Unit 2 of Law of Banking and Negotiable Instruments (syllabus: Module II — the Banking Regulation Act 1949 and the Reserve Bank of India Act 1934: licensing, directions and inspection, the rule-making power, the cash reserve and statutory liquidity requirements, and the banking ombudsman). Below: what the unit covers, the provisions it turns on, and the cases an examiner expects you to name.
What this unit covers
- Is the licensing of banking companies a permit system, and is it constitutional?
- What reserves must a bank maintain, and under which statute?
- What is the source of the Reserve Bank's power to issue directions and schemes?
- What are the limits of a banking ombudsman's jurisdiction?
- What is a moratorium under s. 45, and what may a scheme made during it do?
- When must the High Court order the winding up of a banking company?
- Does the Reserve Bank of India Act override the Companies Act where a finance company proposes a scheme with its depositors?
Treat that list as a self-test: recite each topic's rule from memory before you open its cases.
Provisions
- Banking Regulation Act 1949, s. 22
- Banking Regulation Act 1949, s. 24
- Banking Regulation Act 1949, s. 35A
- Banking Regulation Act 1949, s. 45
- Banking Regulation Act 1949, s. 38
- Reserve Bank of India Act 1934, s. 45-Q
Leading cases
- Sajjan Bank (Private) Ltd. v. Reserve Bank of India
- Section 42 of the Reserve Bank of India Act 1934 and s. 24 of the Banking Regulation Act 1949 are the governing provisions; there is no leading case on this head in this course
- M/S Durga Hotel Complex v. Reserve Bank of India
- Section 45 of the Banking Regulation Act 1949 is the governing provision; this course states no decided case on the moratorium power
- Section 38 of the Banking Regulation Act 1949 is the governing provision; this course states no decided case on compulsory winding up of a banking company
- M/S Integrated Finance Co. Ltd. v. Reserve Bank of India