BRAVE SERIES ABRIDGED VERSION
PART A - Banking Related Acts 157
SNAPSHOT OF IMPORTANT SECTIONSOF THE VARIOUS ACTS
CHAPTER 1 - Important Sections of SBI Act, 1955
Sections Details/Particulars
1 Chapter 1-Short title & commencement
2 Definitions
Chapter 2-Incorporation & Share Capital of SBI
3 Establishment of State Bank
4 Authorised Capital
5 Issued Capital
Chapter 3-Transfer of Undertaking of the Imperial Bank to State Bank
6 Transfer of assets & liabilities of the IBI to SBI
7 Transfer of service of existing officers and employees of the IBI
8 Existing provident and other fund of the IBI
9 Compensation to be given to shareholders of IBI
Chapter-4 Shares
10 Transferability of shares
11 Restrictions on voting rights
12 Shares to be approved securities
13 Register of shareholders
13A Register of beneficial owners
14 (Repeales)
15 Trusts not to be entered on the register of shareholders
Chapter-5 Management
16 Offices, branches & agencies
17 Management
18 Central Board to be guided by directions of Central Government
19 Composition of the Central Board
20 Term of office of chairman, managing director, etc.,
21 Local Boards
21A Term of office of members of Local Board
21B Power of Local Board
21C Local Committees
22 Disqualifications for directorship of Central Board or membership of Local Board orCommittees
23 Vacation of office of directors, etc.,
24 Removal from office of directors, etc.,
25 Casual vacancies
26 Remuneration of directors
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27 Powers and remuneration of chairman
28 Powers and remuneration of vice-chairman
29 Powers and remuneration of managing director
30 Executive and other committees of the Central Board
31 Meetings of the Central Board
31A Meetings of Local Boards
Chapter-6 Business of the State Bank
32 State Bank to act as agent of the Reserve Bank
33 Other business which the State Bank may transact
34 Business which the State Bank may not transact
35 State Bank may acquire the business of other Bank
35A Arrangement with the State Bank on appointment of directors to prevail
Chapter-7 Funds, Accounts and Audit
36 Integration and Development Fund
37 Reserve Fund
38 Disposal of profits
39 Books to be balanced each year
40 Returns
41 Audit
42 Balance Sheet, etc., of State Bank may be discussed at general meeting
Chapter-8 Miscellaneous
43 State Bank may appoint officers and other employees
43A Bonus
44 Obligations as to fidelity and secrecy
45 Bar to liquidation of State Bank
46 Indemnity of directors and members of Local Boards and Local Committees, etc.,
47 Defects in appointment or constitution not to invalidate acts or proceedings
48 (Repealed)
49 Power of Central Government to make rules
50 Power of Central Board to make regulations
51 Requirements of foreign law to be complied within certain cases
52 (Repealed)
53 (Repealed)
54 (Repealed)
55 No proceeding to lie in India against Imperial Bank after appointed day
56 References to the Imperial Bank, the Bank of Bengal, etc., in other laws
57 Dissolution of Imperial Bank, etc.,
The First Schedule � compensation for the Transfer of shares of the Imperial Bankto the Reserve Bank
The Second Schedule- Declaration of Fidelity and Secrecy
The Third Schedule- (Repealed)
The Fourth Schedule-(Repealed)
The Fifth Schedule-(Repaled)
PART A - Banking Related Acts 159
CHAPTER 2Important sections of RBI ACT
SECTIONS CONTENTS
Sec. 2(e) Scheduled Bank: As per this Section, a scheduled bank means a bank whosename is included in the 2
nd schedule of RBI Act 1934. For inclusion, a bank should
satisfy conditions laid down in section 42(6).The essential condition of capital isthat the affairs will be conducted by the bank in a way that will not jeopardize theinterests of the depositors.
Bank which are not included in the 2nd
Schedule of RBI are called Non-scheduledBank.
Sec.17 Types of Business: Defines various types of business which RBI may transact,which include acceptance of deposit without interest from Central/State government,any other person/institution, purchase/sale of foreign exchange, securities,rediscounting the bills/promissory notes, grant loans etc.
Sec.18 Energy Loans: RBI provides emergency loans to banks on liberal terms.
Sec.21 Right to Transact Govt. Business: RBI has the right to transact Govt. businessin India i.e. remittance, exchange, keeping deposit free of interest etc.
Sec.22 Bank Notes: Sole right to issue bank notes.
Sec.23 Issue Department: Bank notes shall be issued by Issue Deptt. Against securityconsisting of gold coins, bullion, rupee coins, foreign securities and other approvedsecurities.
Sec.24 Denomination of Notes: RBI issues all currency notes for denomination2,5,10,20,50,100,500,1000,5,000,10,000. It has power to direct discontinuationor non-issue of currency note of any denomination. The currency note ofdenomination of rupee 2 and 5 has already been discontinued.
Sec.28 Rules for Refunding Value: RBI can frame rules for refunding value of mutilated,soiled or imperfect notes as a matter of grace.
Sec.31 Prohibits issue of Bill of Exchange, Hundi or Promissory Note payable to bearer: Noperson in India other than RBI or the central Govt. is authorized to draw, acceptmake or issue any bill of exchange, hundi, and promissory note payable to bearer.Further it restricts on drawing bearer drafts.
Sec.33 Assets of the Issue Department: The assets if issue deptt. Consists of goldcoins, gold bullion, foreign securities etc. The aggregate value of gold coins, goldbullion, and foreign securities held as assets and the aggregate value of the goldcoins, and gold bullion so held shall not at any time be less than Rs 200 crores andRs 115 crores respectively.
Sec.42(1) Cash Reserve Ratio: RBI (Amendment) Bill 2006 has been enacted with effectfrom June 22, 2006. Consequent upon the amendment, RBI can prescribe theCash Reserve Ratio (CRR) for scheduled banks without any floor rate or ceilingrate. Further, RBI will not be applying any interest on the CRR balances maintainedby Scheduled Commercial Banks with effect from the fortnight beginning June 24,2006 (earlier the floor limit was 3% and ceiling limit was 20%).
Sec.45-A-F Collecting and Furnishing of Credit Information: Empowers RBI to collectcredit information related to borrowers and suit-filed accounts.
· Borrower enjoying secured credit limits of Rs.10 lac and above unsecured limitsof Rs.5 lac and above: Return as on last Friday of April and approval every year.
BRAVE - Banking Related Acts and Various Enactments160
· Doubtful, loss and suit filed accounts with aggregate of outstanding Rs.100 lacand above: Half-yearly March and September.
· Basic Statistical Return (BSR): BSR-I regarding borrowal accounts of aboveRs.2 lac. BSR-II containing information about deposits with break-up into currentsavings and term deposits.
Sec.45-H-T Provision relating to Non-banking Institution: No non-banking financialcompany shall commence business or carry on the business of a non-bankingfinancial company without obtaining a certificate of registration and having netowned fund of twenty-five lac rupees or such other amount not exceeding twohundred lac rupees, as the RBI may notify / specify.
Sec.49 Publication(Declaration) of Bank Rate: RBI shall make public from time to thestandard rate at which it is prepared to buy or re-discount bills of exchange orother commercial paper eligible for purchase under this Act.
CHAPTER 3
Important sections of Banking Regulations Act-1949SECTION DESCRIPTION
Sec.5(a) Approved Securities: It mean such securities authorized by the Central Govt. ofsecurities in which a trustee may invest money of trust under Indian Trust Act1882.
Sec.5(b) Banking: Banking means the acceptance of deposit for the purpose of lending orinvestment, the deposits of money from the public, repayable on demand orotherwise, and withdrawal by cheque, draft, order or otherwise.
Sec.5(c) Banking Company: It means any company, which transacts the business ofBanking in India.
Sec.5(ca) Banking Policy: Policy which is specified from time to time by RBI.
Sec.6 Forms of Banking Business: In addition to the banking business, a bankingcompany may engage in raising/accepting deposits, borrowing, money lending oradvancing of money, dealing in bills of exchange, hundis, promissory notes, issuingletter of credits, buying and selling of foreign exchange, safe deposit locker, safecustody, acting as an agent for any Govt. or local authority, undertaking theadministration of estates as executor, trustee, leasing, mortgaging etc, or anyother form of business which the Central Govt. may notify in the official Gazette.
Sec.8 Prohibition on Trading: No banking company shall directly or indirectly deal onthe buying or selling of goods (every kind of movable property other than actionableclaim), except in connection with realization of security held by it.
Sec.9 Disposal of Non-Banking Assets: No bank shall hold any immovable propertyhowsoever acquired (except for its own use) for any period exceeding 7 years.RBI may extend the period by 5 years where it is satisfied that such extensionwould be in the interest of the depositors of the bank.
Sec.10 Employment of Managing Agents: The period of office of an MD/whole timeChairman cannot exceed 5 years at a time (may be renewed or extended byfurther periods not exceeding 5 years on each occasion). No bank can employ aperson who is/has been adjudged insolvent or has suspended payment to hiscreditors or his compounded with his creditors or who has been convicted of anoffence involving moral turpitude.
PART A - Banking Related Acts 161
Sec.11 Paid up Capital and Reserve Requirement.
For Domestic Banks � Minimum Paid up Capital and Reserves Rs. 5 lac.
For Foreign Banks � Minimum Rs. 15 lac (it is Rs. 20.00 lac where the bank hasplace of business in Bombay, or Calcutta or both).
Sec.12 Capital Structure � The ratio of authorized, subscribed and paid-up capital mustbe minimum 4:2:1.
Sec.13 Restriction on Commission, Brokerage, Discount etc: Stipulation that a bankwill not pay commission, brokerage, discount, etc. more than 2.5% of the paid upvalue of one share.
Sec.14 Prohibition on Charge on Unpaid Capital: No bank shall create any chargeupon any unpaid capital. Any such charge shall be invalid.
Sec.14(a) Prohibition of Floating Charge on Assets: No Banking company shall create afloating charge on the undertaking or any property unless the same is certified inwriting by RBI.
Sec.15 Payment of Dividend: Prohibits payment of dividend by any bank until all of itscapitalized expenses have been completely written off.
Sec.16 Common Directors: No bank shall have a director on its Board of Directors anyperson who is a director of any other banking company.
Sec.17(1) Reserve Fund: Stipulation that a bank must create reserve fund equivalent to notless than 20% of profits out of the balance of profit of each year, before anydividend is declared (RBI has enhanced it to 25% of net profit w.e.f. 31
st March
2001).
Sec.18 Cash Reserve: Every banking company, not being a scheduled bank shall maintain3% of demand and time liabilities by way of cash reserve with itself or by way ofbalance in current account with RBI.
Sec.19 Restriction on nature of subsidiary company: A bank shall not form anysubsidiary company except for undertaking business which is permissible for abanking company.
Sec.19(2) Holding of Shares of any Company: No banking company shall hold shares inany company whether as pledge, mortgagee or absolute owner of an amountexceeding 30% of paid-up share capital of that company or 30% of its own paid-up capital and reserves, whichever is less.
Sec.20 Restriction on advances against own shares: No banking company shall grantloans/advances on the security of its own shares, since it shall amount to purchaseof its own capital.
Sec.21 Powers to Control Advances: Where the Reserve Bank is satisfied that it isnecessary and expedient in the public interest or in the interest of depositors orbanking policy they may frame any policy which shall be binding on bankingcompanies generally or on any banking company in particular. RBI can restrict thebanks from lending against certain notified commodities, maintenance of a minimummargin, ceiling limit of advance or the charging of a minimum rate of interest etc.
Sec.21(a) Rate of Interest charged by banks not to be subject to scrutiny by Courts:A transaction between the banking company and its debtor shall not be reopenedby any court on the ground of excessive charging of rate of interest.
Sec.22 Licensing of Banking Companies: No Banking company can commence thebusiness without obtaining the license from RBI.
Sec.23 Restriction on Opening of New and Transfer of Existing Place of Business:Prior permission of RBI is required for opening of new branch, sub-office, sub payoffice, and extension counter etc except for one month.
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Sec.24 Maintenance of SLR: A banking company is required to maintain at the close ofbusiness on any day a certain percentage of its total demand and time liabilities inIndia in form of cash, gold and unencumbered approved securities. This is knownas SLR.
· Minimum SLR 25% and Maximum 40% to be maintained.
· SLR to be maintained with reference to Total Demand and Time Liabilities as onlast Friday of the second preceding fortnight.
Sec.25 Assets in India: The assets of every banking company as on last Friday of everyquarter must not be less than 75% of its demand and time liabilities in India.
Sec.26 Return of Unclaimed Deposits: Every Bank shall within 30 days after the closeof each calendar year submit a return to RBI on all deposit accounts which havenot been operated upon for 10 years (unclaimed accounts). In case of FixedDeposits, this period will start from due date i.e. date of expiry of such fixedperiod.
Sec.29 Accounts and Balance Sheet: Balance sheet and Profit & Loss a/c must beprepared as on last working day of March every year in the format given in IIISchedule of the Act.
Sec.30 Audit: The balance sheet and profit and loss account shall be audited by a personduly qualified.
Sec.31 Submission of Return: The a/cs and balance sheet together with the auditorsreport shall be published in the prescribed manner and 3 copies of the same shallbe furnished to RBI within 3 months from the end of the period to which thebalance sheet pertains.
Sec.35 Inspection: empowers RBI to undertake inspection of banks.
Sec.35(A) RBI has been given powers to give directions to the banks in the public interest arein the interest of banking policy so that banking is not conducted detrimental tothe interest of the depositors and also secures proper management of bankingcompany.
Sec.36(AA) Powers to Remove Managerial or other persons: Where the RBI is satisfiedthat in the public interest or for preventing the affairs of a banking company beingconducted in a manner detrimental to the interest of the depositors or for securingthe proper management of any banking company, RBI may remove from officeany Chairman, Director or other officers or employees of the banking company.
Sec.44(A) Amalgamation of Banking Companies: The Scheme containing the terms ofamalgamation shall first be approved by general body by two third majority invalue and then further approval by RBI is required.
Sec.45(y) Preservation of Bank Records: Central Govt. in consultation with RBI haspower to frame rules regarding preservation of books, accounts and otherdocuments.
Sec.45 Z Returns of Paid Instruments to Customer: Guidelines for returning the paidinstruments to customer by keeping a true copy.
Sec.45 ZA Nomination: For nomination in Deposit accounts.
Sec.45 ZC Nomination: For nomination in Safe Custody accounts.
Sec.45 ZE Nomination: For nomination in Locker accounts.
Sec.46 Penalties: Whoever in any return, balance sheet or other documents willfullymakes a statement which is false in any material particular or willfully omits tomake a material statement shall be punishable with imprisonment for a term whichmay extend to three years and shall also be liable to fine.
PART A - Banking Related Acts 163
CHAPTER-4CRR & SLR -(Scheduled Commercial Banks)
SLPARTICULARS
CASH RESERVE STATUTORY LIQUIDITYNO. RATIO(CRR) RATIO(SLR)
1 Concept andObjectives
2 Provision
3 Limits
4 Current Obligation
5 Applicable on
6 Maintained with
7 Type of Investment
8 Requirements
CRR is a quantitative tool ofmonetary and credit policyto regulate the moneysupply in the economy. RBIby varying the CRRregulates the lendablefunds of the commercialbanks.
Section 42(1) of ReserveBank Act �1934
Subsequent to amendmentsto RBI act minimum/maximum are no moreprescribed. CRR will bestipulated by RBI as per itsdiscretion.
5.5% (w.e.f.6th Jan 2007).
Net Demand and TimeLiabilities (NDTL) In Indiaon fortnightly basis.
RBI
In cash only
Fortnightly Basis:Saturday to following Friday� 14 days.Daily Basis: All schedulecommercial banks arerequired to maintainminimum CRR balance upto 70% of the total CRRrequirement on all days ofthe fortnight.
STATUTORY LIQUIDITYRATIO(SLR)
SLR is a quantitative tool ofmonetary and credit policy toregulate the money supply inthe economy. RBI by varyingthe SLR regulates the lendablefunds of the commercial banks,by way of investments in Govt.securities.
Section 24 (2-A) of BR Act �1949.
Minimum 25% andMaximum 40%
25%
Total Demand and TimeLiabilities in India as on the lastFriday of the second precedingfortnight.
To be kept in Securities withinIndia.
(a) In cash (b) Gold or (c)Unencumbered approvedsecurities defined u/s 5(a) and25(a) of BR Act.
Last Friday of second precedingfortnight.
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SLPARTICULARS
CASH RESERVE STATUTORY LIQUIDITYNO. RATIO(CRR) RATIO(SLR)
9 Conversion
10 Loans out of FCNR(B) Deposits andIBFC Deposits
11 Interest
12 Penalties
Overseas foreign currencyassets and bank credit inIndia in foreign currency infour major currencies viz.US $, GBP, Japanese Yenand Euro at the FEDAI noonmean rate to be convertedon reporting Friday.
Loans out of ForeignCurrency Non-ResidentAccounts (Bank), FCNE (B),and Inter Bank ForeignCurrency Deposits to beincluded.
As per RBI (Amendment)Bill 2006 w.e.f. June 22,2006, RBI can prescribeCRR without any floor rateor ceiling rate. Further, RBIwill not be paying anyinterest on the CRRbalances w.e.f. the fortnightbeginning June 24,2006.
Any shortfall in themaintenance of CRR isreckoned against theeligible cash balancerequired to be maintainedon the NDTL. The totalamount on interest payableso arrived at is beingreduced by an amountcalculated at the rate of25% per annum on theamount of shortfall.
Overseas foreign currencyassets and bank credit in Indiain foreign currency in fourmajor currencies viz. US $,GEP, Japanese Yen and Euro atthe FEDAI noon mean rate tobe converted on reportingFriday.
Loans out of Foreign CurrencyNon-Resident Accounts (Bank),FCNE (B), and Inter BankForeign Currency Deposits tobe included.
Return depends upon type ofinvestment made by the bank.
If a bank fails to maintainrequired amount of SLR, it shallbe liable to pay to RBI inrespect of that default, thepenal interest for that day atthe rate of 3% per annumabove bank rate on theshortfall and if the defaultcontinuous on the nextsucceeding working day, thepenal interest may be increasedto a rate of 5% per annumabove the bank rate for theconcerned days of default onthe shortfall.
PART A - Banking Related Acts 165
SLPARTICULARS
CASH RESERVE STATUTORY LIQUIDITYNO. RATIO(CRR) RATIO(SLR)
13 Returns All SCBs are required tosubmit to RBI a provisionalreturn in Form A within 7days from the expiry ofrelevant fortnight. It is usedfor preparing presscommuniqué.
The final Form A is requiredto be sent to RBI within 20days from expiry of therelevant fortnight.
Banks should submit to theRBI before 20th day of everymonth, a return in Form VIII,showing the amounts of SLRheld on alternative Fridayduring immediate precedingmonth with particulars of theirDTL in India on such Fridays orif any such Friday is publicholiday under NI Act, at theclose of business of thepreceding working day.
CHAPTER 5Various Types of Banker Customer Relationships
Some important relationships based upon the nature of business conducted by the banks aregiven below:
SL. TYPE OF POSITION POSITIONNO. TRANSACTION OF BANK OF CUSTOMER
1 Deposit Accounts, CC (with Credit Balance) Debtor Creditor
2 O.D, CC, Loan Accounts (with debit balance) Creditor Debtor
3 Collection of Cheques Agent Principal
4 Sale or Purchase of Securities Agent Principal
5 Issuing / Purchase of Draft by purchaser Debtor Creditor
6 Payee of Drafts at Paying Branch Trustee Beneficiary
7 Mail Transfers, Telegraphic Transfers Agent Principal
8 Complying with Standing Instruction Agent Principal
9 Providing Various Services to non Agent PrincipalAccount Holders
10 Money / Cheques deposited pending Trustee BeneficiaryInstructions for disposal thereof
11 Safe Custody of Articles Bailee Bailor
12 Leasing of Locker Lessor LesseeLandlord TenantLicensor Licensee
13 Mortgage of Immovable Property Mortgagee Mortgagor
14 Pledge of Securities / Shares Pledgee Pledgor
15 Hypothecation of Securities Hypothecatee Hypothecator
16 Sale / Purchase of Shares etc Agent Principal
17 Maintaining Currency Chest (RBI�s property) Agent Principal
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18 Fixed Deposit has matured but the customer Debtor Creditorhas not taken the payment so far.
19 A wrong credit given by the bank where the Beneficiary Trusteeamount has not so far been recovered.
CHAPTER 6
Important Sections of Negotiable Instruments Act,1881
SECTION CONTENTS / TITLE
1 Act is applicable throughout India including J & K
3 Banker includes any person acting as a banker and any post office saving bank
4 Definition of Promissory Note
5 Definition of Bill of Exchange
6 Definition of Cheque
8 Holder
9 Holder in due course
10 Payment in due course
13 Meaning of Negotiable instrument
15 Endorsement: Endorsement should be in free running handwriting and not in blockletters also it should tally, letter to letter, with the name of the payee in the cheque
18 When there is difference in amount between the words and figures, the amount inwords is to be treated as the amount ordered by the drawer to pay
20 Inchoate Instrument
22 Three days of grace for calculating the maturity date of usance instrument
25 Maturity date in holiday usance instrument is payable on next preceding businessday
26 Minor may draw, endorse and accept a negotiable instrument so as to bind all partsexcept himself
31 Liability of drawee banker: Banker to compensate for wrongful dishonour
45A Holder rights to get duplicate of lost bill
63 The drawee of a Bill of Exchange has to accept it within 48 hours of presentation(excluding public holidays)
82 If no rate of interest is mentioned in the Promissory Note, interest @ 18% p.a. is tobe paid
85-A Protection paying banker in case of Bank drafts.
85-(1) Paying banker is protected by payment in due course of an order cheque which isproperly endorsed by the payee or his agent
85-(2) Protection to Paying banker in case of bearer cheque. Once a bearer, always a bearer
87 Material alteration of Negotiable Instrument renders it void
89 Paying Banker gets protection where a cheque is materially altered but does notappear to have been altered
SL. TYPE OF POSITION POSITIONNO. TRANSACTION OF BANK OF CUSTOMER
PART A - Banking Related Acts 167
99 Noting
100 Protest
118 Presumptions as to negotiable instruments of consideration
123 Cheque crossed Generally
124 Cheque crossed Specially
128 Payment in due course of crossed cheque
130 Not Negotiable crossing � The transferee cannot have a better title to the chequethan that of the transferor
131 Collecting Banker�s protection in respect of crossed cheques
138 Dishonour of cheque for insufficiency, etc. of funds in the account
139 Presumption in favour of holder
142 The payee / holder of the cheque should file a case within 1 month under Sec 138 ofNI Act
HOLDER (Sec.8) HOLDER IN DUE COURSE (Sec.9)
Consideration Not essential Essential
Actual Possession Not essential Essential
Defective Title Will effect the Will not effect the instrument.instrument
Note: But due to the presumptions given in Section 118 of Negotiable Instrument Act in favourof holder this difference has become immaterial / insignificant.
Difference between BoE & ChequeBILL OF EXCHANGE CHEQUE
Can be drawn payable on demand or usance It is always payable on demand
Drawee of the bill can be any one It is drawn on a bank and such draweecan be only a bank
Usance bills need to be accepted Cheque does not require acceptance
Grace period of 3 days is allowed in Grace period is not allowedcase of usance bill
Bills are not crossed Cheque can be crossed
Can be made payable on demand or on Cheque is always payable on demand up tomaturity date (due day) the time it does not become stale.
Various types of Customers & Natural Guardians of a minora) Hindu Father and after the death of Father, the Mother of minor
b) Married Hindu Girl Husband
c) Window Hindu Girl Guardian of the husband
d) Illegitimate Boy or Mother and after her fatherillegitimate unmarried girl
e) Adopted Son Adoptive Father and after him the adoptive mother
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f) Minor with Step Father Mother and after her father
g) Minor with Step Mother Father and after him mother
h) Muslim Father and after him executor of fathers will except motherand after him fathers father
CHAPTER 7
Important sections of Partnership Act 1932
S 18 A Partner is an agent of the firm for the purposes of the business of the firm.
S 19 Each partner is an agent of other partners; hence, has an equal right to manage thepartnership business.
S 20 Implied authority of a partner can be curtailed or enlarged by all partners.
S 25 Joint and several liability of partners for all acts done while he is a partner.
S 30 A minor can be admitted to the benefits of a partnership.
S 42 Death, insolvency etc of a partner dissolves the partnership.
S 69 A registered firm can sue its creditors. An unregistered firm cannot, but the creditorsof an unregistered firm can sue the firm.
CHAPTER 8
Important sections of Indian Companies Act (1956)S 11 No partnership / association can be formed with more than 20 partners. In the case
of banking firms, the number shall not exceed 10.
S 48 A company may empower person to act as its attorney. The authorization should bein writing and under the common seal of the company.
S 100 A special resolution is necessary for reduction of capital of a company; further, theapproval of National Company Law Tribunal�s (NCLT) is required.
S 125 Charges to be filed with the Registrar of companies within 30 days from the date ofcreation.
S 130(3) The Register of Charges kept by the Company Registrar is open for inspection by anyperson on payment of a fee. These facilities the prospective creditor can find outwhether any charge is subsisting on the assets of the Company.
S 135 Modification of Charge to be filed.
S 138 Satisfaction of Charge to be filed.
S 141 If a Charge is not registered within 60 days, the company or any �Interested� partycan approach NCL for registration showing satisfactory reasons for the omission.
S293 If the borrowings exceed the aggregate of the paid up capital and free reserves, the(1)(d) borrowings should be authorized by the general meeting of the shareholders.
PART A - Banking Related Acts 169
CHAPTER 9
Verification of Documents obtained from Customers
FEATURES
Accounts of Individuals· Legal name and any other names
used.· Correct permanent address
Accounts of Companies· Name of the Company· Principal place of business· Mailing address, Telephone / Fax
Number
Accounts of Partnership Firms· Legal name· Address· Names of all partners and their
addresses, Telephone numbers.
Accounts of Trusts & Foundations· Names of trustees, settlers,
beneficiaries and signatories· Names and addresses of the
founder, the managers,/directorsand the beneficiaries, Telephone /Fax numbers.
DOCUMENTS
(i)Passport (ii) PAN card (iii) Voter�s Identity Card(iv) Letter from a recognized Identity card(subject to the bank�s satisfaction)(vi) Letter form arecognized public authority or public servantverifying the identity and residence of the customerto the satisfaction of bank: (i) Telephone bill(ii) Bank account statement (iii) Letter from anyrecognized public authority (iv) Electricity bill(v) Ration Card (vi) Letter from employer (subject tosatisfaction of the bank) (any one document whichprovides customer information to the satisfaction ofthe bank will suffice).
(i) Certificate of incorporation and Memorandum &Articles of Association (ii) Resolution of the Board ofDirectors to open an account and identification ofthose who have authority to operate the account.(iii) Power of Attorney granted to its managers,officers or employees to transact business on itsbehalf (iv) Copy of PAN allotment letter (v) Copy ofthe telephone bill.
(i) Registration certificate, if registered(ii) Partnership deed (iii) Power of Attorney grantedto a partner or an employee of the firm to transactbusiness on its behalf (iv) Any officially validdocument identifying the partners and the personsholding the Power of Attorney and their addresses(v) Telephone bill in the name of firm/partners.
(i) Certificate of registration, if registered (ii)Power of Attorney granted to transact business onits behalf (iii) Any officially valid document toidentify the trustees, settlers, beneficiaries andthose holding power of attorney, founders/managers/directors and their address (iv) Resolutionof the managing body of the foundation/association(v) Telephone bill
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CHAPATER 10
Joint Accounts-Method of operation
1 OPENING OFACCOUNT
2 STOP PAYMENTOF CHEQUE
3 PREMATUREPAYMENT OFFIXED DEPOSITRECEIPT(FDR)
4 CLOSING OFACCOUNT
5 MAKING /CANCELLATION/ CHANGE OFNOMINATION
6 ATTACHMENTORDER
7 DEATH OFEITHER
8 DEATH OFEITHER /FORMER
9 LOAN AGAINSTFDR
Sl.Particulars
Either Or Former Or Joint Account No. Survivor Survivor (Two Or More)
Both have to sign
Either can stop thepayment
Either can takeprematurepayment
Either can closethe account
Both have to signfor charge innomination
Either or survivoris a joint account.As such each ofthem is equallyliable
Survivor can claimthe amount
Survivor can claimthe amount
Either candischarge the FDRand take loan
Both have to sign
Former only cantake prematurepayment
Former only cantake prematurepayment
Only former has tosign to close theaccount
Both have to signfor change innomination
Former or survivoris a joint account.As such each ofthem is equallyliable
Survivor can claimthe payment afterthe death offormer
Survivor can claimthe amount
Only former camdischarge the FDRand take loan
Both/All have to sign
Anyone can stop thepayment
Both/All have todischarge the FDR forpremature payment
Both/All have to signto close the account
Both/All have to signfor change innomination
In case of jointaccount each of themare equally liable
Surviving person andlegal heirs ofdeceased
Legal heirs along withsurviving accountholder can claim thebalance
Both have todischarge the FDR fortaking loan
PART A - Banking Related Acts 171
Sl.Particulars
Either Or Former Or Joint Account No. Survivor Survivor (Two Or More)
10 PAYMENT INCASE OF DEATHOF ONE A/cWHERENOMINATIONHAS BEEN MADE
11 GARNISHEEORDER
Payment will bemade to thesurvivor. Only onthe death of both,payment will bemade to thenominee
If order is in thejoint names it willbe applicable toEither or Survivoraccount and also inthe Individualaccounts butreverse is not true
Payment will bemade to thesurvivor. Only o thedeath of both,payment will bemade to thenominee
If order is in thejoin names fullamount will beapplicable. If it isthe formers againfull amount will beapplicable.However if it is inthe name ofsurvivor no amountis applicable
Payment will be madeto the survivors orsurvivor along withlegal heirs ofdeceased accountholder(s). Only on thedeath of both/all,payment will be madeto the nominee
If order is in the jointnames it will beapplicable to the jointaccount and also inthe individual accountbut reverse is nottrue.
Where right is available
DEPOSIT IN THE NAME OF LOAN IN THE NAME OF
Single person Jointly with others
Partner in a firm Partnership firm
Single name Same name
Proprietor Proprietorship firm
Joint-former / survivor Former
Where right not available
DEPOSIT IN THE NAME OF LOAN IN THE NAME OF
Joint account One of joint holders
Partnership firm One of the partners
Trust Trustee
Trustee Trust
Dividend A/c. of Company Loan A/c., of the Co.
Minor (under Guardianship) Guardian
BRAVE - Banking Related Acts and Various Enactments172
CHAPTER 11
Right of Lien, Set off & Appropriation
SLPARTICULARS RIGHT OF SET-OFF APPROPRIATIONNO.
1. Legal statute
2. Meaning
3. Applicable on
4. Applied to
5. More than oneaccount of sameperson
6. Sole ProprietorAccount
7. Partners' Accounts(personal deposit)
8. Joint DepositAccounts
9. Trust Accounts
10. Future ContingentDebts
11. Quantum of Amount
12. Principal Amount &Interest
Universal customs andpractice amongst bankers
Rights of the Bank to club orconsolidate differentaccounts of same borrower
Amount of claim
Accounts in the same withsame rights
If prior agreement with thebank is to keep theaccounts separate, thenbank can't exercise thisright.
Deposit account of soleProprietor and its loan.Trading A/c can be clubbed
Partners are jointly andseverally liable and it givesthe implied authority to thebank to recover the loanamount from any of thepartners' personal accounts.
Bank can't exercise thisright on the joint depositaccount if the borrower isone of them
Not Applicable
Not applicable
Amount should be specificand final
Applicable to both
Indian Contract Act(Sections 59, 60 and 61)
Method of crediting amountdeposited by the customer toits outstanding loan in CC/Current(OD)
Amount of claim
Any of the loan accounts ofsame borrower
Applicable to the account asper directions of the borroweror implied intentions to whichaccount the amount to becredited.
Clayton's Rule is applicable.
Clayton's Rule is applicable
Applicable only to CurrentOverdraft & CC accounts andnot.
Applicable
Applicable
Amount should be specific
First interest and then principalamount (Kharavela Ind VsOrissa State Financial Corpn.-Orissa HC 1956)
PART A - Banking Related Acts 173
SLPARTICULARS RIGHT OF SET-OFF APPROPRIATIONNO.
13. Bank's Discretionaryrights`
14. Requirement of legalnotice
15. Assignment of creditbalance to anotherbank
16. Against 2ndMortgage
17. Limitation
18. Garnishee Order
19. Death of thecustomer
At the discretion of theBank
Required except in case ofdeath, insolvency orreceipt of a garnisheeorder
Bank cannot exercise thisright if it has beeninformed of suchassignment by borrower
Allowed
No Limitation
Bank should exercise thisright for adjusting its ownsdebts before complyingwith the garnishee order
Bank has automatic andimplied right
Bank's discretion only if theborrower has not specified towhich account the amountshould be credited.
Not applicable.
Bank cannot exercise this right.
Not Applicable
No Limitation
To be obeyed
Applicable
PARTICULARS GARNISHEE ORDER ATTACHMENT ORDER
Concept
Issuing Authority
Garnishee Order is issuedby the court on theapplicable made by thejudgement creditor in asituation where thejudgement debtor fuses topay debt payable by him.The garnishee order isissued on the bankermaintaining account of thejudgement debtor.
Competent Court at therequest of judgementcreditor
Attachment Orders are issued by theAssessing Officer or Tax RecoveryOfficer on the Bank having any typeof deposit in the assessee from whommoney is due or may become due.
Government authorities such asIncome Tax, Sales Tax, CustomAuthorities etc. for collection of taxand government dues.
CHAPTER 12
Garnishee Order & Attachment Order
BRAVE - Banking Related Acts and Various Enactments174
Legal Provision
Stages / Steps
Nature of liability
Nature of recovery
Depositor
Bank
Amount
Applicable towhich amount
Nature of dues
Limitation period
Deposits
Right of Set-off andAppropriation
Joint accounts,order received insingle name
Joint account &order in same jointnames
Order in the nameof partner, trusts,official assignee /executor receiver,administrator &liquidator etc.
Civil Procedure Code, Sec60, Order XXI, Rule 46
First, Order Nisi and thenOrder Absolute
Private liability
Recovery of private dues.
Judgement debtor
Judgement debtor's debtor
May be mentionedspecifically
On clear balance available inthe account at the time ofreceipt
Execution of decree
12 years
Demand deposits and timedeposits
Available for certain and duedebts
Not applicable
Applicable up to the orderamount
Not applicable for accountsin the name of firm as tosettle the liability of thepartners, firm accountcannot be debits. In case ofother accounts it is notapplicable as they are in therepresentative capacity.
Related status such as Income TaxAct, Sales Tax Act, Wealth Tax Act,Enforcement Directories etc.,
Always in the Absolute form.
Statutory liability.
Recovery of dues of Income Tax /Govt. dues
Assessee in default
Assessee debtor
Must be mentioned specially
Applicable on subsequent balance upto the time total amount is notrecovered.
Government liability
30 years
Demand deposits and timedeposits
Available for ascertainable and duedebts
Equal share depending upon thenumber of account holders
Applicable up to the order amount
Not applicable for accounts in thename of firm. To settle the liability ofthe partners, firm amount cannot bedebited. In case of other accounts, itis not applicable as they are in therepresentative capacity.
PARTICULARS GARNISHEE ORDER ATTACHMENT ORDER
PART A - Banking Related Acts 175
PARTICULARS GARNISHEE ORDER ATTACHMENT ORDER
Deceased
Insolvent
Unutilised portionof limit against FDR
FDR as collateralsecurity
Bank's liability tohonour thecustomer's cheques
Preference
Applicable as the liabilityhas been predetermined bythe court and executionproceeding cannot bestopped after the death.
Not applicable, as afterinsolvency, the recovery isto be done by the officialAssignee / Receiver in thepreferential order
Balance Amount of FDR
Not applicable
Over and above the orderamount
Attachment order, being theliability to govt., will havethe preference overGarnishee Order if bothreceived simultaneously.
Applicable as the liability has beenpre-determined by the statutoryauthority and recovery cannot bestopped after the death.
Not applicable. The amount has beensanctioned to do the productiveactivity and not to settle any statutoryliability.
Balance Amount of FDR
Not applicable
Over and above the order amount
Attachment order, being the liability toGovt., will have the preference overGarnishee Order if both are receivedsimultaneously.
TYPE OF CHARGE TYPE OF SECURITY COLLATERAL SECURITY
Mortgage
Pledge
Hypothecation
Lien
Assignment
Immovable securities
Moveable assets
Moveable assets
Securities which are alreadyin possession of the creditor.
Actionable claims
Land, building, machinery embeddedto the earth.
Stocks, Gold, jewellery
Stocks, motor vehicles, standingcrops.
Goods and securities exceptactionable claims and money.
LIC policies, book debts, FDR.
CHAPTER 13
Charges on Security
BRAVE - Banking Related Acts and Various Enactments176
CHAPTER 14
Various types of Mortgage (Sec 58 of TPA)
SL. EQUITABLE SIMPLECONDITIONAL USUFRUC
ENGLISHPARTICULARS SALE TUROYNO. MORTGAGE MORTGAGE MORTGAGE MORTGAGE MORTGAGE
1 OTHER NAMES
2 U/S OF TPA
3 ALLOWEDCITIES
4 MINIMUM AMTOF LOAN
5 METHOD OFCREATION
6 WITNESSESREQUIRED
7 PURPOSE
8 MORTGAGOR
9 REGISTRATION
By deposit ofTitle Deeds
58(f)
In Bombay,Calcutta &Madras or incitiespermittedused Actpassed byState Govt.
No Limit
By Depositof Title Deed
No
Securitydebt orperform--ance ofobligation
OnlyBorrower/Guarantor
Not required
SimpleMortgage
58(B)
All overIndia
Rs 100/-
By WritingofMortgageDeed
Two
Securitydebt orperform-ance ofobligation
OnlyBorrower/Guarantor
Notrequired
Nil
58(c)
All over India
Rs 100/-
By Writing ofMortgageDeed
Two
Security debtorperformanceof obligation
OnlyBorrower/Guarantor
Required
Nil
58(d)
All overIndia
Rs 100/-
By WritingofMortgageDeed
Two
Securitydebt orperformanceofobligation
OnlyBorrower/Guarantor
Required
Nil
58(e)
Bombay,Calcutta &Madrasand placesnotifiedunder Actpassed byStateGovts.
Rs 100/-
By WritingofMortgageDeed
Two
Securitydebt orperform--ance ofobligation
OnlyBorrower/Guarantor
Required
PART A - Banking Related Acts 177
SL. EQUITABLE SIMPLECONDITIONAL USUFRUC
ENGLISHPARTICULARS SALE TUROYNO. MORTGAGE MORTGAGE MORTGAGE MORTGAGE MORTGAGE
10 POSSESSIONANDOWNERSHIP
11 RIGHTS ONINCOME OFPROPERTY
12 RIGHT OFFORECLOSURE
13 RIGHT OFREDEMPTION
14 LEGAL NOTICE
15 LIMITATION
NotTransferred
WithMortgagor
No Right
Yes, availableto mortgagor
Required
12 years
NotTransferred
WithMortgagor
No Right
Yes,available tomortgagor
Required
12 years
Nottransferred butproperty issold on acondition to beretransferred ifdebt is paidback
WithMortgagor
Mortgage cansue on default
Yes, availableto mortgagor
Required
12 years
Transferredtillrepaymentof debt
WithMortgagor
No Right
Yes,available tomortgagor
Required
12 years
Title isTransfer--able butnot theposses--sion
WithMortgagor
No Right
Yes, butnotownership
Required
12 years
CHAPTER 15
Various types of Securities & their charge
Sl. Type of Type Of Mode Of Registration Of PosssessionNo. Security Charge Valuation Charge The Security
1 Land &Building
2 Plant &Machinery
Equitable Mortgageii) RegisteredMortgage
Hypothecation
Bank�sApprovedValuer
Originalinvoice anddepreciatedvalue
Possible only whenthe property is'Free Hold'. Non-encumbrancecertificate, searchreports and priorsale deeds shouldbe gone throughproperly.
In case ofcompanies, chargeshould be gotregistered with the
Title Deedsremain withthe Bank
The physicalpossessionremains withthe
BRAVE - Banking Related Acts and Various Enactments178
Sl. Type of Type Of Mode Of Registration Of PosssessionNo. Security Charge Valuation Charge The Security
3 Stocks
4 Railway/LorryReceipts, Air-way Bill AndBill Of Lading
5 LIC Policies
6 NSC, IndiraVikas PatraOther Govt.Securities
7 Bank�s OwnTermDeposits
i) Hypothecationii) Pledge
Pledge of Receiptsof Bills in full set ofissue
Assignment ofReceipts
Pledge & Security
Pledge & Security
MarketReport,Newspapers,Invoices.-do-
Invoice
Surrendervaluecertificateissued by thecompany
Face Valueplus Interestaccruedthereon
Face Valueplus interestaccrued
Registrar ofCompanies.
By way ofobtaininginventories andstock reports atregular intervals-do-
By way of deliveryand a validendorsement.Though no legallyrequired, butRailway orTransportauthorities shouldbe notified.
By way ofassignment infavour of the Bank
Blank endorsementor transferassignment infavour of the bank
By way ofAssignment
borrowers,bank hasconstructivepossession
Physicalpossessionremains withthe borrowerand bank hasan equitablechargephysicalpossessionremains withbank in anindependentlyaccessiblestore.
Documentsof titleremain withthe bank
OriginalPoliciesremains withthe bank
OriginalSecuritiesremain withthe Bank
Originaldepositreceiptremains withthe bank
PART A - Banking Related Acts 179
Sl. Type of Type Of Mode Of Registration Of PosssessionNo. Security Charge Valuation Charge The Security
8 Ornaments
9 UTI, SharesOf ApprovedCo�s
10 Book Debts
11 Supply Bills
Pledge
Pledge
Hypothecation
Hypothecation
Newspapers,weightcertificatefromapprovedjeweler
Newspapers,SEBIapprovedagents andbrokers.
Books of theparty,certificatefrom a Act
Certificateissued by theGovt.undertakinginvoices, copyof contractand deliverynote.
Delivery /possession
Letter of Pledge,Blank TransferDeeds /Dematerialization
Hypothecationdeed andassignment letter
A letter ofinstruction to thePSU for making thepayment to thebank
Jewellery iskept in safecustody withthe bank.
Certificatesremain withthe bank
N.A.
N.A
CHAPTER 16
Hypothecation & Charge
SLPARTICULARS HYPOTHECATION PLEDGENO.
1 Legal Provision
2 Definition
Section 2(n) of Securitization &Reconstruction of FinancialAssets & Enforcement ofSecurity Interest Act, 2002
A charge in or upon anymovable property, existing orfuture, created by a borrowerin favour of a secured creditorwithout delivery of possessionof the movable property tosuch creditor, as a security forfinancial assistance and
Section 172 of The IndianContract Act, 1872
The bailment of goods assecurity for payment of a debtor performance of a promise.
BRAVE - Banking Related Acts and Various Enactments180
SLPARTICULARS HYPOTHECATION PLEDGENO.
3 Parties
4 Nature ofSecurities
5 Nature ofCharge
6 Rights ofOwnership
7 Rights of Sale
8 Possession
9 Delivery of Goods
10 Limitation period
11 General lien
12 Degree of care
includes floating charge andcrystalisation of such chargeinto fixed charge on movableproperty.
· Borrower-Hypothecator· Bank-Hypothecatee
Movable
· Equitable· Floating
With the borrower
Through Court of Law
With Borrower
· Actual· Symbolic· Constructive
3 years
Not Available
Borrower to take care of theHypothecated goods
· Borrower-Pledgor / Pawnor.· Bank-Pledgee/Pawnee
Moveable
· Legal· Fixed
With the borrower
Private Sale- after givingreasonable notice (Sec-176-contract Act)
With Bank
Not applicable
No Limited Period
Available
The bank is bound to take asmuch care of the goods bailedto the bank as a man ofordinary prudence would, undersimilar circumstances, take ofhis own goods of the samebulk, quantity and value as thegoods bailed.
PART A - Banking Related Acts 181
CHAPTER 17
Various types of Charge on Securities
SL. PARTI-LIEN
ASSIGN- HYPOTHE-PLEDGE MORTGAGENO. CULARS MENT CATION
1 Meaning
2 LegalStatute
3 Applications
4 Differenttypes ofAssetscovered
5 Possession
6 Rights ofBank to Sell
Right toretain theamount tilladjustmentof the debt.U/s 171 ofContract Act
IndianContract Act
On goodsandsecurities
Goods andsecurities
With theBank
Bank cannotsell but onlyretain
Transfer ofrights,interests,or title infavour ofthecreditor.U/s 3
Transfer ofPropertyAct
Title deeds,instruments,policies
SupplyBills, LICPolicies,BookDebts, FDR
With theBank
Can claimamountfrom theissuers
Not defined inany legalstatute. It isextendedconcept ofpledge. It is acharge onmoveablesecurities withdebtor havingthe possessionof the same
Nil
Movablegoods
Stocks,Vehicles, Plant& Machinery,Standing crops
With theBorrower
Can convertthehypothecationinto pledge
Bailmentof goodsas securityforpaymentof debtandinterest.U/s 172 ofContractAct
IndianContractAct
Movablegoods
Shares,KVP, NSC,Materialsor othergoods notembeddedto theearth
With theBank
Can sellaftergiving anotice
Transfer ofinterest in someimmovableproperty forsecuringexisting or afuture debt(Sec-158 ofTransfer ofProperty Act)
Transfer ofProperty Act
Immovableproperty
Land, Building,Machineryembedded tothe earth
With the Debtor
Can sell
BRAVE - Banking Related Acts and Various Enactments182
CHAPTER-18
Safe Deposit Articles & Lockers
SL PARTICULARS SAFE DEPOSIT LOCKERSNO. OF ARTICLES
1 Banker -CustomerRelationship
2 Leasing out thespace
3 Operation
4 Third Parties
5 Nomination
6 Acceptance ofArticles
7 Type ofPackaging
8 Particulars of theDepositors
Bank is a Bailee and theCustomer is a Bailor.
No space is leased out to thecustomer
There is no involvement of thecustomer with the operation ofthe vault where the valuableshave been kept by the bank
In case the depositor is verywell know and is of very goodreputation, the bank candeliver the articles to anauthorized third person afterproper verification of hisidentify
Nomination is allowed to oneperson
The customer delivers thevaluables/articles to the bankfor keeping in safe custody
Bank accepts sealed packets orenvelops duly signed by thecustomer
The packets has a mention offull particular of the depositor
The Bank is a lessor and thecustomer is a lessee.
A small locker in the lockerscabinet is leased out to thecustomer.
The locker is operated jointlyby the bank and the customerby using master key and hirerskey simultaneously
Lockers could be hired in thenames of joint persons andcould be authorized to beoperated by the persons byPower of Attorney with priorarrangements with the bank. Ifthere is no such priorarrangement, third parties arenot allowed to operate thelockers
In case locker has been hiredby a single person, 'nominationis permitted in favour of oneperson only. However, if thelocker is hired jointly - jointoperations, each person cannominate one (but not morethan two)
The customer itself keeps thearticles in the locker.Bank is not concerned with thepacking of the articles
The bank is not concerned withthe packing of the articles
Locker cabinets are immovablein the strong room. The bank canonly see whether the lockershave been property locked afterthe customer has completed theoperation or not.
PART A - Banking Related Acts 183
SL PARTICULARS SAFE DEPOSIT LOCKERSNO. OF ARTICLES
The bank charges periodical rentas per size of the locker
The customer operates thelocker itself and may take outany article as per need.
Contents of the lockers could bedelivered only to the legal heirsafter recovery of rent, if any,and completion of all theformalities.
If no legal heirs turn up, bankcan issue a notice at theaddress of the deceased andissue a Public Notice in the newspapers. A period of 3 years issufficient to wait and thereafter,the bank can break-open thelocker. The articles so recoveredwould be properly recorded andkept in safe custody.
9 Duty of the Bank
10 Charges
11 Delivery ofarticles
12 Death of theDepositor
The bank is expected to takeproper and extra care regardingsafely of the articles depositedby the customer
The bank takes chargesaccording to the size of thearticles
The customer can take thedelivery of the goods onsurrender of safe custodyreceipt
In the event of death of thedepositor, in case, if on someenvelop, if has been mentionedthat it contains a 'Will' and thename of person to whom it is tobe delivered; the bank candeliver the same onidentification of the person.Articles can be delivered to thenominee, if any.Succession Certificate is notvalid in respect of Safe Depositof Articles of a deceased.Only Probate of the 'Will' orLetter of Administration isrequired for delivery of thearticles
CHAPTER 19
Important sections of Banker�s Book of Evidence Act 1891
S 4 A Certified copy is a prima facie evidence of the entry in the records of the bank.
S 6 The Court may order inspection of any banker�s books in a proceeding before it. Furtherit may also order taking out copies of the banker�s books.
S 8 The order of a court for production and inspection of books of the bank shall be construedas referring to an order made by an officer of the rank of Superintendent of Police andabove as specified by the Govt.
BRAVE - Banking Related Acts and Various Enactments184
CHAPTER 20
Important sections of Indian Contract Act-1872:
SECTION CONTENTS
11 Minor cannot enter into a contract.
25 An agreement without consideration is void.
25(3) A promise to pay a time-barred debt is valid.
28 An agreement curtailing the normal limitation period for filling a civil suit is void.
42 In a joint promise, all the promisors are liable both jointly and severally.
43 Any or more joint promisor may be compelled to perform whole of the promise.
59-61 Appropriation of payment (Clayton�s Rule).
68 Loans to minors to meet necessaries of life are binding on the minor�s estate: Quasi-contracts.
72 Payment made by mistake or under coercion must be returned.
124 Definition of Indemnity.
126 Definition of Guarantee.
128 Surety�s liability is co-extensive with that of the principal debtor, unless providedotherwise.
129 Continuing guarantee extends to a series of transactions.
131 Death of a surety revokes the continuing guarantee for future transactions.
133 Any change in the contract, without surety�s consent, discharges the surety.
134 Surety is not liable if principal debtor is released from liability, by any act or omissionof the creditor.
152 Bailee is not liable for loss, destruction / deterioration of things bailed, if he hasexercised the standard of care as defined in S 151.
170 Bailee has particular lien over the things bailed to him.
173 Pledgee can retain the goods till he receives his payment.
182 Agent and Principal defined.
BAILMENT
148 Bailment defined.
151 Bailee to take reasonable care of goods bailed to him.
171 Bankers, factors etc have a general lien.
172 Pledge defined
176 Statutory notice of sale to be given to the Pledgor before sale of good when hedefaults to pay.
AGENCY
185 No consideration required for Agency.
190 An agent cannot delegate his authority.
201 Death / Insolvency / Insanity of the debtor terminate Agency.
202 Agency coupled with interest � agency not terminated by death.
PART A - Banking Related Acts 185
CHAPTER 22
SECTION DEALING WITH NOMINATION
Particulars Acceptance of nomination Pay / deliver only the nominee
Deposits Section 45ZA Section 45ZB
Safe Custody Section 45ZC Section 45ZD
Lockers Section 45ZD Section 45ZF
(Nomination provision available as under)
Types of A/c Nature of A/c Nominee
Deposits Single / Joint One only
Safe Custody Only single One only
Lockers Single One only
Joint-E/S One only
Joint-E/S One only
Joint operation Each can nominate one(but not more than two)
Types of nomination forms
Account Registration Cancellation Variation
Deposit DA-1 DA-2 DA-3
Safe Custody SC-1 SC-2 SC-3
Lockers SL-1 or SL 1A joint SL-2 SL-3 or SL 3A joint
NRI Accounts: The nomination facility is available in both resident as well as non-residentaccounts.
Nature of A/c Status of Nominee Provision of settlement in favour of nominee
Resident Non-Resident Repatriation of fund to non-resident nominee ascredit to NRE/FCNR account of nominee requiresprior RBI approval.
Non-Resident Resident Repatriation of fund outside India requires RBIpermission, irrespective of the accountmaintained by NRI. For credit to residentnominee, no RBI approval is required.
Non-Resident Non-Resident Repatriation of fund requires RBI permission, bututilization in India requires no approval.
BRAVE - Banking Related Acts and Various Enactments186
CHAPTER 23
Limitation Act, 1963
Article 1 For the balance due on amutual, open and Current A/c, wherethere have been reciprocal demandsbetween the parties.
Article 19 For money payable formoney lent.
Article 22 For money deposited underan agreement that it shall be payableon demand, including money of acustomer in the hands of his banker sopayable.
Article 31 On a bill of exchange orpromissory-note payable at a fixed timeafter date.
Article 32 On a bill of exchange payableat sight, or after sight but not at fixedtime.
Article 33 On a bill of exchangeaccepted payable at a particular place
Article 34 On a bill of exchange orpromissory note payable at a fixed timeafter sight or after demand.
Article 35 On a bill of exchange orpromissory note payable on demand andnot accompanied by any writingrestraining or postponing the right tosue.
Article 36 On a promissory note orbond payable by installments.
Article 37 On a promissory note, bondpayable by instalments which providesthat if default be made in payment ofone or more instalments, the whole shallbe due.
DESCRIPTION Period of TIME FROM WHICH PERIOD OF SUIT Limitation BEGINS TO RUN
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
The close of the year in which the lastitem admitted or proved is entered inthe a/c; such year to be computed asin the a/c.
When the loan is made
When the demand is made
When the bill or note falls due
When the bill is presented
When the bill is presented at thatplace
When the fixed time expires
The date of the bill or note
The expiration of the first term ofpayment as to the part then payableand for the other parts the expirationof the respective terms of payment.
When the default is made unlesswhere the payee or beneficiarywaives the benefit of the provisionand when fresh default is made inrespect of which there is no suchwaiver.
PART A - Banking Related Acts 187
DESCRIPTION Period of TIME FROM WHICH PERIOD OF SUIT Limitation BEGINS TO RUN
Article 39 On a dishonoured foreign billwhere protest has been made and noticeis given.
Article 54 For specific performance of acontract
Article 61 By a mortgagor(a) To redeem or recover possession of
immovable property mortgaged(b) To recover possession of immovable
property mortgaged and afterwardstransferred by the mortgage for avaluable consideration
Article 63 By a Mortgageea) For foreclosureb) For possession of immovable
property mortgaged
Article 116 Under the Code of CivilProcedure 1908a) To a High Court from any decree or
orderb) To any other court from any decree
or order
Article 117 For a decree or order of anyHigh Court to the same Court
Article 118 For leave to appear anddefend a suit under summary procedure.
Article 119 Under the Arbitration Act,1940a) For the filling in Court of an award;b) For setting aside an award or getting
an award remitted for reconsideration
Article 120 Under the Code of CivilProcedure 1908 to have the legalrepresentation of a deceased plaintiff orappellant or of a deceased defendant orrespondent, made a party.
3 years
3 years
30 years
12 years
30 years
12 years
90 days
30 days
30 days
10 days
30 days
30 days
90 days
When the notice is given
The date fixed for the performance, orif no such date is fixed when the plaintiffhas notice that performance is refused.
When the right to redeem of torecover possession accruesWhen the transfer becomes known tothe plaintiff
When the money secured by themortgagee becomes due.When the transfer becomes entitled topossession.
The date of the decree or order
The date of the decree or order.
The date of the decree or order
When the summons is served
The date of service of the notice ofthe making of the awardThe date of service of the notice ofthe filling of the award.
The date of death of the plaintiff,appellant defendant or respondent, asthe case may be.
BRAVE - Banking Related Acts and Various Enactments188
DESCRIPTION Period of TIME FROM WHICH PERIOD OF SUIT Limitation BEGINS TO RUN
Article 127 To set aside a sale inexecution of a decree including any suchapplication by a judgment-debtor
Article 137 Any other application forwhich no period of limitation is providedelsewhere in this connection.
60 days
3 years
The date of the sale
When the right to apply accrues
CHAPTER 24
LIMITATION ACT IMPORTANT SECTIONS
Sec 3 Courts cannot condone the delay in filing the suits due to expiry of limitation
Sec 4 When there happens to be a court holiday on the day, the limitation is expiring,then suit can be filed on the next working day of the court but limitation is notextended.
Sec 5 Courts can condone the delay in preferring appeals
Sec 9 Where once the time has begun to run, no subsequent disability or inability toinstitute a suit or make an application stops it. This rule is strictly applied.However, there are some exceptions allowed vide
Sec 12 In computing the period of limitation for an appeal or application, the timetaken for obtaining a copy of the judgement/order shall be excluded
Sec 14 In computing the period of limitation, the time, and diligence and in good faith,another civil proceeding against the same party for the same relief shall beexcluded
Sec 15(1) If an institution of a suit or application has been stayed by injunction or order,the period of the continuance of the injunction or order will not be reckoned forthe purpose of limitation
Sec 15(2) When notice has been given or sanction requested from the Govt. before theinstitution of a suit in accordance with law, limitation will be suspended duringthe period of notice
Sec 15(5) In computing the period of limitation for any suit, time during which the defendanthas been absent from India shall be excluded
Sec 17 In case of fraud or mistake, the period of limitation will not begin to run untilthe plaintiff or applicant has discovered the fraud or mistake, or could withreasonable diligence, have discovered it
Sec. 12 to 15. Wherein running of time is suspended
PART A - Banking Related Acts 189
Sl. ActionNo.
1 Time to be allowed to the borrower/guarantor in demand notice to repay thedues
2 Time within which the borrower cansubmit representation/objection to theabove notice
3 Time within which the Bank has to conveyits decision against the aboverepresentation/objection
4 Time within which Borrower can file apetition in the DRT against Bank for havingtaken possession of property
5 Maximum time within which DRT has topass the order for the above
6 Time within which the Bank/Borrower canfile appeal with the Appellate Tribunalagainst the order of the DRT
7 Minimum Time Bank has to permit for theborrower to repay the debt, while issuingthe sale Notice
CHAPTER 25
SARFAESI ACT-TIME FRAME TO BE OBSERVED
Time Limit
60 days from the date of notice
60 days from the date of notice
7 days from the date of receipt of therepresentation/objection
Within 45 days from the date of action ofthe Bank
Within 4 months from the date of applicationin the DRT
Within 45 days from the date of receipt ofthe order of the DRT
30 days from the date of notice
n