs (Sections 15-20):<\/strong> Empower PSBs to fix the auditors remuneration.\n<ul class=\"wp-block-list\">\n<li><strong>PSBs will now be permitted<\/strong> to transfer unclaimed shares, interest, and bond redemption amounts to the <strong>Investor Education and Protection Fund (IEPF)<\/strong>, bringing them in line with practices followed by companies under the Companies Act.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact of the Banking Reforms with National Vision<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Depositor-centric: <\/strong>The Act includes robust measures to safeguard public trust in banking institutions by simplified claim settlement for their families.<\/li>\n\n\n\n<li><strong>Improved Financial Transparency: <\/strong>Transfer to the Investor Education and Protection Fund aims at creating a more transparent system for fund management.<\/li>\n\n\n\n<li><strong>Enhanced Audit Quality:<\/strong> The PSBs will now be able to attract more qualified professionals and improve audit quality by paying better auditor remuneration.<\/li>\n\n\n\n<li><strong>Improved Operational Efficiency:<\/strong> The Act simplifies certain procedures, such as updating certain operational definitions.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img data-dominant-color=\"bfdfea\" data-has-transparency=\"false\" style=\"--dominant-color: #bfdfea;\" loading=\"lazy\" decoding=\"async\" width=\"686\" height=\"458\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/Screenshot-2025-12-04-at-7.10.18-PM.png\" alt=\"indian banking law\" class=\"not-transparent wp-image-60622\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/Screenshot-2025-12-04-at-7.10.18-PM.png 686w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/12\/Screenshot-2025-12-04-at-7.10.18-PM-300x200.png 300w\" sizes=\"auto, (max-width: 686px) 100vw, 686px\" \/><\/figure>\n<\/div>\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.pib.gov.in\/PressReleasePage.aspx?PRID=2198614&amp;reg=3&amp;lang=1\" target=\"_blank\" rel=\"noopener\"><strong>PIB<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">India&#8217;s banking sector has undergone a remarkable transformation, and Banking Laws (Amendment) Act, 2025 is a step towards strengthening governance standards in the banking sector.<\/li>\n<p><\/p>\n<p><strong>Need for the Banking Amendment Act, 2025<\/strong><\/p>\n<li class=\"ms-5\">Rising Unclaimed Deposits:\u00a0 A substantial amount in banks remains unclaimed due to the absence of nominees. The Act addresses this challenge by establishing a structured, seamless succession mechanism.<\/li>\n<li class=\"ms-5\">Expanding Financial Inclusion: As more households enter the formal banking system, the complexity of services rises.<\/li>\n<li class=\"ms-5\">Modern frameworks are needed to handle the scale, technology adoption, and increased transaction volumes.<\/li>\n<li class=\"ms-5\">Clarity and Uniformity in Banking Operations: Establishes uniform terminology for smoother integration with emerging technologies.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/04-12-2025\/banking-laws-amendment-act-2025\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-60614","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/60614","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=60614"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/60614\/revisions"}],"predecessor-version":[{"id":60682,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/60614\/revisions\/60682"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=60614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=60614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=60614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}