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BRBL MODULE – A
Chapter:1 LEGAL FRAMEWORK OF REGULATION OF BANKS
What we will study?
*All about Legal Framework of Regulation of Banks?
INTRODUCTION:
Banking in India is mainly governed by the Banking Regulation Act,
1949 and the Reserve Bank of India Act, 1934.
The Reserve Bank of India and the Government of India exercise
control over banks right from the opening of the banks to their
winding up by virtue of the powers conferred under these statutes.
All the regulatory provisions are not uniformly applicable to all banks.
The applicability of the provisions of these Acts to a bank depends on
its constitution; that is, whether it is a statutory corporation, a
banking company or a co-operative society.
In this unit, we look at the definition of banking, the constitution of
different types of banks and applicability of regulatory laws, the
general framework of the regulatory laws and the role of regulators
namely, the Reserve Bank of India and the government.
BUSINESS OF BANKING:
Definition of Banking:
Banking is defined in Section 5(b) of the Banking Regulation Act, 1949
as follows- "Banking means the accepting for the purpose of lending
or investing, of deposits of money from the public, repayable on
demand or otherwise and withdraw able by cheque, draft, order or
otherwise."
Thus, a bank necessarily performs two essential functions:
* Acceptance of deposits from the public and
* Lending or investment of such deposits.
The deposits may be repayable on demand or after a period of time,
as mutually agreed by the banker and the customer.
In terms of the definition, the banker can accept "deposits" of money
only and not anything else.
However, accepting deposits from the "public" does not imply that a
banker accepts deposits from anyone who offers money for such
purpose.
Actually, a banker can refuse to open accounts of undesirable persons
and further, the opening of such accounts is subject to fulfillment of
certain conditions like proper identification and compliance with
Know Your Customer (KYC) norms etc..
The KYC guidelines issued by the Reserve Bank require banks to
follow certain customer identification procedure for opening of
accounts for protecting the banks from frauds, etc., and also for
monitoring transactions of a suspicious nature for the purpose of
reporting to appropriate authorities for taking anti-money laundering
measures and combating financing of terrorism.
Deposits Withdraw able by Cheque:
Under Section 49A of the Banking Regulation Act, no person other
than a banking company.
Reserve Bank of India, the State Bank of India or any other banking
institution, firm or other person notified by the Central Government
in this behalf is authorized to accept deposits withdraw able by
cheque.
Provided that nothing contained in this section shall apply to any
savings bank scheme run by the Government.
Acceptance of Deposits by Non-banking Entities:
There are also non-banking financial companies, firms and other
unincorporated associations of persons and individuals who accept
deposits from the public.
Acceptance of deposits by non-banking financial companies is
regulated by the Reserve Bank under the Non-Banking Financial
Companies Acceptance of Public Deposits (Reserve Bank) Directions,
1998 and other directions issued by it under Chapter IIIB of the
Reserve Bank of India Act.
Licence for Banking:
In India, it is necessary to have a licence from the Reserve Bank under
Section 22 of the Banking Regulation Act for commencing or carrying
on the business of banking.
Every banking company has to use the word "bank" as part of its
name (vide, Section 7 of the Act) and no company other than a
banking company can use the words "bank".
"Banker", "banking" as part of its name.
Further, no firm, individual or group of individuals is permitted to use
the words "bank".
"Banking" or "banking company" as a part of the name or for the
purpose of business.
Subsidiaries of banks and association of banks in certain cases, as also
Primary Credit Societies, a co-operative society formed for the
purpose of protection of mutual interest of co-operative banks and
any co- operative society, not being a primary credit society, formed
by the employees of a banking company, State Bank of India or
nationalized banks are exempted from this restriction.
Permitted Business:
Although, traditionally and as per definition, the main business of
banks is acceptance of deposits and lending/investing, the banks
carry out many allied and even unrelated activities.
Some of the activities permitted under Section 6(1) of the Banking
Regulation Act, include dealing in Bills of Exchange including drawing,
accepting, buying, selling etc., the lending or advancing of money
either with or without security, carrying on and transacting every
kind of guarantee and indemnity business, managing, selling and
realizing any property which may come into the possession of the
banking company in satisfaction or part satisfaction of any of its
claims etc.
Prohibited Business:
Section 8 of the Banking Regulation Act prohibits a banking company
from engaging directly or indirectly in trading activities and
undertaking trading risks.
Buying or selling or bartering of goods directly or indirectly is
prohibited.
Goods for the purpose of this Section 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.
However, this is without prejudice to the business permitted under
Section 6(1) of the Act.
Accordingly, a bank can realize the securities given to it or held by it
for a loan, if need arises for the realization of the amount lent.
It can also buy or sell or barter for others in connection with:
(a) bills of exchange received for collection or negotiation and (b)
undertaking the administration of estates as executor, trustee etc.
Section 9 of the BR Act, dealing with, disposal of non-banking assets
provides that "Notwithstanding anything contained in Section 6, no
banking company shall hold any immovable property howsoever
acquired, except such as is required for its own use, for any period
exceeding seven years from the acquisition thereof or from the
commencement of this Act, whichever is later or any extension of
such period as in this section provided, and such property shall be
disposed of within such period or extended period, as the case may
be. Provided that the banking company may, within the period of
seven years as aforesaid deal or trade in any such property for the
purpose of facilitating the disposal thereof.
Provided further that the Reserve Bank may in any particular case
extend the aforesaid period of seven years by such period not
exceeding five years, where it is satisfied that such extension would
be in the interests of the depositors of the banking company."
CONSTITUTION OF BANKS:
Banks in India fall under one of the following categories:
(a) Body corporate constituted under a special statute
(b) Company registered under the Companies Act, 1956 (Companies
Act 2013) or a foreign company:
(c) Co-operative society registered under a Central or State
enactment.
Public Sector Banks (other than SBI):
These Public Sector Banks are constituted under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 and
the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1980.
Under Section 3 of the aforesaid Acts the Central Government
nationalized (took over the business) of certain banking companies
and vested them in newly created statutory bodies (corresponding
new banks) constituted under the aforesaid Acts.
State Bank of India (SBI):
The State Bank of India was constituted under the State Bank of India
Act, 1955 while the seven associate/subsidiary banks were
constituted under the State Bank (Subsidiary Banks) Act, 1959.
Overtime the seven subsidiaries/associates were merged with the
parent SBI and this process was completed in the FY 2017-18.
Regional Rural Banks (RRBs):
The RRBs were constituted under the Regional Rural Banks Act, 1976.
These banks are governed by the statutes creating them as also some
of the provisions of the Banking Regulation Act and the Reserve Bank
of India Act.
Private Sector Banks/Foreign Banks:
Most Private Sector Banks (including Micro and Small Finance Banks)
are Companies' constituted under Section 3 of the Companies Act,
1956 or incorporated under the Companies Act, 2013.
Foreign Banks are basically foreign companies constituted as per
statutes abroad and treated as such under section 2(42) of the
Companies Act, 2013 and certain provisions of the Companies Act
1956 or 2013 become applicable to them as provided under Section
591 of the Companies Act 1956 or Section u/s 379 of Companies Act,
2013.
All the foreign companies (treated as Foreign Banks) which transact
banking business in India are governed by the Banking Regulation Act
and the RBI Act with regard to their business of banking.
Co-operative Banks:
A co-operative bank conducts ordinary banking business but is
established on a co-operative basis.
The history of Indian cooperative banking dates back to the
enactment of Co-operative Societies Act in 1904.
One of the main objectives enshrined in the aforesaid Act was the
establishment and growth of co-operative credit societies "to
encourage thrift, self-help and co-operation among agriculturists,
artisans and persons of limited means."
However as of today there are different types of co-operative credit
institutions working in India.
Their structure in India is given in the chart below:
Multi State
Scheduled
Urban coop Bks
Single State
Urban Co-
operatives
Multi State
Non-Scheduled
Urban Coop Bks
Credit Co- Single State
operatives v
Long Term SCARDBs* PCARDBs**
Rural Co-
operatives
Short Term State Coop Bks DCCBs*** PACS****
Source:
RBI Article - Development in Cooperative Banking dated 29-12-2016:
https://m.rbi.org.in/scripts/PublicationsView.aspx?id=17410
If a co-operative bank is operating in more than one state, the Central
Act ie.
Multi State Cooperative Societies Act applies.
In other cases, the respective State Co-operative Societies Act would
apply.
By the Banking Laws (Application to Co-operative Societies) Act, 1965,
certain provisions of the Banking Regulation Act and the Reserve
Bank of India Act were extended to the Co-operative banking sector.
Over the years, in India, there had been a large number of problems
in the Co-operative Sector in general and the Co-operative Banks in
particular which led to failure of the PMC Bank in Mumbai in 2019-20
and led the Government of India to amend the Banking Regulation
Act, for increasing the powers of the RBI to better regulate these
entities, The Banking Regulation (Amendment) Act.
2020 was therefore introduced in Parliament and became law w.c.f.
29-09-2020.
More about the regulation and control of Cooperative Banks by the
RBI is discussed later in this chapter.
RESERVE BANK OF INDIA ACT, 1934:
The Reserve Bank of India Act, 1934 was enacted to constitute the
Reserve Bank of India and came intoforce from 6th March 1934.
It was legislated, with the primary aim 'to regulate the issue of Bank
notes and the keeping of reserves with a view to securing monetary
stability in India and generally to operate the currency and credit
system of the country to its advantage'.
It has been amended periodically to take care of the changes in the
banking sector and the need to regulate the changing scenarios in the
Banking sector from time to time.
* State Co-operative Agriculture and Rural Development Banks
** Primary Co-operative Agriculture and Rural Development Banks
*** District Central Co-operative Banks
**** Primary Agricultural Credit Societies
The Act deals with the constitution, powers and functions of the
Reserve Bank.
It does not directly deal with regulation of the banking system except
for Section 42, which provides for cash reserves of scheduled banks to
be kept with the Reserve Bank, with a view to regulating the credit
system and ensuring monetary stability.
Further, Section 18 of the Act provides for direct discount of bills of
exchange and promissory notes when a special occasion arises,
making it necessary or expedient for the purpose of regulating credit
in the interests of trade, industry and agriculture.
The general superintendence and direction of the affairs and business
of the bank have been vested with the Central Board of Directors
which consists of-
* A governor and not more than four deputy governors appointed by
the central government.
* Four directors nominated by the central government, one from
each of the local boards.
* Ten directors nominated by the central government and
* Two government officials nominated by the central government.
The RBI Act defines a Scheduled Bank as under A Scheduled Bank is
one which has been included in the Second Schedule of the Reserve
Bank of India, 1934 which in turn includes only those banks which
satisfy the criteria mentioned on section 42 (6) (a) of this statute.
Some of the other important Sections of the Act deal with the
establishment/incorporation (Section 3).
Capital (Section 4), Management (Section 7), Composition of the
Central Board and term of office of the directors (Section 8) the
Business which RBI may transact (Section 17)/not transact (Section
19), Right to issue Bank Notes (Section 22), Power of the Central
Government to supersede the Central Board (section 30),
Requirement for maintenance of Cash Reserves of Scheduled Banks
with the Bank (Section 42) etc Acting as the lender of the last resort is
also an important role of the RBI.
A lender of last resort is an entity/institution that offers funds to
banks or other financial institutions that are experiencing financial
difficulty or are considered highly risky or near bankruptcy due to
adverse impact of liquidity or other nsks.
Usually the lender of the last resort steps in when it is discerned that
failure to provide credit to the institutions in distress would
dramatically affect the economy or the banking system.
The Lender of the last resort may also be required to intervene in a
scenario where there is a 'run' on a bank or other financial institution.
The RBI may act as lender of the last resort as per provisions under
Section 17 and 18 of the RBI Act.
As has been mentioned earlier the RBI Act has been amended from
time to time.
The latest amendment was necessitated by the serious financial
issues faced by many Non-Banking Financial Companies (NBFCs) in
2019.
The government therefore came up with a proposal, for introduction
of laws and regulations, to give the regulator (RBI) more control over
this sector.
Consequently, Chapter VI of the Finance (No. 2) Act 2019 which took
effect from 9th August 2019 provides for amendments inter alia to
the RBI Act 1934 with respect to Non-Banking Finance Companies
(NBFCs).
The major changes are detailed hereunder.
Limit of net owned funds has been enhanced to Rs. 100 crores from
the existing limit of Rs. 2 crores
Different amounts of net owned funds may be notified for different
categories of NBFCs [Amendment to Section 45-1A];
Under newly inserted sections 45-ID and 45-IE, the RBI has been
provided with two ways to control the management of a regulated
NBFC i.c. by either replacing directors or by superseding its board.
Moreover the new section 45MAA introduced, gives the RBI the
power to remove or debar an auditor from exercising duties as an
auditor for an RBI regulated entity for a period of 3 years, if, the RBI is
satisfied that such auditor has failed to comply with its directions.
Further for providing resolution in NBFCs after inspecting the books
of accounts of the NBFC, the RBI may, in the public interest or in the
interest of financial stability, frame schemes to preserve the
continuity of the NBFC
Thus under newly inserted section 45MBA RBI is given powers to
frame schemes for amalgamation, reconstruction or splitting of an
NBFC into viable and non-viable businesses to ensure the smooth
functioning of the financial system.
The RBI has also been given additional powers, under new section
45NAA, to direct an NBFC to furnish statements and information
relating to its group company(s) and order inspection or audit for the
same.
BANKING REGULATION ACT, 1949:
The Banking Regulation Act, 1949 is a legislation that regulates Banks
in India.
Passed as the Banking Companies Act 1949, it came into force from
16 March 1949.
The name of the statute was changed to Banking Regulation Act 1949
from 1" March 1966.
It became applicable in Jammu and Kashmir from 1956.
Initially, this law was applicable to Banking Companies alone.
However, in 1965, amongst other
Amendments, by adding Section 56, the Act was made applicable to
Co-operative Banks also.
The Act has been amended from time to time and was last amended
vide The Banking Regulation (Amendment) Act 2020 which came into
force from 26th June 2020 "except section 4, which, in so far as it
relates to-
primary co-operative banks, be deemed to have come into force on
the 29th day of June, 2020;
State co-operative banks and central co-operative banks, come into
force on such date as the Central Government may by notification in
the Official Gazette, appoint:
Provided that different dates may be appointed for State co-
operative banks and Central co-operative banks and any reference in
any such provision to the commencement of this Act shall be
construed as a reference to the coming into force of that provision".
The amendment has brought about far reaching changes as regards
RBI's regulatory control over Co-operative banks in terms of
management, capital, audit and liquidation which are discussed more
Elaborately while taking up RBIs control over Co-operative Banks
later in this chapter.
However we may add here that Section 3 of the Act has been
amended (vide the abovementioned amendment of 2020) to read
"Notwithstanding anything contained in the National Bank for
Agriculture and Rural Development Act, 1981, this Act shall not apply
to:
(a) A primary agricultural credit society; or
(b) A Co-operative society whose primary object and principal
business is providing of long-term finance for agricultural
development, if such society does not use as part of its name, or in
connection with its business, the words "bank", "banker" or
"banking" and does not act as drawee of cheques."
The Act was also amended in 2017 through the Banking Regulation
(Amendment) Act, 2017 on 25.08.2017 by inserting two new sections
viz, 35AA and 35AB authorizing the Reserve Bank to issue directions
to any banking company or banking companies to initiate insolvency
resolution process in respect of a default, under the provisions of the
Insolvency and Bankruptcy Code, 2016.
"The RBI draws its power to conduct Annual Financial Inspection (AFI)
of banking companies under Section 35 of the BR Act.
RBI makes a comprehensive risk assessment under 'Risk Based
Supervision" by inviting detailed and structured reports/information
from the Banking Companies through a 'Supervisory Program on
Assessment of Risk and Capital' (SPARC).
" Earlier the Amending Act (2012) introduced the setting up of a
Depositor Education and Awareness Fund (DEAF) to take over
inoperative deposit account(s) which have not been claimed or
operated for a period of ten years or more, within a period of three
months from the expiry of the said period of ten years.
Thus the Banking Regulation Act is a comprehensive piece of
legislation aimed at the development of sound and balanced growth
of banking business in the country.
Right from the definition of the word banking, it's licensing,
functioning, capital and reserve requirements, banking operations
and management structure, liquidity provisions and profit
distribution and bank inspection down to the take-over’s and
amalgamation of the banks and their liquidation have all been
extensively covered under the Act.
The Act provides the Reserve Bank of India (RBI) the powers to
license banks, regulate shareholding and voting rights of
shareholders, supervise the appointment of the boards and
management; regulate the operations of banks, lay down instructions
for audits; control moratorium, mergers and liquidation; issue
directives in the interests of public good and on banking policy, and
impose penalties.
To summarize, the objectives of the Banking Regulation Act is to:
* Provide specific legislation to the business of banking in India
* Prevent bank failures by prescribing minimum capital requirements
* Ensure balanced development and growth of banking companies
* Give specific powers to RBI
* Safeguard the interest of Depositor.
RESERVE BANK AS A CENTRAL BANK AND:
REGULATOR OF NON-BANKING FINANCIAL INSTITUTIONS/BANK:
The Reserve Bank was constituted under Section 3 of the Reserve
Bank of India Act, 1934 for taking over the management of currency
from the Central Government and carrying on the business of banking
in accordance with the provisions of the Act.
Originally, under the RBI Act, the Bank had the responsibility of
(a) Regulating the issue of bank notes;
(b) Keeping of reserves for ensuring monetary stability and
(c) Generally, to operate the currency and credit system of the
country to its advantage.
However one of the major roles currently played by the Reserve Bank
of India is that of regulator of the Banks and other financial
institutions like Non-Banking Financial Companies (NBFCs) etc.
The Banking Regulation Act 1949 empowers the RBI to act as a
regulator and supervisor of banking activities in India.
Powers are exercised as regulator and as a supervisor under certain
Sections of the Act.
The powers include powers to issue licenses, control over voting
rights/quantum of shareholding of shareholders, managerial
personnel, etc.
The major powers of the Reserve Bank in the different roles as
regulator and supervisor can be summed up as under:
(a) Power to issue banking licenses;
(b) Power of appointment and removal of banking boards/personnel;
(c) Power to regulate the business of banks;
(d) Power to give directions;
(e) Power to inspect and supervise banks;
(f) Power regarding audit of banks;
(g) Power to collect, collate and furnish credit information:
(h) Power relating to moratorium, amalgamation and winding up and
(i) Power to impose penalties.
Regulation, Control and Supervision over NBFCs:
The Department of Non-Banking Supervision (DNBS) of RBI is
entrusted with the responsibility of regulation and supervision of
NBFCs under the regulatory - provisions contained under Chapter III B
and C and Chapter V of the Reserve Bank of India Act, 1934.
Details of Regulation and control over NBFCs have been provided in
Unit 6.
GOVERNMENT AS A REGULATOR OF BANKS:
The Reserve Bank is the primary regulator of banks.
But the Central Government has also been conferred extensive
powers under the RBI Act and BR Act to regulate banks either directly
or indirectly.
The Governor and the members of the Central Board of the RBI are
appointed by the Government of India (GOI) who also has powers to
remove them.
The GOI is the sole shareholder of the RBI.
Under Section 7(1) of the RBI Act, the Government of India has been
conferred with powers to give directions to the RBI whenever
considered as important in public interest, in consultation with the
Governor of RBI.
These powers are supposed to be rarely used and it was reported
that the first and only time powers under Section 7(1) of the RBI Act
was utilized by the Government of India was in October 2018 when
separate letters were sent to the RBI governor giving directions on
issues ranging from liquidity for NBFCs, capital requirement for weak
banks and lending to SMEs.
The Government also has other powers under various Acts to
influence RBI decisions in a number of ways, besides being the
appellate authority in several matters where powers are available
with RBI for initial decisions.
A few areas where the power lies with the Government to do certain
acts to regulate/supervise Banks are as follows
Appeal against removal of managerial personnel of a Bank exercised
by RBI, under Section 10B and 36AA of the Banking Regulation Act;
Similarly appeal against, cancellation of banking license (under
Section 22) and refusal of certificate regarding floating charge on
assets (under Section 14A), may be preferred by the aggrieved banks,
with the Government;
Suspension of operations and/or exemption from any of the
provisions of the BR Act (under Section 4 and 53 respectively of the
Act) may be permitted by the GOI on representation/
recommendation of the RBI;
Under Section 6(1) of the Act the GOI notifies which other business a
banking company may engage, in addition to the business of banking.
Some other powers vested with the GOI include rule making powers
under Sections 52 and 45Y (preservation of records), approval for
formation of a subsidiary by a banking company for certain business
under Section 19.
Notification with reference to accounts and balance sheet under
Section 29, directions for inspection of banks under Section 35,
powers to acquire undertakings of banks (Section 36AE),
appointment of court liquidator attached to the High Court under
Section 38A etc.
The provisions confer wide powers on the Central Government to
regulate banks.
These are in addition to the powers conferred on the government as
majority shareholder or full owner of public sector banks under the
statutes constituting them.
CONTROL OVER CO-OPERATIVE BANKS:
A co-operative bank is a co-operative society engaged in the business
of banking and may be a primary Co-operative bank, a district central
Co-operative bank or a State Co-operative bank.
Co-operative banks operating in one state only are registered under
the State Co-operative Societies Act concerned.
The formation of such banks as well as their management and control
over personnel is regulated by the Co-operative law of the State.
The Registrar of Co-operative societies under the Co-operative
Societies Act exercises a wide range of powers on co-operative
societies from registration to winding up.
In the case of Co-operative Banks operating in more than one state,
the Multi-State Co-operative Societies Act, 2002 is applicable.
In that case, the Registrar appointed by the Central Government
takes the place of the Registrar appointed by the State Government
in other cases.
With the introduction of Section 56 in the Banking Regulation Act,
1949 with effect from 1965, Co-operative banks came under the
regulatory purview of the Reserve Bank.
While the formation and management of Co-operative societies
operating in one state only (including those conducting banking
business) are under the control of the State Government, licensing
and regulation of banking business rests with the Reserve Bank.
Thus, there is a dual control of State Governments and the Reserve
Bank over these banks.
The Banking Regulation (Amendment) Act 2020 was enacted with
effect from 26th June 2020 to give more powers to the RBI to
restructure Co-operative Banks, provide more control over
management through powers of Supersession of Board of directors of
a Cooperative Bank (Section 36AAA as amended) etc.
And allow RBI to frame the revival plan for these Banks and protect
the interests of the depositors.
In terms of amended Section 56 of the statute "Notwithstanding
anything contained in any other law
for the time being in force, the provisions of this Act, shall apply to, or
in relation to, co-operative societies as they apply to, or in relation to,
banking companies subject to the following modifications, namely:
References to a "banking company" or "the company" or "such
company" shall be construed as references to a co-operative bank,
References to commencement of this Act" shall be construed as
references to commencement of the Banking Laws (Application to Co-
operative Societies) Act, 1965 (23 of 1965);
References to "memorandum of association" or "articles of
association" shall be construed as references to bye-laws;
References to the provisions of the Companies Act, 1956 (1 of 1956),
except in Part III and Part IIIA, shall be construed as references to the
corresponding provisions, if any, of the law under which a co-
operative bank is registered;
References to "Registrar" or "Registrar of Companies" shall be
construed as references to "Central Registrar" or "Registrar of Co-
operative Societies", as the case may be, under the law under which a
co-operative bank is registered;” ,
Besides, Co-operative Banks have also been permitted to raise capital
through public/private issues preferential shares, debentures etc..
The amendments however do not affect the existing powers of the
State Registrars of co-operative societies under the State laws.
In the case of Co-operative banks which are registered under the
Deposit Insurance and Credit Guarantee Corporation Act, the Reserve
Bank has the power to order their winding up.
The circumstances in which Reserve Bank may require winding up are
provided in Section 13D of the DICGC Act.
REGULATION OF BANKS BY OTHER AUTHORITIES:
Banks may be subject to the control of other regulatory agencies in
the conduct of their business.
For instance, a banking company will be subject to the control of the
authorities under the Companies Act in respect of company matters.
Similarly, a bank is answerable to labour authorities in respect of the
terms and conditions of service of its workmen, opening and closing
of its premises, engagement of contract labour, etc.
Banks are also liable to pay income tax and other taxes such as cash
transaction tax, GST, etc., and have to follow the rules and
regulations in that regard.
As provided in Section 6 of the Banking Regulation Act, banks may
undertake certain non-banking business in addition to the business of
banking.
In that regard also, banks may be subject to the regulatory control of
other agencies.
For instance, in the case of dealings in securities like shares and
debentures, banks are subject to regulation by the Securities
Exchange Board of India (SEBI) under the Securities Contract
(Regulation) Act, 1956 read with the Securities and Exchange Board of
India Act, 1992.
If the Bank desires to raise capital through public issue, it has to
comply with SEBI guidelines.
In case of Insurance Business IRDA Regulations and in case of Mutual
Fund and Merchant Banking Business rules/regulations prescribed by
RBI, SEBI are required to be complied with.

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