BANKING

Banking Laws Index

RBI is the sole repository of power for the management of currency. It is also vested with the sole right to issue bank notes and to issue currency notes supplied to it by the Government of India. It has been held that the RBI has an important role to play in evolving the monetary policy of the country.

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Bank and Banking

Banking Laws & Regulations

Currency & Coins

Central Banking & Reserve Bank of India

National And Scheduled Banks

Private Banks

Foreign Banks

Commercial Banks

Co-Operative Banking

Development Banks

Export Import Banks

Housing Banks-Non

Banking Financial Institutions

Chit Funds

Bank Loan and Securitisation

Banking Ombudsman

Lok Adalats

Lender’s Liability

Bank Guarantee

Financial Analysis of Banks

International Banking Management

Electronic Banking and IT in Banks

Risk Management in Banks

Investment Banking

Money Supply & Price

Gold Control-Deposit banking or money warehousing-National Bank Notes

Bank Audit & Accounting

Foreign Exchange & Forex

Treasury Operation-Bankruptcy and Insolvency

Banking Disputes & Ombudsman

Training in Banking

Finance & management

Cyber Security

Cyber Incident Response and Investigations

Bank Fraud-Corporate Credit Appraisal

List of Central Acts [India]

Topical arrangement

Overview of Banking System
Regulatory Framework and Compliances
Legal Aspects of Banking Operations
Banking Related Laws
Banker – Customer Relations
Loans and Advances
Securities for Banker’s Loans
Financial Analysis of Banks
Financial System Contemporary and Emerging Issues: An Overview
International Banking Management
Electronic Banking and IT in Banks
Risk Management in Banks
Ethics and Corporate Governance in Banks

Banking Law and Practice [ ICSI Syllabus]

Overview of Banking System
Regulatory Framework and Compliances
A. Provisions of RBI Act 1935, Banking Regulation Act 1949, Prevention of Money Laundering Act, 2002.
B. Government and RBI’s Powers Opening of New Banks and Branch Licensing Constitution of Board of Directors and their Rights Banks Share Holders and their Rights CRR and SLR Concepts CashCurrency Management Winding up – Amalgamation and Mergers Powers to Control Advances – Selective Credit Control – Monetary and Credit Policy Audit and Inspection Supervision and Control – Board for Financial Supervision – its Scope and Role Disclosure of Accounts and Balance Sheets Submission of Returns to RBI, Corporate Governance.
Legal Aspects of Banking Operations
Case Laws on Responsibility of Paying and Collecting Banker Indemnities or Guarantees – Scope and
Application – Obligations of a Banker – Precautions and Rights – Laws relating to Bill Finance, LC and
Deferred Payments – Laws Relating to Securities – Valuation of Securities – Modes of Charging Securities – Lien, Pledge, Mortgage, Hypothecation etc. – Registration of Firms/Companies – Creation of Charge and Satisfaction of Charge.
Banking Related Laws
Law of Limitation – Provisions of Bankers Book Evidence Act -Special Features of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 TDS Banking Cash Transaction Tax Service Tax, Asset Reconstruction Companies, The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, The Consumer Protection Act, 1986, Banking Ombudsman Lok Adalats, Lender’s Liability Act.
Banker – Customer Relations
The legal relationship between the Banker and Customer, the Multifarious Transactions between them and the Rights and Duties of the Parties springing out of such relationship Nature of Banking Business Legal Nature of Banker-Customer Relationship and their Mutual Rights and Duties Special Categories of Customers, such as Corporations, Partnership Firms, Hindu Joint Families, Unincorporated Bodies, Trusts, Joint Account Holders, Minors, Nominee Accounts, Liquidator, Mercantile Agents, Non-Resident Indians, Foreigners and the Legal Incidence of Each Different Types of Accounts such as Current Accounts, Savings Bank Account and Fixed Deposits Other Transactions between Banker and Customer such as Safe Deposit Vaults, Financial Advice, Letters of Introduction and Other Services Rendered by Banks Special features of the relationship between banker and customer – Their mutual rights and duties – lien – Power to combine different accounts – Secrecy of account.
Loans and Advances
Law, Practice and Policies governing the employment of the funds in the hands of the banker with special reference to the lending banker State Policy on Loans and Advances – Priority sector advances and socioeconomic policies – Financial inclusion – Self- Employment Schemes – Women Entrepreneurs – Small Scale Industries – Agricultural Finance, Export Finance, etc. – Micro Finance – How the banker profitably uses the fund – Call loans and loans repayable at short notice – Loans and advances – Overdrafts – Legal control over bank’s deployment of funds.
Securities for Banker’s Loans
The legal issues involved in and the practice governing the different kinds of securities for banker’s advances and loans Guarantees, pledge, lien, mortgage, charge – subject matters of collateral security Corporate Securities Documents of title to goods Land and Buildings Book debts Life Policies Factoring; Bill Discounting; Bank Guarantees; Letters of Credit; Commercial Papers.
Financial Analysis of Banks
Introduction; Role of financial analysis in financial management; Techniques of Financial Analysis; DuPont Model of Financial Analysis; Special issues in Financial Analysis of Banking Industry.
Financial System Contemporary and Emerging Issues: An Overview
Introduction; Role of Financial System; Capital Flow Through Intermediary Financial Institutions; Direct Capital Flow; Primary Market Products; Primary Market Issue Facilitators; Secondary Market; Economic Importance of Financial Markets.
International Banking Management
International Banking: An Overview, Legal & Regulatory Framework, International Banking Operations
Management, Risk Management in International Banking, Special Issues: Technology and International Banking; Globalisation and International Banking; Financial Innovations in International Banking.
Electronic Banking and IT in Banks
IT in Banking: An Introduction. IT Applications in Banking- Computer-Based Information Systems for Banking; Electronic Banking; Electronic Fund Management, Enabling Technologies of Modern Banking- Electronic Commerce and Banking; Supply Chain Management; Customer Relationship Management; Integrated Communication Networks for Banks Security and Control Systems – Cybercrimes and fraud management Planning and Implementation of Information Systems.
Risk Management in Banks
Risk Management: An Overview, Credit Risk Management, Liquidity and Market Risk Management,
Operational Risk Management, Special Issues- Risk Management Organisation; Reporting of Banking
Risk; Risk Adjusted Performance Evaluation Basel III.
Ethics and Corporate Governance in Banks
Ethics and Business, Corporate Governance, Corporate Social Responsibility, Governance in Financial Sector

Banking

Tags: Banking Laws

Tagged: Banking

This topic has 2 replies, 1 voice, and was last updated 4 months, 3 weeks ago by advtanmoy.

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09/10/2017 at 13:20 #121629

advtanmoy
Keymaster

RBI is the sole repository of power for the management of currency. It is also vested with the sole right to issue bank notes and to issue currency notes supplied to it by the Government of India. It has been held that the RBI has an important role to play in evolving the monetary policy of the country.

[See the full post at: Banking Laws Index]

19/01/2023 at 09:16 #121630

advtanmoy
Keymaster

Status of the RBI

Vivek Narayan Sharma Vs. Union of India

[Writ Petition (Civil) No. 906 of 2016]

194. Having adverted to the various judgments on the issue of delegated legislation, we find it necessary to refer to certain judgments of this Court outlining the status of the RBI.

195. The Constitution Bench of this Court in the case of Joseph Kuruvilla Velukunnel (supra) was considering a challenge to Section 38(1) and (3)(b)(iii) of the Banking Companies Act, 1949 being violative of Articles 14, 19 and 301 of the Constitution of India, and was, therefore, ultra vires the Constitution of India. Though this Court held that Section 38 is an unreasonable restriction on the right of the Palai Bank to carry on its business and, therefore, unconstitutional, it will be relevant to refer to paragraph 46 of the said judgment, which is as follows:

“46. In the present case, in view of the history of the establishment of the Reserve Bank as a central bank for India, its position as a Bankers’ Bank, its control over banking companies and banking in India, its position as the issuing bank, its power to license banking companies and cancel their licences and the numerous other powers, it is unanswerable that between the court and the Reserve Bank, the momentous decision to wind up a tottering or unsafe banking company in the interests of the depositors, may reasonably be left to the Reserve Bank.

No doubt, the court can also, given the time, perform this task. But the decision has to be taken without delay, and the Reserve Bank already knows intimately the affairs of banking companies and has had access to their books and accounts. If the court were called upon to take immediate action, it would almost always be guided by the opinion of the Reserve Bank. It would be impossible for the court to reach a conclusion unguided by the Reserve Bank if immediate action was demanded. But the law which gives the same position to the opinion of the Reserve Bank is challenged as unreasonable. In our opinion, such a challenge has no force.”

[emphasis supplied]

196. The Court has referred to the pivotal role that the RBI plays as a Central Bank, as a bankers’ bank and numerous other powers that it exercises. The Court held that the law which gives an important position to the opinion of the Reserve Bank was challenged unreasonably and such challenge had no force.

197. It may also be relevant to refer to the following observations of this Court in the case of Peerless General Finance and Investment Co. Limited and another (supra):

“30. Before examining the scope and effect of the impugned paragraphs (6) and (12) of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers’ bank is a creature of statute. It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona fides of the Reserve Bank in issuing the impugned directions of 1987. The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It is the duty of the Reserve Bank to safeguard the economy and financial stability of the country.”

[emphasis supplied]

198. It can thus be seen that this Court has noted that the RBI, which is a bankers’ bank, is a creature of statute. It has large contingent of expert advice relating to matters affecting the economy of the entire country. It has been held that the RBI plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It has been held that it is the duty of the RBI to safeguard the economy and financial stability of the country.

199. It will also further be relevant to refer to the following observations of this Court in the case of Peerless General Finance and Investment Co. Limited and another (supra):

“The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent. The Court can only strike down some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any statute. It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies. This Court has repeatedly said that matters of economic policy ought to be left to the government.”

[emphasis supplied]

200. The Court has held that it is not permissible for a Court to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent. It has been held that it would be risky and hazardous for the courts to tread an unknown path and should leave such task to the expert bodies.

201. Recently a three-Judge Bench of this Court, speaking through one of us (V. Ramasubramanian, J.), in the case of Internet and Mobile Association of India (supra) observed thus:

“141. But as pointed out elsewhere, RBI is the sole repository of power for the management of the currency, under Section 3 of the RBI Act. RBI is also vested with the sole right to issue bank notes under Section 22(1) and to issue currency notes supplied to it by the Government of India and has an important role to play in evolving the monetary policy of the country, by participation in the Monetary Policy Committee which is empowered to determine the policy rate required to achieve the inflation target, in terms of the consumer price index.

Therefore, anything that may pose a threat to or have an impact on the financial system of the country, can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system. The expression “management of the currency” appearing in Section 3(1) need not necessarily be confined to the management of what is recognised in law to be currency but would also include what is capable of faking or playing the role of a currency.”

[emphasis supplied]

202. It can thus be seen that this Court has held that the RBI is the sole repository of power for the management of currency. It is also vested with the sole right to issue bank notes and to issue currency notes supplied to it by the Government of India. It has been held that the RBI has an important role to play in evolving the monetary policy of the country.

19/01/2023 at 09:19 #121631

advtanmoy
Keymaster

Legal tender character of notes issued by RBI

(1) Subject to the provisions of sub-section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government.

(2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender save at such office or agency of the Bank and to such extent as may be specified in the notification.”

106. It can thus be seen that sub-section (1) of Section 26 of the RBI Act provides that, subject to the provisions of sub-section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. Sub-section (2) of Section 26 of the RBI Act provides that on recommendation of the Central Board, the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender save at such office or agency of the Bank and to such extent as may be specified in the notification.

Section 34 of the RBI Act provides that the liabilities of the Issue Department of the RBI shall be an amount equal to the total of the amount of the currency notes of the Government of India and bank notes for the time being in circulation.
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United States Code

Status of the RBI

Legal tender character of notes issued by RBI

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