SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY)

(Established under section 3 of the UGC Act 1956)

Re - accredited by NAAC with ‘A’ Grade
Founder: Prof. Dr. S. B. Mujumdar, M.Sc.,Ph.D. (Awarded Padma Bhushan and Padma Shri by
President of India)
______________________________________________________________________________

Sub Committee - Specialization for Curriculum Development

Under Graduate

Course Title: Banking Law

Course Code: T1495

(UG/PG): UG

Number of Credits: 2

Level: 4

Learning Objective(s):

1. In the light of globalization, India needs to reform its financial sector. These reforms are
incomplete without the reforms in banking sector. With this in mind, the government has
taken a number of steps to improve the Banking sector. In order to discuss on such
implementation of the Banking laws, this course is necessary to teach.
2. This course provides the students an insight into the various aspects of banking sector
which includes financial investments, economics, communication, banker-customer
relationships and various laws related to the banking business in India.
3. To explain the causes of rise in NPAs in various public sector banking companies and to
find out the proper solution for the reduction of NPAs of these banking companies.
4. This course aims to elaborate the laws related to Foreign Exchange as banking business
has grown and widened its scope to the other countries as well.

Learning Outcomes:

After learning of this course the students will

1. understand the various reforms in banking sector and will be updated with the knowledge
of laws related to banking business in India.
 2. be able to analyze the various laws related to banking business in India and will be able
to understand the various banker-customer relations depending on the functions and
banking transactions.

3. comprehend the various challenges and risks involved in the banking business such as
NPAs and will be able to suggest overcoming from these challenges.

4. be well acquainted with the laws related to Foreign Exchange as banking business has
grown and widened its scope to the other countries as well.

Pedagogy:
1. Lecture
2. Discussion
3. Self-study
4. Projects

Pre-learning:

 To pursue 5 year UG Law programme in any recognized centre of SIU.

 To have suggested reading as per session plan and other resources such as films,
documentary, as provided by the course instructor

Course Outline:

Sr.No Topic Hours

1) 1. Introduction to Banking 02

1.1. Role of banking in national economy

1.2. Evolution of banking industry in India
1.3. Historical significance of Central Bank
1.4. Paradigm shift in Industrial financing and banking
structure and licensing – pre and post LPG
1.5. Banking sector reforms – Narshimam Committee
Reports
1.6. Types of banks in India and banking activities
1.7. BIS and its impact on domestic banking Sector

2) 2. Reserve Bank of India Act, 1934 02

2.1. Preamble,
2.2. Main functions and powers,
2.3. Composition of Board,
 2.4. Financial supervision,
2.5. Businesses that Bank may and may not be permitted to
transact,
2.6. Power of RBI
2.7. Provisions relating to Non-banking institutions
receiving Deposits and Financial Institutions
2.8. Non Banking Financial Institutions,
Credit policy regulations and interventions
3) 3. Banking Regulation Act, 1949 03

3.1. Business of banking companies,

3.2. Management of banking company,
3.3. Broad basing of BOD, Paid Up capital and Voting
Rights
3.4. Important regulatory provisions,
RBI’s regulatory interventions
4) 4. BASEL Accord 01
4.1. Basel I, II and III
4.2. Committees in BIS and their significance of Indian
Banking

5) 5. Banker – Customer Relationship 03

5.1. Definition of Banker, Customer, Case laws

5.2. Commencement and Termination of legal relationship
5.3. Salient features of relationship
5.4. Nature of relationship – Debtor/Creditor, Agency,
Trustee, Custodian
5.5. Bailor/Bailee, Trustee; Advisory
5.6. Obligation of Banker – maintain secrecy of customer
5.7. Tourneir Principles, exception to the principles
5.8. Interface with Consumer Protection Act 1986
5.9. Case laws

6) 6. Recovery of Debts due to Banks and Financial Institutions Act, 04

1993
6.1. Salient provisions
6.2. DRT procedures and appellate provisions
6.3. Other remedies for recovery

7) 7. The Bankers Book of Evidence Act 1891 01

7.1. Important definitions
7.2. Provision for submission of printouts
7.3. Mode of proof of entries in bankers' books
7.4. Inspection and taking out of copies
7.5. Provisions regarding Costs
8) 8. SARFAESI Act 04
8.1. Salient features,
8.2. Concept of Securitization, ARC
9) 9. Negotiable Instruments Act, 1881 03

9.1. Meaning, Essential Features, Types, Classification,

Payment and Endorsement of NI
9.2. Parties to NI - Capacity of parties, Liability of Parties
9.3. Important concepts - Holder and Holder in due course
9.4. Negotiation, Acceptance, Acceptance for honour and
Payment
9.5. Dishonour
9.5.1. of B/E – Protest, Noting and Certification
9.5.2. of Cheque – circumstances, Case laws,
consequences of dishonour

10) 10. Foreign Exchange Management Act, 1999 02

10.1. Important definitions and concepts
10.2. Permitted and Prohibited Transactions
10.3. Automatic, Approval Routes
10.4. Employment of foreign nationals

11) 11. Insolvency and Bankruptcy Code, 2016 03

11.1 Insolvency Resolution & Liquidation for Corporate Persons
11.2 Corporate Insolvency Resolution Process
11.3 Insolvency Professional Agencies
11.4 Insolvency Professionals
12) 12. Prevention of Money Laundering Act 2009 (As amended) 01
12.1. Obligations of Banking Companies, Financial
institutions& Intermediaries Sec.12 to 15

13) 13. Banking Ombudsman Scheme 2006 01

14. Total 30

Suggested Readings:
 Awasthy S.K., Securitisation and Reconstruction of Financial Assets, CTJ Publication,
(2004)
 Hapgood Mark Q. C., Paget’s Law of Banking, Lexis NexisButterworths, (2006)
 Mathur, J.G.P., Banking Law Practice, Modern Law Publication, (2004)
 Sekhar&Sekhar, Principles & Practice of Banking, Himalaya Publishing House
 Snehlata and Paul, Management of Banking and Financial Services, Pearson
 Tannan M L., Tannan's Banking Law Digest (1950 - 2004), Wadhwa and Co., 23rd edition,
(2010)
 Tannan M. L., Principles & Practice of Banking, Wadhwa and Co.
 C.P. Chandrasekhar, Development Banks: Their role and importance for development, (2008)
 World Economic and Social Survey 2005: Financing for Development. New York:
Department of Economic and Socia Affairs, United Nations (2005)
 Akshay Uday Shenoy, Yatin Balkrishna Mohane & Charan Singh, Basel Banking Norms: A
Primer, October (2014)
 Eshag, Eprime, Fiscal and Monetary Policies and Problems in Developing
Countries, Cambridge: Cambridge University Press (2000)
 Memorial Lecture reprinted in Kuznets (1974), pp. 165-184.
 Suman Chakraborty, Sabat Kumar Digal,”Securitization in India: A Strategic Tool for
Competitiveness”, (2017), Indian Journal of Applied Research, Vol.III, Issue III, Impact
factor:5.397
 Jeniifer Romero-Torres, Sameer Bhatia, Sudip Sural, “Securitization in India: Managing
Capital Constraints & Creating Liquidity to Fund Infrastructure Assets”, (2017) Asian
Development Bank
 Avni Ojha, Hemchandra Jha, “Impact of non-performing Assets (NPA) on working of the
SBI”, (2017) Asian Research Consortium, Asian Journal of Research in Banking & Finance,
Vol. 7, pp-32-43
 Rajeshwari Sengupta & Harsh Vardhan, “Non-performing Assets in Indian Banks: This time
it is different” , (2017) Indira Gandhi Institute of Development & Research, Mumbai, pp-3-
14
 Dr. Raj Kumar Mittal, M.S. Deeksha Suneja, “The Problem of Rising Non-performing
Assets in Banking Sector in India: Comparative Analysis of Public & Private Banks”, (2017),
International Journal of Management, IT & Engeering, Vol. 7, Issue 7, pp-384-397, Impact
factor: 7.119
 Joachim Jungherr, “Bank Opacity & Financial Crisis”, (2018) Journal of Banking & Finance,
Elsevier,Vol.97, pp-157-176
 CRISIL, “Securitisation Resilient Despite Roadblocks, Changing Demand-supply Dynamics
Help Navigate the Challenges Overview” Fiscal 2018
 Roberto A. De Santis, “Unobservable Systematic Risk, economic activity & Stock market”,
(2018), Jopurnal of Banking & Finance, Elsevier, pp-1-19
 www.rbi.org
 www.bis.org

Webliography

 https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?Id=8133&Mode=0 – Circular
regarding CRAR Basel norms I
 http://www.bis.org/bcbs/basel3.htm- Basel norms

 http://shodhganga.inflibnet.ac.in/bitstream/10603/45107/3/appendix.pdf- Health codes -

Banking laws

 http://www.iibf.org.in/documents/reseach-report/Report-19.pdf - Operational risk

 https://rbi.org.in/history/Brief_History.html- Brief history of RBI

 https://www.quora.com/Personal-Savings-How-do-chit-funds-work - Chit funds

 https://www.youtube.com/watch?v=5Da18zX41tM&feature=youtu.be – Chit funds works

 http://iibf.org.in/documents/Frauds-Classification-and-Reporting.pdf- Banking frauds

 https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7381- Banking frauds

 https://www.rbi.org.in/scripts/bs_nbfclist.aspx- List of NBFCs

 http://www.livemint.com/Industry/VZHDNd1epJoxIljoRIjIGN/RBI-releases-guidelines-on-sale-of-
stressed-assets-by-banks.html - News paper article NBFCs

 http://www.investinganswers.com/financial-dictionary/businesses-corporations/venture-
capital-870 - Venture Capital Funds

 https://simplybanking.wordpress.com/2014/04/18/new-category-of-nbfcs-in-india-non-
operative-financial-holding-company-nofhc/- Non-Operative Financial Holding
Company

 https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8176 – Systemically
important Core Investment Company

 http://www.india-financing.com/The_law_of_Venture_capital_in_India.pdf- Venture
Capital Funds article

 http://economictimes.indiatimes.com/topic/bank-mergers - Merger or Amalgamations of

Banks News

 http://www.business-standard.com/article/finance/govt-may-merge-26-banks-into-six-
big-lenders-proposal-116062200252_1.html - Merger or amalgamations of banks article
2

 http://shodhganga.inflibnet.ac.in/bitstream/10603/40653/12/12_chapter3.pdf - Article on
Mergers or amalgamations in banking sectors.
 http://www.gnlu.ac.in/centredoc/gcbpp/Secondary%20Sources/Negotiable
%20Instruments%20(Amendments)Bill%202015.pdf – Negotiable Instruments
(Amendment) Bill, 2015

 http://www.indiacode.nic.in/acts-in-pdf/2015/201526.pdf - Negotiable Instruments

(Amendment) Bill, 2015

 http://articles.economictimes.indiatimes.com/2016-01-05/news/69538235_1_section-
138-cheque-negotiable-instruments - Negotiable Instruments (Amendment) Bill 2015

 https://www.rbi.org.in/upload/Publications/PDFs/58848.pdf - Co-operative Banks

 http://icrier.org/pdf/Mandira%20Sarma.pdf - Current Developments in Cooperative Banking in

India

 http://www.ijsrp.org/research-paper-1012/ijsrp-p1039.pdf - A study on Cooperative Banks in

India with special reference to Lending Practices - Jyoti Gupta* , Suman Jain

 https://www.eximbankindia.in/organisation- EXIM Bank

 http://shodhganga.inflibnet.ac.in/bitstream/10603/48395/10/10_chapter%206.pdf- EXIM bank

article

 https://www.jec.senate.gov/public/_cache/files/0f7b409d-ada7-47f0-9f96-5dfdd853d3b0/jec-
report----the-role-of-the-export-import-bank-report.pdf- International - EXIM Bank article

 https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/AnnualReports/
6file.pdf -EXIM Bank annual report 2013-14

 https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/AnnualReports/
17file.pdf- EXIM Bank Annual report 2015-16

 https://www.bis.org/bcbs/about.htm?m=3%7C14%7C573- Basel Committee on Banking

Supervision (BCBS)

 https://www.gcb.de/case-stories/kompetenzfelder/frankfurt-the-financial-centre-of-the-
continent.html- Frankhurt case New York

 https://rbi.org.in/Scripts/AboutusDisplay.aspx#LB – RBI Central boards and local boards

 https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=46- Narrow Banking

 https://www.rbi.org.in/scripts/FAQView.aspx?Id=92 – NBFCs

 https://www.scribd.com/doc/9130227/A-Report-on-Venture-Capital-Industry-in-India - Venture
capital
  http://kalyan-city.blogspot.in/2011/10/what-is-merchant-banking-meaning.html - Merchant
Banking Companies

 https://www.rbi.org.in/SCRIPTs/BS_ECMNotificationUserView.aspx?Id=225 – NBFCs Nidhi

Companies

 http://www.mca.gov.in/MCA21/dca/RegulatoryRep/pdf/Nidhi_Companies.pdf - List of Nidhi

Companies

 http://www.edupristine.com/blog/venture-capital - Venture Capital

 https://rbi.org.in/scripts/BS_NBFCNotificationView.aspx?Id=2326 – NBFCs audit

 http://www.thehindu.com/data/Details-of-NPA-figures-of-public-private-sector-banks/
article16670548.ece - NPAs 2016

 https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=294 – Local area Banks

Note: The above list is indicative and non-exhaustive. Students are required to update their
Knowledge and information by referring to other reference text, articles, newspapers, journals,
case laws and Internet as and when necessary.