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All Important Acts And Sections Related to Banking exams by gkrecall

 


All Important Acts And Sections Related to Banking exams by gkrecall

Banking sector is considered the financial pillar of an economy. With time, it has gone through various reforms and acts. Banking sector Acts are very crucial for the student who are preparing for Banking/ General Awareness. We have come up with the most Important Banking Acts that are relevant and important.


1. Important Acts in the Banking Sector
Negotiable Instrument act, 1881

2. Co-operative Societies Act, 1912

3. Reserve Bank of India Act, 1934

4. The Banking Regulation Act–1949

5. The State Bank of India Act–1955

6. The State Bank of India (Subsidiary Banks) Act-1959

7. The Deposit Insurance and Credit Guarantee Corporation Act–1961

8. Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969

9. The Regional Rural Banks Act–1976

10. The National Bank for Agriculture and Rural Development Act–1981

11. NABARD General Regulations 1982

12. The National Housing Bank Act–1987

13. SIDBI General Regulations, 1990

14. Securities and Exchange Board of India Act, 1992

15. Recovery of Debts due to Banks and Financial Institutions Act,1993

16. Insurance Regulatory and Development Authority Act, 1999

17. Foreign Exchange Management Act, 1999

18. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002)

19. Prevention of Money Laundering Act, 2002

20. Fiscal Responsibility and Budget Management Act, 2003

21. Government Securities Act, 2006


Reserve Bank of India act, 1934

The RBI Act, 1934 is a legislative act under which the Reserve Bank of India was established. Along with the Companies Act, it was amended in 1936 to provide a framework for the supervision of banking firms in India. The act also defines Scheduled Banks.

Here are some of the highlights of this act:

  • Section 17 of the Act defines the manner in which the RBI can conduct business.
  • Section 18 defines emergency loans to banks.
  • Section 21 states that the RBI must conduct the banking affairs for the central government and manage public debt.
  • Section 22 states that only the RBI has the exclusive rights to issue currency notes in India.
  • Section 24 states that the maximum denomination of a note can be ₹10,000.
  • Section 26 describes the legal tender character of the Indian bank notes.
  • Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes.
  • Section 31 states that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand.
  • Section 42(1) states that every scheduled bank must maintain an average daily balance with the RBI.

Regional Rural Banks Act, 1976

Under this act, Regional Rural Banks were established to create an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector. This act was recommended by  M. Narasimham. They are jointly owned by the Government of India, the concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50 per cent, 15 per cent, and 35 per cent respectively.


Banking Regulation Act 1949 and Important Sections

There are total 55 Sections in the Banking Regulation Act, 1949. Some important sections are listed below:

Section 10BB: Power of Reserve Bank to appoint [chairman of the Board of directors appointed on a whole-time basis or a managing director] of a banking company.

Section 11: Requirement as to minimum paid-up capital and reserves


Section 12:  Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
Section 21: Power of Reserve Bank to control advances by banking companies
Section 21A: Rates of interest charged by banking companies
Section 22(1): Licensing of banking companies
Section 23: Restrictions on opening of new, and transfer of existing, places of business
Section 29: Accounts and balance-sheet
Section 36AE : Power of Central Government to acquire undertakings of banking companies in certain cases

Section 44A: Procedure for amalgamation of banking companies.

Note:

  • Amalgamation of two banking companies is under the provisions of Section 44A of the Banking Regulation Act, 1949.
  • Amalgamation of a banking company with a non-banking company is governed by sections 391 to 394 of the Companies Act, 1956.
Section 47A: Power of Reserve Bank to impose penalty
 
Section 49A: Restriction on acceptance of deposits withdrawable by cheque.