Few ActsFew Acts

S.K.Mishra

MBA(Fin.),CAIIB,CISA(USA),BS7799 LA(UK)Asst. General Manager , Central Bank Of India

Central Office Mumbai

Reserve Bank OF India Act Reserve Bank OF India Act 19351935

RBI ActRBI Act

Established on April 1, 1935Managed by Central Board of

DirectorsFour local boards at Mumbai, Delhi,

Calcutta and ChennaiIt has 1 Governor, Provision for 4

Dy. Governors and 15 Directors

RBI FunctionsRBI Functions

Issuance of currency : sec 22Bankers to the Government : sec 20

Bankers to the Banks : sec 17(2) and (3)

Controller of Banks :

Controller of Credit : sec 21 and 35A

Statutory Reserves : sec 42

Collection of information : sec45c and d

Maintenance of external value

Monetary control

RBI ActRBI Act

Sec 2(e) Scheduled Bank

Sec 17 Business RBI may transect

Sec 19 Business RBI may not transect

Sec 31 Prohibits issue of Bill of Exchange payable to bearer

Sec 45H-45T Regulations related to non Banking Finance companies

Sec 49 Announce Bank rate

Banking Regulation Act Banking Regulation Act 19491949

BR Act 1949BR Act 1949

Sec 5(b) Banking means accepting for the purpose of lending or investment of deposits of money from public repayable on demand or otherwise and repayable by cheque, drafts order or otherwise

BR Act 1949BR Act 1949

Sec 5(a) Approved Securities means such securities authorised by Central Government under clause (b) of sec. 20 of the Indian Trust Act 1882 OR Securities in which a trustee may invest money under clause (a), (b) , (bb) or (d) of the said Act

BR Act 1949BR Act 1949

Sec 5(f) Demand liabilities are the liabilities which must be met on demand

Otherwise time liabilities

BR Act 1949BR Act 1949

Sec 5(n) Secured loans

Sec 9 Immovable property except for own use

Sec 15 Prohibits dividend payment till all expenses capitalised are not completely written off

Sec 17(1) Create reserve fund 20% of profit

Sec 19 Permits Banks to form subsidiary Co.

Sec 19(2) No Bank Shall hold shares in any company amount > 30% of the paid up capital of that co. or its own paid up capital plus reserves which ever is less

BR Act 1949BR Act 1949

Sec 20(a) Cannot grant advance against its own sharesSec 21A Rate of interest charged by the banks are not subject

to scrutiny by courts on the ground of being excessiveSec 23 Branch LicensingSec 24 SLR 25-40%Sec 26 Unclaimed deposits of 10 years with in 30 days to

RBISec 29 Publication of Balance Sheet Sec 30 Balance Sheet to be got audited by qualified AuditorsSec 31 Submit audited Balance Sheet and report in 3 monthsSec 35 Inspection of Banks and direction by RBISec 45 Power to apply Central Govt. to apply for Suspension

of Business by a Banking Co.

Nagotiable Instruments ActNagotiable Instruments Act

Negotiable instrument definition as per sec.

13.2[(1) of Negotiable instrument Act.

A " negotiable instrument “ means a promissory note, bill of exchange or cheque payable either to order or to bearer.

Sec 4. "Promissory Sec 4. "Promissory note".note".

A " promissory note" is an instrument in

writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the

bearer of the instrument.

Sec 5."Bill of exchange".

A "bill of exchange" is an instrument in

writing, containing an unconditional order, signed by the maker,

directing a certain person to pay a certain sum of money only to, or

to the order of, a certain person or to the bearer of the instrument.

Sec 6."Cheque".Sec 6."Cheque".

A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

The " holder" of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Sec 8."Holder”Sec 8."Holder”

" Holder in due course " means any person

who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee

thereof, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.

Sec 9.Holder in due Sec 9.Holder in due course.course.

"Payment in due course" means payment

in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under

circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein

mentioned.

Sec 10."Payment in due Sec 10."Payment in due course".course".

When a promissory note, bill of exchange or Cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated.

Sec. 14.NegotiationSec. 14.Negotiation

Where amount is stated differently in figures and words. If the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid.

Sec 18.Sec 18.Where amount is stated Where amount is stated

differently in figures and differently in figures and

words.words.

The maturity of a promissory note or bill of exchange is the date at which it falls due.

Days of grace. Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

Sec 22. "Maturity"Sec 22. "Maturity"

Presentment for payment must be made

during the usual hours of business, and, if at a banker's, within banking hours.

Sec Sec 65.Hours for 65.Hours for presentmentpresentment. .

When no rate of interest is specified in the instrument, interest on the amount due thereon shall, be calculated at the rate of eighteen per annum,from the date at which the same ought to have been paid by the party Charge, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs.

Sec Sec 80. Rate of 80. Rate of Interest when no rate Interest when no rate

specified.specified.

85. 3[(1)] Cheque payable to order. Where a cheque payable to

order purports to be endorsed by or on behalf of the payee, the drawee

is discharged by payment in due course.

Sec Sec 85. 3[(1)] Cheque 85. 3[(1)] Cheque payable to orderpayable to order

Any material alteration of a negotiable instrument renders the same void

as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties:

Sec Sec 87.Effect of 87.Effect of material alterationmaterial alteration

Where a promissory note, bill of exchange or cheque has been materially altered but does not appear to have been so altered, or where a cheque is presented for payment which does not at the time of presentation appear to be crossed or to have had a crossing which has been obliterated, payment thereof by a person or banker liable to pay, and paying the same according to the apparent tenor thereof at the time of payment and otherwise in due course, shall discharge such person or banker from all liability thereon ; and such payment shall not be questioned by reason of the instrument having been altered or the cheque crossed.

Sec 89.Payment of instrument on Sec 89.Payment of instrument on which alteration is not apparentwhich alteration is not apparent..

(a)of consideration (b)as to drawn on such date ;(c)as to accepted within a

reasonable time after its date and before its maturity ;

(d)as to time of transfer before its maturity;

(e)as to order of indorsements made appearing upon a negotiable instrument

(f)as to stamp; that a lost promissory note, bill of exchange or cheque was duly stamped ;

Sec 118.Presumptions as to Sec 118.Presumptions as to negotiable instruments negotiable instruments

Be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:

(a)the cheque has been, presented within a period of six months

(b)the payee or the holder in due course

(c)the drawer of such cheque fails to make the payment within fifteen days

Sec 138.Dishonour of cheque Sec 138.Dishonour of cheque for insufficiency, etc., of for insufficiency, etc., of

funds in thefunds in theaccount.account.

India Contract Act 1872India Contract Act 1872

Parties competent to contractMade with free consentLawful considerationLawful objectShould not be declared void

Sec 10Sec 10.Important .Important elementselements

Attained Age of majorityOf sound mindNot disqualified by any Law

Sec 11Sec 11.Competance of .Competance of the partythe party

A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of any other person

Sec 124Sec 124.Indemnity.Indemnity

A contract to perform promise or discharge the liability of a third person in case of his default

Sec 126Sec 126. Guarantee. Guarantee

Party 3 2 Liability Subsisting Contingent Loss First Debtor IndemnifierContract 3 1 Object Security Making up

Comparison Comparison Guarantee Indemnity Guarantee Indemnity

Sec 42 In joint promise all the promisors are liable both joint and several

Sec 43 Any or one may be compelled to perform the whole

Sec 68 Loans to minorsSec 128 Liability of Surety is co-

extensive with that of a principal debtorSec 132 Any change in contract without

surety consent discharges

Various sectionsVarious sections

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