Banking Laws and Practices - 100 Marks

Module aim:
To ensure that students become familiar with the different aspects and provisions of Banking laws
which they may come across in the normal course of discharging their professional responsibilities.

On completion of this module, students will be able to:

 demonstrate a detailed understanding of contract law, knowing how to recognize
formation, discharge and remedies for breach of contact
 recognize the existence of a contract of sale and demonstrate an understanding of

the legal and commercial aspects of sale contracts

 recognize a negotiable instrument and to explain the legal position relating to
such an instrument utilizing the principles of contract law
 demonstrate their knowledge of the main provisions of the Bankruptcy Act 1997
 demonstrate their knowledge of the main provisions of the Arbitration Act 2001.
Specification Grid
This grid shows the relative weightings of subjects within this module and should guide
the relative study time spent on each. Over time the marks available in the assessment
will equate to the weightings below, while slight variations may occur in individual
assessments to enable suitable questions to be set.
Weighting (indicative %)
01 The Negotiable Instruments Act 1881 10
02. Contract and Agency (The Contract Act 1872) 20
03. The Banking Companies Act 1992
04. The Financial Institutions Act 1993 70
05. The Bankruptcy Act 1997
06. The Companies Act 1994 and secretarial practices
07. The Money Loan Court Act
08. The Money Laundering Prevention Act 2012
09. The Anti-Terrorists Act 2012
1. The Negotiable Instruments Act 1881
Candidates should be able to recognise a negotiable instrument and to explain the legal
position relating to such an instrument, utilising the principles of contract law.
In the assessment, candidates may be required to
a) define the following negotiable instruments, describe the differences between
them, and explain how they may normally be used by a business
 cheque; bill of exchange; promissory note
b) explain fully the commercial and legal effects of the following in regard to a
cheque, in terms of the creation, acceptance and discharge of liability
 endorsements; crossings; dishonour and penalties
 banker's liability
c) define, and explain the commercial significance of, "holder in due course" and
"presentment" in relation to a bill of exchange
d) define, apply and advise on
 capacities; rights and liabilities of parties
 discharge of parties from liabilities
 lost instruments; forged instruments
  dishonour of bill of exchange, payment for honour
e) identify the legal position in a given scenario concerning a negotiable instrument,
applying the principles set out in learning outcomes a to d above and the
principles of contract law.
2. The Contract Act 1872
Candidates should be able to demonstrate a detailed understanding of contract law, knowing how
to recognize formation, discharge and remedies for breach of contact. They should also be able to
define agency and apply basic laws of agency to case scenarios given.
In the assessment, candidates may be required to
a) define, apply and advise on
 formation: agreement; consideration
 intention to create legal relations
 enforcement of contracts: terms; privity
 performance of contracts; → termination of contracts
 breach of contract; → discharge of contract
 exemption clauses; → remedies for breach of contract
 indemnity and guarantee; → bailment and pledge
b) differentiate between factors affecting the validity of contracts
 void → voidable → illegal
c) define agency
d) outline the nature of agency and describe the methods by which agency can be
created (by consent. by deed, by ratification, by necessity, by estoppels, by
partnership under the Partnership Act 1932).
e) describe and apply the duties and rights of agents
3. The Bank Companies Act 1991
Candidates should be able to demonstrate their knowledge of the main provisions of the Bank
Companies Act 1991
In the assessment candidates may be required to define, apply and advise on
1. business of and licensing of bank companies, paid up capital and reserves
2. appointment and removal of directors and chief executive officer
3. illegal bank transactions by companies etc.
4. acquisition of the undertaking of banking companies
5. suspension of business and winding up of bank companies
6. Bangladesh bank and the SEC
7. restriction on loans and advances
8. issuance of policy directions
9. remission of loans
10. accounts and audit
11. inspection and investigation
12. submission of return and reports.

4. The Financial Institutions Act 1993

Candidates should be able to demonstrate their knowledge of the main provisions of the Financial
Institutions Act 1993
In the assessment candidates may be required to define, apply and advise on
1. licensing of financial institutions
2. minimum capital, reserve fund and liquid assets
 3. restriction on credit facilities
4. investment
5. holdings of properties
6. powers of Bangladesh Bank in prescribing rules
7. accounts, audit and inspection
8. removal of directors.

5. The Bankruptcy Act 1997

Candidates should be able to demonstrate their knowledge of the main provisions of the
Bankruptcy Act 1997
In the assessment, candidates may be required to
a) identify the nature and function of the bankruptcy court, plaints, receivership and
orders of adjudication
b) define, apply and advise on
 acts of bankruptcy; persons subject to bankruptcy proceedings
 filing plaint; procedures and hearing
 dismissal of plaint; order of adjudication and its effects
 duties of debtors; exempted properties
 creditors' committee; discharge of bankrupt
 fraudulent preference and its effects
 nullification and protection of transactions
 status of secured creditors
 appointment of receiver; Official Receiver
 powers functions and liabilities of receiver
 management and disposal of estate
 disqualification of undischarged bankrupt; appeals.

6. The Companies Act 1994

Candidates should be able to state and explain provisions of company law relating to the following
areas and to describe the practical steps needed for carrying out the main company secretarial
functions
On completion of this module, students will be able to:
 explain provisions of company law relating to
 the nature and functions of companies
 formation of companies and administrative consequences
 share capital and capital maintenance
 shareholders; directors; charges and debentures; insolvency
 describe the practical steps needed for carrying out the main company secretarial functions
 describe the contents and significance of a prospectus and listing particulars
 demonstrate their knowledge of the main provisions of

Nature and functions of companies

Candidates should be able to describe the nature and functions of companies compared
with other legal persons.
a) identify different forms of business organizations
b) explain the differences between partnerships and companies including the advantages and
disadvantages of incorporation, corporate personality and limited liability
c) explain the concept of the veil of incorporation and in what circumstances it may be
lifted, considering both case law and statute law
Formation of companies and administrative consequences
Candidates should be able to describe the processes of company formation and the administrative
consequences.
d) describe the procedure required to form a company by registration including any practical
considerations
e) describe the legal and regulatory provisions relating to
 capital, shares and debentures
 flotation of corporate securities
 Issue of prospectus, including provisions on
 Underwriting; brokerage; discount and premium on shares
 bonus and rights issues of shares
 application, allotment, transfer and transmission of shares
f) explain the format, function and legal effect of a company's Memorandum and Articles of
Association and how they can be changed
g) state the administrative consequences of incorporation including requirements regarding
 filing of documents and returns; maintenance of records
 accounts; disclosure of accounting and other information
 shares; statutory books; company meetings
Share capital - capital maintenance
Candidates should be able to explain the rules relating to capital maintenance.
h) explain the rules on capital maintenance including: the purchase of shares; permissible
capital payments; a reduction of capital; financial assistance and the rules on the payment
of dividends according to the Companies Act 1994 (students may be asked to
interpret accounts but not to make calculations)
Shareholders
Candidates should be able to explain the relationship between the shareholders and the company.
i) explain how a shareholder can influence the management of a company through meetings
and resolutions, including shareholders' right to requisition a meeting
j) identify the various statutory rights of shareholders to Challenge the management of the
company under the Companies Act 1994
Directors
Candidates should be able to explain the relationship between the directors and the company.
k) describe the ways in which a director may be appointed and removed
l) describe directors' duties, explaining the consequences of any breach, e.q
fraudulent trading and negligence
m) explain the powers of directors and in what circumstances they will bind the
company in a contract with third parties
n) identify the situations when the shareholders will be able to challenge the
directors' power to manage the company
Insolvency
Candidates should be able to outline the nature and function of the different procedures
which could lead to the winding up of a company and to identify the order of
repayment of assets in a liquidation.
o) outline the nature and function of receivership, an administration order, a
compulsory and a voluntary winding up
p) identify the priority on a liquidation of the distribution of assets including rights
of creditors and employees.
7. The Money Loan Court Act 2003
- who are to be judged? Who are the clients?
- What are the sources of Laws and Acts to be compatible or to be given due
Importance in this court.
- What are the clauses and sections in this Act
- Terms of reference of judgments

8. The Money Laundering Prevention Act 2012

Definition of money laundering, sources of money laundering and different
prevention clauses. Public agencies and Parties involved in this act. Detection criteria
of money laundering activities. Different International bodies and convention where
Bangladesh become members.

9. The Anti-Terrorists Act 2012

Definition of terrorists activities, sources of terrorists activities and different prevention
clauses. Public agencies and Parties involved in this act. Detection criteria of terrorists
activities. Different International bodies and convention where Bangladesh become
members to cooperate in combating terrorists activities.