Prohibition of trading
Section 8 of the Banking Regulation Act, 1949 deals with prohibition of trading. Notwithstanding anything contained in section 6 or in any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods The Act came into force on 16 Mar 1949.
Notwithstanding anything contained in section 6 or in any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others otherwise than in connection with bills of exchange received for collection or negotiation or with such of its business as is referred to in clause (i) sub-section (1) of section 6:
1[Provided that this section shall not apply to any such business as is specified in pursuance of clause (o) of sub-section (1) of section 6.]
Explanation.-- For the purposes of this section, "goods" means every kind of moveable property, other than actionable claims, stocks, shares, money, bullion and specie, and all instruments referred to in clause (a) of sub-section (1) of section 6.
Section 8, 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
Referred to by 1
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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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: Analyzed prohibition on trading in goods to determine whether assignment of debts constitutes prohibited 'trading'. Court held that transfer of own assets (account receivables) by banks is not trading as contemplated by Section 8, which targets purchase/sale of goods except in connection with realization of security.
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.
Questions about Section 8
What have the courts held on Section 8 of the Banking Regulation Act?
Icici Bank Limited vs Officl. Liquir. of Aps Star Indus. Ld (30 Sep 2010) is the leading judgment on this section among those set out below: Analyzed prohibition on trading in goods to determine whether assignment of debts constitutes prohibited 'trading'. Court held that transfer of own assets (account receivables) by banks is not trading as contemplated by Section 8, which targets purchase/sale of goods except in connection with realization of security.
How do I find court cases under Section 8 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 8, section 8 Banking Regulation Act 1949, section 8 of the Banking Regulation Act. People searching for it also type banking regulation act 1949 section 8. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Icici Bank Limited vs Officl. Liquir. of Aps Star Indus. Ld (30 Sep 2010).
What should I read with Section 8 of the Banking Regulation Act, and has it changed?
Its own text turns on section 6 (Form of business in which banking companies may engage), so none of them can safely be read on its own. 1 other provision in this corpus refers back to it.
When did Section 8 of the Banking Regulation Act come into force?
Section 8 of the Banking Regulation Act, cited as Banking Regulation Act 1949 8, 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
- 5. Interpretation1164 words
- 43A. Preferential payments to depositors1031 words
- 11. Requirement as to minimum paid-up capital and reserves988 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 14 Oct 2026. This page is not a substitute for legal advice.