School of Law and Governance

Central University of South Bihar

LAW 406 Banking Law L T P C
Version: 1.1 4 0 0 4
Pre-requisites//Exposure Contract Act, 1872
co-requisites
Semester VII
B.A. LL.B.(H) & B.Sc.LL.B.(H)

Course Description
In the recent times, the study of Banking Law for the student interested to specialize in
‘commercial laws’ has become imperative, as banking law is a major part of law merchant.
The focal point of banking law has changed, especially in India, as the complexion of
banking sector over a period of time. The traditional study of banking law heavily
concentrates upon ‘banking transactions’ mainly. It means the relationship between ‘bankers’
and ‘customer’ was the major aspect was always concentrated more than anything else. But
today a course in Banking Law should concentrate to a great extent upon ‘regulating banking
institutions’. This subject tries to provide new approach towards Baking Law to the students
so that they could connect themselves with current realistic and practical scenario.
Course Objectives:
1. To understand the concept of Bank and its significance in human life.
2. To understand and examine the various principles of Banking Law.
3. To identify the role and significance of international Banking Law.
4. To assess the role of judiciary in Banking Law.
Course Outcomes:
On completion of this course, the students will be:
1. Acquainted with the concept and various functions of Bank.
2. Appreciate the relevancy of Banking Law.
3. Learn the mechanism to find out the real intent of the legislature in making of the
various Statutes regarding Banking.
4. Understand the relevancy of connectivity of national and international Banking
system.
5. Apply the various practical approaches with regard to Banking.

Pedagogy:

Lecture Method
 Problem Method
Case Study Method

Evaluation Scheme:

Continuous Assessment 30 Points

Attendance 5 Points
Mid-Term 15Points
End Term 50 Points

Module 1: Introduction
A. Evolution of Bank, Banking Institutions, and Banking Law,
Development of British Banking, Historical Background of Banking Institutions in India,
Rise of Joint Stock Banks in India.
B. Types of Banks, Functions of Commercial and Co-Operative Banks, Lead Bank Scheme,
Regional Rural Banks, Banking System.
Module 2: The Banking (Regulation) Act, 1949
A. History, Salient features, Social Control, Nationalisation of Banks, Banking Laws
(Amendment) Act, 2012, Banking & Public and Private Banking Company status.
1. R.C. Cooper v. Union of India, AIR 1970 SC 564.
2. Mahaluxami Bank Ltd. v. Registrar of Companies, AIR 1961 Cal 666.
3. All India New Bank of India Employees Federation, New Delhi v. Union of India,
AIR 2001 All 205.
B. Licensing of Banks, Business Permitted and Prohibited under the Act, Capital and Share
Capital, Loans and Advances, and Management of Banking Companies and
Case Laws:
1. Promod Malhotra v. Union of India, AIR, 2004 SC3338.
2. Jalgaon District Central CooperativeM/S v. Income Tax Officer, 1998.
3. Canara Bank v. National Thermal Power, (2000) 8 SCALE 139.
4. Ram Narayan Poply v. CBI, AIR 2003SC2748.
5. M/S Sardar Associates v. Punjab and Sind Bank, AIR 2010SC218.
C. Functions of RBI, The Organisational Structure of RBI, RBI relationship with
Commercial Banks, Custodian of foreign exchange and foreign exchange control and other
promotional functions
Case Laws:
1. The Jwala Bank Ltd. v. Shitla Prasad Singh AIR 1950 All 309
2. Kalipada Sinha v. Mahaluxmi Bank Ltd. (1962) 32 Com Cases 503 (Cal)
3. CRB Capital Markets Limited v. RBI, (2006) 2 BC 57 (Del)
4. Pramod Malhotra v. Union of India, (2004) 3 BC 194 (SC)
Module 3: Banks and Customer Relations
A. Who is customer?
B. Banker-customer relationship-Debtor and Creditor, Trustee and Beneficiaries, Bailer and
Bailee, Guarantor and Beneficiaries, and Trader and Customer.
C. Termination of Relationship- by the customer and by the banker, NPA and regulations
thereto.
Case Laws:
1. Citi Corp Maruti Finance v. S. Vijay Luxmi, AIR 2012 SC 509.
2. New Bank of India v. Pearey Lal, AIR 1962 SC 1003.
3. Union Bank of India v. Vishwa Mohan, AIR 1998 SC 2128.
Module 4: Negotiable Instruments Act
A. Essential Characteristics, Promissory Notes, Bill of exchange, and Cheque
B. Parties to Instruments, Holder and Holder in Due Course, Differences between holder and
holder in due course, Liabilities of the parties of the instruments.
C. Negotiation, Modes of Negotiation, Endorsement, Kinds of Endorsement, Presentment
D. Crossing of Cheques and Dishonour of Cheques
Case Laws:
1. Kalinna Gounder v. Palani Gounder, AIR 1970 SC 1942.
2. Standard Chartered Bank v. State Bank of Maharashtra, AIR 2016 SC 1750.
3. Yogendra Pratap Singh v. Savitri Devi, AIR 2015 SC 1750.

Module 5: Emerging Trends of Banking and International Banking

A. Credit Card Policy and Regulation, Electronic Payment Service, E-Cheques, Internet
Banking, FDI in Banking Sector, Introduction to Mutual Funds.
B. Basel Norms I, II & III, Letters of Credit and Payment Mechanism under International
Trade.
Case Laws:
1.
Module 6: Remedies and Legal Protection to Banking
Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 [SARFAESI ACT]
  Introduction
 Definitions
 Regulation of Securitization and Reconstruction of Financial Assets of Banks and
Financial Institutions
 Enforcement of Security Interest
 Central Registry
 Offences and Penalties
 Miscellaneous
The Banking Ombudsman Scheme, 2002
 Purpose
 Extent
 Definition
 Establishment and Powers
 Procedure for Redressal of Grievances
 Arbitration and Conciliation Procedure

Suggested Readings:
1. Tannan, M.L., Tannan’s Banking Law, Lexis Nexis Butterworth, Student’s Edition
(I)2014
2. Singh, Avtar, Banking Law and Negotiable Instrument Act, Eastern Book Company,
Paperback
3. Kant, Anjani; Lectures On Banking Law, Central Law Agency, Paperback
4. Chaudhary, R.N.; Banking Law, Central Law Agency, Paperback
5. Ellinger, E. P.; Modern Banking Law, Oxford University Press.
6. Ross Cranston, Principle of Banking, Oxford University Press.
Important Note:
1. The topics, legislations and cases mentioned above are not exhaustive. The teacher
teaching the course shall be at liberty to add new topics/legislations/cases.
2. The students are required to study the legislations as amended up-to-date and consult the
latest editions of books.