An overview of the Reasons for making the Bank Companies Act, 1970

Any company which holds on to the business or which deals in the business of banking in India is called a banking company. A financial establishment that approves deposits and channels the currency into lending activities. The primary functions of any bank are cash, credit, loans, advance, accepting deposits, discounting bills, and overdrafts. This act was promulgated on 14th February 1970. Under section 19 it is mentioned that the act contributes to accession and transfer of the accomplishments of distinct banking companies having concern to their coverage, resource, organisation, and size. 

Banking Regulation Act 

1. Subject to the conditions of this act, the new bank authorised corresponding shall be three thousand crore rupees split into three hundred crores of completely paid shares of ten rupees each. 
2. Issue of the priority shares shall be by the protocols shared by the Reserve Bank of India determining the class of preference shares 
3. Every new bank should have registered in one or more books of the shareholder in the main headquarter office. 
4. The name, occupation, address and the statement of the shareholder, demoting number of the share must be mentioned
5. The date should be mentioned on which a shareholder has joined or ceased. 
6. Any paid-up equity that is missed or unrepresented by accessible assets can be cancelled by the central government after consultation with the Reserve Bank. 

Banking Sector 

To implement the plans for the economic development of the country, the commercial bank assists it. The function of the banking sector in India is considerable. A substantial role in the economy of the country is played by the banking sector. 

The first bank was established in the year 1770 with the name Hindustan Bank. Today the largest bank in India is the State Bank of India which was started with the name Imperial Bank of India and later turned into SBI. The financial and economic situations in the country are superior. In the restructuring of the domestic banking industry by the Reserve Bank of India, regulations can go a long way to help it. Also, the digital transferring system has evolved in India at an immense rate. According to the Faster payment invention index, India’s Immediate Payment service (IMPS) is the only system at level five. 

Following are the various types of banks in India:

1. Cooperative banks
2. Commercial banks
3. Small finance bank
4. Specialized banks 
5. Central bank
6. Payments banks
7.  Local area banks 
8. Regional rural bank

For the economic development of any country, there needs to be capital formation. Banks facilitate the citizens to save their money and invest it productively. Credit creation extremely improves the production movement stimulating economic development. And the consequence results in more employment opportunities. For regional development, proper funds and infrastructure are required for backward areas. Agricultural farmers are provided with timely credit, which develops the primary sector of India. To enhance the living standard of customers, banks provide different kinds of loans which are home loans, car loans, education loans, etc. For maintaining internal and external trade, the commercial banks are providing a good infrastructure with financial support. 

Under the chairmanship of Dr.M. Narasimham, RBI constituted two committees. 

• Decreasing the Statutory Liquidity Ratio as that will assure more reserves for public debt. 
• To increase the credit, the cash reserve ratio has been reduced
• In the nationalised banks, the government shares have been reduced to 33 percent 
• Non-performing Assets have decreased. 
• Banks have given the freedom on giving interests in their own way 

Banking Sections 

The system of Indian banking includes 22 private sector banks, 12 public sector banks, 1485 urban cooperative banks, 56 regional rural banks, and 96000 rural cooperative banks. Today the number of ATMs in India is 213,145. In FY21 total assets of public and private banks increased to US$ 2.48 trillion. 

Conclusion 

A banking company refers to a company that executes the business of banking in India. The banking sector in India has proposed a positive and optimistic response to the financial sector reforms. The main purpose of the act is to regulate the reconstruction and securitization of economic investments and enforcement of safety interests and the circumstances related to them.