banking law and regulations, group-5
Post on 05-Apr-2018
216 Views
Preview:
TRANSCRIPT
-
7/31/2019 Banking Law and Regulations, Group-5
1/23
1
Banking Law and
RegulationsBy
MODERATORSFMS-FSM
-
7/31/2019 Banking Law and Regulations, Group-5
2/23
-
7/31/2019 Banking Law and Regulations, Group-5
3/23
3
The laws related to the banking
The Banking Regulations Act, 1949 The Reserve Bank of India Act, 1934 The Negotiable Instruments Act, 1881 The Companies Act, 1956
Indian Contract Act, 1872 Information Technology Act, 2000 Limitation Act,1963, Stamp Act, 1899, Registration Act, 1908 Transfer of Property Act, 1882 Sale of Goods Act,1930 The Consumer Protection Act, 1986 Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 The Prevention of Money Laundering Act, 2002 The Competition Act, 2002
-
7/31/2019 Banking Law and Regulations, Group-5
4/23
4
Banking Regulation Act,1949
Definition
Banking accepting for the purpose of lending or
investment, of deposits of money from the public,repayable on demand or otherwise, and withdrawal by
cheques, draft, order or otherwise
Banking Company any company which transacts the
business ofbanking in India
-
7/31/2019 Banking Law and Regulations, Group-5
5/23
5
Activities of the Banking Company
Borrowing
Raising
Lending
Advancement Bill of Exchange
Bill of Lading
Promissory notes Transfer of Securities
Letters of Credit continued.
-
7/31/2019 Banking Law and Regulations, Group-5
6/23
6
Activities of the Banking Companycontinued.
Exchange of Foreign
currency
Underwriting and dealing with shares and stocks
Bonds
Deposits
Safe lockers
Transmitting money etc
-
7/31/2019 Banking Law and Regulations, Group-5
7/23
7
Other activities
Acting as agent of the government or localauthority
Clearing and forwarding goods
Contracting public loans and negotiating andissuing the same
Managing and selling of property Undertaking and executing the trusts
-
7/31/2019 Banking Law and Regulations, Group-5
8/23
8
Other activities
continued..
Carrying and transacting every kind of guaranteeand indemnity
Administration of estates
Supporting and aiding associations , institutionsetc
Constructions and acquisition of the propertyAll business which is incidental to the banking
business
-
7/31/2019 Banking Law and Regulations, Group-5
9/23
9
Businesses Prohibited for the Banks
No banking company shall directly or indirectly deal in the buying
and the selling or bartering of goods except in connection with the
realization of the security given to be held by it, To engage in any trade, or buy, sell or barter goods for others
otherwise than in connection with the bills of exchange received for
collection or negotiation..
It can have a subsidiary company as specified under the BR Act,1949
-
7/31/2019 Banking Law and Regulations, Group-5
10/23
10
Licensing of the Banking Companies
RBI will issue license to the banking company- after
satisfying the conditions specified under the BR Act
If the company is incorporated outside India- RBI has
to inspect the books of the company or be satisfied
with the functioning of the company,
This should be in the interest of the public or meet the
law of the country in which it is to be incorporated
without any discrimination to the foreign banks
-
7/31/2019 Banking Law and Regulations, Group-5
11/23
11
Cancellation of the Licenses
If the company ceases to carry on banking business in India
If the company fails to comply with any of the conditions
imposed under the BR Act
If at any time the conditions have been fulfilled or followed
Branches
Branches can be opened with the prior permission
of the RBI
NOTE :-The banking company may be Indian or Foreign
-
7/31/2019 Banking Law and Regulations, Group-5
12/23
12
Restrictions on Loans and Advances
No banking company can grant any loans or advanceson the security of its own shares
Enter into any commitment for granting any loan oradvance to or on behalf ofi) any of its directors
ii) any firm of which its directors is interested as partner, manager employee
or guarantor
iii) any company ( if it is not a subsidiary) where the director of the banking
company is a director, managing agent etc
iv) any individual in respect of whom any of its directors is a partner or
guarantor.
-
7/31/2019 Banking Law and Regulations, Group-5
13/23
13
Return and Inspection
Every banking company to submit a return
monthly statement to the RBI, showing its assets
and liabilities (last Friday of the month)
TheRegional Ruralbanks have to submit a copy
of the return to thesponsoring bank, which willin turn submit to the RBI
-
7/31/2019 Banking Law and Regulations, Group-5
14/23
14
Management of Banking Company
51% of directors to have special and practicalknowledge of banking, accountancy, agriculture andrural economy, co-operation, economics, finance, law,small scale industries, or any other subject as the RBI
considers to be useful to banking. The directors shall not have substantial interest as an
employee, managing director or managing agent, in anycompany (Section 25)
If they do not fulfill the criteria, RBI can ask toreconstruct the constitution of the board, if thedirection is not followed , RBI can remove thedirector's and appoint a suitable person.
-
7/31/2019 Banking Law and Regulations, Group-5
15/23
15
Directors and Chairman
Any director cannot be in office continuously for more than for
8 yrs.
Whole time director/chairman cannot be reappointed as directorfor the next 14 years.
A person being a director in a banking company is barred from
directorship in any other banking company.
NOTE :- Directors appointed by the RBI are exempted from
this rule.
-
7/31/2019 Banking Law and Regulations, Group-5
16/23
16
The Reserve Bank of India Act, 1934
Central Bank of India
Nationalized in the year 1948
It functions as a central bank, with supervisorycontrol of banks and promotional banking
Is also acts as a banker to the central and state
governments
It issues bank notes of all denominations
-
7/31/2019 Banking Law and Regulations, Group-5
17/23
17
It transacts the government business by
carrying out the functions such as:
Maintaining cash balances
Receiving and making payments for the government
Managing public debt Providing ways and means advances to government for
90 days
Advises government on floating loans and legislationthat affect banking.
-
7/31/2019 Banking Law and Regulations, Group-5
18/23
18
Bankers bankand Lender of Last Resort
Schedule banks to borrow from the RBI, based on the eligiblesecurities
To obtain financial accommodation by rediscounting their billsof exchange
It has a supervisory power on other banks, it regulates thevolume of credit generated by banks and it also makes theselective credit control mechanism.
Margin of interest rate in specific category of advances The volume of credit is normally controlled through the
regulatory instruments of bank rate( is the rate of interest at
which the RBI rediscounts the first class bills of exchange ofcommercial banks or other eligible paper) open marketoperations and variable cash reserves.
It has a control, over the interest rate on deposits and advancesby banks
-
7/31/2019 Banking Law and Regulations, Group-5
19/23
19
Computation of Statutory Liquidity Ratio
( S.L.R)
For Computation of statutory Liquidity Ratio the assets are:
Cash in hand ( India)
Balance in current account Balance with the RBI over the minimum reserve requirement
Investment in government securities, treasury bills and othersecurities
But this excludes the borrowings from the RBI against approvedsecurities
As per the provisions of the BR, Act of 1949 the RBI has thesupervision over the management of banks
-
7/31/2019 Banking Law and Regulations, Group-5
20/23
20
CRR
It is another regulatory ratio imposed by the RBI
It is the minimum cash to be maintained as percentage
against demand deposits and time deposits
Reduction in the CRR will stimulate more cash for the
banks to stimulate credit expansion
It fixed the percentage of the CRR It does fix the CRR for the NBFC also.
-
7/31/2019 Banking Law and Regulations, Group-5
21/23
21
Other supervisory powers
A New department called Department of BankingSupervision (DBS) has been set up.
It has been set up with a purpose to undertake offsitesupervision
It receives statutory returns which are presented by thebranches for submission to the RBI
It controls the Foreign Exchange management as acontroller and deals with buying and selling of foreign
exchange Foreign reserve position and exchange stability position
also are dealt by the RBI
-
7/31/2019 Banking Law and Regulations, Group-5
22/23
22
-
7/31/2019 Banking Law and Regulations, Group-5
23/23
23
top related