BANKING LAWS

Hemakshi Jad
 DEFINITION OF BANK:

 A bank is an institution which deals with

money and credit. It accepts deposits from the
public, and
 Makes the funds available to those who need
them, and helps in the remittance of money
from one place to another.
 Definition Of Bank
 According to the Indian Companies Act, 1949,
banking means

 "the accepting for the purpose of Indian Companies

lending or investment, of deposits of money from
the public,

 repayable on demand or otherwise,

 and withdraw able by cheque, draft or otherwise."

 Banks and Economy
 Banks are the institutional bodies that accept
deposits and grant credit to the entities and play a
major role in maintaining the economic stature of a
country.

 Thus, given their importance in the economy,

banks are kept under strict regulation in India.

 The Reserve Bank of India (RBI) is the apex

banking institution that regulates the monetary
policy in the country.
 Banking Regulation Act
 As per Section 5(b) of the Banking Regulation
Act 1949: “Banking” means the accepting, for
the purpose of
 lending or investment, of deposits of money
from the public, repayable on demand or
otherwise, and
 withdrawal by cheque, draft, order or
otherwise.”
 Reserve Bank of India
 The central Bank of India, RBI establish in 1935
(1 April, Kolkata) on the recommendation of
Hilton-Young Commission.

 At that time, the Banking system was only

covered the urban population and

 Need of rural and agriculture sector was totally

neglected.
 RBI
 Reserve Bank as Central Bank of India.

 Initially, the RBI was private shareholder bank

 IMPERIAL BANK was replaced By RBI.

 But to integrate the policies of Govt. and RBI, it

was nationalized after the independence.
 Liberalisation
 In order to improve financial stability and profitability of
Public Sector Banks, the Government of India set up a
committee under the chairmanship of Shri. M. Narasimham.

 The committee recommended several measures to reform

banking system in the country.

1. The major thrust of the recommendations was to make banks

competitive and strong and conducive to the stability of the
financial system.

2. The committee suggested for no more nationalisation of

banks.
 Recommendations
1. Foreign banks would be allowed to open
offices in India either as branches or as
subsidiaries.
2. In order to make banks more competitive, the
committee suggested that public sector banks
and private sector banks should be treated
equally by the Government and RBI.
 Banks and Economy
 Banks are the institutional bodies that accept
deposits and grant credit to the entities and play a
major role in maintaining the economic stature of a
country.

 Thus, given their importance in the economy,

banks are kept under strict regulation in India.

 The Reserve Bank of India (RBI) is the apex

banking institution that regulates the monetary
policy in the country.
DEVELOPMENTAL BANKS
1. Industrial DEVELOPMEMT Bank
2. Agriculture Development
3. EXIM Bank
4. Housing Bank
 The process of modern banking in India began
in the late
18Th Century

 The oldest profit-oriented bank is the ‘Bank Of

Calcutta’ started in 1806 and is presently
known as the ‘State Bank Of India’.

 Currently, there are 34 banks in India, out of

which 12 are public sector banks and 22 are
private sector banks.
 Importance of Banks
 Banks have helped boost the economic
development of the country and have
encouraged a culture of saving amongst the
people of the country.
 History of banking in India
 Ancient India included the use of
‘Usury’. There was also the existence of
loans called ‘Rnapatra’, ‘Rnapanna’, or
‘Rnalekhaya’. Moreover, there was the
use of ‘Adesha’ or ‘Letters Of Credit’.
 Rnapatras
  In ancient India, loan deed forms
called rnapatra or rnalekhya were in use.
These contained details such as the name
of the debtor and the creditor, the
amount of loan, the rate of interest, the
condition of repayment and the time of
repayment. 
 Evolution of Payment System
  Payment instruments and mechanisms have a
very long history in India. The earliest payment
instruments known to have been used in India
were coins, which were either punch-marked
or cast in silver and copper. 
 History IN MEDIEVAL ERA
 In the Medieval Era, there was a use of
‘Dastawez’.

 The loan deed continued into the Mughal

period. The deeds were called dastawez and
were of two types: dastawez-e-indultalab which
was payable on demand and dastawez-e-
miadi which was payable after a stipulated
time.
 History IN COLONIAL PERIOD
 In the Colonial Era, the ‘Bank Of Calcutta’ was
established in 1806 and is the oldest bank which is still in
function just with a change in title originally formed by
the presidency government.

 The ‘Bank Of Bombay’ started in 1840 formed by the

presidency government.

 The ‘Bank Of Madras’ started in 1843 formed by the

presidency government.
 .
 The 3 banks formed by the presidency
government were then combined to form the
‘Imperial Bank Of India’ in
1921.
 Cooperative Banks

 Such banks operate under the state

government’s act.

 The main objective of these banks is to ensure

the social well – being of the public.

 This is done by offering loans that are open to

concession based on user comfort.
 Commercial Banks
 Such banks operate under the Banking
Companies Act of 1956.
 These are often run by either the government or
any private firm.
 The major aim of such banks is to earn maximum
profit through their commercial policies.
 The deposit amount by its users acts as a major
resource of its reserve.
 hese are appropriate for operation in both urban
and rural areas.
 List Scheduled Banks

 PUBLIC SECTOR BANKS PRIVATE BANKS

 1 State Bank of India 1 Axis Bank Ltd.
 2 Bank of Baroda
 (Including Vijaya Bank and 2 Catholic Syrian Bank Ltd. Dena
Bank
 3 Bank of India 3 City Union Bank Ltd.
 4 Bank of Maharashtra 4 Development Credit Bank Ltd.
 5 Canara Bank
 (Including Syndicate Bank) 5 Dhanlaxmi Bank Ltd.
 6 Central Bank of India 6 Federal Bank Ltd.
 7 Indian Bank
 (Including Allahabad Bank) 7 HDFC Bank Ltd.
 List of Scheduled banks

 Indian Overseas Bank 8 ICICI Bank Ltd.

 9 Punjab National Bank
 (including Oriental bank) 9 IndusInd Bank Ltd.

 10. Punjab & Sind Bank 10 Jammu & Kashmir

Bank Ltd.
 11. Union Bank of India
 (including Andhra Bank) 11 Karnataka Bank
 12UCO Bank 12 Karur Vysya Bank
 Types of banks
 a. Public Sector Banks: The denominating
shareholder is either the government or the
central bank of the country.
 b. Private Sector Banks: The denominating
shareholder is either an individual, some
private organization, or a selected group of
individuals.
 c. Foreign Banks: Such banks have their head
offices and main operating systems in a foreign
country with their branches in India.
 Regional Rural Banks
 Operating under the Regional Rural Bank Act of 1976, these
banks started in 1975.
 These banks aim at the development of rural and agricultural
areas with the help of concessional loan offerings.
 The establishment of 196 has taken place in between 1987 –
2005.
 The ownership of these banks belong 50% to the national
government, 15% to the state government, and 35% to the
commercial bank.
 3 geographically consecutive districts cannot have the branches
of the same Regional Rural Bank.
 From 2005 onwards, the merging of these banks took place then
by the government due to which the number reduced to 86.
 Payment banks
 This latest introduction to the banking format
design took place by the RBI.
 The maximum deposit accepted in these banks
is that of Rs.100000.
 There is no facility of loans or credit cards
available in such banks.
 Net, online, mobile, ATM, and debit card
banking can take place via.
 Name of some Payment Banks
 Airtel Payments Bank
 India Post Payments Bank
 Fino Payments Bank
 Jio Payments Bank
 Paytm Payments Bank
 NSDL Payments Bank