135-year-old banking law gets a digital makeover: 3 key changes you need to know

The Rajya Sabha passed the Bill on August 10, after the Lok Sabha cleared it on August 5. The proposed law replaces the 135-year-old Bankers' Books Evidence Act and brings digital and cloud-based banking records within its scope.India’s banking system has moved from paper ledgers to digital records, but the law governing bank records was still based on a framework created in 1891. The new Bankers’ Books Evidence Bill, 2026, seeks to change that.The Rajya Sabha passed the Bill on August 10, after the Lok Sabha cleared it on August 5. The proposed law replaces the 135-year-old Bankers’ Books Evidence Act and brings digital and cloud-based banking records within its scope.Finance Minister Nirmala Sitharaman said the financial sector has changed significantly over the years, with the rise of NBFCs, fintech firms, payment aggregators and other financial service providers.Here are three key changes proposed under the new law. DIGITAL BANK RECORDS CAN BE USED AS EVIDENCEThe biggest change is the recognition of electronic and digital records as bankers’ books.The 1891 law was introduced at a time when banks mainly relied on physical books, ledgers and other paper records. It allowed certain records to be maintained through older forms of technology such as microfilm and magnetic tapes. The new Bill takes a much broader approach. It recognises records stored in electronic or digital form, including those kept at a bank’s own premises or at an offsite, virtual or cloud location.This means digital records of bank accounts and transactions can be relied upon as evidence in court proceedings, subject to the conditions laid down under the law.The change is important because most banking activity today happens digitally. Account statements, transaction histories and other banking information are increasingly stored and accessed electronically.BANK OFFICIALS GET PROTECTION FROM ROUTINE COURT APPEARANCESThe Bill also retains an important protection for bank officials.When a bank is not directly involved in a legal case, its officers generally cannot be forced to produce bankers’ books or appear in court simply to prove transactions recorded in those books.However, courts can still ask for records in certain situations. This could happen if there is a special reason to question the accuracy of the records or if an order to provide records for inspection has not been followed.The idea is to reduce the need for bank employees to appear repeatedly in court in cases where banking records are being used as routine evidence.LAW COULD COVER MORE FINANCIAL FIRMSAnother important provision gives the central government the power to extend the law to other financial-sector entities.This could eventually bring entities such as NBFCs, insurance companies, pension funds and other regulated financial institutions within its scope.The financial sector has become increasingly interconnected, with people using different products for savings, investments, insurance and payments. The government believes the legal framework needs enough flexibility to keep pace with these changes.If the law is extended to other entities, the government can also set specific conditions, exceptions or modifications for them.Why the change mattersThe proposed law is essentially an attempt to bring an old legal framework in line with the way banking works today.From internet banking and mobile apps to cloud-based systems and digital payments, banks now generate and store huge amounts of electronic data. Giving such records a clear legal status could make it easier to use them in court proceedings.At the same time, the wider use of digital records also brings questions around the privacy and security of customer data. As more financial information becomes accessible in legal proceedings, safeguards around how such information is accessed and used will remain important.The Bill therefore marks more than just a change in how bank records are defined. It is an effort to update a 135-year-old legal framework for a banking system that is now largely digital.- EndsPublished By: Jasmine anandPublished On: Aug 18, 2026 11:49 IST