The Banking Regulation Act of 1949 regulates banking firms in India and gives powers to the Reserve Bank of India (RBI) to license and supervise banks. It defines banking and imposes requirements on transactions, management, and penalties for non-compliance. The RBI Act of 1934 established the RBI and provides the framework for RBI to conduct monetary policy and supervise scheduled banks. Key powers include issuing currency, setting reserve ratios, lending to banks and governments, and collecting credit information. Both acts work to create transparency, protect depositors, and ensure smooth functioning of the banking system.

2.  BANKING LEGISLATION is a form
of government regulation which
subjects banks to certain requirements,
restrictions and guidelines,
 designed to create market
Transparency between banking institutions and
the individuals and corporations with whom
they conduct business.

3.  The failure of some Indian banks in the earlier
part of the 20th century- 87 banks during
1913-1917 and another 373 banks during
1922-1932,completely shattered public
confidence in banks.
 Most recently, the spate of failure of
cooperative banks in Gujarat and failure of
the Yes bank in the private sector, have again
highlighted the needs for control and
regulation.

4.  Legislation was thus extremely important for the
twin purpose of protecting the interest of
depositors, shareholders, stockholders, and
confidence of the public at large as well a for the
smooth functioning of the monetary and
financial system.

5.  The Banking Regulation
Act, 1949 is a legislation
in India that regulates all
banking firms in India.
 Initially, the law was
applicable only to banking
companies. But, 1965 it
was amended to make it
applicable to cooperative
banks and to introduce
other changes.

6.  The banking regulation act imposed the law
relating to banking and provides for the nature of
transactions which can be carried-out by banks in
India.
 The control over management, Suspension
and winding up of banking companies and
penalties for violating provision of the act.

7.  The Act gives the power to Reserve Bank of
India (RBI)for licences banks,
 have regulation over shareholding and voting
rights of shareholders;
 supervise the appointment of the boards and
management;
 regulate the operations of banks
 lay down instructions for
audits;, mergers and liquidation;
 issue directives in the interests of public good and
on banking policy, and impose penalties.

8. This Act applies to following categories of Banks:
1: Nationalized Banks
2: Non-Nationalized Banks or private banks
3.Cooperative Banks

9.  All primary agri.. Credit society.
 Non-agri..primary credit society with paid-up
capital and reserves of less than rupees 1lac.
 All cooperative societies not carrying-on
banking business.
 Lands mortgage banks.

10. s.no part Topics
1 I Preliminary 1 to 5A
2 II Business of Banking Companies 6 to 36A
3 IIA Control over management 36AA to 36AC
4 IIB Prohibition of certain activities in relation to banking
Companies
36AD
5 IIC Acquisition of the undertakings of Banking
Companies in certain cases
36AE to
36AJ
6 III Suspension of business and winding up of Banking
Companies
36B to 45
7 IIIA Speedy provision for speedy disposal of winding up
proceedings
45A to 45X
8 IIIB Provision relating to certain operation of Banking
Companies
45Y to 45ZF
9 IV Miscellaneous 46 to 55A
10 V Application of the Act to cooperative Banks 56

11.  SECTION 5b:- DEFINITION OF BANK
A bank is a financial institution that
accepts deposits from the public and
creates credit.

12.  According to Sec. 5 of the Banking Regulation Act,
1949, A banking company means the accepting, for
the purpose of lending or investment, of deposits
of money from the public, repayable on demand or
otherwise and withdrawn by Cheque, Draft, Order,
or otherwise.
 In short, a banking company means and includes
any company which carries on the business or
which transacts the business of banking in India.

13. sec5n loans against asset, whose market value is higher than loan
at any time
sec6 Forms of business in which banking company may engage.
Sec6.1 Banks may act as an agent of a person/govt undertaking and
execute trusts.
sec7 For banking co. carrying on banking buss in INDIA to use at
least one word,bank,banker,banking company in its name,
Sec 8 Prohibits buss like trading of goods
Sec
10B(2)
CMD cannot exceed 5 year at a time.
sec21 Empowers RBI to control advances by the banking company
sec22 Empowers RBI to issue license for opening a bank
sec23 Prior RBI permission required for opening a new branch
sec35 No bank can open an office abroad without the permission of
RBI
SEC
44A
provide procedure for amalgamation of banking company

14.  Reserve Bank of India Act, 1934 is the
legislative act under which the Reserve Bank
of India was formed. This act along with
the Companies Act, which was amended in
1936, were meant to provide a framework for
the supervision of banking firms in India.

15.  The Act contains the definition of the so-
called scheduled banks, as they are
mentioned in the 2nd Schedule of the Act.
These are banks which were to have paid up
capital and reserves above RS5 lakh.

16.  The Section 17 of the Act defines manner in which
the RBI can conduct business.
 The RBI can accept deposits from the central and
state governments without interest.
 It can purchase and discount bills of
exchange from commercial banks.
 It can purchase foreign exchange from banks and
sell it to them.
 It can provide loans to banks and state financial
corporations.
 It can provide advances to the central government
and state governments.
 It can buy or sell government securities. It can deal
in derivative, repo and reverse repo

17.  The Section 18 deals with emergency loans to
banks
 sec 19 deals with business which RBI may not
transact.
 The Section 21 states the RBI must conduct the
banking affairs for the central government and
manage public debt.
 The Section 22 says that only RBI has the
exclusive rights to issue currency notes in India.
 The Section 24 states that the maximum
denomination a note can be RS10,000

18.  The section 26 of Act, describes the legal
tender character of Indian bank notes.
 The Section 28 allows the RBI to form rules
regarding the exchange of damaged and
imperfect notes.
 The Section 31 says that in India only the RBI
or the central government can issue and
accept promissory notes that are payable on
demand. However, cheque, that are payable
on demand, can be issued by anyone

19.  SEC42 deals with CRR of schedules bank to be
kept with RBI as prescribed.
 Sec45 power of RBI to collect credit information.
 Sec45H regulations related to non-bank finance
companies.
 Sec48 exemption to RBI from paying income tax or
super tax
 Sec49 announcement/publication of bank rate, i.e.,
the standard rate at which the RBI is prepared
to buy or rediscount bills of exchange .