Quiz on Banking Regulation Act 1949

Section 35 expressly deals with inspection of banking companies and their books and accounts.

Section 20A restricts the power to remit debts due to a banking company, subject to its terms.

Section 5A gives the Act overriding effect over inconsistent constitutional documents and arrangements within its scope.

Section 26 deals with return of unclaimed deposits; the Depositor Education and Awareness Fund is separately addressed by Section 26A.

Section 29 addresses accounts and balance sheets; Section 30 separately deals with audit.

Section 30 is the audit provision, while Section 29 concerns accounts and balance sheets.

Section 35A is the key direction-making provision, subject to its wording and the facts of the matter.

Section 36AB concerns appointment of additional directors by RBI.

Section 44A sets out the procedure for amalgamation of banking companies. Other resolution or reconstruction routes may involve different provisions.

Section 45 provides for RBI to apply to the Central Government for suspension of business and preparation of a scheme of reconstitution or amalgamation in specified circumstances.

Section 45ZA concerns nomination for payment of depositors‘ money, subject to statutory conditions and rules.

Section 45ZE addresses release of contents of safety lockers. Safe custody articles are addressed separately under Section 45ZC.

Section 45ZC addresses nomination for return of articles kept in safe custody; locker contents are dealt with separately.

Section 47A gives RBI power to impose penalties within the provision‘s scope and subject to applicable procedural requirements.

Section 56 applies the Act to cooperative societies subject to modifications listed in that section. The specific modification must be checked for the issue in question.

Section 8 generally prohibits trading in goods but contains statutory exceptions and should not be expanded into a blanket ban on all asset or security transactions.

They are different provisions: Section 35 concerns inspection, while Section 35A concerns RBI‘s power to give directions.

The official announcement specifies that listed provisions came into force on 1 August 2025 and notes that different commencement dates may be appointed for different provisions.

Use the official India Code consolidated Act and relevant Gazette notifications or official government publications for amending legislation and commencement.

Section 29 concerns accounts and balance sheets; Section 30 concerns audit.

Section 20 contains restrictions on loans and advances to directors and specified connected interests; the exact statutory scope and exceptions must be checked.

Use the amended statutory text and commencement notification. The 2025 amendment revised the threshold from ₹5 lakh to ₹2 crore for the relevant provision.

Section 22 requires an RBI licence for a company to carry on banking business in India, subject to statutory provisions.

Section 23 governs opening new and transfer of existing places of business, subject to its provisions and RBI directions.

Section 24 concerns maintenance of a percentage of assets, read with current applicable law and regulatory directions.

Section 35 empowers RBI to cause inspection of a banking company and its books and accounts.

Section 44A sets out the procedure for amalgamation of banking companies under the statutory route it provides.

Section 46 contains penalty provisions; the applicable penalty must be identified from the specific contravention and current law.

Section 47A concerns RBI‘s power to impose penalties within its statutory scope and procedure.

Identify the legal nature of each action and apply the relevant provisions separately; Section 35 addresses inspection and Section 35A directions.

Section 56 applies the Act to cooperative societies subject to specified modifications, so the ordinary banking-company provision may not apply identically in every case.

Compare the question with the current consolidated Act and the relevant amending Act or Gazette notification, especially for amended or commencement-sensitive provisions.

Section 10B concerns the power of RBI to appoint a chairman of the board appointed on a whole-time basis or a managing director, as specified in the current text.

Section 14A addresses prohibition of a floating charge on assets.

Section 16 addresses prohibition of common directors, subject to its terms.

The Act consolidates and amends the law relating to banking and provides a framework for regulating banking companies.

The Act came into force on 16 March 1949.

Section 5(b) focuses on accepting deposits from the public for lending or investment, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.

Section 2 provides that the Act is additional to other laws, subject to provisions expressly stated in the Act. The statutory text has been amended over time, so current cross-references should be checked in the consolidated Act.

Section 3 excludes qualifying primary agricultural credit societies and certain cooperative societies providing long-term agricultural finance, provided the statutory naming and cheque-drawee conditions are met.

Section 4 empowers the Central Government, on a representation from the RBI and subject to statutory limits and conditions, to suspend operation of all or specified provisions.

Section 5A gives the Act overriding effect over a banking company‘s memorandum, articles, agreements or resolutions to the extent of inconsistency.

Section 6 sets out permissible forms of business for banking companies, including banking-related activities listed in the section.

Section 7 concerns the use of the words ‘bank‘, ‘banker‘, ‘banking‘ or ‘banking company‘ and related naming requirements.

Section 8 generally prohibits a banking company from directly or indirectly dealing in buying or selling or bartering goods, subject to statutory exceptions.

Section 9 addresses disposal of immovable property acquired by a banking company, subject to the statutory framework and exceptions.

Section 10 contains restrictions concerning managing agents and certain forms of employment; the consolidated text should be consulted for current wording.

Section 10A concerns the composition of a banking company‘s board, including directors with specified professional or other experience.

Section 11 sets out requirements relating to minimum paid-up capital and reserves, with details depending on the statutory provisions and applicable categories.

Section 12 addresses regulation of paid-up, subscribed and authorised capital and voting rights, subject to its detailed provisions and amendments.

Section 12B regulates acquisition of shares or voting rights in banking companies, including RBI approval requirements where applicable.

Section 13 restricts commission, brokerage, discount or similar payments on sale of shares beyond the statutory framework.

Section 14 prohibits a banking company from creating a charge upon unpaid capital, as provided in the Act.

Section 15 contains restrictions on payment of dividends by banking companies, including statutory conditions relating to expenses and capitalised expenses.

Section 16 generally prohibits common directors across banking companies, subject to the statutory text and exceptions.

Section 17 deals with the Reserve Fund and specifies the statutory transfer requirement from profits, subject to its terms.

Section 18 is titled ‘Cash reserve‘ and applies according to the Act‘s scope and modifications. Do not confuse it with the CRR framework applicable under the RBI Act to scheduled banks.

Section 19 restricts the nature of subsidiary companies of banking companies.

Section 20 restricts loans and advances to directors and specified connected interests, subject to the exact statutory definitions and exceptions.

Section 20A restricts the power to remit debts due to the banking company, subject to the statutory provisions.

Section 21 empowers RBI to determine policy in relation to advances by banking companies and issue directions within the section‘s scope.

Section 21A provides that rates of interest charged by banking companies are not subject to scrutiny by courts in the manner stated in that section.

Section 22 requires a company to hold an RBI licence to carry on banking business in India, subject to the section‘s provisions.

Section 23 governs opening new and transferring existing places of business, subject to its provisions and applicable RBI directions.

Section 24 concerns maintenance of a percentage of assets. Its relationship with current statutory requirements and RBI rules must be read in the consolidated text.

Section 25 deals with assets in India and the statutory requirements specified in that section.

Section 26 concerns return of unclaimed deposits and associated reporting requirements under the statutory framework.

Section 26A provides for the Depositor Education and Awareness Fund, subject to the section‘s terms and applicable rules.

Section 27 deals with monthly returns and the RBI‘s power to call for returns and information.

Section 28 concerns the RBI‘s power to publish information in accordance with the Act.

Section 29 deals with accounts and balance sheets, while audit is separately addressed in Section 30.

Section 30 addresses audit of banking companies and related statutory requirements.

Section 31 concerns submission of returns in the manner specified by the Act.

Section 35 empowers RBI to cause inspection of a banking company and its books and accounts, subject to the Act.

Section 35A empowers RBI to issue directions in the public interest, in the interest of banking policy, to prevent affairs being conducted detrimentally to depositors or prejudicially to the bank, or to secure proper management, as specified.

Section 35AB concerns RBI directions in respect of stressed assets, subject to the applicable statutory framework.

Section 36 sets out further powers and functions of RBI in relation to banking companies.

Section 36AA provides RBI‘s power to remove managerial and other persons from office in specified circumstances.

Section 36AB deals with RBI‘s power to appoint additional directors to a banking company‘s board.

Section 37 addresses suspension of business by a banking company in the circumstances specified by law.

Section 38 addresses winding up by the High Court under the statutory framework.

Section 39 provides for RBI to be the official liquidator in the circumstances specified by the Act.

Section 44A provides a statutory procedure for amalgamation of banking companies, including the specified approval process.

Section 45 concerns RBI‘s application to the Central Government for suspension of business and preparation of a scheme of reconstitution or amalgamation in specified circumstances.

Section 45ZA addresses nomination for payment of depositors‘ money, subject to its terms and applicable rules.

Section 45ZC deals with nomination for return of articles kept in safe custody.

Section 45ZE addresses release of contents of safety lockers, subject to the statutory process.

Section 46 contains penalty provisions. The exact penalty for a contravention must be checked against the current wording and the applicable provision.

Section 47A empowers RBI to impose penalties for contraventions within its statutory scope and subject to applicable procedure.

Section 49A restricts acceptance of deposits withdrawable by cheque, subject to its exceptions and wording.

Section 51 applies specified provisions of the Act to the State Bank of India and other notified banks, as provided by the section.

Section 56 applies the Act to cooperative societies subject to the modifications set out there.

The 2025 amendment revised the threshold from ₹5 lakh to ₹2 crore. Check the amending Act and commencement notification for the precise scope and effective date.

The Government announced that specified provisions listed in the commencement notification took effect from 1 August 2025. Not every provision should be assumed to have commenced on that date.

The amendment increased the maximum tenure from eight years to ten years for the relevant directors, excluding the chairperson and whole-time director as described in the official summary.

The amendments permit public sector banks to offer remuneration to statutory auditors, among other changes intended to improve audit quality.

An older guide may omit amendments and commencement dates. The current consolidated Act, amending Acts and official commencement notifications should be checked.

Section 22 contains the licensing requirement for carrying on banking business in India, subject to its provisions.

Section 23 governs opening new places of business and transfer of existing places, together with applicable RBI directions.

Section 21 empowers RBI to control advances by banking companies; Section 35A may also be relevant depending on the nature of the direction.