What are the provisions of Banking Regulation Act?

What are the provisions of Banking Regulation Act?

ADVERTISEMENTS: The following points highlight the eleven provisions of banking regulation act. They are: (1) Prohibition of Trading (2) Non-Banking Assets (3) Management (4) Minimum Capital and Reserves (5) Capital Structure (6) Payment of Commission, Brokerage etc.

What is statutory reserve in banking?

Under Section 17, every banking company incorporated in India is required to transfer at least 25% of its current profit to its reserve fund. It is known as statutory reserve. Only those banks get exemptions from this legal condition whose reserve along with share premium if any become equal to paid up capital .

What are the statutory provisions followed by banking sector?

Section 18 of the Banking Regulation Act requires that every banking company, not being a scheduled bank, shall maintain in India by way of cash reserve with itself, or by way of balance in a current account with the Reserve Bank, or by way of net balance in current accounts, or in one or more of the aforesaid ways, a …

What are the examples of statutory reserve?

Followig are the examples of statutory reserves: Development Rebate Reserve, Investment Allowance Reserve, Export Profit Reserve, etc.

What is difference between provision and reserve?

A reserve is an appropriation of profits for a specific purpose. In short, a reserve is an appropriation of profit for a specific purpose, while a provision is a charge for an estimated expense.

What are the salient provisions of Banking Regulation Act 1949 & RBI?

Banking Regulation Act gives the power to RBI to license banks and also the regulation of the shareholding. It grants power to RBI to conduct appointment of the boards and management members of banks. It also lays down directions for audits to be managed by RBI, and control merging and liquidation.

What is the role of the RBI under the Banking Regulation Act of 1949?

The Act gives the Reserve Bank of India (RBI) the power to license banks, have regulation over shareholding and voting rights of shareholders; supervise the appointment of the boards and management; regulate the operations of banks; lay down instructions for audits; control moratorium, mergers and liquidation; issue …

What is bank under Banking Regulation Act?

(b) “banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise; (c) “banking company” means any company which transacts the business of banking 10 [in India].

What are the activities permitted by the Banking Regulation Act, 1949?

Lending/Borrowing of money with/ without security, issuing travellers’ cheque, buying & selling foreign exchange notes, deposits vaults, collecting & transmitting of money & securities, buying bonds and other securities on the behalf of customers.

How many sections are there in total in Banking Regulation Act, 1949?

56 sections
Important sections of Banking Regulation Act, 1949 The act has 56 sections.

Which is the statutory reserve of a bank in India?

Reserve Fund/Statutory Reserve (Sec. 17): According to Sec. 17, every banking company incorporated in India shall, before declaring a dividend, transfer a sum equal to 20% of the net profits of each year (as disclosed by its Profit and Loss Account) to a Reserve Fund.

What are the important rules of Banking Regulation Act, 1949?

What are the important rules of Banking Regulation Act, 1949? The Banking Regulation Act, 1949 is legislation in India that regulates all banking firms in India. Initially, the law was applicable only to banking companies. But, 1965 it was amended to make it applicable to cooperative banks.

How much of a bank can the Reserve Bank regulate?

The Reserve Bank has the power to regulate the percentage also between 3% and 15% (in case of Scheduled Banks). Besides the above, they are to maintain a minimum of 25% of its total time and demand liabilities in cash, gold or unencumbered approved securities.

What are the regulations that govern banking in India?

The Regulations That Govern Banking in India. The banking system in India is regulated by the Reserve Bank of India (RBI), through the provisions of the Banking Regulation Act, 1949. Some important aspects of the regulations that govern banking in this country, as well as RBI circulars that relate to banking in India, will be explored below.