Banking Laws (Amendment) Bill 2025: Enhancing Depositor Rights And Banking Governance

Komal Bajpai

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Updated: 23-07-2025 at 3:32 PM

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The Parliament of India took steps to update banking systems when it passed the Banking Laws (Amendment) Bill 2025. This legislation brings important updates to make banks more customer-friendly while improving bank management practices. New banking rules now permit more types of nominees for account holders and adjust what qualifies as significant stake ownership in banking organisations.

Key Provisions Of The Banking Laws (Amendment) Bill 2025

Under this Bill, the law for banks experiences many important updates in its operations.

Multiple Nominations for Depositors

Depositors now have the option to designate any four people as their account nominees, which is double the previous permission for just one nominee. Bank clients will find money transfers to beneficiaries after their death easier to process thanks to this modification, which has improved during the COVID-19 pandemic.

Nomination Modes:

Depositors have the option to divide their account balance into particular percentages assigned to each nominee for balanced fund disbursement.
Nominators name one main candidate who will get funds first, and additional regarded nominees in sequence when the main nominee cannot accept the money.

Redefinition of 'Substantial Interest'

The Bill updates the substantial interest rule for banking companies by increasing the financial limit from ₹5 lakh to ₹2 crore. The Bill's new figure takes into account the economic evolution since 1963 to show who owns important amounts of capital in financial institutions.

Also Read: India Revises MPs' Salary And Pension By 24%

Implications For Depositors And The Banking Sector

The updates included in the Banking Laws (Amendment) Bill 2025 will be relevant for a wide range of issues:

Improved Control for Depositors: The newfound ability for depositors to appoint multiple nominees will afford depositors significant control of their financial assets and will limit the ability for trust disputes among beneficiaries.
Enhanced Regulatory Norms: The new definition and understanding of ‘substantial interest’ will serve as a basis for improving the regulatory norms of banking and will present more transparency and accountability.

Also Read: Parliament Passes Amendments To Disaster Management Act

Opposition And Calls For Further Scrutiny

Despite the Bill's passage, some opposition members have expressed concerns:

No Digital Security: Some critics have argued that the Bill does not adequately address the need for adequate digital security, have expressed the need for consumer protections in a digital environment.
More Review: Similarly, there have been opposition members who have stated that a further review of the Bill is necessary because there needs to be a deeper look at some issues to institute effective change to banking.

Conclusion

A fundamental progress toward banking reform in India comes from the Banking Laws (Amendment) Bill 2025, which protects depositors' rights and modernises banking governance standards. Despite the positive changes from introducing multiple nominees and changes to the 'substantial interest' definition, there exists a need for continuous discussions to handle upcoming challenges in banking practices.

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