Banking Regulation Act, 1949

2021-06-23T01:46:39Z

2401:4900:1A79:8319:B513:73C2:F6CB:64FD: /* Amendments */

{{Use dmy dates|date=June 2020}}
{{Use Indian English|date=November 2018}}
{{Infobox legislation
| short_title = The Banking regulation Act, 1949
| image =
| imagesize = 150
| imagelink =
| imagealt =
| caption =
| long_title = An Act to consolidate and amend the law relating to banking
| citation = [https://www.indiacode.nic.in/bitstream/123456789/1885/1/A1949_10.pdf Act No. 10 of 1949]
| territorial_extent = Whole of [[India]]
| enacted_by = [[Parliament of India]]
| date_enacted = 10 March 1949
| date_assented =
| date_signed =
| date_commenced =
| bill =
| bill_citation =
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| 1st_reading =
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| amended_by = Banking Regulation (Amendment) Bill, 2020
| repeals =
| related =
| summary =
| keywords =
| status = In Force
}}

The '''Banking Regulation Act, 1949''' is a legislation in [[India]] that regulates all banking firms in India.<ref name="Sharma">{{cite book|author=Dr. Ashok Sharma|title=Auditing|url=https://books.google.com/books?id=AzDGYFQY7RgC&pg=PA214|access-date=11 January 2015|publisher=FK Publications|isbn=978-81-87139-74-4|page=214}}</ref> 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. It is applicable in jammu and Kashmir from 1956. 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.<ref name="Patel2008"/> In 2020 it was amended to bring the cooperative banks under the supervision of the [[Reserve Bank of India]].<ref name="auto">{{Cite web|url=https://www.livemint.com/industry/banking/banking-regulation-amendment-bill-2020-passed-what-it-means-for-banks-customers-11600337144895.html|title=Banking Regulation Amendment Bill passed. What it means for banks, customers|first=Anulekha|last=Ray|date=17 September 2020|website=mint}}</ref>

==Overview==
The Act provides a framework under which commercial banking in India is supervised and regulated. The Act supplements the [[Companies Act 2013|Companies Act, 1956]].<ref>{{Cite web|url=http://www.helplinelaw.com/docs/the-companies-act-1956|title=The Companies Act 1956 Indian Bare Acts - India Bare Act - Law Firm Lawyers India|website=www.helplinelaw.com}}</ref> [[Primary Agricultural Credit Society]] and cooperative land mortgage banks are excluded from the Act.<ref name="Patel2008">{{cite book|author=Bimal N. Patel|title=India and International Law: Introduction|url=https://books.google.com/books?id=V7PI25CBkXYC&pg=PA218|year=2008|publisher=Martinus Nijhoff Publishers|isbn=90-04-16152-X|pages=218–219}}</ref>

The Act gives the [[Reserve Bank of India]] (RBI) the power to license 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; control [[Moratorium (law)|moratorium]], [[mergers]] and [[liquidation]]; issue directives in the interests of public good and on banking policy, and impose penalties.<ref name="Patel2008"/>

In 1965, the Act was amended to include [[Cooperative banking|cooperative banks]] under its purview by adding the Section 56. Cooperative banks, which operate only in one state, are formed and run by the state government. But, RBI controls the licensing and regulates the business operations.<ref name="Patel2008"/> The Banking Act was a supplement to the previous acts related to banking.

==Amendments==

In 2020, Finance Minister [[Nirmala Sitaraman]] introduced a bill to amend the Act. The bill sought to bring all cooperative banks under the [[Reserve Bank of India]]. It brought bring 1,482 urban and 58 multi-state cooperative banks under the supervision of the RBI. The bill granted the RBI to initiate a scheme for reconstruction or merging of a bank without placing it under moratorium.<ref name="auto"/> The bill was passed by the parliament.

==See also==
{{Portal|Banks|Money}}

* [[Banking in India]]
* [[Public Debt Act, 1944]]
* [[Reserve Bank of India Act, 1934]]

==References==
{{reflist}}

{{Indian legislations}}{{Financial services in India}}
[[Category:Banking in India]]
[[Category:Acts of the Parliament of India 1949]]
[[Category:Bank regulation]]
[[Category:Financial regulation in India]]
[[Category:Financial history of India]]

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Banking Regulation Act, 1949