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      Question

      Following the Banking Laws (Amendment) Act, 2025, the

      monetary threshold in the definition of “substantial interest” in relation to a company under Section 5(ne) was revised. The paid-up value of shares held that triggers “substantial interest” (or ten per cent of the paid-up capital, whichever is less) now stands at:
      A Five lakh rupees Correct Answer Incorrect Answer
      B One crore rupees Correct Answer Incorrect Answer
      C Fifty lakh rupees Correct Answer Incorrect Answer
      D Two crore rupees, or such other amount as may be notified by the Central Government Correct Answer Incorrect Answer
      E Ten lakh rupees Correct Answer Incorrect Answer

      Solution

      Section 3 of the Banking Laws (Amendment) Act, 2025 (Act 16 of 2025), with effect from 1 August 2025, substituted “five lakhs of rupees” in Section 5(ne) with “two crore rupees or such other amount as may be notified in the Official Gazette by the Central Government.” Accordingly, in relation to a company, “substantial interest” means the holding of a beneficial interest by an individual or spouse or minor child, whether singly or together, in shares on which the paid-up amount exceeds two crore rupees (or the notified amount) or ten per cent of the company’s paid-up capital, whichever is less. The upward revision modernises a long-outdated threshold and ties it to a notifiable, flexible figure.

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