Banking Laws Amendment Act 2025

The Banking Laws Amendment Act came into effect on 1 August 2025, bringing significant reforms to India’s banking structure. Aimed at strengthening bank governance, protecting depositors, and modernising outdated laws, the Banking Laws Amendment Act 2025 is a vital topic for SSC aspirants and other competitive exam candidates.

This blog covers everything SSC students need to know—from the legislative background to key changes in RBI rules, PSBs India, audit reforms, and more.

What is the Banking Laws Amendment Act 2025?

The Banking Laws Amendment Act 2025 introduces 19 important changes across five key legislations:

• Reserve Bank of India Act, 1934

• Banking Regulation Act, 1949

• State Bank of India Act, 1955

• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

• Banking Companies Act, 1980

This amendment act aims to improve banking regulation, enhance transparency, and streamline compliance, particularly within public sector banks (PSBs) and cooperative banks.

Scope and Notification Timeline

The Banking Laws Amendment Act was:

• Introduced in August 2024

• Passed by the Lok Sabha in December 2024

• Approved by the Rajya Sabha in March 2025

• Notified in the Official Gazette in July 2025

• Came into effect on 1 August 2025

Understanding the timeline of the Banking Laws Amendment Act 2025 helps SSC aspirants trace its legal and regulatory evolution.

Key Reforms under the Banking Laws Amendment Act 2025

Redefinition of ‘Substantial Interest’

The Act raises the threshold for substantial interest in banking from ₹5 lakh to ₹2 crore, a limit unchanged since 1968.

• This affects banking director eligibility norms.

• Ensures only significant stakeholders can influence bank governance

Why it matters: This aligns with the current financial environment and reduces conflict of interest in board-level decision-making.

Changes in Cooperative Bank Governance Rules

To align with the 97th Constitutional Amendment, the Banking Laws Amendment Act updates cooperative bank director tenure:

• Old limit: 8 years

• New limit: 10 years (excluding chairpersons and full-time directors)

Why it matters: This ensures greater continuity and leadership stability in cooperative banks.

Unclaimed Funds IEPF Transfer

Under the amended rules, public sector banks are now allowed to transfer:

• Unclaimed dividends

• Shares

• Bond redemption amounts

… to the Investor Education and Protection Fund (IEPF).

Why it matters: This move brings banks in line with company law and improves the handling of dormant accounts, promoting investor protection through banking law changes.

Auditor Reforms: PSB Audit Reforms India

The Banking Laws Amendment Act 2025 empowers PSBs in India to remunerate statutory auditors, enabling them to:

• Hire skilled professionals

• Improve audit standards

• Boost transparency and accountability

These audit reforms ensure better checks on public financial institutions.

Bank Reporting Rules Change

Earlier, banks reported to the RBI weekly every Friday. Now, as per the new RBI reporting guidelines for banks in 2025, they will report:

• Fortnightly

• Monthly

• Or Quarterly

This change in RBI rules reduces the administrative burden and modernises the compliance process.

Why SSC Aspirants Should Focus on This Act

• The Banking Laws Amendment Act is highly relevant for the SSC CGL, CHSL, and Banking Awareness sections.

• Questions may arise from topics like cooperative bank governance, IEPF, bank director eligibility, and statutory audit rules for PSBs.

• It also connects with broader themes like Indian banking laws updates and the impact of banking law amendments on RBI regulation.

Key Takeaways

Final Thoughts

The Banking Laws Amendment Act 2025 represents a bold step toward modernising India’s banking legislation. By amending five major banking laws, the Act introduces greater governance, transparency, and accountability across the financial sector. The redefinition of substantial interest, alignment of cooperative bank tenures, and authority granted to remunerate statutory auditors reflect the evolving needs of the economy.

Additionally, changes like the transfer of unclaimed amounts to IEPF and revised RBI reporting timelines aim to streamline regulatory processes and protect stakeholders. These reforms not only improve operational efficiency but also align India’s banking framework with global best practices.

The Banking Laws Amendment Act is a crucial development for anyone following the trajectory of financial regulation and institutional reform in India.