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ABOUT THE ACT

Act passed in 1949 for regulation of the banking in India. Made applicable to Co-operative Banks in 1964. As per the Act Reserve Bank of India is the regulatory authority for Banks. Reserve Bank of India has some powers for regulation of Banks under the RBI Act, 1935

CONTD
Was enacted owing to safeguard the interest of the depositors.

Control abuse of powers by some bank personnel controlling banks in particular.

Safeguard the interest of Indian economy in general.

REFORMS TO THE ACT

Bigger

banks have to be managed by whole time chairman possessing special knowledge and practical experience of the working of a banking company or of finance, economics or business administration.
The

majority of the directors had to be persons with special knowledge or practical experience in any of the areas such as accountancy, agriculture & rural economy, banking, co-operative, economics, finance, law, small scale industries.

CONTD
At

least two directors had to possess special knowledge and practical experience in respect of agriculture, rural economy and co-operation.
The

banks were also prohibited from making any loans of advances, secured or unsecured to their directors or to any companies in which they have substantial interest.

COMMENCEMENT
By

introducing Section 56 in the Banking Regulation Act, 1949 w.e.f. 1st March, 1966 the Act was made applicable to the Co-operative Banks.

Section 56 modifies the provisions of the Act as applicable to the Co-operative Banks.

APPLICABILITY AGAINST OTHER LAWS

Provisions of the Banking regulation Act, 1949 are not in substitution of other laws applicable, unless otherwise expressly said (Section 2 r.w. 56 (b)) Act is not applicable to: Primary Agricultural Society Co-operative Land Mortgage Bank Any other co-operative society except as provided by Sec. 56

PROVISIONS OF THE ACT

Part I Preliminary.

Part II Business of Banking Company. ART II-A Control over management. P PART II-B - Prohibition of certain activities in relation to banking companies. PART II-C - Acquisition of the Undertakings of Banking Companies.

CONTD
PART III - Suspension of business and winding up of banking companies. PART-III-A - Special provisions for speedy disposal of winding-up proceedings. PART III-B - Provisions relating to certain operations of banking companies. PART IV Miscellaneous. PART V - Application of the Act to Cooperative Banks.

KEY ASPECTS OF THE ACT

Short title, extent and commencement. Application of other laws not barred. Act to apply to co-operative societies in certain cases. Power to suspend operation of Act. Interpretation. Form and business in which banking companies may engage.

CONTD
Use of words bank ,banker ,banking or banking company. Prohibition of trading. Disposal of non-banking assets. Prohibition of employment of Managing Agents and restrictions on certain forms of employment. Board of Directors to include persons with professional or other experience.

CONTD
Banking company to be managed by whole-time Chairman. Power of Reserve Bank to appoint Chairman of a banking company. Chairman and certain Directors not to be required to hold qualification shares. Requirement as to minimum paid-up capital and reserves. Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders.

CONTD
Election of new Directors. Restriction on commission, brokerage, discount, etc., on sale of shares. Prohibition of charge on unpaid capital. Restrictions as to payment of dividend. Prohibition of common Directors. Reserve Fund. Cash reserve. Restriction on nature of subsidiary companies. Restrictions on loans and advances

http://www.legalindia.in/banking-regulation-act-1949 http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/69 297.pdf http://venkrajen.in/docs/legal_aspects_all_modules. pdf http://220.227.161.86/19403sm_cal_finalnew_cp20. pdf http://blogs.rediff.com/ajaygautam/2011/06/27/important-provisions-of-thebanking-regulation-act-1949/