If you are appointed as a Compliance Officer of The Global Bank Ltd., how you will advise to Mr. Rohit Aggarwal, Branch Manager to remove the Knowledge Gaps on Legal and Regulatory Compliance in Banks with regard to proc

Banking Regulation Act, 1949 (hereinafter referred to as "the Act"), is the most important as it affects the functioning of all institutions carrying on banking business whereas the other enactments relate only to certain specific type(s) of banks. Some of the important provisions of the Act are as under According to Section 5(b) of Banking Regulation Act, 1949, Banking is defined as "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, and order or otherwise". According to Section 24 of Banking Regulation Act, 1949, Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of Gold or Government approved securities before providing credit to the customers. Statutory Liquidity Ratio is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit. It is determined as percentage of total net demand and time liabilities. The current CRR is 19.25% (Change from time to time as decided by RBI). The objectives of SLR are as under: To augment the investment of the banks in government securities. To ensure solvency of banks. A reduction of SLR rates looks imminent to support the credit growth in India. The SLR is commonly used to contain inflation and fuel growth, by increasing or decreasing it respectively. Section 22 of the Banking Regulation Act, 1949 prohibits a company from carrying on banking business in India unless it holds a license issued by the RBI. The licence may be a conditional licence. The licence may be cancelled if the company ceases to carry on banking business in India or fails to comply the conditions imposed upon it under sub-section (1) of this section or fails to fulfill any other condition laid down in the section. Other Important Provisions of the Banking Regulation Act, 1949 are: Sec Provision Sec 4 Power to Suspend Operation of the Act Sec 5(c) Banking Companies Sec 6 Forms of Business Sec 11, 12 and 13 Requirements as to Minimum Paid-up Capital and Reserves and Regulation of Capital Sec 14 and 14A Prohibition on Creation of Charge on Unpaid Capital Sec 15 Restriction on Payment of Dividend Sec 17 Reserve Fund Sec 19 Restriction on Nature of Subsidiary Companies Sec 20 and 21 Restriction on Loans and Advances Sec 23 Restrictions on Opening and Transfer of Places of Business Sec 29-33 Provisions Relating to Accounts and Audit