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The Banking Laws (Amendment) Act , 2025 was implemented on August 1, 2025 , raising the "substantial interest" threshold from the previous ₹5 lakh limit (which was in place since 1968) to ₹2 crore .
The revision was made to modernize governance standards and reflect current economic realities and inflation . A "substantial interest" designation triggers stricter regulatory oversight and conflict-of-interest checks for bank directors and their relatives .The updated higher threshold ensures that this heightened scrutiny is applied only to individuals who hold a genuinely material financial stake , thereby reducing unnecessary compliance burdens on minor shareholders .
