Name: Keerat Sidhu

Roll Number: IPL01056

Session: 04
Terms:
1. Promissory Note: A written commitment to pay a specific sum to a designated person.
2. Bill of Exchange: A written order from the drawer to the drawee to pay a specified
sum to the payee.
3. Hundis: Negotiable instruments similar to bills of exchange, commonly used in
indigenous banking, particularly in India.
4. Letter of Credit: A financial document issued by a bank guaranteeing payment to a
seller on behalf of the buyer.
5. Bill of Lading: A document acknowledging receipt of goods, outlining the terms of
their transport, commonly used in shipping.
6. Traveller's Cheque: Preprinted, fixed-amount cheques designed for secure use by
travellers as an alternative to cash.
7. Railway Receipt: A document confirming the receipt of goods for transport by
railway.
8. Warrant: A financial instrument granting the holder the right to buy securities at a
specific price within a certain period.
9. Debenture Stock: Interest-bearing securities representing a loan made by the investor
to the issuing company.
Case Laws:
 Allahabad Bank & Ors Vs Deepak Sharma
The gravity of an offense related to moral turpitude hinges on the details of the case.
No matter how we define moral turpitude, the court underscored that a highly serious
instance of such an offense occurs when a person employed in a bank is entrusted
with public funds and commits forgery. The severity of a moral turpitude-related
offense varies based on the specific facts of the case. Regardless of the exact
definition of moral turpitude, the court highlighted that a particularly grave situation
arises when an individual working in a banking company manipulates public funds
through forgery.
 Pawan Kumar Vs State of Haryana & Ors
The term "moral turpitude" is employed in both legal and everyday conversations to
characterize behaviour that is inherently despicable, immoral, or reveals a significant
level of depravity. Put simply, it refers to actions that are fundamentally wicked and
corrupt. In legal and common language, "moral turpitude" is a term used to signify
conduct that is inherently evil, immoral, or indicative of a profound level of depravity.
In more straightforward terms, it points to actions that are fundamentally wicked and
corrupt.
Provisions of Banking Regulation Act
 Section 08: Prohibition of trading.
Prohibiting banking companies from engaging in the direct or indirect trading of
goods, with a few exceptions. According to the section, banks are not allowed to buy,
sell, or barter goods unless it is related to the realization of security held by the bank
or is part of specific banking activities outlined in section 6. The prohibition extends
to the bank's involvement in any trade or acting as an intermediary in the buying,
selling, or bartering of goods for others, except when handling bills of exchange for
collection or negotiation. The section defines "goods" as movable property excluding
actionable claims, stocks, shares, money, bullion, specie, and specified instruments.
There is a proviso exempting certain businesses detailed in section 6 from the
prohibition.
 Section 10: Prohibition of employment of managing agents and restrictions on
certain forms of employment.
 (1)(a) No Managing Agents: Banks can't have managing agents
 (1)(b) Employment Rules: Banks can't hire or keep people who:
o Went bankrupt or had money problems.
o Got convicted for doing something really wrong.
o Get paid based on company profits.
 Exceptions:
o Bonus payments allowed under certain situations.
o Certain roles like brokers can get commissions.
o The Reserve Bank decides what's a reasonable salary.

 (1)(c) Management Rules: Banking companies' management cannot include

individuals who
- Directors in unrelated companies.
- Running other businesses on the side.
- Stick around as managers for more than five years in a row.
- Exception: Directors who aren't the big bosses (managing directors)
get a pass.
 (2) Factors Considered by Reserve Bank:When the Reserve Bank when
forming opinions considers factors like:
- Financial condition and history of the banking company.
- Size, area of operation, resources, and business volume.
- Number of branches or offices.
- Qualifications, age, and experience of the person.
- Remuneration comparison with others in similar positions.
- Interests of depositors.
 (6): Finality of Reserve Bank's Decisions: Any decision or order made by the
Reserve Bank under this section is considered final and cannot be appealed.
 Section 10 A: Board of directors to include persons with professional or other
experience.
 (1): Initial Requirements for Banking Companies: This part says that every
banking company, whether it existed before or came into being after a certain
 law in 1968, needs to follow the rules outlined in this section. However,
existing companies get a three-month break from these rules.
 (2): Composition of the Board: More than half (51%) of a bank's board
members must be people with special knowledge or practical experience in
areas like accountancy, agriculture, banking, etc. There's a requirement for at
least two directors to have expertise in agriculture, rural economy, co-
operation, or small-scale industry. Additionally, directors shouldn't have
substantial interests in unrelated companies or be owners of large trading,
commercial, or industrial businesses.
 (2A): Term Limits for Directors: This part sets limits on how long directors
can serve. Regular directors, except the chairman or whole-time director, can't
stay in office continuously for more than eight years. If the chairman or
whole-time director is removed, they can't be a director again for four years.
 (3): Board Reconstitution: If a banking company's board doesn't meet the
composition requirements mentioned earlier, they have to reorganize the
board.
 (4): Retirement Decision: In case directors need to retire to meet the
requirements mentioned in subsection (2), the board can decide which director
or directors will retire by drawing lots.
 (5): Reserve Bank's Intervention: If the Reserve Bank believes that the board
composition doesn't meet the necessary criteria, it can order the banking
company to reorganize. If the company doesn't comply within two months, the
Reserve Bank can remove a director and appoint someone new.
 (6): Final Decisions: Decisions made regarding appointments, removals, or
reorganizations under this section are considered final and cannot be
questioned in court.
 (7): Director's Term: Directors appointed or elected under this section will
serve until the date their predecessors' term would have ended.
 (8): Validity of Board Actions: Actions taken by the board are not considered
invalid just because there are issues with the board's composition or if a
member didn't meet the requirements outlined in this section.
 Section 10B: Banking company to be managed by whole time chairman
 (1): Appointment of Whole-Time Chairman: Regardless of other laws or
contracts, every banking company, whether existing or formed after 1994,
must have one of its directors appointed as the chairman. The chairman, if
appointed on a whole-time basis, will manage the entire affairs of the banking
company, but under the supervision of the Board of directors.
- (1A): Part-Time Chairman: If a chairman is appointed on a part-time
basis, approval from the Reserve Bank is required. The management
responsibilities will be given to a managing director under the control
of the Board of directors.
 (2): Term Limits for Chairman and Managing Director: The chairman and
every managing director, if appointed on a whole-time basis, must be in the
full-time employment of the company. Their term is set by the Board of
directors, not exceeding five years. They can be re-elected or re-appointed.
 The chairman is allowed to be a director of a subsidiary or a company
registered under certain provisions.
 (3): Managing Director Transition: Existing managing directors, when a
chairman is elected, either leave immediately or upon the election or
appointment of the chairman.
 (4): Qualifications for Chairman and Managing Director: Chairmen and
managing directors must have special knowledge and practical experience
related to banking, financial institutions, or business administration. They
should not be involved in certain other businesses or have conflicting interests.
 (5A): Extension of Term: A chairman or managing director, upon the end of
their term, can continue in office with the approval of the Reserve Bank until
their successor takes over.
 (6): Reserve Bank's Authority: The Reserve Bank can, if it deems a person
unfit for the role, require the banking company to elect or appoint a new
chairman or managing director. If the company fails to do so, the Reserve
Bank can remove the current person from the position and appoint a suitable
replacement.
 (7): Appeals and Finality: The banking company and the person facing
removal can appeal to the Central Government within thirty days. The
decision of the Central Government is final and cannot be challenged in court.
 (8): Part-Time Honorary Work: The Reserve Bank may permit the chairman or
managing director to undertake part-time honorary work that doesn't interfere
with their duties.
 (9): Temporary Arrangements: In certain circumstances like death, resignation,
or incapacity of the chairman or managing director, the banking company can
make temporary arrangements, with the approval of the Reserve Bank, for up
to four months.