The Banking Laws (Amendment) Act, 2025, introduces wide-ranging changes to India's core banking statutes. These changes simplify compliance, modernise reporting timelines, and bring customer-facing systems in line with evolving expectations. Institutions—especially public and cooperative banks—will need to make policy and system-level adjustments across governance, reporting, nominations, and asset handling. Here is a practical breakdown of what the amendments say, what they mean for the industry, and the challenges that may arise during implementation.
RBI Act Amendment: Reporting Now Follows Calendar-Based Fortnights
What changed:
Banks must now report as of the last day of a calendar fortnight, instead of alternate Fridays. The reporting window has also been shortened from seven to five days. The special return required on the last Friday of the month has been removed.
Why this matters:
This shift aligns statutory deadlines with internal accounting cycles. For compliance teams, this is an opportunity to reduce manual work and integrate regulatory filings into automated MIS pipelines. Banks that rely on staggered timelines across functions will need to recalibrate internal processes to ensure timely fortnight-end reconciliation and submissions.
Implementation challenges:
Transitioning to the new reporting schedule may strain banks' existing systems and processes, especially for smaller institutions with limited technological infrastructure. Ensuring data accuracy within the shortened reporting window could pose difficulties, potentially leading to compliance issues.
Banking Regulation Act: Thresholds Raised, Terms Extended, and Language Standardised
What changed:
The financial threshold for classifying “substantial interest” has been raised to ₹2 crore or 10% of paid-up capital. Director tenure in cooperative banks has been extended to ten years. Reporting terms like “alternate Friday” have been replaced with exact calendar references (e.g., “last day of the month” or “last day of the quarter”).
Why this matters:
These changes modernise governance and compliance benchmarks in line with industry scale and technology. Institutions must revisit board appointment policies and shareholding disclosures. The uniform terminology makes compliance programming easier, particularly in banks transitioning to rule-based filing systems.
Implementation challenges:
Updating internal policies and ensuring all stakeholders are aware of the new thresholds and terms may require significant effort. Training and communication will be essential to prevent misunderstandings and ensure smooth adoption of the changes.
Depositor Nomination Rules: Four Nominees Permitted with Clear Priority Framework
What changed:
Customers can now name up to four nominees—either all at once or one after the other. In the case of successive nominations, rights pass strictly in the order listed. Simultaneous and successive nominations cannot overlap.
Why this matters:
This significantly improves asset succession clarity for both banks and depositors. Legal teams must update account opening forms, nominee declarations, and claims workflows. Branch staff will need training to explain nomination structures to customers. From a risk lens, the clarity reduces the likelihood of post-mortem disputes and judicial interventions.
Implementation challenges:
Modifying existing systems to accommodate multiple nominees and ensuring that staff are adequately trained to handle the new nomination structures could be resource-intensive. Additionally, educating customers about the changes will be crucial to prevent confusion.
SBI Act: Unclaimed Money Must Be Transferred to IEPF After Seven Years
What changed:
SBI must transfer any unclaimed funds—such as dividends, interest, redemptions, or shares—to the Investor Education and Protection Fund (IEPF) if they remain untouched for seven years. It can now fix auditor remuneration independently.
Why this matters:
SBI will need stronger dormant account tracking and customer notification systems. From a governance perspective, delinking auditor fee decisions from RBI/Central Government is a vote of institutional maturity—but it also increases the responsibility of board audit committees to justify compensation frameworks. This realignment strengthens the broader movement toward financial autonomy within regulatory bounds.
Implementation challenges:
Establishing robust mechanisms to identify and manage unclaimed funds will require investment in technology and processes. Ensuring compliance with the transfer requirements to the IEPF may also necessitate coordination across various departments within the bank.
Nationalised Banks: Auditor Eligibility and Asset Transfers Aligned with SBI
What changed:
Nationalised banks must now ensure their auditor appointments meet Companies Act, 2013 standards. Like SBI, they are also required to transfer unclaimed assets to the IEPF after seven years.
Why this matters:
The amendments create consistency in audit eligibility and unclaimed asset treatment across public sector banks. This helps banks anticipate compliance expectations under the MCA framework, harmonising audit governance across financial and corporate domains. Legal and audit functions must align on qualification thresholds, documentation, and timelines for unclaimed asset tracking.
Implementation challenges:
Aligning auditor appointments with the Companies Act standards may limit the pool of eligible auditors, potentially increasing costs. Additionally, managing the transfer of unclaimed assets to the IEPF will require meticulous record-keeping and coordination.
In Closing: Internalising Reform Before It Turns to Risk
The 2025 amendments are a shift toward simplicity, uniformity, and legal clarity—but they also signal the regulatory expectation that compliance should now be frictionless and technology-driven. For banks and financial institutions, the time to update policy manuals, reporting systems, and customer-facing processes is now.
Leadership teams that act early will not only reduce compliance risk but also improve operational agility and customer trust. The amendments are not merely legislative—they are invitations to strengthen the institution from within.
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