8/2/2014 BNK601 - Banking Laws & Practices - Lecture 1

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BNK601 - BANKING LAWS & PRAC TIC ES - LEC TURE 1

Cou r se Managemen t

Objectives

This course has been designed with the v iew to f ocus specia l emphasis on the f ollowing aspects:

Developing interpretat iona l skills and clear understanding of the students regarding preva lent banking and ancillarylaws in Pakistan.

Developing professiona l skills so as to apply these laws in rea l lif e s ituat ions.

Enabling them to manage lega l requirements perta ining to banks and banking t ransact ions.

Course management:

The ent ire course would comprise of the f ollowing modules, deta il of the topics covered under these modules is a lso givenhereunder:

Module 1

It would cover the f ollowing topics:

Course Management

Int roduct ion to lega l sy stem of Pakistan

Int roduct ion to Banking Laws

Module 2

Financia l sy stem and banking: it would cover the f ollowing topics/contents:

F inancia l inst itut ions

F inancia l markets and F inancia l inst ruments

Ev olut ion of Banking: it would cover in deta il the f ollowing topics/contents:

Historica l background

Nat iona lizat ion of banks

The (banks nat iona lizat ion Act , 1974)

Following topics shall be cov ered at length in this module:

Direct f inance, indirect f inance, Fore ign exchange market , Stock markets, Bond markets, F inancia l Intermediaries including:Commercia l Banks, C redit Unions, Sav ings and Loan Associat ions, Mutua l Sav ing Banks, Mutua l Funds, F inance Companies,Pension Funds etc. Key Serv ices Prov ided by F inancia l Inst itut ions like Risk Sharing, Liquidity Informat ion serv ices. We sha lla lso discuss concept and scope of Debt and equity markets, Primary Markets and secondary markets, Ex change markets andover-the-counter markets (OTC), including Forward cont racts and future markets. money market Inst ruments and Capita lmarket inst ruments.

Module 3

Some important statutes regarding banking: This would cover the f ollowing statutes:

Banking Companies Ordinance, 1962: it would comprise the f ollowing topics/contents:

Int roduct ion of the ordinance

Important statutory def init ions

Forms of business in which banking companies may engage

Regulat ions regarding Pa id- up capita l, Subscribed capita l and Authorized capita l

Elect ion of new directors

Cash reserve

Powers of State bank to cont rol advances by banking company

Licensing policy of State Bank of Pakistan

Guide lines by State Bank

Accounts and ba lance sheet

Power of State Bank to remove directors

Prosecut ion of directors, chief execut ive or other of f icers

Transact ion of banking business illega lly by companies, etc.

Suspension of business

Winding-up of banking company

Specia l prov is ions f or speedy disposa l of winding up proceedings

Banking Mohtasib

Procedure f or making compla ints to Banking Mohtasib

Penalt ies

Power of f edera l government to make rules

Banking companies rules, 1963

SBP Act , 1956: it would cov er in deta il the following topics/contents:

Establishment and incorporat ion of the banks

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IT (Informat ion Tech)

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8/2/2014 BNK601 - Banking Laws & Practices - Lecture 1

http://www.vutube.edu.pk/index.php?option=com_content&view=article&id=4:bnk601-banking-laws-a-practices-lecture-1&catid=4:banking-laws-a-practices-b… 2/3

Management

Business and funct ions of banks

SBP Banking Serv ices Corporat ion, Ordinance, 2001

Pakistan banking and f inance serv ices commission Act , 1992

The co-operat ive societ ies and co-operat ive banks (re-payment of loans ordinance, 1966)

The establishment of f edera l bank f or co-operat ive and regulat ion of co-operat ive banking Act , 1977

Micro f inance inst itut ions Ordinance, 2001

The corporate and indust r ia l re-st ructuring corporat ion Ordinance, 2000

Module 4

Banker - Customer re lat ionships: it would cover in deta il the f ollowing topics/contents:

Banker and customer re lat ionship

Debtor and creditor re lat ionship

Agency re lat ionship

Bailor- Ba ilee re lat ionship

Mortgagor-Mortgagee Relat ionship

Pledger-pledgee re lat ionship

We shall focus specia l at tent ion on the following topics:Banker , customer , R ights and Dut ies of Customer, Dut ies of the Agent , R ights of the Agent , Dut ies of Principa l, Essent ia lsof Ba ilment , Dut ies of Ba ilee, Rights of Mortgagee, Essent ia ls of a Va lid Cont ract , C lassif icat ion of Cont racts, Terminat ionof Banker- Customer Relat ionship.

Module 5

Ty pes of Customer’s Account: it would cover in deta il the f ollowing topics/contents:

Opening of account

C lassif ied account

Partnership account

Account of companies

Joint accounts

Trust account

Accounts of executors/ administ rator

Module 6

Law re lat ing to Negot iable instruments: it would cover in deta il the f ollowing topics/contents:

Int roduct ion

Promissory note

Bill of ex change

Negot iat ion of inst ruments

Negot iat ion by de livery

Negot iat ion by endorsement

Holder in due course

Presentat ion of inst ruments

Payment and interest

Discharge f rom liabilit y

Module 7

Principles and Forms of Lending: it would cover in deta il the f ollowing topics/contents:

Principles of lending

Forms of lending

Over draf ts, loans

Securit ies for Adv ances: it would cover the f ollowing topics/contents:

Pledge

Hypothecat ion

Mortgage

Module 8

Non-funded facilit ies: it would cover the f ollowing topics/contents:

Let ter of credit

Def init ion of let ter of credit

Revocable and irrevocable credit s

Types of let ter of credit

Opening of let ter of credit

Negot iat ion of let ter of credit

Reimbursement of let ter of credit

Rules regarding Non-funded f acilit ies

Unif orm customs and pract ices f or documentary credit (UCP 600)

Unif orm Rules f or Cont ract Guarantee URCG-325

Unif orm Rules f or Demand Guarantee URDG-458

Module 9

Designing of legal documents: it would cover in deta il the f ollowing topics/contents:

Terminat ion of the agreement , Mortgage deed

Redempt ion deed

Redempt ion of mortgage

Let ter of hypothecat ion

Module 10

Designing of legal documents: it would cover in deta il the f ollowing topics/contents:

Hire- purchase agreement

8/2/2014 BNK601 - Banking Laws & Practices - Lecture 1

http://www.vutube.edu.pk/index.php?option=com_content&view=article&id=4:bnk601-banking-laws-a-practices-lecture-1&catid=4:banking-laws-a-practices-b… 3/3

Terminat ion of the agreement

Mortgage deed

Redempt ion deed

Redempt ion of mortgage

Let ter of hypothecat ion

Prudent ia l regulat ions of SBP: it would cover in deta il the f ollowing topics/contents:

Regulat ions f or consumer f inancing

Statutory Def init ion

Regulat ions

C lassif icat ions

For small and medium enterprises f inancing

Def init ions

Regulat ions

C lassif icat ions

Prudent ia l regulat ions f or corporate/ commercia l banking

Def init ions

Risk management

Corporate governance

Guide lines for banks by SBP: it would cover in deta il the f ollowing topics/contents:

Def ining r isk

Risk management

Risk management f ramework

Managing credit r isk

Components of credit r isk management

Managing problem credit s

Managing market r isk

Elements of market r isk management

Risk management commit tee

Managing liquidity r isk

Early warning indicators of liquidity r isk

Liquidity r isk st rategy

Managing operat iona l r isks

Operat iona l r isk management principles

Risk report ing

Module 11

Financia l inst itut ions ( Recov ery of Finances) Ordinance, 2001: It would cover in deta il the f ollowingtopics/contents:

Int roduct ion

Def init ions

Establishment of banking court

Power of banking court

Procedure of banking court

Leave to defend

Interim decree

Power to set aside decree

Disposa l of suit

Sa le of mortgage property

At tachment before judgment

Banking documents

Execut ion of decree, appeal

Module 12

It would cover the f ollowing topics:

Applicat ion of limitat ion Act , 1908

Ancillary statutes

Limitat ion Act , 1908

Stamp Act , 1899

Arbit rat ion Act , 1949

Contract Act , 1872

Besides tex t books and reference books, suf f icient reading materia l sha ll be ava ilable in the f orm of handouts. It is be lievedthat students sha ll be duly benef ited f rom the mult iple resources at the ir disposa l.

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