Jayakar Bathula, NALSAR University of Law-HYDERABAD

I-BANKING REGULATIONS IN ANCIENT TIMES:1,The history of banking depends on the history of money, and on grainmoney and food cattle-money used from at least 9000 BC,

2,The History of Banking begins with the first
prototype banks of merchants in the ancient world,
3, This began around 2000 BC in Assyria and Babylonia.
Later, in ancient Greece and during the Roman Empire.
4, The first offshore banking industry seems to have emerged
in the tiny and remote island of Delos.

5, By the fifth millennium B.C the settlements of Sumer (An
ancient region in southwestern Asia, in present-day
Iraq, comprising the southern part of Mesopotamia), such as
Eridu, were formed around a central temple.

CODE OF HUMMARABI:-

1,The code of Hammurabi was implemented in the Ancient
Mesopotamia to keep all the records of the Banking transactions 5th
Millennia B.C.
2,The first grain loans and letters of credit existed from the time of the
first great civilizations on earth. And they were used to give receipts
for the Clay tablets.

COINS IN MESAPATOMIA:-

1,These coins were used in Mesopotamia for
their Banking transactions.

HOUSE OF EGIBI OF BABYLONIA:-

1,Prior to the reign of Sargon I of Akkad (2335-2280) the occurrence of trade
was limited to the internal boundaries of each city-state of Babylon and the
temple located at the center of economic activity there-in trade at the time
for citizens external to the city was forbidden.
2,During the reign of Darius according to the source a "lending house" a
family engaging in "professional banking..." .
3,The provision of credit is apparently also something the Murashu
family participated in.

4, Cuneiform records of the house of Egibi,The origin of paper currency began
in Babylon, if you consider clay tablets to be paper or China.

EGYPT:1,About the time of the 18th century BC amounts of gold were deposited
within the boundaries of the temple buildings of Egypt for reasons of
security.
2, The Ptolemy's of Egypt developed the two-tier monetary system using
precious metals for international trade and grain for local monetary
transaction.
3,In Egypt from early times, grain having an intrinsic value as food
functioned, in addition to precious metals, as money. The regional granaries
were used to store and loan the grain of communities, functions similar to
banking services.
4, Documents made to show the banking of taxes were known as pep tokenrecords.

ANCIENT GREEK COINS:The faces of coins from the 7th century BC onwards.

ANCIENTGREEK:-

1,Its first mention of bankers relates to fifth and fourth century BC
Athens. These developed from money changers exchanging foreign
for Athenian coins from benches set up in the Agora or market place.
2,They soon added a facility of safe deposit boxes. They then began to
lend money, typically at 12 per cent interest. The best known of these
early bankers was Passion, a former slave, who died an extremely
wealthy man in 370BC.

GOLD COINAGE:-

Gold coin produced by the Roman Imperial MintDuring-325 BC.

ANCIENT HISTORY OF BANKING IN ROME:1,The first silver coin was the didrachm, introduced in 269 BC after victory in
war with Tarentum and Pyrrhus - Rome controlled
Samnium, Lucania and Bruttium, practically all of Italy, leading to the
conflict with Cartago.
2, The wealth gained in the war made a silver currency possible, though the
coins with a Greek-Italic design were probably made for the conquered
lands, which were using Greek drachmas for centuries. In 241 the war with
Cartago brought Sicily under control. In 235 BC were the unwieldy bronze
coins reduced to a half weight with the same nominal value, turning them
into credit coins.

II-HISORY OF BANKING IN MEDEIVAL TIMES:1,The Bardi and Peruzzi families dominated banking in 14th century
Florence, establishing branches in many other parts of Europe. Perhaps the
most famous Italian bank was the Medici bank, established by Giovanni
Medici in 1397.
2,The oldest bank still in existence is Monte dei Paschi di Siena, headquartered
in Siena, Italy, which has been operating continuously since 1472.It is
followed by Bahrenberg Bank of Hamburg (1590).
3,Significant private international banking and commercial ventures provided
the foundation for many fortunes but even they succumbed to the recession
that began in the fourteenth century.

MEDIEVAL EUROPE:4,In the early fourteenth century, Florence's textile industry and
banking catapulted the city-state into the forefront of European
enterprise and, eventually, into the Italian Renaissance. Significant
private international banking and commercial ventures provided the
foundation for many fortunes.

5,During the fifteenth century, municipal banks became
established, including one at Barcelona in 1401 and one a few years
later at Valencia. One of the longest and most stable banks was the
Bank of Saint George in Genoa, established in 1407 by state
creditors and run by a board of directors.

WAR LOANS:-

1, With the increased economic activity of the Middle Ages, there was a growing
need for money exchange and the conversion of coins. Money changers were
soon holding and transferring large sums of money and extending loans to
merchants. As the demand increased, so did the number of services.
2, Common financial activities came to include granting loans, investing, as well as
most of the deposit, credit and transfer functions of a modern bank.

3,The greatest danger to medieval banking was in granting loans to European
monarchs to finance wars. The use of mercenary armies and field artillery
increased the costs of mounting military operations. To finance these
activities, rulers were often willing to repay loans at extremely high rates of
interest sometimes as high as 45 to 60 percent.
4, Some times they were simply refused to repay and the Bardi and Peruzzi banks
were suffered greatly when England's monarchs refused to pay for loans
acquired to finance the Hundred Years' War loans.

GROUPS:1, By 1325, for example, the Peruzzi bank owned all of the Revenues of the
Kingdom of Naples(the southern half of Italy, the most productive grain
belt of the entire Mediterranean area); they recruited and ran King Robert
of Naples‟ army, collected his duties and taxes, appointed the officials of
his government, and above all, sold all the grain from his kingdom.
2, By the dawn of the thirteenth and fourteenth centuries, bankers were
grouped into three distinct categories: the pawnbrokers, the
moneychangers, and the merchant bankers.
3, The Leccacorvo bank did most of its business with established
merchants, bankers, and government officials, including the communes of
Genoa and Piacenza, the king of France and the Pope.

VEDIC PERIOD:1,In ancient India there is evidence of loans from the Vedic period beginning
1750 BC. Later during the Maurya dynasty (321 to 185 BC), an instrument
called Adesha was in use, which was an order on a banker desiring him to
pay the money of the note to a third person, which corresponds to the
definition of a bill of exchange as we understand it today.
2, Chanukyah‟s Arthashastra (About 300 B.C) is full of facts to show that
there were powerful guilds of merchant bankers in existence who received
deposits, advanced loans and carried on the other banking functions.
3,Buddhist period, there was considerable use of these instruments. Merchants
in large towns gave letters of credit to one another.

MEDEIVAL INDIA:1,Banking in India in the modern sense originated in the last decades of
the 18th century. The first banks were Bank of Hindustan (17701829) and The General Bank of India, established 1786.
2, The East India Company was established The General Bank of India
in 1786. The others which followed were the Bank of Hindustan and
the Bengal Bank. In the first half of the 19th century the East India
Company established three banks; the Bank of Bengal in 1809, the
Bank of Bombay in 1840 and the Bank of Madras in 1843.

3, These three banks were amalgamated in 1920 and a new bank, the
Imperial Bank of India was established on 27th January 1921.

NATIONALIZATION OF BANKS:1,The Banking Regulation Act was passed as the Banking Companies Act
1949 and came into force wef 16.3.49. Subsequently it was changed to
Banking Regulations Act 1949 wef 01.03.66.
2, The Government of India issued an ordinance ('Banking Companies
(Acquisition and Transfer of Undertakings) Ordinance, 1969')
and nationalized the 14 largest commercial banks with effect from the
midnight of 19 July 1969. The Parliament passed the Banking Companies
bill and it received the presidential approval on 9 August 1969.
3, A second dose of nationalization of 6 more commercial banks followed in
1980. The stated reason for the nationalization was to give the government
more control of credit delivery. With the second dose of nationalization, the
Government of India controlled around 91% of the banking business of
India. Later on, in the year 1993, the government merged New Bank of
India with Punjab National Bank.

LIBARALIZATION OF BANKS:1,In the early 1990s, the government embarked on a policy
of liberalization, licensing a small number of private banks. These came to
be known as New Generation tech-savvy banks, and included Global Trust
Bank (the first of such new generation banks to be set up), which later
amalgamated with Oriental Bank of Commerce, UTI Bank (since
renamed Axis Bank), ICICI Bank and HDFC Bank.
2, The revitalization of the banking sector in India, which has seen rapid
growth with strong contribution from all the three sectors of
banks, namely, government banks, private banks and foreign banks. the
Indian banking has been set up with the proposed relaxation in the norms
for Foreign Direct Investment, where all Foreign Investors in banks may be
given voting rights which could exceed the present cap of 10%, at present it
has gone up to 74% with some restrictions.

III- BANKING REGULATIONS IN MODERN TIMES:1,The IT revolution had a great impact in the Indian banking system has
increased many folds after the economic liberalization of 1991 as the
country's banking sector has been exposed to the world's market.
2, In 1988 the Committee on Mechanization in the Banking Industry was Dr. C
Rangarajan, Deputy Governor, RBI- recommendations of this committee
were introducing MICR technology (Magnetic ink Character recognition
Technology) in all the banks in the metropolis in India.
Bhubaneswar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further
stated in Kolkata, Mumbai, Delhi, Chennai.
3,In 1994 Electronic Funds Transfer (EFT) system was introduced in Banking
Industry. Electronic Payments system in 1995. Number of ATMs of
different Scheduled Commercial Banks of India as on end March 2005.

INDIA:1,Banking regulation originates from microeconomic concerns over the ability
of bank creditors (depositors) to monitor the risks originating on the
lending side and from micro and macroeconomic concerns over the
stability of the banking system in the case of a bank crisis. In addition to
statutory and administrative regulatory provisions, the banking sector has
been subject to widespread “informal” regulation, i.e., the government‟s
use of its discretion, outside formalized legislation, to influence banking
sector outcomes.
2, In recent years regulation in banking has become less pervasive and has
shifted from structural regulation to other more market oriented forms of
regulation. As a consequence competition has come to play a very
important role in the allocation of credit and in the improvement of
financial services.

JAPAN AND U.K, FSMA-2000:1, Regulatory authority over the banking, securities and insurance industries is
combined into one single financial-service agency, Corporate governance
regulation in the financial sector traditionally has been regarded as a
specialty area with standards and rules fashioned to achieve the overriding
objectives of financial regulation safety and soundness of the financial
system, and consumer and investor protection. In the case of banking
regulation, the traditional principal agent model used to analyze the
relationship between shareholders, directors.
2, These additional regulatory responsibilities for management have led some
experts to observe that banking regulation is a substitute for corporate
governance. Increasingly, regulators are devising frameworks that require
financial firms to adopt internal, self-monitoring systems and processes to
comply with statutory and regulatory standards. (UK Financial Services
and Markets Act of 2000 (FSMA).

U.S.A-IBRA-1977:1, In the U.S, banking is regulated at both the federal and state level.
Depending on the type of charter of banking organization has and on its
organizational structure, it may be subject to numerous federal and state
banking regulations. And maintains separate securities, commodities, and
insurance regulatory agencies separate from the bank regulatory agencies at
the federal and state level.
2,The Federal Deposit Insurance Corporation, The Federal Reserve Board, or
The Office of the Comptroller of the Currency, Within the Federal Reserve
Board, In 1978 foreign banks operating in the United States were required
to hold the same level of reserves under the specifications of
the International Banking Regulation Act-1977.

EUROPE (EBA)-2011:1,The EBA was established on 1 January 2011, upon which date it inherited all
of the tasks and responsibilities of the Committee of European Banking
Supervisors (CEBS). The EBA is able to prevent regulatory arbitrage and
should allow banks to complete fairly throughout the EU.
2, The European Banking Authority (EBA) published its final draft Regulatory
Technical Standards (RTS) and final draft Implementing Technical
Standards (ITS) on own funds, as well as its final draft RTS on credit risk
adjustment (CRA). These final draft RTS and ITS will be enhancing
regulatory harmonization in the banking sector in Europe and namely at
strengthening the quality of capital.-(EBA-Press Rease-26/07/2013).

AFRICAN CONTINENT:1,UBA is a large financial services provider in Nigeria with subsidiaries in
20 sub-Saharan countries, with representative offices in France, the United
Kingdom and the United States. Formed by the merger of the commercially
focused UBA and the retail focused Standard Trust Bank in 2005. Listed on
the Nigerian Stock Exchange in 1970, UBA claims to be rapidly evolving
into a pan-African full service financial institution. The Group adopted the
holding company model in July 2011.As of December 2011.
2, Bank regulation in Africa is at a crossroads. The transition from Basel I to
Basel II was relatively smooth, although there were many a 'doubts on the
feasibility of Basel II banking regulatory codes. With the global financial
crisis and the collapse of Basel II, the new financial regulatory architecture
is anchored on Basel III. Bank regulators in Africa, and commercial
bankers in the continent, are worried about many features of Basel III but
their voices seem to be in the wilderness. Old hopes dashed, but some new
hopes have emerged, alongside new challenges.

IV-NATURE OF INTERNATIONAL BANKING:1, The changing nature of banking, risk and capital regulation in the new
millennium on the horizon, it seems a particularly fitting time to discuss
some of the key trends that are affecting the way both bankers and
supervisors.
2, we will see major strides in the area of banking we call “e-finance”. More
banks will venture into the relatively new world of on-line PC banking or
will expand electronic bill presentment and paying services. it‟s always
been this way to an extent. That‟s why we see a major push towards
precious metals and „hard‟ assets amid the ridiculous nature of the banking
industry that is funded with around 83 billion in taxpayer finances each
year.

V-CONFLICTS BETWEEN BANKING REGULATIONS AND
TRADE LIBARALIZATION:1, the ad hoc nature of WTO dispute resolution is not well-equipped to balance
the competing interests between trade liberalization and regulation of
financial markets. The paper therefore argues that the WTO Council for
Trade in Services and Committee on Trade in Financial Services should
facilitate negotiations to address these issues with a view to deciding
parameters for defining and/or recognizing standards of prudential
regulation and the extent to which they can limit, or be limited by, GATS
obligations and commitments.
2, International Trade Organization‟, designed to provide an international code
to govern trade relations that would be subject to binding dispute resolution
with ultimate appeal to the International Court of Justice.

CONFLICTS:3, An important corollary was that world economic recovery was to be
achieved through increasing trade liberalization combined with stable
exchange rates based on a par value system directly linked to the US dollar
and gold. Indeed, it was recognized that trade liberalization and financial
stability were the linchpins of a successful international economic system.
4, Doha Development Agenda should address some of these issues as they
relate to the regulation of cross-border trade in financial services. The role
of the WTO in this area raises important issues regarding the institutional
design of financial regulation and related issues of global financial
governance.

5, The GATS does not attempt to regulate the content and scope of domestic
regulation, but rather merely seeks to ensure that a WTO member‟s
domestic regulation does not pose unnecessary barriers to cross-border
trade in services.

RECENT GROUWTH IN INT.BANKING:-

2, The size of foreign exposures differs substantially across banking systems.
UK and German banks‟ foreign claims are the largest, both standing at $4.1
trillion, followed by French banks ($3.2 trillion), Swiss, Dutch and
Japanese banks (over $2 trillion each) and US banks ($1.7 trillion). Scaling
these foreign exposures by banks‟ total assets (i.e. including domestic
assets) yields a more comparable measure for gauging the importance of
international business across different national banking systems.
3, The acceleration and deceleration of growth around 1987 for the most part
reflected changing lending patterns of US and European banks. Growth
peaked several times during the 1990s and after, roughly corresponding to
the Mexican peso crisis and the bond market sell-off in 1994, the Asian
financial crisis in 1997 and the bursting of the dotcom bubble in 2000
followed by recession in the United States..

Jayakar Bathula, NALSAR University of Law-HYDERABAD

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Jayakar Bathula, NALSAR University of Law-HYDERABAD