Legal and Regulatory Aspects of Banking

Various Acts relating to Banking

Name of Act Effective date Remarks
Reserve Bank of India Act
193
Last amendment to t!e Act
in "##$%
$
t!
&arc! 193 Reserve Bank of India came into
e'istence on 1
st
April 193(
RBI )as Nationali*ed on 1
st
+anuary
199%
Act as Note issuing Aut!ority
Act as Banker,s Bank
Banker to -tate and .entral /overnment
0unction as a promoter of Agriculture
and Industry to accelerate pace of
economic development
&onitory policy and .redit control
measures are undertaken 1y RBI
Banking Regulation Act
199
1$
t!
&arc!
199
2!e act e'tends to )!ole of India
BR act )as enacted to consolidate and
amend la) relating to 1anking and to
provide for a suita1le frame )ork for
regulating t!e 1anking companies
In 19$( t!e Act )as amended to .o
3perative Banks as )ell )it! certain
modification 4-ection ($5
-tate Bank of India Act 19(( Introduced for taking over Imperial Bank
Banking .ompanies
4ac6uisition and 2ransfer of
7ndertakings5 Act 198# and
Banking .ompanies
4ac6uisition and 2ransfer of
7ndertakings5 199#
Nationalisation of 1 and $ Banks
respectively%
Regional Rural Bank Act
198$
( RRBs )ere formed on "
nd
3cto1er 198(
Aut!orised capital of eac! RRB is Rs(
.rores%
National :ousing Board
Act 1998
9%8%1999 Aut!ori*ed capital of N:B is Rs(## Lak!s
&ulti -tate .o operative
-ocieties Act "##"%
2!is act is applica1le to .o 3perative
Banks operating in t)o state%
2!e ;eposit Insurance and
credit /uarantee
.orporation Act 19$1
<rovides cover for default in respect of
advances under <riority -ector against
payment of guarantee premium%
Also gives insurance cover for small
depositors up to Rs1=## =###> against
payment of guarantee premium%
Negotia1le Instruments Act
1991
1
st
&arc! 199" 2!e act is applica1le to )!ole of India
including +?@ and -ikkim % 2!ere are 18
-ection in NI Act
Important sections includes%
2!e follo)ing -ections of NI act gives
protection to t!e paying Bank
-ection AAA 1# <ayment in due
course
-ection AAA 9( protection to a Bank
paying 3rder .!e6ue
-ection AAA 9(A <rotection to a Bank
paying order ;;
-ection AAA 99 <ayment of altered
c!e6ues )!ere
alteration is not
visi1le%
-ection AAA 1"9 <ayment of crossed
c!e6ues
-ection 31 Responsi1ility of
;ra)ee Bank su1Bect
to satisfaction under
-ection 1#
SARFAESI Act 2002 21
st
June 2002 Extends to whole of India including State of
J&K
Recover of !e"ts due to
#an$s and Financial
Institution Act 1%%& '!R(
1%%&)
2*
th
June 1%%& (his Act constituted the S+ecial !e"t
Recover (ri"unals,)
(he #an$er-s #oo$ Evidence
Act 1.%1
(o facilitate the +roduction of "oo$ of
evidence
/egal Services Authorities Act
1%.0 1 /o$ Adalats,
For co2+ro2ise or settle2ent of dis+utes
"etween +arties,
3onsu2er 4rotection Act
1%.5
(his Act is to +rotect the interest of
consu2ers%
Societies Registration Act
1.50
Regarding registration of Societies,
/i2itation Act 1%5& Regarding li2itation +eriod
Inco2e (ax Act 1%51
3ontract Act 1.02 (he Act refers to the general 4rinci+les of
3ontract and also s+ecial t+es of contracts
li$e 6uarantee and Inde2nities
Sale of 6oods Act 1%&0 !eals with the conce+t of sale7 the rights of
un+aid seller etc
4artnershi+ Act 1%&2 Registration of a +artnershi+ deed has
added advantage in that the fir2 can sue the
de"tors for recover of 2one due fro2
de"tors 8ne +artner can sue the other
+artners in case one +artner is forced to +a
a2ount to outsiders through 3ourt order
under the Joint and Several res+onsi"ilit
9axi2u2 nu2"er of +artners in a #an$ing
+artnershi+ fir2 :::: 10
9axi2u2 +artners in a fir2 doing "usiness
other than #an$ing ::::: 20
4artnershi+ with 4rofessionals as +artners
::::::::::::: ;0
<o deed then fluctuating 3a+ital
<o deed 2eans sharing +rofit e=ual
3o2+anies Act 1%;5 4rivate /td 3o2+an 2ini2u2 2
shareholders 2axi2u2 ;07 4u"lic /td 3o
2ini2u2 0 no 2axi2u2
Foreign Exchange
9anage2ent Act 1%%% 'FE9A
1%%%)
(o facilitate external trade and +a2ent for
+ro2oting the orderl develo+2ent
(ransfer of 4ro+ert Act 1..2 !eals with sale> 9ortgage etc of I22ova"le
+ro+erties,
Right to infor2ation Act 200; Intent to +rovide for accessing to+
infor2ation
(he +revention of 9one
/aundering Act 2002,
(o +revent 2one laundering
#an$ has to co2+l with K?3 nor2s and to
re+ort 3(R and S(R transactions
Infor2ation (echnolog Act
2000
4revention of #ad de"ts
SE#I Act 1%%2 (he controller of 3a+ital 9ar$ets,
Ar"itration and 3onciliation
Act 1%%5
@hen ever dis+ute arises "etween #an$s or
Financial Institution with the SecuritiAation or
Reconstruction 3o2+an the sa2e is
resolved under the +rovisions of Ar"itration
and 3onciliation Act 1%%5,
.ertain important provisions in -c!edule to t!e limitation Act
;escription of suit <eriod of
Limitation
2ime from )!ic! period 1egins
to run%
For 2one +aa"le for 2one lent (hree ears @hen the loan is 2ade
For 2one lent under an
agree2ent that it shall "e +aa"le
on de2and7
(hree ears @hen loan is 2ade
8n a "ill of exchange +aa"le at
sight or after sight "ut not at a fixed
ti2e,
(hree ears @hen the "ill is +resented
8n a "ill of exchange or +ro2issor
note +aa"le at a fixed ti2e after
sight or after de2and
(hree ears @hen the fixed ti2e ex+ires,
8n a +ro2issor <ote or a "ond
+aa"le " instal2ents
(hree ears (he ex+iration of the first ter2 of
+a2ent as to the +art then
+aa"le and for other +arts the
ex+iration of the res+ective ter2s of
+a2ent
For arrears of rent (hree ears @hen the arrears "eco2e due,
For s+ecific +erfor2ance of a
contract
(hree ears (he date fixed for the +erfor2ance
or if no such date is fixed when the
+laintiff has noticed the
+erfor2ance is refused,
(o enforce +a2ent of 2one
secured " a 2ortgage or
otherwise charged u+on
i22ova"le +ro+ert
(hree ears @hen the 2one sued "eco2e
due,
# 9ortgage
a) For foreclosure
12 ears @hen the 2one secured " the
2ortgage "eco2e due,
# 9ortgage
a) For +ossession of
I22ova"le +ro+ert
&0 ears @hen the 2ortgage "eco2es
entitled to +ossession,