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Act10
Enacted 1949

The Banking Regulation Act, 1949

In force 133 sections Finance

An Act to consolidate and amend the law relating to banking.

Act 10 of 1949 Enacted 10 Mar 1949 In force 16 Mar 1949 Department Department of Financial Services

Administered by. Ministry of Finance, Department of Financial Services · Other Acts of 1949

Preamble

THE BANKING REGULATION ACT, 1949

ACT NO. 10 OF 19491

[10 th March, 1949.] An Act to consolidate and amend the law relating to banking 2***.

WHEREAS it is expedient to consolidate and amend the law relating to banking 2***;

It is hereby enacted as follows:--

What this Act covers

Summary of the Banking Regulation Act, 1949

Key Provisions:

1. Licensing of Banking Companies:

o Requires every banking company to obtain a licence from the Reserve Bank of India (RBI) before commencing or carrying on banking business.

o Empowers the RBI to grant, refuse, suspend, or cancel licences subject to prescribed conditions.

2. Regulation of Banking Business:

o Prescribes the forms of business that banking companies may undertake and restricts activities not related to banking.

o Regulates the opening, shifting, and closing of branches with the approval of the RBI where required.

3. Capital and Reserve Requirements:

o Prescribes minimum capital and reserve requirements for banking companies.

o Requires banks to maintain adequate reserves and comply with prudential norms to ensure financial stability.

4. Management and Governance:

o Regulates the appointment, qualifications, and remuneration of directors and key managerial personnel.

o Empowers the RBI to issue directions relating to the management and administration of banking companies.

5. Inspection and Supervision:

o Authorizes the RBI to inspect banking companies, examine their books and accounts, and issue directions in the interest of banking policy, depositors, or the public.

o Requires banks to furnish returns, statements, and other information to the RBI.

6. Amalgamation, Reconstruction, and Winding Up:

o Provides procedures for the amalgamation, reconstruction, or voluntary winding up of banking companies.

o Empowers the RBI to prepare schemes for amalgamation or reconstruction in appropriate cases.

7. Moratorium and Suspension of Business:

o Enables the Central Government, on the recommendation of the RBI, to impose a moratorium on a banking company under specified circumstances.

o Facilitates measures for the revival or orderly resolution of financially distressed banks.

8. Restrictions on Loans and Investments:

o Imposes restrictions on loans and advances to directors and related parties to prevent conflicts of interest.

o Regulates investments and exposure to safeguard depositors' funds.

9. Accounts, Audit, and Disclosure:

o Requires banking companies to maintain proper books of account, prepare financial statements, and have their accounts audited.

o Prescribes disclosure and reporting requirements to ensure transparency.

10. Penalties and Enforcement:

o Prescribes penalties for contraventions of the Act, rules, directions, or orders issued by the RBI.

o Empowers the RBI to take corrective and supervisory action against defaulting banking companies.

Sections

Type to filter. 133 sections.

  1. 1Short title, extent and commencement
  2. 2Application of other laws not barred
  3. 3Act not to apply to certain co-operative societies
  4. 4Power to suspend operation of Act
  5. 5Interpretation
  6. 5AAct to override memorandum, articles, etc
  7. 6Form of business in which banking companies may engage
  8. 7Use of words "bank", "banker", "banking" or "banking company"
  9. 8Prohibition of trading
  10. 9Disposal of non-banking assets
  11. 10Prohibition of employment of managing agents and restrictions on certain forms of employment
  12. 10ABoard of directors to include persons with professional or other experience
  13. 10BBanking company to be managed by whole time chairman
  14. 10BBPower of Reserve Bank to appoint chairman of the Board of directors appointed on a whole-time basis or a managing director of a banking company
  15. 10CChairman and certain directors not to be required to hold qualification shares
  16. 10DProvisions of sections 10A and 10B to override all other laws, contracts, etc
  17. 11Requirement as to minimum paid-up capital and reserves
  18. 12Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
  19. 12AElection of new directors
  20. 12BRegulation of acquisition of shares or voting rights
  21. 13Restriction on commission, brokerage, discount, etc., on sale of shares
  22. 14Prohibition of charge on unpaid capital
  23. 14AProhibition of floating charge on assets
  24. 15Restrictions as to payment of dividend
  25. 16Prohibition of common directors
  26. 17Reserve Fund
  27. 18Cash reserve
  28. 19Restriction on nature of subsidiary companies
  29. 20Restrictions on loans and advances
  30. 20ARestrictions on power to remit debts
  31. 21Power of Reserve Bank to control advances by banking companies
  32. 21ARates of interest charged by banking companies not to be subject to scrutiny by courts
  33. 22Licensing of banking companies
  34. 23Restrictions on opening of new, and transfer of existing, places of business
  35. 24Maintenance of a percentage of assets
  36. 25Assets in India
  37. 26Return of unclaimed deposits
  38. 26AEstablishment of Depositor Education and Awareness Fund
  39. 27Monthly returns and power to call for other returns and information
  40. 28Power to publish information
  41. 29Accounts and balance-sheet
  42. 29APower in respect of associate enterprises
  43. 30Audit
  44. 31Submission of returns
  45. 32Copies of balance-sheets and accounts to be sent to registrar
  46. 33Display of audited balance-sheet by companies incorporated outside India
  47. 34Accounting provision of this Act not retrospective
  48. 34AProduction of documents of confidential nature
  49. 35Inspection
  50. 35APower of the Reserve Bank to give directions
  51. 35AAPower of the Central Government to authorize Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process
  52. 35ABPower of Reserve Bank to issue directions in respect of stressed assets
  53. 35BAmendments of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Reserve Bank
  54. 36Further powers and functions of Reserve Bank
  55. 36ACertain provisions of the Act not to apply to certain banking companies
  56. 36AAPower of Reserve Bank to remove managerial and other persons from office
  57. 36ABPower of Reserve Bank to appoint additional directors
  58. 36ACPart IIA to override other laws
  59. 36ACASupersession of Board of Directors in certain cases
  60. 36ADPunishments for certain activities in relation to banking companies
  61. 36AEPower of Central Government to acquire undertakings of banking companies in certain cases
  62. 36AFPower of the Central Government to make scheme
  63. 36AGCompensation to be given to shareholders of the acquired bank
  64. 36AHConstitution of the Tribunal
  65. 36AITribunal to have powers of a civil court
  66. 36AJProcedure of the Tribunal
  67. 36BHigh Court defined
  68. 37Suspension of business
  69. 38Winding up by High Court
  70. 38ACourt liquidator
  71. 39Reserve Bank to be official liquidator
  72. 39AApplication of Companies Act to liquidators
  73. 40Stay of proceedings
  74. 41Preliminary report by official liquidator
  75. 41ANotice to preferential claimants and secured and unsecured creditors
  76. 42Power to dispense with meetings of creditors, etc
  77. 43Booked depositors' credits to be deemed proved
  78. 43APreferential payments to depositors
  79. 44Powers of High Court in voluntary winding up
  80. 44AProcedure for amalgamation of banking companies
  81. 44BRestriction on compromise or arrangement between banking company and creditors
  82. 45Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation
  83. 45APart IIIA to override other laws
  84. 45BPower of High Court to decide all claims in respect of banking companies
  85. 45CTransfer of pending proceedings
  86. 45DSettlement of list of debtors
  87. 45ESpecial provisions to make calls on contributories
  88. 45FDocuments of banking company to be evidence
  89. 45GPublic examination of directors and auditors
  90. 45HSpecial provisions for assessing damages against delinquent directors, etc
  91. 45-IDuty of directors and officers of banking company to assist in the realisation of property
  92. 45JSpecial provisions for punishing offences in relation to banking companies being wound up
  93. 45KOmitted
  94. 45LPublic examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement
  95. 45MSpecial provisions for banking companies working under schemes of arrangement at the commencement of the Amendment Act
  96. 45NAppeals
  97. 45-OSpecial period of limitation
  98. 45PReserve Bank to tender advice in winding up proceedings
  99. 45QPower to Inspect
  100. 45RPower to call for returns and information
  101. 45SChief Presidency Magistrate and District Magistrate to assist official liquidator in taking charge of property of banking company being wound up
  102. 45TEnforcement of orders and decisions of High Court
  103. 45UPower of High Court to make rules
  104. 45VReferences to directors, etc., shall be construed as including references to past directors, etc
  105. 45WPart II not to apply to banking companies being wound up
  106. 45XValidation of certain proceedings
  107. 45YPower of Central Government to make rules for the preservation of records
  108. 45ZReturn of paid instruments to customers
  109. 45ZANomination for payment of depositors' money
  110. 45ZBNotice of claims of other persons regarding deposits not receivable
  111. 45ZCNomination for return of articles kept in safe custody with banking company
  112. 45ZDNotice of claims of other persons regarding articles not receivable
  113. 45ZERelease of contents of safety lockers
  114. 45ZFNotice of claims of other persons regarding safety lockers not receivable
  115. 45ZGPriority of successive nominations
  116. 46Penalties
  117. 46AChairman, director, etc., to be public servants for the purposes of Chapter IX of the Indian Penal Code
  118. 47Cognizance of offences
  119. 47APower of Reserve Bank to impose penalty
  120. 48Application of fines
  121. 49Special provisions for private banking companies
  122. 49ARestriction on acceptance of deposits withdrawable by cheque
  123. 49BChange of name by a banking company
  124. 49CAlteration of memorandum of a banking company
  125. 50Certain claims for compensation barred
  126. 51Application of certain provisions to the State Bank of India and other notified banks
  127. 51APowers of Reserve Bank not to apply to International Financial Services Centre
  128. 52Power of Central Government to make rules
  129. 53Power to exempt in certain cases
  130. 54Protection of action taken under Act
  131. 55Amendment of Act 2 of 1934
  132. 55APower to remove difficulties
  133. 56Act to apply to co-operative societies subject to modifications

Schedules

This Act has 5 schedules. A schedule is published as a document of its own; the text is reproduced on its page where it has been read, and the document is mirrored here either way.

Rules made under this Act

7 sets of Rules. India Code publishes Rules as a record and a document rather than as text, so these are indexed here and not reproduced. All Rules.

  • Nomination of Shri Mukesh Kumar Ja, MD & CEO, OBC on the Board of Canara HSBC OBC Life Insurance Company Ltd. as Director, exempting the applicability2018
  • Nomination of Shri Raj Kiran Rai G., MD & CEO, Union Bank of India on the Board of Star Union Dai-Ichi Life Insurance Company Limited as Director, exempting the applicability2018
  • Nomination of Shri P.S. Jayakumar, MD & CEO, Bank of Baroda on the Boards of India Bank Malaysia Berhard and Ms IndiaFirst Life Insurance Company Limited as Director, exemptin2016
  • Banking Ombudsman Scheme 20062005
  • Banking Companies (Period of Preservation of Records Rules)19851985
  • Banking Companies Nomination Rules, 19851985
  • Banking Regulation (Companies) Rules 19491949

Related Acts

Ordinances

India Code records no parent Act for an ordinance, so these are tied to this Act by their own titles and their dates rather than by anything the source states. An ordinance is made when Parliament is not sitting and lapses six weeks into the next session unless it is enacted.

  • The Banking Regulation (Amendment) Ordinance, 2020amended this Act · 2020
  • The Banking Regulation (Amendment) Ordinance, 2017amended this Act · 2017
  • The Banking Regulation (Amendment) Ordinance, 1994amended this Act · 1994

All Ordinances

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Every one of the 133 sections of this Act has its own page. This page is not a substitute for legal advice.