2.1.5 Current Regulatory Structure

INSTITUTE - USB
DEPARTMENT - BBA
Subject Name- Banking & Insurance
Subject Code- 22BAT-324
Faculty Name – Mr. Vivek Sharma (E13500)
DISCOVER . LEARN . EMPOWER

Historical aspects of Banking in India
Current Regulatory Structure
Course Objective
1. To create awareness among the students regarding banking
and insurance concepts for better careers in this field
2. To apply the practical knowledge of Banking and Image Address
Insurance in a dynamic business environment. https://www.google.com/url?sa=i&url=https%3A
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Banking structure and the reforms in TBw
Indian financial system.
2
Table of Contents
S No. Contents Slide No.
1 Present Regulatory Structure 4-6
2 Banking Regulation Act 1949 7
3 Scope of Banking Regulation Act 1949 8
4 Features and Objectives of Banking 9

Regulation Act 1949
3
1. Present Regulatory Structure
• The regulation of banks and financial institutions in India is

controlled by the Banking Regulation Act of 1949. Initially
passed as the Banking Companies Act 1949, the act actually
came into effect from 16th March, 1949. However, the act’s
name was changed to the Banking Regulation Act from 01st
March 1966 onwards.
4
5
•At present, there are five prime Regulators of Banks and Financial
Institutions in India. They are:
1) Reserve Bank of India
2) Securities and Exchange Board of India
3) Pension Fund Regulatory and Development Authority
4) Forward Markets Commission
5) Insurance Regulatory and Development Authority of India
•The financial system in India is regulated by independent regulatory
bodies in different fields namely banking, capital market, insurance,
commodity market, and pension funds. However, the Government of
India plays an important role in influencing the regulatory framework of
these institutions, at least to some extent.
•Primarily, in India, the regulations of all banking institutions are
governed by the Banking Regulation Act, of 1949. It was passed as the
Banking Companies Act, of 1949, and came into effect on March 16,
1949. At first, the law was material just to banking organizations. In 1965
it was developed to make it suitable for helpful banks and to present
different changes.
• Banking Regulation Act, 1949 is an Act that provides a framework for
regulating the banks of India. The Act came into force on 16th March
1949. This Act gives RBI the power to control the behavior of banks.
This Act was passed as the Banking Companies Act, 1949.
• It did not apply to Jammu and Kashmir until 1956. This Act monitors
the day-to-day operations of the bank. Under this Act, the RBI can
license banks, put regulation over shareholding and voting rights of
shareholders, look over the appointment of the boards and
management, and lay down the instructions for audits. RBI also plays
a role in mergers and liquidation.
8
Features of the Banking Regulation Act, 1949
 Non-banking companies are forbidden to receive money deposits that
are payable on demand.
 Non-banking risks are reduced by prohibiting trading by banking
companies.
 Maintaining minimum capital standards.
 Regulation on the acquisition of shares of banking companies.
 Power of the Central Government to make schemes for the banks.
 Provisions regarding liquidation proceedings for banking companies.
9
Key Objectives of Banking Regulation Act
 To meet the demand of the depositors and provide them security and
guarantee.
 To provide provisions that can regulate the business of banking.
 To regulate the opening of branches and changing of locations of
existing branches.
 To prescribe minimum requirements for the capital of banks.
 To balance the development of banking institutions.
•
10
Summary
• India's financial regulatory framework is overseen by multiple
bodies, including the Reserve Bank of India (RBI) for monetary
policy and banking regulation, the Securities and Exchange Board
of India (SEBI) for securities markets, and the Insurance
Regulatory and Development Authority of India (IRDAI) for
insurance.
• This multi-agency structure ensures stability, investor protection,

and market integrity.
11
REFERENCES
• Reference Books
1. J.N. Jain & R.K. Jain: Modern Banking and Insurance, Regal Publications
2. A. Ranga Reddy, C. Rangarajan: Rural Banking and Overdues Management, Mittal Publication
• Reference Website
• https://unacademy.com/content/bank-exam/study-material/important-bank-finance-acts/business-of-
banking-companies-in-banking-regulation-act-1949/
• https://www.investopedia.com/articles/investing/112714/regulations-govern-banking-india.asp
• https://testbook.com/banking-awareness/regulators-of-banks-and-financial-institutions-in-india
12
THANK YOU
For any queries

Kindly Email: vivek.e13500@cumail.in

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INSTITUTE - USB

DISCOVER . LEARN . EMPOWER

2 Banking Regulation Act 1949 7

3 Scope of Banking Regulation Act 1949 8

4 Features and Objectives of Banking 9

• The regulation of banks and financial institutions in India is

• This multi-agency structure ensures stability, investor protection,

For any queries

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