BANKING LAW important question with answers
Q1 define banker and customer state general relationship between banker and customer with suitable case law.
Define banker and customer:-
Banker :- banker is a person who has managed bank and provides service to customer
Customer :- customer means a person who has an account with the bank
Relationship between banker and it customer
Banker and customer relationship divided into two categories as follow
A) General relationship
Debtor and creditor
B) Special relationship
Bailor and Bailee
Principal and agent
Trustee and beneficiary
Case –hanuman bank ltd v/s v.k.pt nadir
Q2 define endorsement, described the various type of endorsement
ENDORSMENT –endorsement means the writing of one’s name the on the back of the instrument or any paper attached to it with the intention of transforming the right there in the endorsement is signing a negotiable instrument for the purpose of negotiation . A person who effected and endorsement is called endorser and a person whom negotiable instrument is transferred is called the endorsee
Essential of valid endorsement (Type or class of endorsement)
1) Blank or general endorsement
2) Special or full endorsement
3) Partial endorsement
4) Restrictive endorsement
5) Conditional and qualified endorsement
a) Sans recourse
b) Facultive
c) Sans frais
Liberty deprived upon a contingency
Q3 define lending elaborate the principal of good lending
Lending define _ (loan and advance )landing of fund to the constituent mainly trader ,business and industrial enterprises company the major portion of banks fund is employed by way of loan and advance
Principal of sound lending or good landing
Safety
Liquidity
Profitability
The purpose of the loan
The principal of diversification of risk
Precaution and procedure (advance money on security of good)
Selection of the borrowers
Selection of the commodities
Charging the security
Storage of goods
Conduct of the account
Legal requirement
Q4 Define promissory note distinguish it from bill of exchange:-
Define promissory note :- section 4 of the act define a promissory note as a promissory note is an instrument in writing (not being bank note or currency note ) containing an unconditional undertaking signed by the maker to pay a certain sum of money only to or the order of a certain person or the bearer of the instrument
Essential of promissory note
· It must be in writing
· It must be expressed
· The promise to pay must be unconditional
· Signed by the maker
· Maker must be certain
· Promise must be to pay a certain sum
· Pay money
Meaning of bill exchange
section 5 of the negotiable instrument Act define of exchange as an instrument in writing containing an unconditional order signed by the maker directing to certain person to pay a certain sum of money only to or to the order of a certain person or to the order of the bearer of the instrument
Writing acknowledgment of the debt written by the creditor and accepted by the debtor 3 parties to bill of exchange 1) drawer, accepter, or drawee and payee
Essential element of bill of exchange
· It must be in writing
· Signed by the drawer
· parties to the instrument
Difference between bill of exchange and promissory notes cheque and clam and drafts Promissory notes
Promissory notes
2 parties maker and payee
Promissory note does not required any acceptance it is signed by the person who is liable to pay
Unconditional promise to pay
In promissory note liability of maker is primary
Promissory note cannot be draw in sets
Bill of exchange
3 parties drawer ,accepter ,drawee and payee
Acceptance is required of the drawee before it is presented for payment
Unconditional order to pay
But in case bill of exchange liability of drawer of bill exchange is secondary
Bill of exchange be drawn in sets
Q5 discuss the function and promotional role of RBI explained the constitution and management of RBI
Reserve bank of India – (RBI) - reserve bank of India was a fresh bill introduced in the India legislature assembly on September 8, 1929 and reserved bank of India Act was passed in September 1934 the reserve bank of India started functioning from 1st April 1935
Reserve bank of Indian constitution
The reserve bank was originated constituted as a shareholder bank with a capital of RS 5 crore divided into 5 lakh fully paid up share of RS 100 each with the expansion of the nominal value of RS 2.2 lakh subscriber by the central government
Nationalization
After independence the public opinion was stronger in favor of nationalization of the reserve bank a decision was taken in the regarded in 1947 reserve bank of India (transfer to public ownership) Act was passed in 1948 and from 1st January 1949 it being to functioning as a government owned institution
Management of RBI
The management of reserve bank of India is vested within the central board of director comprising 20 members appointed by central government
1) 1 governor and 4 deputy governor
2) 4 directors one from each local board
3) 10 directors
4) 1 government official
5) Term 5 years governor and deputy governor
Local board
For each of the regional area of country, western, eastern, north, southern area
Head quarter
Bombay, Calcutta, madras and Delhi, consist 5 members appointed central government
Function of the central board
· Right to notes issue –every country central bank issue notes sole right
· Banker to the government _RBI government bank
· Bankers bank _ empowered to supervise the working of member banks
· Lender of last resort-financial accommodation (help) to members bank
· Control of credit – 3 ways
· Custodian of reserves of international currency
Relationship between reserve bank of India & commercial banks
· Apex bank and customer bank
· Commercial bank are bound to take permission for opening there branches
· Commercial bank operation and account book etc. subject of inspection of RBI
· RBI can issue direction to commercial bank
· Power to interfere in the management
· RBI as controller of credit
Q6- write a detailed note on banking ombudsman ombudsman: -
ombudsman is a person appointed by a legislation body to receive investigate and report on complained by private individual against government officialBanking ombudsman scheme 1995 was formed by the reserve bank of India and issued under section 35-A of the banking regulation Act 1949 .
Applicability of the scheme: - the banking ombudsman scheme 1995 applies to the business in India of every commercial bank
Object of the scheme :- satisfaction and satisfaction settlement of such complaints
Appointment of banking ombudsman
RBI appoint one or more person to be known as banking ombudsman hold office during the pleasure of the governor, reserve bank of India . Banking ombudsman have been appointed in capital and big cities only
Location of office
Office will be located at such place as may be specified by the reserve bank of India.
Qualification for banking ombudsman
A person of high standing in the legal banking financial services public administrative or management sector
Tenure of banking ombudsman
3 years age limit of 65 years
Power and duties
To receive complaint relates banking service to consider such complaint and facilities the satisfaction or settlement by agreement by making recommendation and
Jurisdiction of banking ombudsman
· The authority of banking ombudsman relates to matter to banking services and lone and advances
Procedure for redressal of grievance:-
Any person who has a grievance against a bank may himself or through an authorized representative makes complaint in writing to banking ombudsman within the jurisdiction branch or office
Settlement of dispute
Banking ombudsman tries to promote settlement between the complaint and bank through conciliation or mediation
Rejection of complaint:-
Banking ombudsman complaint made without any sufficient cause or not perused or no loss or damages.
Annual report of functioning and working
Evaluation of banking ombudsman scheme
