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THE BANKING REGULATION ACT, 1949
Preamble of regulatory Act
- An Act to consolidate and amend the law relating to banking.
- WHEREAS it is expedient to consolidate and amend the law relating to banking .
- The Banking companies act, presently known as banking regulation act was enacted owing to safeguard the interest of depositors, control abuse of power by some bank personnel controlling the banks in particular and to the interest of Indian economy in general.
- The Banking Regulation Act was passed as the Banking Companies Act 1949 and came into force w.e.f 16.3.49. Subsequently it was changed to Banking Regulations Act 1949 wef 01.03.66.
- However, it should be remembered that this act does not supersede the provision of companies act or any other law for the time being in force in respect of banking business.
Definition of banks
- In India, the definition of the business of banking has been given in the Banking Regulation Act, (BR Act), 1949. According to Section 5(c) of the BR Act, 'a banking company is a company which transacts the business of banking in India.' Further, Section 5(b) of the BR Act defines banking as, 'accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable, by cheque, draft, order or otherwise.'
- This definition points to the three primary activities of a commercial bank which distinguish it from the other financial institutions. These are: (i) maintaining deposit accounts including current accounts, (ii) issue and pay cheques, and (iii) collect cheques for the bank's customer
Different provisions of Banking regulations Act
S. No. |
Parts |
Topics |
Sections covered |
1. |
I |
Preliminary |
1 to 5A |
2. |
II |
Business of Banking Companies |
6 to 36 A |
3. |
IIA |
Control over management |
36AA to 36AC |
4. |
IIB |
Prohibition of certain activities in relation to banking Companies |
36AD |
5. |
IIC |
Acquisition of the undertakings of Banking Companies in certain cases |
36AE to 36AJ |
6. |
III |
Suspension of business and winding up of Banking Companies |
36B to 45 |
7. |
IIIA |
Speedy provision for speedy disposal of winding up proceedings |
45A to 45X |
8. |
IIIB |
Provision relating to certain operation of Banking Companies |
45Y to 45ZF |
9. |
IV |
Miscellaneous |
46 to 55A |
10. |
V |
Application of the Act to cooperative Banks |
56 |
Applicability of the Banking Regulation Act, 1949
This Act applies to following categories of Banks:
- Nationalized Banks
- Non-Nationalized Banks
- Cooperative Banks
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