OBJECTIVES:
A Vitally important economic institution the banking is deeply influenced by
socio-political and economic changes. The emerging changes in India, particularly after the
initiation of the planning process as an instrument of rapid economic development had molded
and the affected the banking structure, policies, patterns and practices. A significant development
in the banking system is diversification in banks financing. The Commercial banks entered into
the field of wide ranging financial assistance to industry, both large and small scale, requiring the
need for social control of the banking system eventually leading to the nationalization of banks.
The conventional banking system, found to be deficient for planned developmental
purposes, paved the way for developmental banking. The fag of the last millennium witnesses
influx of foreign banking companies into India and a shift in the banking policy as part of the
global phenomenon of liberalization. The legal system is adopting itself into the new mores.
This course is designed to acquaint the student with the conceptual and operational
parameters of banking law, the judicial interpretation and the new and emerging dimensions of
the banking system.
Course content
UNIT I
NATURE AND DEVELOPMENT OF BANKING – History of banking in India and elsewhere- indigenous banking-evolution of banking in India – different kinds of banks and their functions. Multi-functional banks- growth and legal issues.
LAW RELATING TO BANKING COMPANIES IN INDIA: Controls by government and its agencies: On management-On accounts and audit-Lending-Credit policy-Reconstruction and reorganization-Suspension and winding up.
UNIT-II
BANKING REGULATION ACT. 1949: Evolution of Central Bank, Characteristics and functions, Economic and social objectives, The Central bank and the State- as banker’s bank, The Reserve Bank of India as the Central Bank.
ORGANISATIONAL STRUCTURE – Functions of the RBI- Regulation of monitory mechanism of the economy – Credit control – Exchange control-Monopoly of currency issue
Bank rate policy formation. Control of RBI over non- banking companies, Financial companies, Non financial companies.
THE DEPOSIT INSURANCE CORPORATION ACT, 1961: Objects and reasons- Establishment of Capital of DIC, Registration of banking companies insured banks, liability of DIC to depositors. Relations between insured banks, DIC and Reserve Bank of India.
UNIT-III
RELATIONSHIP OF BANKER AND CUSTOMER: Legal character, Control between banker and customer, Banker’s lien, Protection of bankers, Customers – Nature and type of accounts- Special classes of customers- lunatics, minor, partnership, corporations, local authorities, Right and duties of Banker & customer. Consumer protection-banking as service.
UNIT-IV
LAW RELATING TO NEGOTIABLE INSTRUMENTS, 1881 ACT (read with the amended act of 2002) – Negotiable Instrument – Kinds
Holders and holder in due course – Parties – Negotiable – Assignment – Presentment – Endorsement – Liability of parties – Payment in due course – Special rules of evidence – material alteration – Noting and protest – Paying banker and collecting banker – Bills in sets
Penal provisions under NI Act- banker’s book evidence Act
UNIT-V
LENDING BY BANKS: Good lending principles- Lending to poor masses- Securities for advances, Kinds and their merits and demerits – Repayment of loans: rate of interest, protection against penalty- Default and recovery – debt recovery tribunal.
RECENT TRENDS OF BANKING SYSTEM IN INDIA: New technology, Information technology , Automation and legal aspects, Automatic teller machine and use of internet, Smart card, Use of expert system, Credit cards.
Prescribed Books:
Tannan,M.L., Banking Law and Practice, (Lexis Nexis,2014).
M. S. Parthasarathy (Ed.), Khergamvala, Pt Ltd, 1955)
Negotiable Instruments Act (Bombay: N.M.Tripathi Justice Bhaghabati Prasad Banerjee, Guide to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Reference Books:
Singh, Avtar, Laws of Banking and Negotiable Instruments, (Eastern Book Co., 2007)
Basu , Saroj Kumar and Alak Ghosh, A Review of Current Banking Theory and Pructice, ( Mc Millan, 1974)
Paget, Law of Banking. 13” Edition, (UK: Lexis Nexis,2007)
Goyle, L.C., The Law of Banking and Bankers, (Eastern Law House, 1995)
Relevant provisions of Information Technology Act, 2000