Key Provisions of Banking Regulation Act, 1949
Banking Regulation Act, 1949 was enacted on 10 March 1949 and came to effect on 16 March 1949. This act regulated all banking firms in India.
- Initially, this act was passed as Banking Companies Act, 1949 and it was applicable to whole of India except Jammu & Kashmir. It was changed to Banking Regulation Act, 1949 from March 1, 1966. It became applicable to Jammu and Kashmir from 1956.
- Initially it covered only commercial banks. The 1965 amendment made it applicable to cooperative banks.
- The banks covers commercial banks as well as cooperative banks. However, the Primary Agricultural Credit Society and cooperative land mortgage banks are excluded from it.
Powers to RBI
This act empowers the RBI to grant license to banks; regulation over their 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.