The Banking Regulation Act 1949

Act No. 10 of 1949 10th March 1949*

(Updated up to 2020 and for provisions applicable w.e.f 1.4.2021)

An Act to consolidate and amend the law relating to banking 2***.

WHEREAS it is expedient to consolidate and amend the law relating to banking 2***;

It is hereby enacted as follows:-

 

PART I PRELIMINARY

Section 1. Short title, extent and commencement.

(1) This Act may be called the Banking 3[Regulation] Act, 1949.

4[(2) It extends to the whole of India 5***.]

(3) It shall come into force on such date6 as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

 

Section 2 Application of other laws not barred

The provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in derogation of the 7[Companies Act, 1956 (1 of 1956)], any other law for the time being in force.

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1. For statement of Objects and Reasons, see Gazette of India, 1948, Part V, pp. 311 and 312; for Report of Select Committee, see ibid., 1949. Part V. pp. 45 to 48. Extended to Dadra and Nagar Haveli by Regulation 6 of 1963, section 2 and Schedule I (w.e.f. 1-7-1965) and to Goa, Daman and Diu by Regulation 11 of 1963, section 3 and Schedule (w.e.f. 1-2-1965).

Nothing in this Act (except section 34A) shall apply to the Industrial Development Bank of India, vide Act 18 of 1964, section 34.

2. The word "companies" omitted by Act 23 of 1965, s. 10 (w.e.f. 1-3-1966).

3. Subs. by s. 11, ibid., for "Companies" (w.e.f. 1-3-1966).

4. Subs. by Act 20 of 1950, s. 2, for sub-section (2) (w.e.f. 18-3-1950).

5. The words "except the State of Jammu and Kashmir" omitted by Act 62 of 1956, s. 2 and the Schedule (w.e.f. 1-11-1956).

6. 16th March, 1949, see Notification No. F. 4 (46)-FI/49, dated the 10th March, 1949, Gazette of India, 1949, Part I.

7. Subs. by Act 95 of 1956, s. 14 and the Schedule, for "Indian Companies Act, 1913 (7 of 1913)" (w.e.f. 14-1-1957). 

 

Section 3 Act not to apply to certain co-operative societies

Section 4 Power to suspend operation of Act

Section 5 Interpretation

Section 5A Act to override memorandum, articles, etc

 

PART II BUSINESS OF BANKING COMPANIES

Section 6 Forms of business in which banking companies may engage

Section 7 Use of words bank, banker, banking or banking company

Section 8 Prohibition of trading

Section 9 Disposal of non-banking assets

Section 10 Prohibition of employment of managing agents and restrictions on certain forms of employment

Section 10A Board of directors to include persons with professional or other experience

Section 10B Banking company to be managed by whole time chairman

Section 10C Chairman and certain directors not to be required to hold qualification shares, Section 10D Provisions of sections 10A, 10B and 10BB to override all other laws, contracts, etc

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 12A Election of new directors

Section 12B Regulation of acquisition of shares or voting rights

Section 13 Restriction on commission, brokerage, discount, etc., on sale of shares

Section 14 Prohibition of charge on unpaid capital, Section 14A Prohibition of floating charge on assets

Section 15 Restrictions as to payment of dividend

Section 16 Prohibition of common directors

Section 17 Reserve Fund

Section 18 Cash Reserve

Section 19 Restriction on nature of subsidiary companies

Section 20 Restrictions on loans and advances

Section 20A Restrictions on power to remit debts

Section 21 Power of Reserve Bank to control advances by banking companies

Section 21A Rates of interest charged by banking companies not to be subject to scrutiny by courts

Section 22 Licensing of banking companies

Section 23 Restrictions on opening of new and transfer of existing, places of business

Section 24 Maintenance of a percentage of assets

Section 25 Assets in India

Section 26 Return of unclaimed deposits

Section 26A Establishment of Depositor Education and Awareness Fund

Section 27 Monthly returns and power to call for other returns and information

Section 28 Power to publish information

Section 29 Accounts and balance-sheet

Section 29A Power in respect of associate enterprises

Section 30 Audit

Section 31 Submission of returns

Section 32 Copies of balance-sheets and accounts to be sent to registrar

Section 33 Display of audited balance-sheet by companies incorporated outside India

Section 34 Accounting provisions of this Act not retrospective

Section 34A Protection of documents of confidential nature

Section 35 Inspection

Section 36 Further powers and functions of Reserve Bank

Section 36A Certain provisions of the Act not to apply to certain banking companies

 

PART IIA CONTROL OVER MANAGEMENT

Section 36AA Power of Reserve Bank to remove managerial and other persons from office

Section 36AB Power of Reserve Bank to appoint additional directors, Section 36 AC Part IIA to override other laws

 

PART IIAB SUPERSESSION OF BOARD OF DIRECTORS OF BANKING COMPANY

Section 36ACA Supersession of Board of Directors in certain cases

 

PART IIB PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES

Section 36AD Punishments for certain activities in relation to banking companies

 

PART IIC ACQUISITION OF THE UNDERTAKINGS OF BANKING COMPANIES IN CERTAIN CASES

Section 36 AE Power of Central Government to acquire undertakings of banking companies in certain cases

Section 36AF Power of the Central Government to make scheme

Section 36AG Compensation to be given to shareholders of the acquired bank

Section 36AH Constitution of the Tribunal

Section 36AI Tribunal to have powers of a civil court Section 36AJ Procedure of the Tribunal

 

PART III SUSPENSION OF BUSINESS AND WINDING UP OF BANKING COMPANIES

Section 36B High Court defined

Section 37 Suspension of business

Section 38 Winding up by High Court

Section 38A Court Liquidator

Section 39 Reserve Bank to be official Liquidator

Section 39A Application of Companies Act to liquidators

Section 40 Stay of proceedings

Section 41 Preliminary report by official liquidator

Section 41A Notice to preferential claimants and secured and unsecured creditors

Section 42 Power to dispense with meetings of creditors

Section 43 Booked depositors credits to be deemed proved

Section 43A Preferential payments to depositors

Section 44 Powers of High Court in voluntary winding up

Section 44A Procedure for amalgamation of banking companies

Section 44B Restriction on compromise or arrangement between banking company and creditors

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstruction or amalgamation

 

PART IIIA SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS

Section 45A Part IIIA to override other laws

Section 45B Power of High Court to decide all claims in respect of banking companies

Section 45C Transfer of pending proceedings

Section 45D Settlement of list of debtors

Section 45E Special provisions to make calls on contributories

Section 45F Documents of banking company to be evidence

Section 45G Public examination of directors and auditors

Section 45H Special provisions for assessing damages against delinquent directors, etc

Section 45I Duty of directors and officers of banking company to assist in the realisation of property

Section 45J Special provisions for punishing offences in relation to banking companies being wound up

Section 45L Public examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement

Section 45M Special provisions for banking companies working under schemes of arrangement at the commencement of the Amendment Act

Section 45N Appeals

Section 45O Special period of limitation

Section 45P Reserve Bank to tender advice in winding up proceedings

Section 45Q Power to inspect

Section 45R Power to call for returns and information

Section 45S Chief Presidency Magistrate and District Magistrate to assist official liquidator in taking charge of property of banking company being wound up

Section 45T Enforcement of orders and decisions of High Court

Section 45U Power of High Court to make rules

Section 45V References to directors, etc., shall be construed as including references to past directors, etc. Section 45w Part II not to apply to banking companies being wound up

Section 45X Validation of certain proceedings

 

PART IIIB PROVISIONS RELATING TO CERTAIN OPERATIONS OF BANKING COMPANIES

Section 45Y Power of Central Government to make rules for the preservation of records

Section 45Z Return of paid instruments to customers

Section 45ZA Nomination for payment of depositors money

Section 45ZB Notice of claims of other persons regarding deposits not receivable

Section 45ZC Nomination for return of articles kept in safe custody with banking company

Section 45ZD Notice of claims of other persons regarding articles not receivable

Section 45ZE Release contents of safety Release of lockers

Section 45ZF Notice of claims of other persons regarding safety lockers not receivable

 

PART IV MISCELLANEOUS

Section 46 Penalties

Section 47 Cognizance of offences

Section 47A Power of Reserve Bank to impose penalty

Section 48 Application of fines Section 49 Special provisions for private banking companies

Section 49A Restriction on acceptance of deposits withdrawable by cheque, Section 49B Change of name by a banking company, Section 49C Alteration of memorandum of a banking company

Section 50 Certain claims for compensation barred

Section 51 Application on of certain provisions to the State Bank of India and other notified banks

Section 52 Power of Central Government to make rules

Section 53 Power to exempt in certain cases

Section 54 Protection of action taken under Act

Section 55 Amendment of Act 2 of 1934, Section 55a Power to remove difficulties

 

PART V APPLICATION OF THE ACT TO CO-OPERATIVE BANKS

Section 56 Act to apply to co-operative societies subject to modifications