BANKING

LAW

mdian Fuamaal oyatuw

otem oue couny coAsli of twancial maseto, tanual
mtumdi aiow fnamcial motumt n pooducta.
7
Fuame equu vatet to woney- tue souce ot prouicn fund for a
paaticulaw actindi
fuuanci d aector acds as an wtundiass avd faalitates tle {low of
fund from awes oft ouwplo 0 areas e defieit.
MOney maet eapital Mauleet " forex Mael o(redit Maulet

wotituiow ot pulblie utot - facilütators of conoie

Guw diaMs ef Public Moey roud s of eor por ae fnane
Teuotees a diperitor s mtuat toldens of tinaneial talaiu
aguatiow MOm
To preseve - Proteti'on of depoitort.
Bate

o a finamcial wnttubion tuat putovms wvaad fuwctious ule

acapling duponla, kding loas, Prooln aguicultue GRueat
dudlapient te.

tuvancial mattution uat accept deponls fro ue pulic eG cueates

a dauwand dupeik wbute
uatul sinut ueausly gwng leam
4reele word banque' benel
Cuauaeteiatics oBaule
* Uvited Domi ion TRUst td v kirlewool
Abamle cauies @ut totlouwing actiuta
conduct o urvent a<e b) Pauyment of cheques
 ) Collecion of chequs fon tustowns.
Bou et Cetnad Ltd, Colouu bo v IT Comniion Colouon
Baueer Oe wlo cUeies on, as eis puu apal bus wess uu
Occeplw t dipoito ot money
subjek' to witudanwal by ceq ues, dvat

s(2) of Bamlm eegulation Aet

(a) Lms
tue acuptwy for kie pupose of lemdn or uVLabmal, ap
ponls at moey trowte publie epayable on dumand or
Otheinl cnd withdvawalole Aoy cque dratt, ovd |0uawse

dipont - ixed, sawng

2
xcluamge for promi sony mati or BoE
sconday
Moviy Tvawoku - dratto b0E 2. Advameiny teue loans
3. Ovea dr att fauWia 4
tuvidun gowntes.
Nd for bande Cwpotamel)
I. To romde te
2 To contol tu
Kupply o wmouyw andt h edit
3. To euse puolic eontidnee
wvease
A. To avoLd couCOnt eation ot tuameial pows wte luands of a fuw
mdiiduals E wotituos
5. To oet equal norms coudutioe Cle vat ot wtust, peiod of
lndin ete-) to al typu of oustomu.
 Evoutio Bavts mda

Ancit - CTemple Banles)

ls stalbliad wn temples, voe peope oould
valuablus for ateeepmg
dupoitrd itemy,
Tu twupe iut would t n M veupli for tue

Modern
ndupeudune Plane foat wdipnduna Pease
TMe pot wdipeudenca Pre nationali saio Peiod
Pot nati enaiaak' cn Peiod
ibuati ou Puiod
fre mdepuudme Plasi
1s Baule Hindstan Bae /Bone of Hidustan C1440)
tast mdia Co - estalyined Baule of Bengal Bane ot Bombay,
Banle ot Madas" (eréi duutial Banles )
mto - bwpei al Bonde of ndia SBI (Nw nam)
MUgd
> RBI - Apeil 1435

Huaw erYors &tme

Post mdepwdn ase

Banl em Sector UMdu lut. ownwsm
luial populatiou - depuua
GoI Matiomaiicd RBI m 1449.
SBI Mation alised w1455
dun pu0d of meiua Gandu
l4 bames (tommucial) nationalsed
o move nation alio d w (980s
mpact op Nakovalisa'on
1. IE ud to au ineease wfumds &tueuby ienas m the eccucmie
CoMdihou ot t counte
 3 tekwal agneultual octov of tte couuty
4. Itt opuad vp a mayor cwploymunt opportmits fo tw people
5
Pcft baves was med by Gout fo tment of peonl.
Competiti ow deivtned E wenle ctiicney wevcved.
Wbuaization Puiod (rom l441 )
Vauo bomleng ockov veforwa ww wtadued to mpaue
te
oqeation ciiuy aud upgrade ie lhualtlu funanial tourdauy
Dif comwi ttees
The (st Naw asimam lowmitee C194) 3. Cuaw Comm tte
2
Vauma Com w He Ci446) 4 2nd (i441)
Nauasmhan Comaite
((448).
Tue 1948 vepont of cowuttu to Gol (mayor veco mmdaiou)

Baaling > Nou -

Provi nowng Defom ww te Rou of R8I

foviqu Banles would be atlowed ti cpw otces w mdia itu
as bianches or as mibidiaies
plase ot lefoms
Youcy Frawmewornu
(veductou n intst ates, cee ase)
fuv ameial Heath
wpooving
lmrovmut ot uititutional Prawmensore
plsnge o eeformu

way
eefowim kue steuutne o e bame
Tecdunologal Upgradati ou
 Corporatiou) Guvanteu cvedit iuvane DepasiDiGGc
t
watitutions innual mpotaut Ota
ovatve co- owe
opuatve 9istuct
to-
opLeatt
ve Co- Siate Bans Secto pubie Oten
Bonles Nationalie bL
(RaB) Banles
Puval forciju
Banes sSector vate Pri sSector Puoie
Banks opeatve Co- Banles Commerial
Dchuduu Noy Banles Sehedue
RBI
IM) Mony wtutau
fo at
Bhas
(Uer) mtufau Paynenlh Umked platforms wunt pay lal digi
sUue ) 24? cuatlbot C tes analy data AI
ewegene ) Banes
( Only Mobde BAmes Diqutal -
fow. pat duqital otwwm
miweas techwolagy
- New ,
Dewlopnens leent
ous opuati Divusi{ieak
ofon odquay capital
(NPA:) AsetoYutowna focwoes
of
MAw
Nou
eton
elopnt dv
levouve H
 IRBT- Coutval Bamlng wota tution ef e lounty

Estabiahed- 1Q35 ymdu RBI Act (434

Nationali nd w (444

Funetiov o RBI
RBI to Contol

aulen to Gout
eualbling
(oceptnq depoila, colctivg mony adunneny Loavs
loans uplo
uplo 3mowlas)
*(hansociny qout bnweas) adui sov - ou ecovome e motay
" (bamen fo ntau
qout) managu Juable dust of govt
Banen to Cowwuial Bamles lotun Baes).
taccapng d1ponlb &olueling moy )
*qulalivg cvedit
vedit
wthe wmtuest ot trad1, cDMne,
Cash cNUs ot sceduled banes upt
4- lendu ot Lant lesort.
Coutros voum at wedi uated by commu aal bamls to m
pmu ntabilly
Maintan te mtenal a extenal value f eny
Developwunk of uual bamluvn rpromotion et fuianual wut tutions
4’
quatitataye + qusmbitalive mthod o coutvclÇ vgulate cudil fiow
ot too wwel
Cauoe mlation (obsAve)
5*to leip forcigu emchange iau atalble ie tustodiam for onigu nesves

and sels
3’ Give icnse to bamles
Permision to opeu miw brons or chmnge location
Goa
wapec bods a Kcs of comnuial banles.
lwui dintos aproluot lomeu fom entumq tvamslelecthive C. contel)
Ceuwsve top ctials 4 apoml addtonal disccos of banleny Co.
 seueduled Banles
bans wucu uted e 2hd scvdul o tu RBI Acl, 1434
tyay sevual privikqu ao Cowpaud to Nou- Schiduld Bomles
vicaiyt
eututted to
, we
also wti
eute tlad
tled for cueny clugt failiieu
>
Clavm houe
opLata ve
lo- opcaat ve ale may alo bewme schuduled bamesf bwy
fulkill tue cvnteu a otpuated by
, Paud up (aplal of 25 acson move &comply wi tlh all tue vquvmwab
Of RBI
CRR witth RBI
> Maiutan a
Autuon oed to boryow fun ds fooun e8I
More fnaa ally atabe
Nou Scheduled Banles

> ot isted tue and scuedule ot RRL At

> wo coudio tuat dA wlbe fulfi d fo it to be condud a
von- sceduled boanl
7 mamtan tu Cep awt tumsewu
> mot alowcd to bovow fmds from eB I

Cowwuucial Banles
> Oldust wotututens
utalblin hed as wpoat odiu witu slanelhodngs by put mddual,
atu put undu otatt ownuusup &couhel
Suuie proidd fmamcy orgawsd, tvade, cowmeue ncusty
dwg agviuty anall scal bsnes amal borrowes
Pube cter Banles
Connotes a mtuatio wheu the wayor full ntale wthe
bonley awe leld by the Govt.
(964 - Omly 8Public Secto then l4 commevcial bonlcs.
 tuese baules atlowed to vaise Captal thsoUgG tPOs E tuus shane holding
patun ehaged
4or, wamaqiunt couthol- Cuteal Gout
IPrivate sectór banus
ntalaholdeu - ndiudual covporat
wayor m
mamy
july 1443 on Ae ot banleng uctor vetos kbI alowcd
banes to ataut
otat bonleing opuatuovn
with o lende
Out cf lo icoucs is ued 4banls lave wuged

fouqu Bantes
quteud ottiu outade mdia and opuau iw bda tucouglo eramcu
> allowed ou neiprocal bass
opeeatt theCuqa brancus or wholly owud submidiaies
aduto ait koal lawe, qudelnes &dinetivs af daw lsqulator
Caputali ati an ot at least 5 milion wodu to veacu munimw
wn hald for doy bumes
baoed on 2fndantal prmaples
mational
neaut tat foriqu buls ave qve Mear-
brcatmevt n dia ony it then lome Couny allows welin
bamtes to oquu orandhus fveey
whoty cund
made in pumted
subidiaug
lo- Opuati ve Bamle s
Aole

opeu atu ve 4ociety rgisted orduemd to lave bew

Undu tate (Ceutval 'Act.
w More than 1 otate, te lutral
>if a co. opualive Bak in opuainq
Co- opualive Doieh es Act applicabl
anot tum Aqicuttwal evedut wotitadiovs
long team Agicultual Cvedit mollfutios
Urban Coopuative Baes.
 Shot beem Aqmeutual Uadt maitutiou
ohot
>Taues
Cave of
3-tiu oteucte (1:5)
qicultu relatrd ndustues
euact ed
kaws od cd by tale jou
euhane
State Coopeat v Baules Tiev 1

Centeal /Dn tict Coopeatí ve Banles -

Cequlatrd
Titr 2
b 2B1, S4,
NABAR D)
Tiev 3 (Vi Uage evel)
(ostect Uvel)
to CRe
kqncultu (Pumag) ouperalve Banks
sLR coneesons
Y State Qwns u Co - Seio
mgt. chosen by Wm bs
teem
Agi cutual Cmeik wat tulions
Aq

tem wedt for malmy peunant

wuprovemwns

Coopuatve Peual Drveleqmunt

banes (CARDBs) efont m tuus ivection.
at stat wel te nésCAP DBs
Yat local evel br anclus of sCARDB and PCARDBs CPeimay
Pulal Banes CRRB)
lend
Uvique types ot cowmMaial banla ttu at ed o agmclluve aud tu kual
CConoy at a neduced aate
ane 50(s0 jout vent wwes bfw feduual gout. &otale
comAcial lbane (35/)
ae 3 dustuct ttat ae
2RB can not open by anclus n more (h
concted

lalbou
Mola vm depoito rom Aual household
 Speualized Banks

SIDBI (2mall wdutis Deuelopwunt Bande of ndia)

can poid a toan tor aomal calu eut ap on bwmen. wtu
Suppt o ths bank, wal busmes can Cuent

EXIM (post &Empont) Bank

CQuntis that we enpot mg or poog goods. Chonoton o ata
Trada)
NABARD( Nation Baue tor Agi lual Dwe lopnet)

vilug
" teutztaticval valdty e Be (Aqusi tions of of Untaleingo ) Ordnance

Fat

At ml969, wlich aimed o matignalioe l4 mayor pvt. oanes Ti act

hfid tue cwwslup &coutrel tuae banles tu te gout.
Share holdw ot theot banes calleged ue couti tutiona valduy of
, claimung tuat it violated thuu PR undu Act 14 &19 of Consi.

Constu tutional validuty of vatienalinatiom of banles

Cuut ad detue wu the Act
aande nauholdu ait it was mthe pubic mterest

aut tuat mationali saio ot banes Was a meauns

aclueve doial outrol ova tle loamleina sctor g promott eonoie
duuelepuu at.
indiidual mg
 veslucaon on ue
Vaoonabl
(ue
in teveot o
ConcluoOn
(ouel Coucuded lval
tue Act was
Heldihat
g publc inteust
affrmd powe of ndou qout nal cnaloe bank ,

p kue wluls ot omwnc trod

Modecn Baules peufoeryn a tot af fuus

Porimauy
Acep Ging Depottb Aduanstug
a ovuáaft b ash Cirdit

3. Axed Afe dpori 6 MOny at Cali

4 3 Lcans te lndstnes
2 lcas
uonday Fun 3 lcans t tevciqu hade
Seuuices 4 (tnsuui Credit |PE1sCnal lcans
a) collecuon 5 MiBcclavuous Advances

) mcomu Tax Covsultant

d) salu & Puchase ot fnancal Assc\5
cde ceased ustomer's wiu)

te doe oM laeh at o cuo towen)

3 vtiiuy Seces
b) nf c funds )quannter
a) Unduuwitm e) Locla facluli
bubsidi'au Aciui ies
Fmamce B. Meuchant Banlev
a Mutual funds
4. Yentuc tapital Fund
focteny
Bc (2A- Electiou o New directors
RBI quve aneng Co to catl a Gm o ohauhotdiu
less twan 2 wonttu toom dati of ondn clect Vuw diveco,
nd
Sec l6 - hoioition ot Cowmow dvctos
Co - awed
dinector ct y
Sc 36 AA- Powu c RBI to MOve navag ial olln psou pow
>reveulny aHais ot laulz Co beuw covduhed
in a wauvw
Neuld la gww au opportulia dituimntal
to tst of dapositens
t rereut ttuu mde
> Ordu ot RbI funal can not e
ckallngc
8c 56 AB- Pouwen O RBI to appovnt additional directex

dupon tors boulzw co.

Ordur wW Wutmg - appomk additoal dimctors of te Co.

rquived te had qualiftcakion. dhas m (amlmy o.

Sec 36 AC T Past Ti A to overid otuu laws
Or vemoval o divector, EO or olen tmployee ufs 36 AA G3648
have efed Ovee Compamieu Act 1956 or Ony ot law.
Sec 36ACA -
upercsnon Of BOp m coetaw can
d

> prvet atains of bomm Co couducted w manna

ditai wwal to daponites intat (bamlun Co.
RucoYd w wwbwy - kumede BoD for apeicd nat
(2 montu.
" 2B1 Due meh directo to Adwimoater
evayoe ohall vaate offce (et0, ductoy, M0, chaiman)
 rexpuuuu
weet t
Coumitteu

banilg
ecticn of niw dinecto
POWERs OF RB11 -
Sec q)
(Sec 4 oauiNu as to wummum paud vp 9pital naves
Secl| -

Sec 12 -

Sec 12B -

Sec l5 - lestuctu s as to pay ment of diudnd

lesewe fnd
See 18 - las leewe

loas E aduanu
Sec a0 -
YUit debt
Sec ao A - Veoteict 0u on pown to
Coutol aduancus
Powu of esceve Bameto

Se 26- letuen et Uneauned deponls Auav ess fwd

- estabugh ment ot DepoitS eduoatsu
Sec aG A
and ueto.
vetuns Powu to call fo7 C1u ectuevs
Sec at -
MoutV
Sec ag - Powu to publioh mto
Sec aq - Ale s Bal. ohet
See 30 Audit assoiate luterp es
Sc 31
Bee 32 Copies ot Bal ohuct e to be dant to Pequthar
Sc 35 - wrction
Sec 35 - fowu et eBI t5 give direcibus
Sec 35 AB- Powu oB RB] to ssuu cirecions w opeel of oteessed asct.
 FUN TIONS OF INDIGENOUS BANKS

tntodueion
Baules ane pivate fiws /ünciuduals wlo opuale as
banles amd a
betu teeuve dupest and qwe loavs uch
g ae also fuuauial wudiatos
aquucies ccuti tuted tu taade bull cf te
wdigecws fnanial
wdian finanoial,
"vdiatucus bandau ave by aud iaqe uban baues
CowIihes.
iuudi tay
Funetieu
)0 Aceeplwg Depcis
cuunt Afe.
Aat pau d ou fixed Ae tuam on
2) Aduanen loowe

roduckive puuposes to weet tue w midiat e ohet tam neds a

1e boYYOwrs.

3) Dincouwitwg lundis
Tp fun of hm. bamlees. They wite, buy e ell ldis olic
we ils t exchange. They prouoe tunamee'G reni ttane faei ltbies
to trodus and huall industtialists by advaucing leans, wtig
4buying and slling Sundis, witino fnamu billi andbut tradi
lolla. Tun tucy ctit.cy ulp w tnanty ntuwal tzade
auo w
4) eemittanee failities
Tis b doe
ole bankn uitt
have at otu place or tu o e
volhomtey have huch arrangemunto.
 mland liade
fuuauceloctlh wals
huy
tountuyad thus

Spculative Ackili'es
fcod
auticles ef
hading and
baileung uila
Ipot aud alo them lles.

(ouustou Aquat.
b anles act as comni i o
puchas aguutual produta
dousei
dwiepauak
Of imtual trade.
Puw fim
finws
taugt of tmat lay poide txpdiu nd
Capitäl to mal' industiali t!

Tany poouide Bovug tel