The banking regulation act, 1949 is a legislation in india that regulates all banking firms in. Initially, the law was applicable only to banking companies. The provisions of this act, as in force for the time being, shall apply to, or in relation to, cooperative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely. Nonbanking financial companies have been advised to adopt the banking companies nomination rules, 1985 made under section 45za of the banking regulation act, 1949. April 14, 2015 dear all welcome to the refurbished site of the reserve bank of india. Reserve bank of india reserve bank of india was established in 1935, after the enactment of the reserve bank of india act 1934 rbi act. In terms of subsection 1 of section 19 of the banking regulation act, 1949, a banking company shall not form any subsidiary company. Until 1994, different departments in reserve bank of india were exercising supervision over banks, nonbanking financial companies and financial institutions. The objectives of this function are to protect the interest of the depositors and maintain the safety and soundness of the banking and financial system of the country. The rbi is now almost fully effective in this area under various provisions of the rbi act and the banking companies regulation act. Dear sir, section 6 of the banking regulation act, 1949 as applicable to cooperative societies forms of business in which banking companies may engage. Rbi derives its regulating powers for indian banking system from the provisions of the banking regulation act 1949. But, 1965 it was amended to make it applicable to cooperative banks and to introduce other changes. Hence, a business activity of a banking company should be in consonance with the guidelines.
The deposit insurance corporation act, 1961 47 of 1961. The banking regulation act, 1949 came into force on 16th march 1949. At the first instance, it is important to note that rbi is the main body which issues guidelines relating to banking company. Deshmukh raghuram rajan urjit patel quiz 1st governor of rbi.
Wikipedia is a registered trademark of the wikimedia foundation, inc. It is therefore in the national interest that legislative safeguards be provided so that it gives a flavour of. Nbfcs are not banks, but their activities are related to lending and other activities such as providing loans and advances, credit facility, savings and investment products, trading in the money market, managing portfolios. The business of banking or nbfc can be undertaken only by an entity incorporated under the erstwhile companies act, 1956 or companies act, 20. Also, as per section 22 of banking regulation act, 1949 for carrying out a banking business it is required to hold a license issued in that behalf by the reserve bank of india. Section 10bb provides power to reserve bank to appoint chairman of the board of directors appointed on a whole time basis or managing director of any banking company. The provisions of this chapter shall not apply to the state bank or a banking company as defined in section 5 of the banking regulation act, 1949 or a corresponding new bank as defined in clause da of section 5. Rbi has launched this banking and ombudsman scheme in 1995 and is no under the banking regulation act. The banking ombudsman scheme is introduced undersection 35 a of the banking regulation act, 1949.
Board of directors to include persons with professional or other experience. Foreign banks who are aspiring to actively participate in. Banking regulation act 1949 schedule iii citation 38791. Banking regulation act, 1949 bare acts law library. Rbi us 112 b ii of the banking regulation act, 1949 as. Banking class 1 the banking regulations act 1949 section 5 section 7 section 9. Banking regulation act, 1949 hereby directs that yes bank ltd. The credit information companies regulation act, 20051 equifax. Role of rbi in compulsory merger of private sector banking companies. Whereas it is expedient to consolidate and amend the law relating to banking 2.
The key statutes and regulations that govern the banking industry in india are. One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise. Whereas the reserve bank of india is satisfied that in order to protect the interest. Read this page to know how an rbi banking ombudsman can help you in case of a complaint related to banks and their services. The act gives the reserve bank of india rbi the power to license banks. The reserve bank of india amendment act, 1949 44 of 1949.
Quiz in which was banking regulation act passed in parliament. Banking regulation act, 1949 also provide powers of reserve bank of india such as. The definition of banking is given in the banking regulation act, 1949. Reserve bank of india logo reserve bank of india database. However, with the enactment of the banking companies regulation act 1949, the position has changed considerably. Reserve bank of india act, 1934 as modified up to february 28, 2009. Provisions relating to nonbanking institutions receiving. Banking the banking regulations act 1949 section 5 section 7. The banking regulation act, 1949 reserve bank of india. After independence, the government passed reserve bank transfer to public ownership act, 1948 and took over rbi from private shareholders after paying appropriate compensation. Until the monetary policy committee was established in 2016, 6 it also controlled monetary policy in india. March 1948 february 1949 march1934 when did banking regulation act came into force.
Powers, history, functions of the reserve bank of india rbi. A statutory directive issued by the reserve bank in exercise of the powers conferred by the banking regulation act, 1949. Rbi was set up in 1935 under the reserve bank of india act,1934. All commercial banks excluding rrbs dear sirmadam, section 23 of the banking regulation act, 1949 master circular on branch authorisation. Companies act, 1956 banking companies acquisition and transfer of undertakings act bankers books evidence act banking secrecy act negotiable instruments act, 1881 guidelines, directions and instructions issued by rbi through notifications and circulars. The legal and institutional framework for bank supervision in india is provided under the banking regulation act, 1949. To, the chief executive officer, all primary urban cooperative banks.
These regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. The rules for nomination facility are provided for in section 45qb of the reserve bank of india act, 1934. The banking regulation act 1949 is a legislation in india that regulates all banking firms in india. Banking regulation act, 1949 reserve bank of india. Accordingly, reserve bank, considering the public interest and on being satisfied that it was necessary so to do, in exercise of the powers conferred by clause a of subsection 1 of section 36 of the banking regulation act, 1949 act 10 of 1949 and of all the powers enabling it in this behalf, issued a guidance on foreign contribution. For other entities, it derives power from the rbi act 1934.
The reserve bank of india rbi is the central bank of india, which was established on april 1, 1935, under the reserve bank of india act. Nonbanking financial company is a registered company which is regulated by the reserve bank of india under rbi act, 1934. Click on the green button to login in to partsmart web. The rbi act was enacted to establish and set out the functions of. This master circular updates the previous instructions on the above subject contained in the master circular dated july 2, 2012. Rbi circular on section 6 of the banking regulation act. Banks are regulated by reserve bank of india under provisions of the banking regulation act, 1949 and reserve bank of india act, 1934. The banking regulation act was implemented on march 10, 1949.
The banking regulation act, 1949 is a legislation in india that regulates all banking firms in india. Banking regulation act 1949 copy reserve bank of india. The act outlines a framework that regulate and supervises the commercial bank in india. Banking regulation act 1949 objectives paper tyari.
Thus, nationalization of rbi took place in 1949 and from january 1, 1949, rbi started working as a government owned bank. The act was changed to banking regulation act, 1949 from 1 st march, 1966. The banking regulation act 1949 contains various provisions governing the commercial banks in india. The act was initially known as banking companies act, 1949. It was passed in 1949 to consolidate and amend the laws relating to banking companies. Within the contours of the regulations, reserve bank of india also issues directions to authorised persons under section 11 of the foreign exchange management act fema, 1999. The department of banking regulation exercises regulatory powers in respect of commercial banks, local area banks labs and regional rural banks rrbs as per the provisions contained in the banking regulation act, 1949, the reserve bank of india act, 1934, the regional rural banks act. Difference between banks and nbfcs in india enterslice. This act gives power to rbi reserve bank of india to exercise control and. Act, 1934 2 of 1934 or the banking regulation act, 1949 10 of 1949. You will also find banking ombudsman complaint contact details and their offices. Read this article to learn about the following important principal provisions of banking regulation act, 1949 i.
In terms of section 45qb of the rbi act, the depositors of nonbanking financial company may nominate, in the manner prescribed under the rules made by the central government under section 45za of the banking regulation act, 1949 bract one person to whom, in the event of death of the depositors, the amount of deposit shall be returned by. Yes, nomination facility is available to the depositors of nbfcs. The regulations that govern banking in india investopedia. Principal provisions of banking regulation act, 1949.
Short title, extent and commencement 1 this act may be called the banking 2 regulation act, 1949. Control and regulations of banks under the banking regulations act, 1949 banking is a unique industry in the sense that the bulk of its working funds are derived fiom demand and time deposits. Banking regulation act, 1949 br act gave wide powers to rbi as regards to establishment of new banksmergers and amalgamation of banks, opening of new branches, etc br act, 1949 gave rbi. Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money. Act to apply to cooperative societies subject to modifications.
Inspection of credit information company, credit institution and specified user. The reserve bank shall make an annual report to the central government on the trend and progress of banking in the country, with particular reference to its activities under clause 2 of section 17 of the reserve bank of india act, 1934 2 of 1934, including in such report its suggestions, if any, for the strengthening of banking business. Rbi guidelines for business structuring of a bank ipleaders. Passed as the banking companies act 1949, it came into force from 16 march 1949 and changed to banking regulation act 1949 from 1 march 1966.
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