Interpretation
Section 5 of the Banking Regulation Act, 1949 deals with interpretation. [In this Act], unless there is anything repugnant in the subject or context,-- [(a) approved securities means the securities issued by the Central Government or any State Government or such other securities as may be specified by the Reserve Bank from time to time.] (b) banking means the accepting, The Act came into force on 16 Mar 1949.
1[In this Act], unless there is anything repugnant in the subject or context,--
2[(a) approved securities means the securities issued by the Central Government or any State Government or such other securities as may be specified by the Reserve Bank from time to time.]
(b) banking means the 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;
(c) banking company means any company which transacts the business of banking 3[in India];
Explanation.--Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause;
4[(ca) banking policy means any policy which is specified from time to time by the Reserve Bank in the interest of the banking system or in the interest of monetary stability or sound economic growth, having due regard to the interests of the depositors, the volume of deposits and other resources of the bank and the need for equitable allocation and the efficient use of these deposits and resources;]
5[(cc) branch or branch office, in relation to a banking company, means any branch or branch office, whether called a pay office or sub-pay office or by any other name, at which deposits are received, cheques cashed or moneys lent, and for the purposes of section 35 includes any place of business where any other form of business referred to in sub-section (1) of section 6 is transacted;]
6[(d) company means any company as defined in section 3 of the Companies Act, 1956 (1 of 1956); and includes foreign company within the meaning of section 591 of that Act;]
7[(da) corresponding new bank means a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);]
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(f) demand liabilities means liabilities which must be met on demand, and time liabilities means liabilities which are not demand liabilities;
9[(ff) Deposit Insurance Corporation means the Deposit Insurance Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of 1961);]
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(ffb) Exim Bank means the Export-Import Bank of India established under section 3 of the Export-Import Bank of India Act, 1981 (28 of 1981);]
12[(ffc) Reconstruction Bank means the Industrial Reconstruction Bank of India established under Section 3 of the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984);]
13[(ffd) National Housing Bank means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987);]
(g) gold includes gold in the form of coin, whether legal tender or not, or in the form of bullion or ingot, whether refined or not;
14[(gg) managing agent includes,--
(i) secretaries and treasurers,
(ii) where the managing agent is a company, any director of such company, and any member thereof who holds substantial interest in such company,
(iii) where the managing agent is a firm, any partner of such firm;]
15[(h) managing director, in relation to a banking company, means a director who, by virtue of of an agreement with the banking company or of a resolution passed by the banking company in general meeting or by its Board of directors or, by virtue of its memorandum or articles of association, is entrusted with the management of the whole, or substantially the whole of the affairs of the company, and includes a director occupying the position of a managing director, by whatever name called:]
16[Provided that the managing director shall exercise his powers subject to the superintendence, control and direction of the Board of directors.]
17[(ha) National Bank means the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);]
18[(hb) National Bank for financing Infrastructure and Development means the Institution established under section 3 of the National Bank for Financing Infrastructure and Development Act, 2021;
(hc) other development financial institution means a development financial institution licensed under section 29 of the National Bank for Financing Infrastructure and Development Act, 2021;]
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(j) prescribed means prescribed by rules made under this Act;
17[(ja) regional rural bank means a regional rural bank established under section 3 of the Regional Rural Banks Act, 1976 (21 of 1976);]
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21[(l) Reserve Bank means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934):]
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(n) secured loan or advance means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance; and unsecured loan or advance means a loan or advance not so secured;
22[(ni) Small Industries Bank means the Small Industries Development Bank of India established under section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989);]
23[(na) small-scale industrial concern mean an industrial concern in which the investment in plant and machinery is not in excess of seven and a half lakhs of rupees or such higher amount, not exceeding twenty lakhs of rupees, as the Central Government may, by notification in the Official Gazette, specify in this behalf, having regard to the trends in industrial development and other relevant factors;
24[(nb) Sponsor Bank has the meaning assigned to it in the Regional Rural Banks Act, 1976 (21 of 1976) :
(nc) State Bank of India means the State Bank of India constituted under section 3 of the State Bank of India Act, 1955 (23 of 1955);]
25[(nd)] subsidiary bank has the meaning assigned to it in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);
26[(ne)] substantial interest,--
(i) in relation to a company, means the holding of a beneficial interest by an individual or his spouse or minor child, whether singly or taken together in the shares thereof, the amount paid-up on which exceeds five lakhs of rupees or ten per cent. of the paid-up capital of the company, whichever is less;
(ii) in relation to a firm, means the beneficial interest held therein by an individual or his spouse or minor child, whether singly or taken together, which represents more than ten per cent. of the total capital subscribed by all the partners of the said firm;]
27[(o) all other words and expressions used herein but not defined and defined in the Companies Act, 1956 (1 of 1956), shall have the meanings respectively assigned to them in that Act.]
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Section 5, The Banking Regulation Act, 1949 (Act 10 of 1949).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
- Banking Companies (Acquisition and Transfer of Undertakings) Act s. 3 Establishment of corresponding new banks and business thereof
- Banking Companies (Acquisition and Transfer of Undertakings) Act s. 3 Establishment of corresponding new banks and business thereof
- s. 6 Form of business in which banking companies may engage
- s. 35 Inspection
- Export-Import Bank of India Act s. 3 Establishment and incorporation of Export-Import Bank of India
- National Bank for Agriculture and Rural Development Act s. 3 Establishment and incorporation of National Bank for Agriculture and Rural Development
- National Bank for Financing Infrastructure and Development Act s. 3 Establishment and incorporation of Institution
- National Bank for Financing Infrastructure and Development Act s. 29 Setting up of other development financial institution
- National Housing Bank Act s. 3 Establishment and incorporation of National Housing Bank
- Regional Rural Banks Act s. 3 Establishment and incorporation of Regional Rural Banks
- Small Industries Development Bank of India Act s. 3 Establishment and incorporation of Small Industries Development Bank of India
- State Bank of India Act s. 3 Establishment of the State Bank
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Mahesh Kumar Sahu vs Malleshwaram Coopoerative Bank LTD
Court's Decision & Legal Precedent
When cooperative banks perform banking activity (accepting public deposits and lending money), such banking activity falls within Entry 45 of List I, irrespective of the cooperative bank's entity structure as a cooperative society falling under Entry 32 of List II. Consequently, (1) cooperative banks are 'banking company' within Section 5(c) of BR Act, 1949 when read with Section 56(a); (2) cooperative banks are 'banks' for purposes of SARFAESI Act, 2002; (3) the SARFAESI Act's recovery procedures under Section 13 are applicable to cooperative banks as recovery is an essential aspect of banking business covered by Entry 45; (4) the notification dated 28 January 2003 and the 2013 amendment to SARFAESI Act are constitutionally valid as Parliament has competence under Entry 45 to legislate on banking activities regardless of the entity structure. The incidental impact on State List matters (cooperative society management) does not invalidate the central legislation under the doctrine of pith and substance.
On this section: Central statute defining banking and banking company; Section 56 crucial for understanding how the Act applies to cooperative banks through incorporation by reference
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Universal Textile Waterproof Co. (india) vs Union of India
Court's Decision & Legal Precedent
Cooperative banks registered under State Cooperative Laws and multiState cooperative banks are governed by Entry 45 of List I (Banking) for their banking activities and recovery of banking debts, while Entry 32 of List II governs their incorporation, regulation and winding up as cooperative societies. The Parliament has legislative competence to provide recovery procedures for cooperative banks under Entry 45 through the SARFAESI Act, as recovery is an essential banking function. The definition of 'banking company' in Section 5(c) of the Banking Regulation Act, 1949 includes cooperative banks through Section 56(a) by incorporation by reference. The notification dated 28.1.2003 specifying cooperative banks under the SARFAESI Act and Section 2(1)(c)(iva) inserting multiState cooperative banks are constitutionally valid.
On this section: Definition of banking, banking company, and cooperative banks; incorporation of cooperative banks by reference; the distinction between core banking and ancillary activities
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Kerala State Co-operative Agricultural and Rural Development Bank Ltd. Kscardb vs The Assessing Officer, Trivandrum
Court's Decision & Legal Precedent
A cooperative society which is not a state cooperative bank, central cooperative bank, or primary cooperative bank as defined under NABARD Act, 1981 and which does not conduct banking business as defined in Section 5(b) of the Banking Regulation Act (i.e., does not accept deposits from the public and does not hold an RBI license) is not a co-operative bank within the meaning of Section 80P(4) of the Income Tax Act, 1961, and is therefore entitled to claim deduction of the whole of its profits and gains of business attributable to providing credit facilities to its members under Section 80P(2)(a)(i) of the Act. The determination of whether an entity is a co-operative bank depends on: (1) whether it has been declared as a state/central cooperative bank by the State Government under NABARD Act, 1981; (2) whether it conducts banking business as defined (accepting deposits from public); and (3) whether it holds an RBI license under Section 22 of the Banking Regulation Act, 1949.
On this section: Defines banking as accepting deposits from public for lending or investment with withdrawal by cheque etc. Defines banking company as any company transacting banking business in India. The court used these definitions to determine whether the appellant conducts banking business.
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Sanjay Rajabhau Rathi vs Nashik District Ind
Court's Decision & Legal Precedent
Cooperative Banks Registered Under State Cooperative Laws And MultiState Cooperative Societies Registered Under The MultiState Cooperative Societies Act, 2002, With Respect To The Banking Activity They Perform, Are Governed By Legislation Relatable To Entry 45 Of List I (Banking) Of The Seventh Schedule Of The Constitution Of India, Not Entry 32 Of List II (Cooperative Societies). Consequently, The Definition Of 'Banking Company' In Section 5(c) Of The Banking Regulation Act, 1949, When Read With Section 56(a) And Section 5(cci), Includes Cooperative Banks. Therefore, Cooperative Banks Qualify As 'Banks' Under Section 2(1)(c) Of The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (SARFAESI Act), And The Recovery Procedures Under Section 13 Of SARFAESI Apply To Cooperative Banks. The 2003 Notification Specifying Cooperative Banks Under Section 2(1)(c)(v) SARFAESI And The 2013 Amendment Inserting Section 2(1)(c)(iva) MultiState Cooperative Banks Are Both Constitutionally Valid Exercises Of Parliamentary Competence.
On this section: Central Statute Regulating Banking; Key Issue Was Whether Section 56 Effectively Incorporates Cooperative Banks Into The Definition Of 'Banking Company' And Subjects Them To Banking Regulation
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Yogakshemam Kuries vs The State of Kerala State of Kerala . Chief Secretary
Court's Decision & Legal Precedent
Non-Banking Financial Companies registered under Chapter IIIB of the Reserve Bank of India Act, 1934 and regulated by the Reserve Bank of India cannot be simultaneously regulated by State Money Lenders Acts such as the Kerala Money Lenders Act, 1958 and the Gujarat Money Lenders Act, 2011, because Chapter IIIB constitutes a complete, exhaustive, and comprehensive code covering all aspects of NBFC regulation, the RBI Act is traceable to the exclusive legislative domain of Parliament under Union List Entry 43, and the application of State laws to RBI-regulated NBFCs conflicts with the scheme of federal financial regulation and casts a shadow of eclipse over State legislation in this field.
On this section: The Court distinguished banking companies (which accept deposits) from NBFCs (which may only lend), establishing that NBFCs not falling under Banking Regulation Act necessitate regulation under RBI Act Chapter IIIB.
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Nedumpilli Finance Company Limited vs The State of Kerala State of Kerala . Chief Secretary
Court's Decision & Legal Precedent
Non-Banking Financial Companies registered under Chapter IIIB of the Reserve Bank of India Act, 1934 are exclusively regulated by the RBI and are not subject to the application of State Money Lenders Acts such as the Kerala Money Lenders Act, 1958 or the Gujarat Money Lenders Act, 2011, because Chapter IIIB constitutes a complete and exhaustive code of regulation, and Parliament's exclusive authority under Article 246(1) over the regulation of financial corporations (List I) preempts State authority under Entry 30 of List II (money lending), with the doctrine of eclipse and Section 45Q's overriding clause confirming the primacy of federal regulation.
On this section: The Court analyzed the definitional distinctions showing that banking requires accepting deposits from public, whereas NBFCs may only lend without accepting deposits, explaining why RBI had to create separate Chapter IIIB for non-deposit taking financial companies.
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Icici Bank Limited vs Officl. Liquir. of Aps Star Indus. Ld
Court's Decision & Legal Precedent
Inter se transfer of Non-Performing Assets by banks is a legitimate and legally permissible business activity under the Banking Regulation Act, 1949. Such transfers fall within the scope of banking business as defined by Section 6(1) read with Section 6(1)(n) of the BR Act 1949, are authorized by RBI Guidelines dated July 13, 2005 which have statutory force under Sections 21 and 35A of BR Act, and do not constitute prohibited 'trading in debts' under Section 8 of the Act. Assignment of account receivables with underlying security by one bank to another bank, without assignment of the assignor bank's obligations to the borrower, is legally valid and permissible, and the assignee bank is entitled to be substituted as secured creditor in proceedings relating to companies in liquidation.
On this section: Examined definitions of 'banking' and 'banking company'. Court interpreted 'banking' narrowly as core activity of accepting deposits for lending, but found this does not restrict all banking business to only this core activity.
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Rajendrakumar Aatmaram Agarwal vs The State of Maharashtra
Court's Decision & Legal Precedent
Cooperative banks not owned or controlled by the State or Central Government are not excluded from the definition of 'Financial Establishment' under Section 2(d) of the MPID Act, notwithstanding their regulation under the Banking Regulation Act, 1949.
On this section: Applying banking regulation frameworks to cooperative societies.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… under: - " 2(d) Financial Establishment means any person accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a co-operative society owned or controlled by any State Government or the Central Government or a banking company defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949); " Section 3 of MPID Act pertains to the Fraudulent Default by a Financial Establishment, which reads as under: - > " 3. Fraudulent default by Financial Establishment .- Any Financial Establishment, which fraudulently defaults any repayment of deposit on …
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… To make things more clear that there is no duplication of control, Section 45H of the RBI Act states that the provisions of Chapter IIIB shall not apply to a Banking Company as defined in Section 5 of the Banking Regulation Act. 4.15 But the definition of " money lender " in the Kerala Act excludes only a " bank " to which the Banking Regulation Act applies . It does not exclude a non banking institution from the definition. Therefore, the Kerala State authorities started claiming and technically …
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… To make things more clear that there is no duplication of control, Section 45H of the RBI Act states that the provisions of Chapter IIIB shall not apply to a Banking Company as defined in Section 5 of the Banking Regulation Act. 4.15 But the definition of " money lender " in the Kerala Act excludes only a " bank " to which the Banking Regulation Act applies . It does not exclude a non banking institution from the definition. Therefore, the Kerala State authorities started claiming and technically …
Made under this section, and citing it
1 instrument names this provision in its title or its text without being made under it.
Questions about Section 5
What have the courts held on Section 5 of the Banking Regulation Act?
Mahesh Kumar Sahu vs Malleshwaram Coopoerative Bank LTD (05 May 2020) is the leading judgment on this section among those set out below: Central statute defining banking and banking company; Section 56 crucial for understanding how the Act applies to cooperative banks through incorporation by reference. Another 7 judgments on this section are set out below, 7 of them from the Supreme Court. They run from 2010 to 2024.
How do I find court cases under Section 5 of the Banking Regulation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Banking Regulation Act 1949 5, section 5 Banking Regulation Act 1949, section 5 of the Banking Regulation Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 8 reported judgments on this section are set out on this page, beginning with Mahesh Kumar Sahu vs Malleshwaram Coopoerative Bank LTD (05 May 2020).
What should I read with Section 5 of the Banking Regulation Act, and has it changed?
Its own text turns on Banking Companies (Acquisition and Transfer of Undertakings) Act 3 (Establishment of corresponding new banks and business thereof), Banking Companies (Acquisition and Transfer of Undertakings) Act 3 (Establishment of corresponding new banks and business thereof), section 6 (Form of business in which banking companies may engage), section 35 (Inspection), and on 8 further provisions, so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. One instrument names it without being made under it, most recently Banking Ombudsman Scheme 2006 (2005).
When did Section 5 of the Banking Regulation Act come into force?
Section 5 of the Banking Regulation Act, cited as Banking Regulation Act 1949 5, came into force on 16 Mar 1949, having been enacted on 10 Mar 1949. It is in force as at the date shown on this page.
Other sections of this Act
- 56. Act to apply to co-operative societies subject to modifications5544 words
- 45. Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation2310 words
- 10B. Banking company to be managed by whole time chairman1171 words
- 43A. Preferential payments to depositors1031 words
- 11. Requirement as to minimum paid-up capital and reserves988 words
- 24. Maintenance of a percentage of assets967 words
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. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.