This document provides an overview of key sections of the Banking Regulation Act of 1949 in India. It outlines sections related to the definition of banking, activities permitted for banks, reserve requirements, auditing of balance sheets, inspection powers of the Reserve Bank of India, suspension of troubled banks, and penalties for non-compliance. The act establishes the regulatory framework for banking in India and grants oversight powers to RBI to supervise banks and issue directives to ensure the health of the banking sector.

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WELCOME

2. BANKING REGULATION ACT,1949
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 Applicable through out India
 Sec-3 Not applicable to Land Mortgage Banks,
PACS
 Sec – 5 a Approved Securities
 Sec.5-b Definition of Banking
Accepting for the lending or investment of deposits of
money from public repayable on demand or otherwise and
withdrawable by cheque, drafts or otherwise

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 Sec.5-f Demand and Time Liabilities
Demand Liabilities are the liabilities which be met on
demand and time liabilities means liabilities which are
not demand liabilities.
 Sec. 5-n Secured Loan
A loan or advance made on the security of asset, he
market value of which is not at any time less than the
amount of such loan or advance and an unsecured loan
or advance means a loan or advance not secured.

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 Sec.6-1 Banking Business
A Banking company may be engaged in accepting deposits,
borrowing money, lending money dealing in bills,
collection of bills, buying/ selling foreign exchange,
lockers, issuing letter of credit, traveller cheques,
mortgages, insurance business, acting as trustee, etc. or an
business which central Govt. ma notify in the Official
Gazette.
 Sec.6-2 Restriction on Banking Business
No Banking Company shall engage in any form of business
other than those refered to under Sec. 6-1 supra

5. BANKING REGULATION ACT,1949
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 Sec. 7 Use of word Banking
For Banking Companies carrying on Banking business
in India to use at least one word Bank, Banking,
Banking Company in its name
 Sec. 9 Immovable Property
Banks are prohibited from holding any immovable
property howsover acquired except as acquired for its
own use for a period exceeding 7 years from
acquisition of the property. RBI may extend this
period by 5 years

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 Sec.10 Management
Prohibitions on employment like Chairman, Directors etc.,
(Period of office not more than 5 years extendable by
another 5 years)
 Sec.17 -1 Reserve Fund Creation
20% of the profit before any dividend is declared- But the
RBI is insisting to transfer atleaset 25% of net profits to RF
 Sec.18 Cash Reserve by Non Scheduled Banks

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 Sec.19-2 Shares in other companies
No Banking Company shall hold shares in any
Company (pledge,mortgage,absolute owners) not
exceeding 30% of paid up Share Capital (+) Reserves
or 30% of paid up share capital whichever is less
Sec. 20 Banks cannot grant loans against its
own shares

8. BANKING REGULATION ACT,1949
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 Sec. 21 Control over advances by RBI
Power to RBI to issue directive to banks to determine
policy for advances ( such as purpose, margin, extent,
ROI or other conditions
 Sec.22 Issuance Banking Company Licence
 Se.23 Branch Licencing
Restrictions on opening new and transfer of exisiting
place of Business

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 Sec.24 SLR-
Every Bank to maintain percentage of its demand and
time liabilities by way of cash, gold, unencumbered
securities Maximum 40% as on last Friday of 2nd
preceding fortnight
 Sec.26 Unclaimed Deposits
Return of unclaimed Deposits (10 years and above)
within 30 days of each Calendar year to RBI

10. BANKING REGULATION ACT,1949
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 Sec.29 Publication of Balance Sheet
Every Bank has to publish its Balance Sheet as the last
working day of March every year on Form B of 3rd
Schedule of this Act
 Sec.30-I Audit by qualified Auditors
Balance Sheet is to be got audited from qualified auditors
 Sec.31 Submission of Balance Sheet
Submission of Balance Sheet and Auditors Report within 3
months from the end of period to which they refer to. RBI
may extend the period by further 3 months

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 Sec. 35 Inspection of Banks
RBI is authorised to undertake inspection of Banks and give
directions as deemed appropriate. RBI has directed Banks to
round off transactions to nearest rupee u/s 21 and 35
 Sec. 35-A
Powers to RBI to give directions in public interest or in the
interest of Banking Policy
 Section 36
RBI can terminate any Chairman or any employee of a Bank
where it considers desirable to do so.

12. BANKING REGULATION ACT,1949
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 Section 45
RBI has powers to apply to Central Govt. for suspension of Business
by a Banking Company and prepare a scheme of reconstitution or
amalgamation
 Sec.45 Y Preservation of Records
Central Govt. has powers to frame rules specifying the period for
which a Bank shall preserve its Books
 Sec. 45 ZA to ZF
Nomination Facility for Bank Deposits, Safe Deposit Lockers, and
articles
 Sec.45 Z
Return the Paid instruments

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 Sec.47 A
RBI can impose penalties for kinds of violations
 Sec.49A
Other than Banking Company no institution /person
can accept Deposits with drawable by Cheques
 Sec. 52
Central Govt. can make rules for all matte

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