The Banking Regulation Act, 1949 is a legislation in

India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...

that regulates all banking firms in India. Passed as the Banking Companies Act 1949, it came into force from 16 March 1949 and changed to Banking Regulation Act 1949 from 1 March 1966. It is applicable in Jammu and Kashmir from 1956. Initially, the law was applicable only to banking companies. But, 1965 it was amended to make it applicable to cooperative banks and to introduce other changes. In 2020 it was amended to bring the cooperative banks under the supervision of the

Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...

Overview

The Act provides a framework under which commercial banking in India is supervised and regulated. The Act supplements the

Companies Act, 1956 The Companies Act 1956 was an Act of the Parliament of India, enacted in 1956, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries. It was repealed and replaced b ...

Primary Agricultural Credit Society A Primary Agricultural Credit Society (PACS) is a basic unit and smallest co-operative credit institutions in India. It works on the grassroots level (gram panchayat and village A village is a clustered human settlement or communi ...

and cooperative land mortgage banks are excluded from the Act. The Act gives the

(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 directives in the interests of public good and on banking policy, and impose penalties. In 1965, the Act was amended to include cooperative banks under its purview by adding the Section 56. Cooperative banks, which operate only in one state, are formed and run by the state government. But, RBI controls the licensing and regulates the business operations. The Banking Act was a supplement to the previous acts related to banking.

Amendments

In 2020, Finance Minister Nirmala Sitaraman introduced a bill to amend the Act. The bill sought to bring all cooperative banks under the

. It brought 1,482 urban and 58 multi-state cooperative banks under the supervision of the RBI. The bill granted the RBI ability to reconstruct or merge banks without moratoriums. The bill was passed by the parliament.

References

{{Financial services in India Banking in India Acts of the Parliament of India 1949 Bank regulation Financial regulation in India Financial history of India

Overview

Amendments

See also

References