BANKING LAW -IMPORTANT DEFINATIONS CHAPTER 1 TO 15

Chapter 1 introduction of banking

Definition of banking –banking is a kind of business the banker in deal in money he accepted deposit from the member of public Commercial bank – commercial bank are conducting all type of banking business ,and accepting deposit from the public ,banking advance issuing bank guarantees foreign exchange ,financing ,import and export trade ancillary business like executer and trustee business safe deposit of valuable ,sale and purchase of shares and securities investors management etc.


Chapter 2 nationalization

The nationalization bank play a new and pioneering role in helping the public sector get on its fact it should be possible to cut the link that binds the public sector to government and to for a new commercial and techno-economic –nexus the public and public sector .


Chapter 3 bank and customer

Customer – customer means a person who has an account with the bank old a person maintained an account with the bank


Chapter 4 special types of bankers customers

Every person who has competent to contract can open an account with a bank provided the bank is satisfied regarding his bonafide and willing to enter into necessary business relation with him but there are certain types of person (e.g. minor ,lunatic ,,married woman ,Pardanshin woman ,etc. whose capacity to enter into valid contract is subject to certain legal restriction .


Chapter 5 control ombudsman

The ombudsman means a person appointed a legislative body to receive ,investigate against government official but banking ombudsman scheme 1995 was formed by reserve bank of India and issued under section 35-A of the banking regulation Act 1949.

Chapter 6 control banking theory and RBI

Reserve bank of India – in the year 1926 the commission of India currency finance which know as Hilton young commission suggested the establishment of reserve bank of India a bill was introduced in the Indian legislative assembly in 1927 and the bill was dropped on constituted grounds A fresh bill was introduced on September 8.1929 and reserve bank of India Act was passed in September 1934 and reserve bank of India started working 1st April 1935


Chapter 7 lending by bank (loan and advance)

Landing of found to the constituent mainly trades business and industrial enterprises constitute the main business of a banking company The major portion of a bank fund is employed by May of fund and advance The major part of bank income earned from interest and discount on the found so lent .


Principal of sound lending

· Safety

· Liquidity

· Profitability

· The purpose of a loan

· The principal of diversification of risk .


Chapter 8 contract of indemnity and guarantee

Contract of indemnity and guarantee is a special signification for banker in course of their business dealing bank may have to enter into contract of indemnity with other parties Contract of indemnity and guarantee are specific contract and are governed by the provision of the Indian contract Act 1872


Contract of indemnity section 124

A contract of indemnity is a contract by which one party promises to save the other from the loss caused to him by the contract to the promissory himself or by the conduct of 3rd party section 124 0f the Indian contract act 1872


Contract of guarantee

A contract of guarantee is contract to perform the promise of discharge of liability of third party person in case of his defaultThe person who give the guarantee is called the surety is given is the principal debtor A person to whom the guarantee is given is called creditor the contract is either written or oral section 126 of the Indian contract Act 1872


Chapter 9 the recovery of the debts due to banks & financial institution Act 1993

  • · Establishment of tribunal and appellate tribunal

  • · Jurisdiction power and authority of tribunal

  • · Procedure of the tribunal

  • · Appeal of the appellate tribunal

  • · Recovery of debt determinate by tribunal


Chapter 10 investment in non –banking finance institution

Non-banking finance institution (NBFCs) representing companies engaged in transferring the funds from lender to borrowers name came to recognized all over the globe. Non-banking finance company consist mainly of finance companies which carry on hire purchase finance ,housing finance ,investment loan ,equipment leasing ,mutual benefit financial companies but do not include insurance companies or stock exchange or stock banking companies



Chapter 11 foreign exchange control regime in India

Foreign exchange regulation Act (FERA) 1973

It this Act regulate certain aspect of the conduct of business outside the country by India companies and induce by foreign companies

The FERA was widely described as a draconian and obnoxious law

Main object of FERA framed against the back ground of service of foreign exchange problem and controlled economic regime.

Modification economic liberalization and improving foreign exchange reserves position

· According a new Act the foreign exchange management Act (FEMA) 1999

· FEMA which came into effect from January 1st 2000

Chapter 12 negotiable instrument Act 1881

In the term negotiable instrument means a document in writing which creates a right is favor of some persona and which is freely transferable by delivering accordingly to section 13(a) of the Act A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer

Chapter 13 the banker book evidence Act 1891

Chapter 14 ancillary services of a banker

Chapter 15 state bank of India




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