Banking and Finance Law is not a distinct area of law like contract or torts. It easily describes the collection of legal principles which impact on banking transactions and on the banker-customer relationship.
These Banking laws and practice could be asked in the Bank Exam, i.e IBPS PO, IBPS Clerk, RRB etc.
In the banking activity, a diverse range of legal principles intersect, which we call Banking law and regulations. These legal principles are drawn from a range of sources, including common law, the Law Merchant, 1 equity and statute.
In addition, for banks that subscribe to it, the Code of Banking Practice is a legally enforceable set of principles and rules incorporated into the contract between the bank and its retail customers.
The most important banking laws are as follows: -
Actuaries Act 2006: - An Act for regulating and developing the profession of Actuaries and for matters connected therewith or incidental thereto. Actuary is a person, who compiles and analyses statistics and uses them to calculate insurance risks and premiums. The act was introduced on 27th August, 2006.
Bankers Book Evidence Act, 1891: - An Act to amend the Law of Evidence with respect to Bankers’ Books. “Bankers’ books” include ledgers, day-books, cash-books, account-books and all other books used in the ordinary business of a bank.
The Banking Regulation Act, 1949: - The Banking Regulation Act, 1949 is a legislation in India that regulates all banking firms in India. This act was introduced on 10th March, 1949. It is an addition to the Companies Act, 1956.
With the help of this act Reserve Bank of India (RBI) gets 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.
The Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004: - It is an act further to amend the Banking Regulation Act, 1949 and the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The act was introduced on 20th December, 2004.
The Export-Import Bank of India Act, 1981: - An act to establish the Export-Import Bank of India in order to provide financial assistance to exporters and importers. It helps the EXIM Bank to function as the principal financial institution to manage the working of institutions engaged in providing finance for export and import of goods and services with a view to promote the country’s international trade. The act was introduced on 11th September, 1981.
The Industrial Disputes (Banking and Insurance Companies) Act, 1949: - An Act to provide for the settlement of industrial disputes concerning certain banking and insurance companies. The act was introduced on 14th December, 1949.
The Industrial Disputes (Banking Companies) Decision Act, 1955: - An Act to provide for the modification of the decision of the Labour Appellate Tribunal, in an agreement to the recommendations of the Bank Award Commission. The act was introduced on 21st October, 1955.
The State Bank of Sikkim (Acquisition of Shares) and Miscellaneous Provisions Act, 1982: - An Act to provide for the acquisition of certain shares of the State Bank of Sikkim for the purpose of better consolidation and extension of banking facilities in Sikkim. The act was introduced on Nov 6, 1982.
The State Bank of India Act, 1955: - An Act to establish a State Bank for India, to transfer to it the undertaking of the Imperial Bank of India to extend the banking facilities on a large scale, more particularly in the rural and semi-urban areas, and for various other public purposes. The act was introduced on 8th May, 1955.
State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007: - An Act to amend the State Bank of Saurashtra Act, 1950, the State Bank of Hyderabad Act, 1956 and the State Bank of India (Subsidiary Banks) Act, 1959. The act was introduced on 18th June, 2007.
State Bank of India (Amendment) Act, 2010: - An Act further to amend the State Bank of India Act, 1955. The act was introduced on 24th August, 2010.
The Small Industries Development Bank of India Act, 1989: - An Act to establish the Small Industries Development Bank of India as the principal financial institution for the promotion, financing and development of industry in the small-scale sector and to co-ordinate the functions of the institutions engaged in the promotion, financing or developing industry in the small-scale sector. The act was introduced on 25th October, 1989.
The State Bank of Hyderabad Act, 1956: - An act to transfer the share capital of the Hyderabad State Bank to the Reserve Bank of India and to provide for its proper management. The objective of this act was to secure more efficient performance of banking and treasury functions by the Hyderabad State Bank as agent to the Reserve Bank of India. The act was introduced on 22nd December, 1956.
The Unit Trust of India Act 1963: - An Act to provide for the establishment of a Corporation with a view to encouraging saving and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities. The act was introduced on 30th December, 1963.
Reserve Bank of India Act, 1934: - An act under which the Reserve Bank of India was formed. In the 2nd Schedule of the act, the definition of scheduled banks is mentioned. This act along with the Companies Act, which was amended in 1936, were meant to provide a framework for the supervision of banking firms in India. The act was introduced on 6th March 1934.
Reserve Bank of India (Amendment) Act, 2006: - An Act to amend the Reserve Bank of India Act, 1934. The act was introduced on 12th June, 2006.
The Regional Rural Banks Act, 1976: - An Act to provide for the incorporation, regulation and winding up of Regional Rural Banks to develop the rural economy by development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. The act was introduced on 9th February, 1976.
The Recovery of Debts Due To Banks and Financial Institutions Act, 1993: - An Act for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. The act was introduced on 27th August, 1993.
Negotiable Instrument Act–1881: - An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The act was introduced on 9th December, 1881.
The Industrial Finance Corporation of India Act–1948: - An act to establish an Industrial Finance Corporation for the purpose of making medium and long- term credits more easily available to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or alternative to capital issue method is impossible. The act was introduced on 27th March, 1948.
The Banking Companies (Legal Practitioner Clients’ Accounts) Act–1949: - An Act to restrict the liability of banking companies in connection with certain transactions by legal experts. The act was introduced on 8th December, 1949.
The Banking Companies (Acquisition and Transfer of Undertakings) Act–1970: - An Act for the acquisition and transfer of the undertakings of certain banking companies, in respect to their size, resources, coverage and organization. The purpose of the act is to control the heights of the economy and to meet progressively and serve better, the needs of development of the economy in agreement with national policy and objectives. The act was introduced on 14th February, 1970.
The Subsidiary Banks General Regulation–1959: - An act for the formation of certain Government or Government associated banks as subsidiaries of the State Bank of India and for the constitution, management and control of the subsidiary banks. The act was introduced on 10th September, 1959.
The National Bank for Agriculture and Rural Development Act–1981: - An Act to establish a development bank to be known as the National Bank for Agriculture and Rural Development for providing and regulating credit and other facilities for the promotion and development of agriculture small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas to boost integrated rural development and secure prosperity in rural areas. The act was introduced on 30th December, 1981.
The National Housing Bank Act–1987: - An Act to establish a bank to be known as the National Housing bank to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support to such institutions. The act was introduced on 30th December, 1981.
The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act–(SARFASI-2002): - An Act to regulate securitization and reconstruction of financial assets and enforcement of security interest. The act was introduced on 21st June, 2002.
Industrial Development Bank (Transfer of Undertaking & Repeal) Act–2003: - An act for the transfer the undertaking of the Industrial Development Bank of India to the “Company”, to be formed and registered under the Companies Act 1956 to carry on banking businesses. The act was introduced on 30th December, 2003.
The Banking Ombudsman Scheme, 2006: - The Banking Ombudsman Scheme enables an efficient and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The scheme was introduced on 1st January, 2006. You can also refer to: