The Banking Regulation Act 1949 contains various provisions’ governing the Commercial Banks in India. The Act was initially known as Banking Companies Act, 1949. It was passed in 1949 to consolidate and amend the laws relating to banking companies. The act was changed to Banking Regulation Act, 1949 from 1st March, 1966. The Act, as amended up-to-date, is a comprehensive piece of legislation aimed at the development of sound and balanced growth of banking business in the country. Right from the definition of the word banking, its licensing, functioning, capital and reserve requirements, banking operations and management structure, liquidity provisions and profit distribution and bank inspection down to the take-overs and amalgamation of the banks and their liquidation have all been extensively covered under the Act.
It does not apply to primary agriculture credit societies, cooperative land mortgage banks and any other cooperative society. The act was initially applicable to commercial banks only but it was amended in 1966 to include cooperative banks in its ambit by adding Section 56. The act extends to whole of India except Jammu and Kashmir.
The objective of Banking Regulation Act, 1949 is to:
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