New Delhi, Dec 4 (IANS) The new Banking Laws (Amendment) Act, 2025, notified recently by the government, is a step towards strengthening governance standards in the banking sector by ensuring uniformity in reporting by banks to the Reserve Bank of India, along with improved audit quality in public sector banks, an official statement said.
The act also enhances depositor and investor protection by promoting customer convenience through improved nomination facilities, according to the official explainer.
A huge amount lies across banks, as unclaimed deposits, often because no nominee was recorded. The new rules are targeted to cut this delay by ensuring smoother claim settlements and faster access for families.
Depositors can now nominate up to four persons for their bank accounts via either simultaneous or successive nominations. Simultaneous nominations allow percentage-wise allocation totalling 100 per cent. Successive nominations ensure seamless succession in case of a nominee’s death for articles in safe custody and lockers.
The maximum tenure of directors has been increased from 8 to 10 years. Tenure for directors in other banking companies remains unchanged. The new laws align co-operative banks with the 97th Constitutional Amendment, which mandates democratic governance and elevates their status in the country’s political and economic framework.
The reforms empower public sector banks to fix auditors’ remuneration, which will enable them to attract more qualified professionals and improve audit quality by paying better salaries to auditors.
Banks have also been permitted to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), bringing them in line with practices followed by companies under the Companies Act.
Household reliance on the banking system has intensified in recent times, with the government aiming to extend financial services to the large hitherto unserved population of the country to unlock its growth potential. In order to keep pace with the rising complexity as financial inclusion deepens and access to banking expands nationwide, it becomes essential to reduce manual work, match operations with industry scale and technology and shift statutory deadlines for better compliance, the statement said.
The Banking Amendment Act, 2025, has been introduced amid rapid digital growth and evolving financial challenges. The provisions will help to gain clarity in asset succession for smoother transfer of assets for both banks and depositors, minimising disputes and reducing the need for judicial intervention.
The new laws ensure uniform terminology to streamline regulatory compliance and facilitate adaptation to emerging technologies within the banking ecosystem. They also revise statutory deadlines aligned with accounting cycles to reduce manual workload, promote automation, and strengthen systemic efficiency, the statement added.
–IANS
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