New banking rules will affect SBI, PNB, and unclaimed deposits, making it important for Indian expats in the UAE to stay updated.
Dubai: If you’re an Indian expat in the UAE with bank accounts, investments, or fixed deposits in India, several banking rule changes that came into effect from August 1 could affect how your money and investments are managed.
The changes are part of the Banking Laws (Amendment) Act, 2025, which introduces reforms aimed at strengthening bank governance, improving transparency, and protecting investors and depositors. The provisions apply to public sector banks, including the State Bank of India (SBI), as well as cooperative banks.
What’s Changing?
One of the key changes is the revision of the definition of “substantial interest.” The threshold has been increased from ₹5 lakh to ₹2 crore, the first revision since 1968. The government says the update better reflects today’s economic conditions and strengthens governance standards within the banking sector.
The Act also allows public sector banks to transfer unclaimed shares, unpaid dividends, and unclaimed bond redemption amounts to the Investor Education and Protection Fund (IEPF), bringing them in line with the rules already followed by companies under the Companies Act. Investors can still recover these assets through the IEPF claim process, but they will no longer be handled directly by the bank once transferred.
Another reform changes how statutory auditors are appointed and compensated at public sector banks. The amendments allow banks to offer remuneration to auditors, a move intended to attract experienced audit professionals and improve audit quality and oversight.
For cooperative banks, the maximum tenure of directors, excluding the chairperson and whole-time director, has been increased from eight years to ten years, aligning the sector with constitutional provisions governing cooperative institutions.
Why It Matters for NRIs
For Indian expatriates in the UAE, the biggest practical impact relates to inactive investments.
If you own shares in a public sector bank or have unclaimed dividends or bond redemption proceeds that have remained untouched for several years, those amounts could eventually be transferred to the IEPF under the new framework. While the money is not forfeited, reclaiming it requires submitting an application through the IEPF process rather than approaching the bank directly.
The reforms are also expected to improve governance and transparency across public sector banks, providing greater confidence for customers maintaining NRE, NRO, savings accounts, or fixed deposits in India.
What About Unclaimed Bank Deposits?
It’s important to distinguish between bank deposits and investor assets.
Unclaimed bank deposits continue to be governed by the Reserve Bank of India’s Depositor Education and Awareness (DEA) Fund rules. Under existing RBI regulations, deposits that remain inoperative or unclaimed for 10 years are transferred to the RBI’s DEA Fund, not the IEPF. Banks have also been instructed to make it easier for customers to reactivate such accounts by allowing KYC updates at all branches, through video KYC, and, where applicable, via authorized business correspondents.
What Should UAE-Based NRIs Do?
If you have financial assets in India, it is worth reviewing them to ensure nothing has been left inactive.
Check that your bank accounts, fixed deposits, and investment records are up to date, verify nominee details, and ensure dividends or bond proceeds are being credited correctly. If you have old investments or dormant accounts, contacting your bank or registrar now may help avoid a more complicated recovery process later.
The August 1 reforms are primarily aimed at strengthening governance, improving audit standards, and protecting investors. For NRIs, they also serve as a timely reminder to review long-forgotten financial assets and ensure important records remain current.
Source: Gulf News
