PSBs to Transfer Unclaimed Shares to IEPF from Aug 1

New Delhi, Jul 30 (PTI) The government has notified amendments to the Banking Laws (Amendment) Act, 2025 which allows Public sector banks (PSBs) 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.

The amendments also empower PSBs to offer remuneration to statutory auditors, facilitating the engagement of high-quality audit professionals and enhancing audit standards, the Finance Ministry said in a statement on Wednesday.

Besides, the gazette notification dated July 29, 2025 has also enhanced the threshold of 'substantial interest' from Rs 5 lakh to Rs 2 crore.

The threshold of 'substantial interest' has been amended after 1968.

Additionally, it said, the notification aligns director tenures in cooperative banks with the 97th Constitutional Amendment by increasing the maximum tenure from 8 years to 10 years, excluding the chairperson and whole-time director.

These amendments would come into effect from April 1, 2025, it said.

The implementation of these provisions marks a significant step towards strengthening the legal, regulatory, and governance framework of the Indian banking sector, it said.

The Banking Laws (Amendment) Act, 2025 was notified on April 15 2025, containing a total of 19 amendments across five legislations — the Reserve Bank of India Act, 1934, Banking Regulation Act, 1949, State Bank of India Act, 1955 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980.

The Banking Laws (Amendment) Act, 2025 seeks to improve governance standards in the banking sector, ensure enhanced protection for depositors and investors, improve audit quality in public sector banks, and increase the tenure of directors (other than the chairperson and whole-time directors) in cooperative banks.