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Banking Regulation Act, 1949

An Act to consolidate and amend the law relating to banking.

Sector Banking & NBFCPurpose Banking & Finance RegulationAct No. 10 of 1949Enacted 10 Mar 1949Ministry FinanceUpdated till 20th December, 2025
All Acts Securities and Exchange Board of India Act, 1992 Securities and Exchange Board of India Act, 1992

TaxByKK · Laws by Sector · taxbykk.comIndex as on 20th December, 2025

Index of provisions · 11 groups, 133 sections

Part I PreliminaryPart II Business of Banking CompaniesPart IIA Control Over ManagementPart IIAB Supersession of Board of Directors of Banking CompanyPart IIB Prohibition of Certain Activities in Relation to Banking CompaniesPart IIC Acquisition of the Undertakings of Banking Companies in Certain CasesPart III Suspension of Business and Winding Up of Banking CompaniesPart IIIA Special Provisions for Speedy Disposal of Winding Up ProceedingsPart IIIB Provisions Relating to Certain Operations of Banking CompaniesPart IV MiscellaneousPart V Application of the Act to Co-operative Banks

Part I – Preliminary

Part I Preliminary6 sections

  1. 1Short title, extent and commencement
  2. 2Application of other laws not barred
  3. 3Act not to apply to certain co-operative societies
  4. 4Power to suspend operation of Act
  5. 5Interpretation
  6. 5AAct to override memorandum, articles, etc

Part II – Business of Banking Companies

Part II Business of Banking Companies49 sections

  1. 6Form of business in which banking companies may engage
  2. 7Use of words “bank”, “banker”, “banking” or “banking company”
  3. 8Prohibition of trading
  4. 9Disposal of non-banking assets
  5. 10Prohibition of employment of managing agents and restrictions on certain forms of employment
  6. 10ABoard of directors to include persons with professional or other experience
  7. 10BBanking company to be managed by whole time chairman
  8. 10BBPower of Reserve Bank to appoint chairman of the Board of directors appointed on a whole-time basis or a managing director of a banking company
  9. 10CChairman and certain directors not to be required to hold qualification shares
  10. 10DProvisions of sections 10A and 10B to override all other laws, contracts, etc
  11. 11Requirement as to minimum paid-up capital and reserves
  12. 12Regulation of paid -up capital, subscribed capital and authorised capital and voting rights of shareholders
  13. 12AElection of new directors
  14. 12BRegulation of acquisition of shares or voting rights
  15. 13Restriction on commission, brokerage, discount, etc., on sale of shares
  16. 14Prohibition of charge on unpaid capital
  17. 14AProhibition of floating charge on assets
  18. 15Restrictions as to payment of dividend
  19. 16Prohibition of common directors
  20. 17Reserve Fund
  21. 18Cash reserve
  22. 19Restriction on nature of subsidiary companies
  23. 20Restrictions on loans and advances
  24. 20ARestrictions on power to remit debts
  25. 21Power of Reserve Bank to control advances by banking companies
  26. 21ARates of interest charged by banking companies not to be subject to scrutiny by courts
  27. 22Licensing of banking companies
  28. 23Restrictions on opening of new and transfer of existing, places of business
  29. 24Maintenance of a percentage of assets
  30. 25Assets in India
  31. 26Return of unclaimed deposits
  32. 26AEstablishment of Depositor Education and Awareness Fund
  33. 27Monthly returns and power to call for other returns and information
  34. 28Power to publish information
  35. 29Accounts and balance-sheet
  36. 29APower in respect of associate enterprises
  37. 30Audit
  38. 31Submission of returns
  39. 32Copies of balance-sheets and accounts to be sent to registrar
  40. 33Display of audited balance-sheet by companies incorporated outside India
  41. 34Accounting provision of this Act not retrospective
  42. 34AProduction of documents of confidential nature
  43. 35Inspection
  44. 35APower of the Reserve Bank to give directions
  45. 35AAPower of Central Government to authorise Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process
  46. 35ABPower of Reserve Bank to issue directions in respect of stressed assets
  47. 35BAmendments of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Reserve Bank
  48. 36Further powers and functions of Reserve Bank
  49. 36ACertain provisions of the Act not to apply to certain banking companies

Part IIA – Control Over Management

Part IIA Control Over Management3 sections

  1. 36AAPower of Reserve Bank to remove managerial and other persons from office
  2. 36ABPower of Reserve Bank to appoint additional directors
  3. 36ACPart IIA to override other laws

Part IIAB – Supersession of Board of Directors of Banking Company

Part IIAB Supersession of Board of Directors of Banking Company1 section

  1. 36ACASupersession of Board of Directors in certain cases

Part IIB – Prohibition of Certain Activities in Relation to Banking Companies

Part IIB Prohibition of Certain Activities in Relation to Banking Companies1 section

  1. 36ADPunishments for certain activities in relation to banking companies

Part IIC – Acquisition of the Undertakings of Banking Companies in Certain Cases

Part IIC Acquisition of the Undertakings of Banking Companies in Certain Cases6 sections

  1. 36AEPower of Central Government to acquire undertakings of banking companies in certain cases
  2. 36AFPower of the Central Government to make scheme
  3. 36AGCompensation to be given to shareholders of the acquired bank
  4. 36AHConstitution of the Tribunal
  5. 36AITribunal to have powers of a civil court
  6. 36AJProcedure of the Tribunal

Part III – Suspension of Business and Winding Up of Banking Companies

Part III Suspension of Business and Winding Up of Banking Companies16 sections

  1. 36BHigh Court defined
  2. 37Suspension of business
  3. 38Winding up by High Court
  4. 38ACourt liquidator
  5. 39Reserve Bank to be official liquidator
  6. 39AApplication of Companies Act to liquidators
  7. 40Stay of proceedings
  8. 41Preliminary report by official liquidator
  9. 41ANotice to preferential claimants and secured and unsecured creditors
  10. 42Power to dispense with meetings of creditors, etc
  11. 43Booked depositors’ credits to be deemed proved
  12. 43APreferential payments to depositors
  13. 44Powers of High Court in voluntary winding up
  14. 44AProcedure for amalgamation of banking companies
  15. 44BRestriction on compromise or arrangement between banking company and creditors
  16. 45Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation

Part IIIA – Special Provisions for Speedy Disposal of Winding Up Proceedings

Part IIIA Special Provisions for Speedy Disposal of Winding Up Proceedings24 sections

  1. 45APart IIIA to override other laws
  2. 45BPower of High Court to decide all claims in respect of banking companies
  3. 45CTransfer of pending proceedings
  4. 45DSettlement of list of debtors
  5. 45ESpecial provisions to make calls on contributories
  6. 45FDocuments of banking company to be evidence
  7. 45GPublic examination of directors and auditors
  8. 45HSpecial provisions for assessing damages against delinquent directors, etc.
  9. 45-IDuty of directors and officers of banking company to assist in the realisation of property
  10. 45JSpecial provisions for punishing offences in relation to banking companies being wound up
  11. 45K[Omitted]
  12. 45LPublic examination of directors and auditors, etc., in respect of a banking company under schemes of arrangement
  13. 45MSpecial provisions for banking companies working under schemes of arrangement at the commencement of the Amendment Act
  14. 45NAppeals.
  15. 45-OSpecial period of limitation
  16. 45PReserve Bank to tender advice in winding up proceedings
  17. 45QPower to inspect
  18. 45RPower to call for returns and information
  19. 45SChief Presidency Magistrate and District Magistrate to assist official liquidator in taking charge of property of banking company being wound up
  20. 45TEnforcement of orders and decisions of High Court
  21. 45UPower of High Court to make rules
  22. 45VReferences to directors, etc., shall be construed as including references to past directors, etc
  23. 45WPart II not to apply to banking companies being wound up
  24. 45XValidation of certain proceedings

Part IIIB – Provisions Relating to Certain Operations of Banking Companies

Part IIIB Provisions Relating to Certain Operations of Banking Companies9 sections

  1. 45YPower of Central Government to make rules for the preservation of records
  2. 45ZReturn of paid instruments to customers
  3. 45ZANomination for payment of depositors’ money
  4. 45ZBNotice of claims of other persons regarding deposits not receivable
  5. 45ZCNomination for return of articles kept in safe custody with banking company
  6. 45ZDNotice of claims of other persons regarding articles not receivable
  7. 45ZERelease of contents of safety lockers
  8. 45ZFNotice of claims of other persons regarding safety lockers not receivable
  9. 45ZGPriority of successive nominations

Part IV – Miscellaneous

Part IV Miscellaneous17 sections

  1. 46Penalties
  2. 46AChairman, director, etc., to be public servants for the purposes of Chapter IX of the Indian Penal Code
  3. 47Cognizance of offences
  4. 47APower of Reserve Bank to impose penalty
  5. 48Application of fines
  6. 49Special provisions for private banking companies
  7. 49ARestriction on acceptance of deposits withdrawable by cheque
  8. 49BChange of name by a banking company
  9. 49CAlteration of memorandum of a banking company
  10. 50Certain claims for compensation barred
  11. 51Application of certain provisions to the State Bank of India and other notified banks
  12. 51APowers of Reserve Bank not to apply to International Financial Services Centre
  13. 52Power of Central Government to make rules
  14. 53Power to exempt in certain cases
  15. 54Protection of action taken under Act
  16. 55Amendment of Act 2 of 1934
  17. 55APower to remove difficulties

Part V – Application of the Act to Co-operative Banks

Part V Application of the Act to Co-operative Banks1 section

  1. 56Act to apply to co-operative societies subject to modifications

Schedules

  • The First Schedule
  • The Second Schedule
  • The Third Schedule
  • The Fourth Schedule
  • The Fifth Schedule

About this Act

The Banking Regulation Act, 1949 is the core statute governing banking companies in India. It consolidates and amends the law on banking, setting out what business a bank may carry on, how it is capitalised and managed, and how it reports and is inspected.

The Act does not create a new regulator; it gives wide supervisory powers to the Reserve Bank of India, including licensing, inspection, issuing directions, removing managerial persons, superseding boards and imposing penalties. The Central Government also holds powers, such as suspending a bank's business on the Reserve Bank's application and acquiring undertakings.

The index is arranged in Parts rather than Chapters: Part I (preliminary), Part II (business of banking companies), Parts IIA to IIC (management control, supersession, prohibited activities and acquisition), Parts III to IIIB (suspension, winding up and operational matters such as nomination and lockers), Part IV (miscellaneous) and Part V (co-operative banks).

Who it applies to

  • Banking companies, including foreign banks operating branches in India
  • Co-operative banks, to the extent applied with modifications under Part V
  • Directors, chairpersons, managing directors and officers of banks
  • Auditors of banking companies and liquidators in bank winding-up proceedings
  • Depositors and locker holders, for nomination and claim settlement provisions

Good to know

Key Parts
Part II holds most day-to-day rules: licensing (section 22), cash reserve (section 18), liquid assets (section 24), accounts and audit (sections 29 and 30), and RBI directions (section 35A). Part V (section 56) extends the Act to co-operative banks.
Earlier name
The Act was originally called the Banking Companies Act, 1949 and took its present name when it was applied to co-operative banks in the 1960s.
Recent amendment
The Banking Laws (Amendment) Act, 2025 is among the latest amending Acts.
Amended by
The Banking Companies (Amendment) Act, 1950 (20 of 1950); The Banking Companies (Amendment) Act, 1953 (52 of 1953); The Reserve Bank of India (Amendment) Act, 1956 (38 of 1956); The Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956); The State Bank of Hyderabad Act, 1956 (79 of 1956); The Banking Companies (Amendment) Act, 1956 (95 of 1956); and 29 more Acts

Frequently asked questions

Which section requires a licence to carry on banking business?

Section 22, Licensing of banking companies.

Where is the Reserve Bank's power to issue directions to banks?

Section 35A. Directions on stressed assets are in section 35AB, and authorisation to start insolvency resolution is in section 35AA.

Which section deals with nomination for deposits?

Section 45ZA. Nomination for safe custody articles is in section 45ZC and for safety lockers in section 45ZE.

Which provision allows the Reserve Bank to impose monetary penalties?

Section 47A. Criminal penalties are in section 46.

How does the Act apply to co-operative banks?

Through Part V, section 56, which applies the Act to co-operative societies subject to modifications.