| The Banking regulation Act, 1949 | |
|---|---|
 | |
| Parliament of India | |
| |
| Citation | Act No. 10 of 1949 |
| Territorial extent | Whole ofIndia |
| Enacted by | Parliament of India |
| Enacted | 10 March 1949 |
| Amended by | |
| Banking Regulation (Amendment) Bill, 2020 | |
| Status: In force | |
TheBanking Regulation Act, 1949 is a law inIndia that regulates all banking companies in India.[1] Passed as the Banking Companies Act 1949, it came into force on 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, in 1965 it was amended to make it applicable to cooperative banks and to introduce other changes.[2] In 2020 it was amended to bring the cooperative banks under the supervision of theReserve Bank of India (RBI).[3]
The Act provides a framework for the regulation of commercial banking in India. It supplements theCompanies Act, 1956.[4]Primary Agricultural Credit Society and cooperative land mortgage banks are excluded from the Act.[2]
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; controlmoratorium,mergers andliquidation; issue directives in the interests of public good and on banking policy, and impose penalties.[2]
In 1965, the Act was amended to includecooperative 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.[2] The Banking Act was a supplement to the previous acts related to banking.
In 2020, Finance MinisterNirmala Sitaraman introduced a bill to amend the Act. The bill sought to bring all cooperative banks under theReserve Bank of India. It brought 1,482 urban and 58 multi-state cooperative banks under the supervision of the RBI.nstruct or merge banks without moratoriums. The bill was passed by the parliament.[3]
