Banking Regulation Act 1949

• Passed as Banking Companies Act 1949 (came into effect from 16th March 1949)
changed to Banking Reg. Act 1949 w.e.f. 1st March 1966.
• Since 1956, applicable throughout India including J&K.
• Act not applicable to Primary Agril. Credit Societies, co-op . land mort. banks &
non ag. Primary credit societies.

Sec.5(b):- Banking means accepting for purpose of landing or investment of deposits of

money from public repayable on demand or otherwise and withdrawable by cheque,
drafts, order or otherwise.

Sec.5 (c ):- Banking Company means any company which transacts the business of
banking.

Sec.5(f):- Demand liabilities are liabilities which must be met on demand & time
liabilities means liabilities which are not demand liabilities.

Sec.5(h):- Secured loan or adv. means a loan or adv. Made on security of assets, the
market value of which is not at any time less than the amount of such loan or advances &
unsecured loan or advances means a loan or advancers not so secured.

Sec.6-1:- Banking Business may be engaged in accepting deposits, borrowing money,

lending money, dealing in bills, collection of bills, buying / selling Foreign Exchange,
Lockers, Issuing L/C, T/C, mortgages, insurance business, acting as trustee etc. or any
business which Central Govt. declares in official Gazette.

Sec.8:- Restriction on business of trading in goods except realisation of securities held

by it.

Sec.9:- Immovable Property prohibited – except for its own use for a period exceeding
-7- years – RBI may extend period.

Sec.11&12: Paid up Capital, Reserves

Foreign Bank:- Min. 15 Lacs (Rs.20 Lacs in Mumbai / Calcutta)
Domestic Banks:- Not less than 5 Lacs. Ratio of Authorised subscribed & paid – up
capital 4:2:1.

Sec.14-1:- Prohibits a banking Co. from creating a charge upon any unpaid capital of
Company.

Sec.17:- To create Reserve Fund not less than 25% of net profit to be transferred to
Reserve Fund w.e.f. 31st March 2001

Sec.18:- Cash Reserves – Non Sch. Banks:-

3% of cash reserve with R.B.I.
Sec.19:- Permits banks to form subsidiary Company for certain purposes.

Sec.19(2):- No banking Co. shall hold shares in any company whether as pledgee,
mortgagee or absolute owner of an amount exceeding 30% of its own paid up capital+
reserves OR 30% of paid up share capital of that Co. whichever is
less.

Sec.20:- Banks cannot grant loans against security of their own shares.

Sec.22:- Licensing of Banking Co. – From RBI

Sec.24 ( 2-a) SLR:- Maintain a % of its demand & time liabilities by way of Cash + Gold
+ Unencumbered Securities – 25% to 40% . Present 25%.

Sec.26:- Unclaimed Deposit: Return of unclaimed deposits (10 yrs. & above) within
-30- days of close of financial year to RBI.

Sec.29:- Banks to publish its B/S on Form A & P/L A/c on Form B (as per 3rd schedule)
on the last working day of March every year.

Sec.30-1:- Audit: B/S to be got audited from qualified auditors.

Sec.31:- To submit B/S & auditors report within -3- months.

Sec. 36:- RBI can terminate any Chairman / employee when considered desirable.

Sec.45:- RBI – powers to apply to Central Govt. for suspension of business by a banking
Co.& prepare a scheme of reconstitution or amalgamation.

Sec.452:- Banks can return the unpaid instrument by keeping a true copy. Customer to
undertake to preserve the instruments as prescribed by Central Govt.

Sec.47(A):- Penalty by RBI on various violations.

Sec.49(A):- Other than a banking Co./ RBI/ SBI, no person can accept deposits of money
withdrawable by cheque.

Bank Donation:- Profit making banks, 5% of published net profits of previous year &
loss making banks Max Rs.5/- Lacs.

Classification of Branches
Rural Less than 10000.
Semi-Urban:- 10000 & above, below 1 Lac.
Urban:- 1 Lac & above – less than 10 Lacs.
Metro:- 10 Lacs & above.
(NABARD & NHB – Rural not exceeding 50000)

Sr.No. CRR SLR.

1. Act Sec.42(1) RBI Act 1934 Sec.24(2-a) BRA 1949

2. Kept as Cash bal. with RBI Cash + Gold + approved
securities
3. Basis As % of NDTL. At fortnightlyAs % of DTL on daily
basis. basis.
4. Internet No int. payable w.e.f. 24-06-06 As per investment made in
diff. securities.
5. Min. &3% to 20% 25% to 40%
Max.
6. Penalty Penal int. for the day notPenal int. for the day on
maintained at 3% p.a. above bankwhich not maintained at
rate. For next day 5% 3% p.a. above bank rate .
For next day 5%
7. Return toForum A (fortnightly) Forum VIII 20th day of
RBI every month.

Sec.45:- ZA to ZF – Nomination
Facility on bank deposits, safe deposit of articles & lockers.
Notification Dt. 29-03-1985

Particular Acceptance of Nomination Pay / Deliver only to nominee

Deposit Sec.45ZA Sec.45ZB
Safe Custody Sec.45ZC Sec.45ZD
Locker Sec.45ZE Sec.45ZF

Nomination Provisions
Type of A/c Nature of A/c No. of Nominees
Deposit Single / Joint One Only
Safe Custody Only Single One Only
Lockers Single One Only
Lockers Joint – E/S One Only
Lockers Joint – F/S One Only
Lockers Joint Operation Each one can nominate one (Max – 2 )