Discuss the salient features of the indian banking (regulation) act 1949
Answers
The Banking Regulation Act, 1949 came into force on March 16, 1949. It contained various aspects related to banking in India. Its purpose is to: Provide safety in the interest of depositors.
The salient features of this Act are as follows.
(i) Trading prohibition - Banks cannot buy, sell or barter goods, directly or indirectly.
(ii) Non-banking asset - A bank cannot hold any immovable property beyond seven years of the date of acquisition.
(iii) Management - A bank shall have one of its Directors as Chairman on its Board of Directors and a minimum 51% people of the members of the Board of Directors should have finance or banking experience.
(iv) Minimum Capital - A bank should have the cash reserve minimum paid-up capital as stipulated by the Reserve bank of India.
(v) Commission Payment - A bank cannot pay in excess of 2.5% shares in the form of commission, discount, remuneration or brokerage
(vi) Dividend Payment - A bank cannot pay any dividend on shares till its capital expenses are cleared.