IMPORTANT PROVISIONS OF BANKING REGULATION ACT, 1949.

IMPORTANT PROVISIONS OF BANKING REGULATION ACT, 1949.
The important legal provisions under the Banking Regulation Act, 1949 are as follows:

(a) Licensing: Banking company has to obtain license from the Reserve Bank of India before starting banking business in India. The license is also required for opening a new place of business or changing the existing place of business in India, or outside India. The RBI has to ensure the financial soundness of the proposed banking company. 

(b) Prohibiting Trading: A banking company is prohibited from carrying out any other business or deal directly or indirectly in buying and selling of goods.

(c) Non - Banking Assets: A banking company is not allowed to acquire assets for trading purposes. However, it can acquire assets for its own use. For example, land and building, furniture, vehicles, etc. It is also allowed to grant loans or advances against the security of such assets. In case of default by the borrower, such assets may be possessed by the bank. Such assets are known as "Non - banking assets". A banking company must dispose of such assets, within a period of seven years from the date of acquisition of such assets.

(d) Capital structure: The share capital of banking company should include only ordinary or equity shares. A banking company cannot carry on business if the subscribed capital is less than 50% of its authorized capital or paid up capital is less than 50% of its subscribed capital.

(e) Management: The management of banking company shall be in the hands of duly constituted Board of Directors. One of the directors, shall be the chairman, appointed for a period of 5 years. 51% of directors of the banking company must have specialized knowledge of accountancy, agriculture, banking, cooperation, economics, finance, business and law.

(f) Commission on sale of shares: A banking company is not allowed to pay commission on sale of shares exceeding 2.5 % of the paid up value of share.

(g) Statutory Reserve: Section 17 of the Banking Regulation Act, 1949 provides that at least 20% of the profits prior to declaration of dividend must be transferred to the statutory reserve. The percentage has increased to 25% in the year 2007. It should be shown separately from other reserves. However, the Central Government on recommendation of RBI, may exempt any bank from this restriction if the amount of reserve fund together with share premium is at least equal to the paid up share capital. As required by RBI, the Scheduled Banks have to transfer 25% of their disposable profits after adjustment/provision for bonus with effect from the year ended March 31, 2001. The Central Government, in consultation with RBI can change this provision depending on the economic situation.


(h) Restriction on payment of dividend: Section 15 of the Banking Regulation Act, provides that, no bank shall pay any dividend on its shares until all its capital expenses such as preliminary expenses, commission on issue of shares, losses incurred and other expenses, commission on issue of shares, losses incurred and other expenses not represented by tangible assets are completely written off. 

No comments:

To Get Board Exam Important Follow us.

No. 1 Simple Hack, you can try out, in preparing for Board Exam

How to Study for CBSE Class 10 Board Exams Subject Wise Tips?

JEE Main 2020 Registration Process – Exam Pattern & Important Dates

NEET UG 2020 Registration Process Exam Pattern & Important Dates

How can One Prepare for two Competitive Exams at the same time?

8 Proven Tips to Handle Anxiety before Exams!


PDF FILE TO YOUR EMAIL IMMEDIATELY PURCHASE NOTES & PAPER SOLUTION. @ Rs. 50/- each

SSC MATHS I PAPER SOLUTION

SSC MATHS II PAPER SOLUTION

SSC SCIENCE I PAPER SOLUTION

SSC SCIENCE II PAPER SOLUTION

SSC ENGLISH PAPER SOLUTION

SSC & HSC ENGLISH WRITING SKILL

HSC ACCOUNTS NOTES

HSC OCM NOTES

HSC ECONOMICS NOTES

HSC SECRETARIAL PRACTICE NOTES

2019 Board Paper Solution

HSC ENGLISH SET A 2019 21st February, 2019

HSC ENGLISH SET B 2019 21st February, 2019

HSC ENGLISH SET C 2019 21st February, 2019

HSC ENGLISH SET D 2019 21st February, 2019

SECRETARIAL PRACTICE (S.P) 2019 25th February, 2019

HSC XII PHYSICS 2019 25th February, 2019

CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019


BUY FROM PLAY STORE

DOWNLOAD OUR APP


HOW TO PURCHASE OUR NOTES?



S.P. Important Questions For Board Exam 2020


O.C.M. Important Questions for Board Exam. 2020


Economics Important Questions for Board Exam 2020


Chemistry Important Question Bank for board exam 2020


Physics – Section I- Important Question Bank for Maharashtra Board HSC Examination


Physics – Section II – Science- Important Question Bank for Maharashtra Board HSC 2020 Examination


MUST REMEMBER THINGS on the day of Exam


Are you prepared? for English Grammar in Board Exam.


Paper Presentation In Board Exam


How to Score Good Marks in SSC Board Exams


Tips To Score More Than 90% Marks In 12th Board Exam


How to write English exams?


How to prepare for board exam when less time is left


How to memorise what you learn for board exam