New Delhi, Dec 4 (NationPress) The recently enacted Banking Laws (Amendment) Act, 2025 marks a significant advancement in enhancing governance standards within the banking sector. This legislation aims to ensure consistency in reporting by banks to the Reserve Bank of India while also elevating the quality of audits in public sector banks, as stated by an official announcement.

The new act significantly boosts protection for depositors and investors by facilitating customer convenience through enhanced nomination options, as indicated in the official breakdown.

A substantial sum remains unclaimed in banks due to the absence of recorded nominees. The new regulations are designed to expedite this process by allowing for quicker claim settlements and improved access for families.

Depositors are now allowed to nominate up to four individuals for their bank accounts through simultaneous or successive nominations. Simultaneous nominations permit percentage-wise distributions that total 100%, while successive nominations ensure a smooth transition of responsibilities in the event of a nominee's death for items in safe custody and lockers.

The tenure of directors has been extended from 8 to 10 years, while the tenure for directors in other banking entities remains unchanged. This new legislation aligns co-operative banks with the 97th Constitutional Amendment, which mandates democratic governance and enhances their role within the nation's political and economic framework.

Moreover, the reforms grant public sector banks the authority to determine auditors' remuneration, enabling them to attract more skilled professionals and enhance audit quality by offering competitive salaries.

Banks are also now authorized to transfer unclaimed shares, interest, and bond redemption amounts to the Investor Education and Protection Fund (IEPF), aligning them with practices established under the Companies Act.

Recent times have seen an increased reliance on the banking system by households, with the government seeking to provide financial services to the large, previously underserved population, thereby unlocking the country's growth potential. To keep up with the growing complexity as financial inclusion expands and banking access broadens nationwide, it is essential to minimize manual tasks, align operations with industry standards and technology, and adjust statutory deadlines for improved compliance, according to the statement.

The Banking Amendment Act, 2025 has been implemented in the context of rapid digital advancement and changing financial challenges. These provisions are designed to clarify asset succession, facilitating smoother transfers of assets for both banks and depositors, while minimizing disputes and reducing the necessity for judicial intervention.

The new laws are intended to create standardized terminology to streamline regulatory compliance and ease the adaptation to emerging technologies within the banking landscape. Additionally, they revise statutory deadlines to align with accounting cycles, thereby reducing manual workloads, encouraging automation, and enhancing overall systemic efficiency, the statement concluded.