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THE BANKING REGULATION ACT, 1949 - CONT'D
Banking Policy
“Banking Policy” means policy specified by RBI from time to time in the interest of
- Banking system
- Monitory stability
- Sound economic growth
- Interest of depositors
- Volume of deposits and other resources of the bank
- Efficient use of the deposits and resources …..Section 5(ca)
Cash Reserve (CRR) Section 18 r. w. 56 (j)
- Every bank is required to keep cash reserve, with itself or by way of balance in the current account with RBI or Central / District Co-operative Bank or net balance in all such way, of minimum prescribed % amount of its DTL as of last Friday of fortnight
- A return about this has to be submitted to RBI before 15thof each month about alternate Friday
SLR (Statutory Liquidity Ratio)
Bank shall maintain unencumbered approved securities, valued not exceeding the current market price, or an amount which shall not be less than 24% of the total of its demand and time liabilities (DTL)
Restrictions on loans and advances
- Notwithstanding anything to the contrary contained in section 77 of the Companies Act, 1956 (1 of 1956), no banking company shall,
(a) grant any loans or advances on the security of its own shares, or
(b) enter into any commitment for granting any loan or advance to or on behalf of
(i) any of its directors,
(ii) any firm in which any of its directors is interested as partner, manager, employee or guarantor, or
(iii) any company [not being a subsidiary of the banking company or a company registered under section 25 of the Companies Act, 1956 (1 of 1956), or a Government company] of which 61[or the subsidiary or the holding company of which] any of the directors of the banking company is a director, managing agent, manager, employee or guarantor or in which he holds substantial interest, or
(iv) any individual in respect of whom any of its directors is a partner or guarantor.
Licensing of banking companies
- Save as hereinafter provided, no company shall carry on banking business in India unless it holds a licence issued in that behalf by the Reserve Bank and any such licence may be issued subject of such conditions as the Reserve Bank may think fit to impose.]
- Every banking company in existence on the commencement of this Act, before the expiry of six months from such commencement, and every other company before commencing banking business 69[in India], shall apply in writing to the Reserve Bank for a licence under this section.
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