BARE ACT ON THE BANKING REGULATION ACT 1949

Banking Regulation Act 1949 is legislation created to supervise all the commercial banks in India. This legislation was passed in the year 1949 and was amended in the year 1965 & made the legislation applicable to all commercial and co-operative banks in India. This legislation or Act provides the RBI (Reserve Bank of India) with the power to give license to a bank and to take the license from a bank. RBI also becomes the shareholder of the bank and gains voting rights due to the Banking Regulation Act 1949. RBI has every right to remove and appoint a board of director while supervising the operations of the bank. This Act also has the right to make changes in the banking policies and issue it to all the banks under RBI. The Banking Regulation Act 1949 was introduced because banking business in India was very vague during the 1940s and the government was not able to supervise or regulate the banks based only on the Indian Companies Act 1913. Since the banks were able to run successfully and were not able to maintain the minimum amount of capital the legislation was introduced. This also helped in decreasing the competition within the banks and helps them in maintaining the minimum capital amount.