The act was originally in force from 16 march 1949 as the banking companies act, 1949. Banking regulation act, 1949 as applicable to the cooperative societies. They are regulated by the reserve bank of india under the banking regulation act, 1949 and banking laws application to cooperative societies act, 1965. Act to apply to cooperative societies subject to modifications. The act extends to entire nation including jammu and kashmir. Parliament has competence to make laws regarding recovery. It has also come to the notice of rbi that some cooperative societies are accepting deposits from nonmembers nominal members associate members which tantamount to conducting banking.
The provisions of the act were expanded to apply to the cooperative societies as specifically prescribed in the enactment. The approach to regulating the banking business of cooperatives has been halfhearted ever since 1966 when certain provisions of the banking regulation act 1949 were made applicable to. May 05, 2020 in 1965, the banking and regulation act was made applicable to cooperative banks. Regional rural banks vs cooperative banks published on thursday, january 12, 2017.
Passed as the banking companies act 1949, it came into force from 16 march 1949 and changed to banking regulation act 1949 from 1 march 1966. It governs the aspect of banking of cooperative banks run by the cooperative societies, the bench said. Some sections of banking regulation act are not applicable to cooperative banks. Thereafter, the recovery of debt and bankruptcy act rdb, 1993 defined the term bank. The banking regulation act, 1949 is a legislation in india that regulates all banking firms in india. In view of large deposits and working funds of cooperative banks, certain provisions of the banking regulation act, 1949 were made applicable, by the banking laws application to cooperative societies act, 1965, to the state cooperative banks, the central cooperative banks and primary nonagricultural banks. Banking regulation act 1949 and important sections pdf. The banking laws application to cooperative societies. Banking regulation act 1949 as applicable to co operative societies. Meanwhile, section 56 of the act is applicable to cooperative societies. This means that the customers of a cooperative bank are also its owners. It added that the cooperative banks cannot carry on any activity without compliance of the provisions of the banking regulation act, 1949 and any other legislation applicable to such banks relatable to banking. Cooperative banks must comply with banking regulation act. It was amended and renamed as banking regulation act, 1949 and extended to the cooperative banks from 1 march 1966 as the banking regulation act, 1949 as applicable to cooperative societies b r act, 1949 aacs.
Mar 07, 2020 the cooperative banks are also regulated by the reserve bank of india rbi and governed by the banking regulations act 1949 and banking laws cooperative societies act, 1955. The banking regulation act 1949 has 56 sections in total. In view of large deposits and working funds of cooperative banks, certain provisions of the banking regulation act, 1949 were made applicable, by the banking laws application to cooperative societies act, 1965, to the state cooperative banks, the central co. Act to apply cooperative societies in certain cases. Aug 27, 2019 the banking regulation act 1949 contains various provisions governing the commercial banks in india. The important provisions of banking regulation act, 1949 as applicable to cooperative banks are given below. The banking regulation amendment bill, 2020 was introduced in lok sabha by the minister of finance, ms. Return in this form is to be submitted to the reserve bank of india under section 24 of the banking regulation act, 1949 as application to cooperative societies by scheduled state cooperative banks and sections 18 and 24 of the act ibid. The cooperative banks are also regulated by the reserve bank of india rbi and governed by the banking regulations act 1949 and banking laws cooperative societies act, 1955. The similar position has been reiterated by honble supreme court in its interim order dated 27. The bill seeks to amend the banking regulation act, 1949, with regard to cooperative banks. Control over cooperative banks in india paper tyari. The banking regulation act, 1949 contents introduction.
This is a violation of section 7 of the banking regulation act, 1949 as applicable to cooperative societies the b. Application of other laws not barred 3 act to apply to cooperative societies in certain cases. Introduction banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. The act was initially enacted to regulate the banking companies. The banking regulation act, 1949 as applicable to cooperative societies objectives of the banking regulation act broadly are. Provisions of rbi act 1935, banking regulation act 1949, prevention of money laundering act, 2002. Banking in india types of banks banking classification. The rbi act was enacted to establish and set out the. The banking regulation act, 1949 as modified upto january 7, 20 contents part i preliminary section 1 short title, extent and commencement section 2 application of other laws not barred section 3 act to apply to cooperative societies in certain cases section 4 power to suspend operation of act section 5 interpretation. It does not apply to primary agriculture credit societies, cooperative land mortgage banks and any other cooperative society. Nothing in this act shall apply to a a primary agricultural credit society. Passed as the banking companies act 1949, it came into force wef 16 march 1949 and changed to banking regulations act 1949 wef 01. May 15, 20 the basis of this decision is that the rddb act is applicable to a banking company as defined in section 5c of the banking regulation act br act, 1949. Provided further that in the case of a primary credit society which becomes a primary cooperative bank after the commencement of clause iii of section 42 of the banking laws amendment act, 1983, the period of seven years shall commence from the day it so becomes a primary cooperative bank.
The act was initially applicable to commercial banks only but it was amended in 1966 to include cooperative banks in its ambit by adding section 56. Use of words bank, banker, banking or banking company 8. Details about the section 35a of the banking regulation act. Thus began the regime of dual control, as cooperative banks were controlled by state specific laws too. The provisions of this act, as in force for the time being, shall. There was initially 55 sections but in 1965 the banking regulation act 1949 was amended to include cooperative banks in the 56th section. But, 1965 it was amended to make it applicable to cooperative banks and to. To acquire specialized knowledge of law and practice relating to banking detailed contents. From 1 st march, 1966, it was renamed as banking regulation act, 1949. They also come under the regulatory ambit of the reserve bank of india rbi under two laws, namely, the banking regulations act, 1949, and the banking laws cooperative societies act, 1955. Regulation act which have been made applicable to cooperative. In so far as its administrative functions are concerned a cooperative bank is to go by. The act does not apply to certain cooperative societies.
Cooperative banks work on principles of cooperation that is the. Study material for bank promotion banking regulation act. Form and business in which banking companies may engage. However, this act is not applicable where the institutions are classified according to their financial status or according to their. It has also come to the notice of rbi that some cooperative societies are accepting deposits from nonmembers nominal members associate members which tantamount to. The banking regulation cooperative societies rules, 1966. Caution against various cooperative societies using the word. They are governed by banking regulation act 1949 and banking laws co operative societies act 1965. Important sections in banking regulation act 1949 related to rbis pca rbi to remove managerial persons under section 36aa of the br act 1949 as applicable. The accounts and balancesheet referred to in section 29 together with the auditors. Dear sir, section 23 of the banking regulation act, 1949 as applicable to cooperative societies guidelines.
Provisions of the banking regulation act, 1949 are not in substitution of other laws applicable, unless otherwise expressly said section 2 sub 56 b act is not applicable to 1 primary agricultural society 2 cooperative land mortgage bank 3 any other cooperative society except as provided by sec. Anyonya sahakari mandali, established in 1889 in the province of baroda, is the earliest known cooperative credit union in india. The mention in the act with respect to the banking companies act, 1949 in any of the legislations or any legal document shall be interpreted to pass on the banking regulation act of 1949. Banking regulation amendment bill, 2020 need, features. Section3 the act shall not apply to a a primary agricultural credit society and b a cooperative land development bank. In 1966, the act was made applicable to cooperative banks by incorporating section 56 therein. Comments as provided in part v of the banking regulation act, 1949 this act is applicable to the cooperative societies. Section 23 of the banking regulation act, 1949 as applicable to cooperative societies guidelines on offsitemobile automated teller machines atms.
Aug 26, 2011 provisions of the banking regulation act, 1949 are not in substitution of other laws applicable, unless otherwise expressly said section 2 sub 56 b act is not applicable to 1 primary agricultural society 2 cooperative land mortgage bank 3 any other cooperative society except as provided by sec. In 1965, it was amended and made applicable to cooperative banks also. The co operative banks are registered under co operative societies act and also regulated by rbi. Section 3 act to apply to cooperative societies in certain cases. Banking regulation cooperative societies rules, 1966. The definition under the br act is not intended to include a cooperative bank. Till 1938, all ucbs were included in the category of non agricultural credit societies. Registrar of cooperative societies of a state, the reserve bank shall issue such order in. What are cooperative banks and its different types.
They were brought under the rbis watch in 1966, a move which brought the problem of dual regulation along with it. The banking regulation act, 1949 reserve bank of india. Rbi asks cooperative societies not to use word bank in. Not applicable to primary agricultural credit society and cooerative land mortgage banks and agriculture primary credit societies. Act to apply to cooperative societies in certain cases. Multistate cooperative societies registered under multi state cooperative societies act, 2002 are not banking companies under section 5c of the banking regulation act rallymark legal 1949. For commencing banking business, a primary urban cooperative bank, as in the case of commercial bank, is required to obtain a licence from the reserve bank of india, under the provisions of section 22 of the banking regulation act, 1949 as applicable to cooperative societies. Aug 31, 2009 section 6 of the banking regulation act, 1949 as applicable to cooperative societies forms of business in which banking companies may engage a reference is invited to section 6 1f of the banking regulation act b. An act to consolidate and amend the law relating to banking. In 20, multistate cooperative banks was added to the definition. Cooperative banks are financial entities set up on a cooperative basis and belonging to their members. Since then there is duality of control over these banks with banking related functions being regulated by the reserve bank and management related.
The rbi has asked cooperative societies not use the word bank in their names as it violates the banking regulation act. Banking regulation act 1949 objectives paper tyari. Section 35a of the banking regulation act, 1949 aspirant world. The provisions of this act, as in force for the time being, shall apply to, or in relation to, cooperative societies as they apply to, or in relation to banking companies subject to the following modifications, namely. Banking regulation act, 1949 bare acts law library.
Regional rural banks vs cooperative banks bankexamstoday. T he banking regulation act is not pertinent to primary agricultural credit societies, nonagricultural primary credit societies and cooperative land. The banking laws application to cooperative societies act, 1965 in continuation of our circular no. The act was changed to banking regulation act, 1949 from 1 st march, 1966. Caution against various cooperative societies using the. Initially applicable for banking companies but applicable to cooperative banks since 1965.
Registrar of cooperative societies of a state, the reserve bank shall. The key statutes and regulations that govern the banking industry in india are. Banking regulation act 1949 part 5 application of the act to. It was passed in 1949 to consolidate and amend the laws relating to banking companies. Banking regulation act 1949 as applicable to co operative.
They are registered under the states cooperative societies act and they come under the rbi regulation under two laws. An act to consolidate and amend the law relating to banking 2. Prior to the introduction of the banking regulation act of 1949 as applicable to cooperative societies there was no uniformity in the operations of ucbs in india. The act regulates the functioning of banks and provides details on various aspects such as licensing, management, and operations of banks. Nov 20, 2018 this act was originally enacted as banking companies act, 1949 on 16 march 1949. Sep 29, 2019 the rbi under the act can also impose restrictions on banks to ensure better governance and control. In a statement, the rbi said that it has also come to the notice that some cooperative societies are accepting deposits from public which tantamount to conducting banking business in violation of the provisions of the act. The banking laws application to cooperative societies act. Though the banking regulation act came in to force in 1949, the banking laws were made applicable to cooperative societies only in 1966 through an amendment to the banking regulation act, 1949. The banking regulation act, 1949 national bank for. Return in this form is to be submitted to the reserve bank of india under section 24 of the banking regulation act, 1949 as applicable to cooperative societies by scheduled state cooperative banks and sections 18 and 24 of the act ibid by the other cooperative banks not later than 15 days after the end of the months to which it relates.
In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing. Debt recovery laws a must for cooperatives the economic times. The provisions of this act, as in force for the time being, shall apply to, or in relation to, cooperative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely. Rbi circular on section 6 of the banking regulation act, 1949. After section 2 of the banking regulation act, 1949 hereinafter in this chapter referred. The act was initially known as banking companies act, 1949. The banking regulation amendment bill, 2020 prsindia. Whereas it is expedient to consolidate and amend the law relating to banking 2. Mar 16, 2015 banking regulation act, 1949 is partially applicable to cooperative banks. In 1965, the banking and regulation act was made applicable to cooperative banks.