Saturday, 24 September 2016

Banking Regulation Act, 1949

The Banking Regulation Act, 1949 is a legislation in India that regulates all banking firms in India. Initially, the law was applicable only to banking companies. But, 1965 it was amended to make it applicable to cooperative banks and to introduce other changes.



The provisions of this Act are in addition to the provisions of Companies Act, 1956 (1 of 1956 ). Below are the various section of the act:

PART I: PRELIMINARY

  • Section 1 - Short title, extent and commencement 
  • Section 2 - Application of other laws not barred
  • Section 3 - Act to apply to co-operative societies in certain cases
  • Section 4 - Power to suspend operation of Act
  • Section 5 - Interpretation
  • Section 5A - Act to override memorandum, articles, etc

PART II: BUSINESS OF BANKING COMPANIES


  • Section 6 – Form and business in which banking companies may engage
  • Section 7 - Use of words “bank”, “banker”, “banking” or “banking company”
  • Section 8 - Prohibition of trading
  • Section 9 - Disposal of non-banking assets
  • Section 10 - Prohibition of employment of Managing agents and restrictions on certain forms of employment
  • Section 10A - Board of Directors to include persons with professional or other experience
  • Section 10B - Banking company to be managed by whole time Chairman
  • Section 10BB - Power of Reserve Bank to a ppoint Chairman of the Board of Directors appointed on a whole-time basis or a Managing Director of a banking company
  • Section 10C - Chairman and certain Directors not to be required to hold qualification  shares
  • Section 10D - Provisions of sections 10A and 10B to override all other laws, contracts, etc
  • Section 11 - Requirement as to minimum paid-up capital and reserves
  • Section 12 - Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
  • Section 12A - Election of new Directors
  • Section 12B – Regulation of acquisition of shares or voting rights
  • Section 13 - Restriction on commission, brokerage, discount, etc. on sale of shares
  • Section 14 - Prohibition of charge on unpaid capital
  • Section 14A - Prohibition of floating charge on assets
  • Section 15 - Restrictions as to payment of dividend
  • Section 16 - Prohibition of common Directors
  • Section 17 - Reserve Fund
  • Section 18 - Cash reserve
  • Section 19 - Restriction on nature of subsidiary companies
  • Section 20 - Restrictions on loans and advances
  • Section 20A - Restrictions on power to remit debts
  • Section 21 - Power of Reserve Bank to control advances by banking companies
  • Section 21A - Rates of interest charged by banking companies not to be subject to scrutiny by courts
  • Section 22 - Licensing of banking companies
  • Section 23 - Restrictions on opening of new, and transfer of existing, places of business
  • Section 24 - Maintenance of a percentage of assets
  • Section 25 - Assets in India
  • Section 26 - Return of unclaimed deposits
  • Section 26A - Establishment of Depositor Education and Awareness Fund
  • Section 27 - Monthly returns and power to call for other returns and information
  • Section 28 - Power to publish information
  • Section 29 - Accounts and balance-sheet
  • Section 29A - Power in respect of associate enterprises
  • Section 30 - Audit
  • Section 31 - Submission of returns
  • Section 32 - Copies of balance-sheets and accounts to be sent to registrar
  • Section 33 - Display of audited balance-sheet by companies incorporated outside India
  • Section 34 - Accounting provisions of this Act not retrospective
  • Section 34A - Production of documents of confidential nature
  • Section 35 - Inspection
  • Section 35A - Power of the Reserve Bank to give directions
  • Section 35B - Amendments of provisions relating to appointments of Managing  Directors, etc., to be subject to previous approval of the Reserve Bank
  • Section 36 - Further powers and functions of Reserve Bank
  • Section 36A - Certain provisions of the Act not to apply to certain banking companies

PART IIA: CONTROL OVER MANAGEMENT


  • Section 36AA - Power of Reserve Bank to remove managerial and other persons from office
  • Section 36AB - Power of Reserve Bank to appoint additional Directors
  • Section 36AC - Part IIA to override other laws

PART IIAB: SUPERSESSION OF BOARD OF DIRECTORS OF BANKING COMPANY


  • Section 36ACA - Supersession of Board of Directors in certain cases

PART IIB: PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES


  • Section 36AD - Punishments for certain activities in relation to banking companies

PART IIC: ACQUISITION OF THE UNDERTAKINGS OF BANKING COMPANIES IN CERTAIN CASES


  • Section 36AE - Power of Central Government to acquire undertakings of banking companies in certain cases
  • Section 36AF - Power of the Central Government to make scheme
  • Section 36AG - Compensation to be given to shareholders of the acquired bank
  • Section 36AH - Constitution of the Tribunal
  • Section 36AI - Tribunal to have powers of a civil court
  • Section 36AJ - Procedure of the Tribunal

PART III: SUSPENSION OF BUSINESS AND WINDING-UP OF BANKING COMPANIES


  • Section 36B - High Court defined
  • Section 37 - Suspension of business
  • Section 38 - Winding up by High Court
  • Section 38A - Court liquidator
  • Section 39 - Reserve Bank to be official liquidator
  • Section 39A - Application of Companies Act to liquidators
  • Section 40 - Stay of proceedings
  • Section 41- Preliminary report by official liquidator
  • Section 41A - Notice to preferential claimants and secured and unsecured creditors
  • Section 42 - Power to dispense with meetings of creditors, etc
  • Section 43 - Booked depositors' credits to be deemed proved
  • Section 43A - Preferential payments to depositors
  • Section 44 - Powers of High Court in voluntary winding up
  • Section 44A - Procedure for amalgamation of banking companies
  • Section 44B - Restriction on compromise or arrangement between banking company and creditors
  • Section 45 - Power of Reserve Bank to apply to Central Government
  • for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation

PART IIIA: SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS


  • Section 45A - Part III A to override other laws
  • Section 45B - Power of High Court to decide all claims in respect of banking companies
  • Section 45C - Transfer of pending proceedings
  • Section 45D - Settlement of list of debtors
  • Section 45E - Special provisions to make calls on contributories
  • Section 45F - Documents of banking company to be evidence
  • Section 45G - Public examination of Directors and auditors
  • Section 45H - Special provisions for assessing damages against delinquent Directors, etc
  • Section 45I - Duty of Directors and officers of banking company to assist in the realisation of property
  • Section 45J - Special provisions for punishing offences in relation to banking companies being wound up
  • Section 45K - Power of High court to enforce schemes of arrangements, etc
  • Section 45L - Public examination of Directors and auditors, etc., in respect of a banking company under schemes of arrangement
  • Section 45M - Special provisions for banking companies working under schemes of arrangement at the commencement of the Amendment Act
  • Section 45N - Appeals
  • Section 45O - Special period of limitation
  • Section 45P - Reserve Bank to tender advice in winding up proceedings
  • Section 45Q - Power to Inspect
  • Section 45R - Power to call for returns and information
  • Section 45S - Chief Presidency Magistrate and District Magistrate to assist official liquidator in taking charge of property of banking company being wound up
  • Section 45T - Enforcement of orders and decisions of High Court
  • Section 45U - Power of High Court to make rules
  • Section 45V - References to Directors, etc., shall be construed as including references to past Directors, etc
  • Section 45W - Part II not to apply to banking companies being wound up
  • Section 45X - Validation of certain proceedings

PART IIIB: PROVISIONS RELATING TO CERTAIN OPERATIONS OF BANKING COMPANIES


  • Section 45Y - Power of Central Government to make rules for the preservation of       records
  • Section 45Z - Return of paid instruments to customers
  • Section 45ZA - Nomination for payment of depositors' money
  • Section 45ZB - Notice of claims of other persons regarding deposits not receivable
  • Section 45ZC - Nomination for return of articles kept in safe custody with banking company
  • Section 45ZD - Notice of claims of other persons regarding articles not receivable
  • Section 45ZE - Release of contents of safety lockers
  • Section 45ZF - Notice of claims of other persons regarding safety lockers not receivable

PART IV: MISCELLANEOUS


  • Section 46 - Penalties
  • Section 46A - Chairman, Director, etc., to be public servants for the purposes of Chapter IX of the Indian Penal Code
  • Section 47 - Cognizance of offences
  • Section 47A - Power of Reserve Bank to impose penalty
  • Section 48 - Application of fines
  • Section 49 - Special provisions for private banking companies
  • Section 49A - Restriction on acceptance of deposits withdrawable by cheque
  • Section 49B - Change of name by a banking company
  • Section 49C - Alteration of memorandum of a banking company
  • Section 50 - Certain claims for compensation barred
  • Section 51 - Application of certain provisions to the State Bank of India and other notified banks
  • Section 52 - Power of Central Government to make rules
  • Section 53 - Power to exempt in certain cases
  • Section 54 - Protection of action taken under the Act
  • Section 55 - Amendment of Act 2 of 1934
  • Section 55A - Power to remove difficulties

PART V: APPLICATION OF THE ACT TO CO-OPERATIVE BANKS


  • Section 56 - Act to apply to co-operative societies subject to modifications
  • Schedule I - FIRST SCHEDULE
  • Schedule II - SECOND SCHEDULE
  • Schedule III - THIRD SCHEDULE
  • Schedule IV - FOURTH SCHEDULE
  • Schedule V - FIFTH SCHEDULE


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