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BANKING LAW

Semesters: Sem. VIII Course Teacher: Dr. Ajay Kumar

Objectives of the Course

Banks and the banking system evolved into a vital socio-economical institution in the

modern age. This has been largely influenced by the socio-political and economic

changes that have been witnessed at large.

As a developing State India has been influenced by these developments leading to the

evolutionary effect on banking structure, policies, patterns and practice. A study of these

developments reveals the development from banking as a generic entity to specialized

one. One could quote commercial banks, cooperative banks, development banks as a

paradigm.

The evolutionary process still continues with the global phenomenon of liberalization.

This has witnessed the entry of foreign banking companies in the Indian market leading

to a deviation in the banking policy. Moreover new means such as e-banking and e-

commerce has made it essential that the Indian legal system adopt new modus operandi

to cope with the modern scenario.

In a backdrop of the above scene the course is designed to enlighten the students with

- the conceptual and legal parameters including the judicial interpretation of

banking law.

- new and emerging dimensions in banking system including e-commerce and

e-banking.

- an abridged comparative analysis of a few banking systems in the World –

specifically Swiss banking, US banking and EU banking

Contents

Module 1: Introduction

i. Nature and development of banking

ii. History of banking

iii. Functions of banks

iv. Formation of Banks

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v. Different Kinds of Banks

vi. Regulation of Banks

Module 2: Social control

i. Nationalization

ii. Development – private ownership, nationalization and disinvestment

iii. Protection of depositors

iv. Priority lending

v. Promotion of underprivileged classes

Module 3: The relationship between Banks and their Customer

i. “Customer” defined

ii. Legal character of Banker- Customer relationship

iii. Rights and obligations of Banks

Right to set-up, Banker’s lien, Confidentiality

iv. Various Accounts

Current, Joint, Deposit, Trust

v. Special cases

Lunatics, Minors, Agents, Administrators and Executors, Partnership firms,

Companies

Module 3: Law and the Banking Companies in India

(Banking Regulation Act, 1949)

i. Regulation by Government and the respective agencies

ii. On Management

iii. On Account and Audit

iv. On Money Lending

v. Lending/ Credit policy

vi. Control by Ombudsman

Module 4: Lending by Banks

i. Principles of ‘good banking’

ii. Securities for advances

iii. Debt recovery tribunal

Module 6: Control Banking Theory and the Reserve Bank of India (RBI)

i. Evolution of RBI

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Characteristics/ functions/ Economic/social objectives

ii. Why it is the banker’s bank?

Central Bank, Functions, Regulation of money/s and monetary mechanism –

Domestic and foreign currency, Credit control, Exchange control, Fixation of bank

rate policy formulation

iii. Control over

Financial companies, Non-financial companies

Module 7: The Legal scenario

i. The Reserve Bank of India Act, 1934

ii. The Negotiable Instruments Act, 1882

Negotiable Instruments, Promissory Notes, Cheques, Endorsement, What is sec 138

and sec 152 of the act? Meaning and kinds, Transfer and negotiations, Holder and

holder in due course, Penalties – the criminal and civil aspect

iii. Information Technology Act, 2000 in regards to e-commerce and e-banking

Module 8: A comparative analysis of International Banking with Indian banking

Swiss banking, US banking, EU banking

Module 9: The future of Indian banking

ESSENTIAL READING AND REFERENCE SOURCING

Basu, A. Review of Current Banking Theory and Practice (1998) Mac millan

M. Hapgood (ed.), Pagets’ Law of Banking (1989) Butterworths, London

R. Goode, Commercial Law, (1995) Penguin, London

Ross Cranston, Principles of Banking Law (1997) Oxford.

L.C. Goyle, The Law of Banking and Bankers (1995) Eastern

M.L. Tannan, Tannan’s Banking Law and Practice in India (1997) India Law House,

New Delhi,2 volumes

K.C. Shekhar, Banking Theory and Practice (1998) UBS Publisher Distributors Ltd. New

Delhi.

M. Dassesse, S. Isaacs and G. Pen, E.C. Banking Law, (1994) Lloyds of London Press,

London

V. Conti and Hamaui (eds.), Financial Markets’ Liberalization and the Role of Banks’,

Cambridge University Press, Cambridge, (1993)

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J.Dermine (ed.), European Banking in the 1990s’ (1993) Blackwell, Oxford.

C. Goodhart, The Central Bank and the Financial System (1995); Macmillan, London

S. Chapman, The Rise of Merchant Banking (1984) Allen Unwin, London

K. Subrahmanyan, Banking Reforms ain India (1997) Tata Maigraw Hill, New Delhi.

Subodh Markandeya and Chitra Markandeye, Law Relating to Foreign Trade in India:

Being a Commentary on the Foreign Trade, (Development and Regulation) Act 1992,

Universal Law Publishing Co. Pvt. Ltd. Delhi.

R.S. Narayana, The Recovery of Debts due to Banks and Financial Institutions Act, 1993

(51 of 1993), Asia Law House, Hyderabad.

M.A. Mir, The Law Relating to Bank Guarantee in India (1992), Metropolitan Book,

New Delhi.

Anthony Pierce, Demand Guarantees in International Trade (1993) Sweet & Maxwell,

Ross Cranston (ed.) European Banking Law: The Banker-Customer Relationship (1999)

LLp, London

Mitra, The Law Relating to Bankers’ Letters of Credit and Allied Laws (1998) University

Book Agency, Allahabad.

R.K. Talwar, Report of Working Group on Customer Service in Banks

Janakiraman Committee Report on Securities Operation of Banks and Financial

Institution (1993)

Narasimham Committee report on the Financial System (1991) – Second Report (1999)

Note: This syllabus is subject to changes. Appropriate cases and acts will be discussed

during the lectures. If necessary additional information on reading and reference sourcing

will be provided as the course proceeds.

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PROJECT TOPIC

Law of Banking and Finance

SEMESTER - VIII

ROLL NO. NAME OF THE PROJECT

401 Consumer Protection in Banks

402 Emergence of Bank as a service sector : a critique

403 National Housing Bank

404 NPA Management

405 R.C.Cooper v/s Union of India – A Critical Study

406 Banking Ombudsman

408 RBI and its Role as Central Bank

409 Promotional Role of RBI

410 Critical study of Bankers Books and Evidence Act

411 EXIM Bank and its role in International Trade

412 Analysis of Bank - Customer Relationship: As Agency

Relationship

416 Analysis of Bank – Customer Relationship: As Trusteeship

Relationship

417 Analysis of Bank – Customer Relationship: As Debtor and

Creditor

418 Remedies to Bank for Recovery of Loan

419 Right of set-off

420 Foreign Currency Management

421 E-Banking

422 Government Control over the Management of Bank

423 Functioning of RBI

425 Role and Functions of Banking Institutions in India in the

Development of Indian Economy

426 Governmental control over lending of Bank

428 Role of Banking Institution in India

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429 Role and Function of Reserve Bank of India

430 Bankers Lien

431 Assets Back Securities

433 Securities for Bank advancement: A critique

434 Merger of Banking Companies

435 Reconstruction of Banks

437 Banking Services and Consumer Protection

438 Co-operative Bank

439 Bankers duty of confidentiality

440 Kishan Credit Card Scheme: A critical analysis

442 The Banking regulation Act 1949: A review

443 Winding – up of Banks

444 Voluntary Amalgamation of Banks

445 Dishonour of Cheque

448 Banker’s Draft

449 Functions of Commercial Bank

450 Comparative Analysis of International Banking Practices

with Indian Indian Banks

452 Rural Banks in India

454 Letter of Credit and Bank Guarantee

455 Cash reserve and statutory liquidity Ratios in Bank

456 Social Banking

457 IBA Code and Banking Practices

458 NABARD

459 Swiss-Banking System: A comparative Study

460 Debt Recovery Tribunal

462 Emergence of Industrial Bank: A critical analysis

465 Merger and Amalgamation of Banking Institutions

466 Liberalization of Banking system

467 Merger of Banking Institutions

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468 Lead Bank Scheme

469 Foley v/s Hill Critical Analysis

470 Legal position of Directors in Bank

471 Transformation of a financial institution to a universal

bank- The ICICI Story

472 Bankers Right

475 Foreign Banks in India

479

Legal positions of Directors of Banks

480

Regulatory affairs for Private Banks

481

Reserve Bank of India mandatory and credit policy

4373

Bank Audit

4376

Government Control over Lending of Banks

Dr. AJAY KUMAR