Why in NEWS
Key provisions of the Banking Laws (Amendment) Act, 2025 have come into force, aiming to modernize India’s banking sector, enhance depositor protection, improve audit transparency, and bring cooperative banks under stricter oversight.
Key Terms / Concepts
| Term | Explanation |
|---|---|
| Substantial Interest | A director/officer’s major financial stake in a firm, potentially leading to conflict of interest. Limit revised from ₹5 lakh to ₹2 crore. |
| Investor Education & Protection Fund (IEPF) | A fund under the Companies Act, 2013 where unclaimed investor assets are transferred for public awareness and protection. |
| 97th Constitutional Amendment Act (2011) | Gave constitutional status to cooperative societies and included the right to form cooperatives under Article 19(1). |
Key Highlights of the Act
| Area | Provision |
|---|---|
| Laws Amended | Amends 5 key banking laws: RBI Act, Banking Regulation Act, SBI Act, Banking Companies Acts (1970 & 1980) |
| Substantial Interest Limit | Revised from ₹5 lakh to ₹2 crore to reflect current economic conditions |
| Cooperative Banks | Director tenures extended from 8 to 10 years (excluding chairpersons & whole-time directors) |
| Audit in PSBs | PSBs can set remuneration for statutory auditors—aimed at improving audit quality |
| IEPF Norms for PSBs | Unclaimed investor assets can now be transferred to IEPF like in private companies |
In a Nutshell
“SURE” Code
Stronger audit standards
Updated governance norms
Revised financial thresholds
Enhanced depositor protections
Prelims Questions
- The 97th Constitutional Amendment relates to which of the following?
(a) Panchayati Raj
(b) Cooperative societies
(c) Urban local bodies
(d) Electoral reforms - What is the revised limit for ‘substantial interest’ under the 2025 Amendment?
(a) ₹5 lakh
(b) ₹20 lakh
(c) ₹2 crore
(d) ₹5 crore - Which of the following acts is not amended under the Banking Laws (Amendment) Act, 2025?
(a) RBI Act, 1934
(b) Companies Act, 2013
(c) SBI Act, 1955
(d) Banking Regulation Act, 1949
Answer Key (Prelims)
| Q | Ans | Explanation |
|---|---|---|
| 1 | (b) | The 97th CAA gave constitutional status to cooperative societies. |
| 2 | (c) | The threshold for substantial interest is revised to ₹2 crore. |
| 3 | (b) | The Companies Act, 2013 was not amended; it’s used for parity reference. |
