KNOW ABOUT THE BANKING LAW

The banking regulation act was passed in the year 1949 as the Banking Companies Act 1949. It came into effect on the 16th of March 1949. At first, this banking regulation act was only for the banking companies of India but in 1965, it was made to support cooperative banks as well and support their changes. Last year in 2020 this law was amended in the context of cooperative banks and came under the supervision of the Reserve Bank of India. In this article, we will know all about the banking laws and their amendments.

We’ll discuss the different sections of the laws of banking. The main objective of passing the banking regulation act was to provide regulation and proper rules for the banking sector in our country. At the time many banks were trying to reach adequate targets and enquire the required capital for their functioning and it was very necessary and high time to regulate an act to support the banking sector. This act, after getting amended, made sure that there is no unhealthy behaviour and practice in this sector. In this article, we will know more about the banking regulation act, banking sections, and banking companies.

OBJECTIVES 

When we talk about the objectives of passing the banking regulation act of 1949 we come down to the following points:

• Provide a proper mechanism for referral and recruitment of banking officials all over the country
• To ensure that every new branch that is opened in our country is licensed
• Post proper rules and regulations on investment policies in banking
• To secure shareholders and public investment and the rights of the people

BANKING SECTIONS UNDER THE BANKING REGULATION ACT, 1949

Important sections under the banking regulation act of 1949. The act has a total of 56 sections and some of the most important sections in the list are:

• Section 10 BB states the power of The Reserve bank of India to appoint its chairman of the board who sits on the board of directors.
• Section 11 states the required amount to be paid as capital and reserves
• Section 17 states reserve fund
• Section 18 states cash reserve
• Section 29 of the banking regulation act states rules on accounts on balance sheets updated by the bank
• Section 46 holes all the information about the penalties
• Section 47a holds the power of The reserve bank of India to impose penalties on any bank on any matter
• Section 49 gives special provisions to the banking companies of India. This is only applicable to private banking companies.
• Section 52 gives RBI that is reserve Bank of India the power to make its own rules

SOURCES OF REGULATION

Since the time of the amendment of the banking regulation act 1949, we can now come up with the four major sources behind the banking law.

The far-reaching legislation process in the broad categorization of it is passed by the United States Congress. The United States Congress then Infosys the law to the agencies, which is the second source of litigation. Sources of banking law at the state level and at the federal level are the fourth and the third respectively. 

The primary function and role of every Bank in this world is to lend money to its consumers for the smaller businesses, or larger businesses, or for their personal use. Set a specific amount of interest rate by which the principal amount is calculated as simple or compound interest and the consumer has to repay the whole amount in the given time period. The Federal government regulates all the rules and regulations under the lending system of banks. There are many provisions that are required to disclose the rate of interest charges, total payment method and the amount and other information that is linked to every loan that is sanctioned by the bank.

The next is the mortgage landing. It has been a very long time since this process has been followed. The mortgage lending process is a very complicated one and the Government of every country has adopted different types of regulation public policy to encourage self-ownership. 

The United States Congress over the years has passed several laws to protect the consumers of the banks through this process. There are many laws under the fair housing act that don’t allow anyone to discriminate against any consumer against each other on loan applications on the basis of their caste creed, nationality traits etc.

Federal statutory bodies all over the world address banking fraud in today’s world. This is a very clear fact that every bank is prohibited and strictly not allowed to take any kind of gifts or bribes or any minimum fees to approve any kind of loan credit or approval for extension of any kind. For example section 214 is only for the prohibition of bribes. Also, no banking official or any bank employee is allowed to create any kind of false reports or execute any transaction that doesn’t fall under authorization. In case this is happening they can face a high amount of fines or a long term in prison.

CONCLUSION

The banking regulation act and the laws under it were not made only to regulate the banking behaviour or review rules and regulations are the behaviour of the banking sector in the country but to amend several laws that are in the interest of the consumers and all the banks that are functioning under the financial sector of the world. This includes any kind of dissatisfaction or unauthorised behaviour either by the bank or the consumer for which there are specific laws and sections under the law to make sure no fraud or disrespect happens. According to the sections present in the law or the act no person or no banking organisation can violate any rule. Also in case this happens there are further other rules too to make sure the smooth functioning of the banking organisation in the banking sector of India and the world.