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Salient features of Banking Regulation Act 1949

The law relating to banking in India today is the outcome of gradual process of evolution before 1949. The Indian companies Act 1913 contained special provisions relating to banking companies, which were inadequate and were subsequently incorporated in the comprehensive legislation passed in 1949 under the name of Banking Regulation Act 1949. This Act was suitably amended a number of times to insert new provisions and to amend the existing ones to suit the needs of changing circumstances.

Structure of the Act

The original Act had 56 sections housed in five parts and five schedules. After the amendments the Act of 1949 has 70 sections in Ten parts.

Salient features of the Act

  1. A comprehensive definition of banking so as to bring within the scope of the legislation all institutions which receive deposits, repayable on demand or otherwise for lending or investment.
  2. Prohibition of non-banking companies from accepting deposits repayable on demand.
  3. Prohibition of trading to eliminate non-banking risks.
  4. Prescription of minimum capital standards.
  5. Limiting the payments of dividends.
  6. Inclusion the scope of legislation of banks registered outside the provinces of India.
  7. Introduction of comprehensive system of licensing of banks and their branches.
  8. Prescription of a special form of balance sheet and conferring of powers on the Reserve Bank to call for periodical returns.
  9. Inspection of books and accounts of a bank by Reserve Bank.
  10. Empowering the central government to take action against banks conducting their affairs in a manner detrimental to the interests of the depositors.
  11. Provision for bringing the Reserve Bank of India into closer touch with banking companies.
  12. Provision of an expeditious procedure for liquidation.
  13. Bringing the imperial bank of India within the purview of some of the provisions of the Bill.
  14. Widening the powers of the Reserve Bank of India so as to enable it to come to the aid of banking companies in times of emergencies.
  15. Provision for the extension of the Act to acceding states.

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Created on 2021/03/17 21:10 by LawPage • Last modified on 2021/04/09 22:09 (external edit)