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Banking Regulation Act 1949

Passed as Banking Companies Act 1949 (came into effect from 16th March 1949) changed to Banking Reg. Act 1949 w.e.f. 1st March 1966. Since 1956, applicable throughout India including J&K. Act not applicable to Primary Agril. Credit Societies, co-op . land mort. banks & non ag. Primary credit societies.

Sec.5(b):- Banking means accepting for purpose of lending or investment of deposits of money from public repayable on demand or otherwise and withdrawable by cheque, drafts, order or otherwise.

Sec.5 (c ):- Banking Company means any company which transacts the business of banking.

Sec.5(f):- Demand liabilities are liabilities which must be met on demand & time liabilities means liabilities which are not demand liabilities.

Sec.5(h):- Secured loan or adv. means a loan or adv. Made on security of assets, the market value of which is not at any time less than the amount of such loan or advances & unsecured loan or advances means a loan or advancers not so secured.

Sec.6-1:- Banking Business may be engaged in accepting deposits, borrowing money, lending money, dealing in bills, collection of bills, buying / selling Foreign Exchange, Lockers, Issuing L/C, T/C, mortgages, insurance business, acting as trustee etc. or any business which Central Govt. declares in official Gazette.

Sec.8:- Restriction on business of trading in goods except realisation of securities held by it. Sec.9:- Immovable Property prohibited except for its own use for a period exceeding 7- years RBI may extend period. Sec.11&12: Paid up Capital, Reserves Foreign Bank:- Min. 15 Lacs (Rs.20 Lacs in Mumbai / Calcutta) Domestic Banks:- Not less than 5 Lacs. Ratio of Authorised subscribed & paid up capital 4:2:1.

Sec.14-1:- Prohibits a banking Co. from creating a charge upon any unpaid capital of Company.
Sec.17:- To create Reserve Fund not less than 25% of net profit to be transferred to Reserve Fund w.e.f. 31st March 2001

Sec.18:- Cash Reserves Non Sch. Banks:3% of cash reserve with R.B.I. Sec.19:- Permits banks to form subsidiary Company for certain purposes.

Sec.19(2):- No banking Co. shall hold shares in any company whether as pledgee, mortgagee or absolute owner of an amount exceeding 30% of its own paid up capital+ reserves OR 30% of paid up share capital of that Co. whichever is less. Sec.20:- Banks cannot grant loans against security of their own shares.

Sec.22:- Licensing of Banking Co. From RBI Sec.24 ( 2-a) SLR:- Maintain a % of its demand & time liabilities by way of Cash + Gold + Unencumbered Securities . Present SLR 24%. Sec.26:- Unclaimed Deposit: Return of unclaimed deposits (10 yrs. & above) within -30- days of close of financial year to RBI. Sec.29:- Banks to publish its B/S on Form A & P/L A/c on Form B (as per 3rd schedule) on the last working day of March every year. Sec.30-1:- Audit: B/S to be got audited from qualified auditors.

Sec.31:- To submit B/S & auditors report within -3- months. Sec. 36:- RBI can terminate any Chairman / employee when considered desirable. Sec.45:- RBI powers to apply to Central Govt. for suspension of business by a banking Co.& prepare a scheme of reconstitution or amalgamation. Sec.45(2):- Banks can return the unpaid instrument by keeping a true copy. Customer to undertake to preserve the instruments as prescribed by Central Govt.

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Sec.47(A):- Penalty by RBI on various violations. Sec.49(A):- Other than a banking Co./ RBI/ SBI, no person can accept deposits of money withdrawable by cheque. Bank Donation:- Profit making banks, 5% of published net profits of previous year & loss making banks Max Rs.5/- Lacs. Classification of Branches Rural Less than 10000. Semi-Urban:- 10000 & above, below 1 Lac. Urban:- 1 Lac & above less than 10 Lacs. Metro:- 10 Lacs & above. (NABARD & NHB Rural not exceeding 50000)

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Sr. No. 1. 2. 3. 4. 5. 6. Act Kept as Basis Internet Min. & Max. Penalty CRR Sec.42(1) RBI Act 1934 Cash bal. with RBI As % of NDTL. At fortnightly basis. No int. payable w.e.f. 24-06-06 3% to 20% Penal int. for the day not maintained at 3% p.a. above bank rate. For next day 5% Forum A (fortnightly) SLR. Sec.24(2-a) BRA 1949 Cash + Gold + approved securities As % of DTL on daily basis. As per investment made in diff. securities. 25% to 40% Penal int. for the day on which not maintained at 3% p.a. above bank rate . For next day 5% Forum VIII 20th day of every month.

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Return to RBI

NOMINATION FACILITY(W.E.F.1985)
In name/s of individual only. Not when a/c is in representative capacity eg. Trust A/c, Sole Prop., Partnership, Company, Clubs, Association etc. Joint A/c- by all a/c holders even though operated by any one. In favour of only one individual (Dep. & Safe custody of articles) Nomination made in Form DA-1, cancelled by Form DA-2, changed through Form DA-3. Renewal of term dep.- Nomination continues.

NOMINATION (CONTINUED)
A/c in name of minor- nomination by lawful guardian. Nominee-Minor- Another individual not being minor to be appointed to receive proceeds on behalf of nominee on death of depositor during minority of nominee. Safe Dep. Locker- Sole Hirer nominee-only one. Joint Hirer-can be one or more persons. Safe Custody Of Articles-Nom. -Form SC-1. Cancellation-Form SC-2. Variation-Form SC-3

NOMINATION (Cont.)
Safe Dep. Locker- Nomination-Sole Hirer-SL-1. Joint Hirer-SL 1A- Cancellation -Sole & Joint Hirer-SL 2, Variation by Sole Hirer-SL 3 & by Joint Hirer-SL 3A. When nominee makes claim- Obtain death certificate, identify nominee, make payment by draft/Bankers Cheque. Articles in Safe Custody/Locker- Inventory taken in presence of nominee & two witnesses- Nominee gives acknowledgement of receipt of articles.

15 Sec.45:- ZA to ZF Nomination(Summery of Provisions) Facility on bank deposits, safe custody of articles & lockers. Notification Dt. 29-03-1985
Particular Deposit Acceptance of Nomination Sec.45ZA Pay / Deliver only to nominee Sec.45ZB Sec.45ZD Sec.45ZF

Safe Custody Sec.45ZC Locker Sec.45ZE

Type of A/c Deposit Safe Custody Lockers Lockers Lockers Lockers

Nomination Provisions Nature of A/c No. of Nominees Single / Joint Only Single Single Joint E/S Joint F/S Joint Operation One Only One Only One Only One Only One Only Each one can nominate one (Max 2 )

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Nomination Forms
A/c Registration Cancellation Variation

Deposit

DA 1

DA 2DA
SC 2

DA 3
SC 3

Safe SC 1 Custody

Lockers

SL 1 Single SL 1 A Joint

SL 2

SL 3 Single SL 3A Joint

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Mr.B.J.Ved