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ACKNOWLEDGMENT

The incredible activity of Team All Legal Forum is to give a stage to the scholars from all through the country to get their unique work distributed in type of diaries is outstanding. This volume has been capably arranged by the group and has advanced vital and most most important aspects comes under Banking Law in India, Evolution of Banking Law, Structure of RBI, DRAT, Lok Adalats under legal services authority act, Securitization, Dishonour of cheques, Banking Regulation Act Amendment Bill 2020 and many more. At the very end of our publication it inludes the Multiple Choice Questions to quickly learn and revise along with some fun corners to not to get bored. We praise all the understudy benefactors for their superb piece of work and our all the best for all your future undertakings. We guarantee all the perusers that this will add a ton to the information subsequent to perusing this ideal assemblage of examination on the most recent consuming of the country. Truth be told its for the lawful clique as well as for any individual who has an interest in field of law and to know Banking System in India.

With Best Wishes

Ms Mahimashree Kaur

ALL INDIA LEGAL FORUM

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FOREWORD

More has been aforesaid regarding the writing of lawyers and judges than of the other cluster, except, of course, poets and novelists. The distinction is that whereas the latter has sometimes been loved for their writing, the general public has nearly always damned lawyers and judges for theirs. If this state of affairs has modified in recent times, it's solely therein several lawyers and judges have currently joined the rest of the globe is repining regarding the standard of legal prose. My best desires to all or any these student contributors, for his or her future endeavors. My best desires and assurance to the readers that this can add loads to the information when reading this excellent compilation. It’s not just for the legal fraternity but for anyone who has an interest in the field of law. Our antique culture prays for peace and happiness for one and everyone. Family is that the initial and oldest social cluster. it's vie a crucial role within the stability and prosperity of the civilization. Almost everything of lasting worth in humanity has its roots within the family. Peace and harmony in the family area unit vital for the all- around development of kids. This Compilation of Banking Law in India, Evolution of Banking Law, Structure of RBI, DRAT, Lok Adalats under legal services authority act, Securitization, Dishonour of cheques, Banking Regulation Act Amendment Bill 2020 by All India Legal Forum is aimed at bringing about desired sensitivity in all duty holders. We’re glad to be a part of the All India Legal Forum.

Here’s an introduction to team: Patron- in-Chief: Aayush Akar Editor-in-Chief: Shubhank Suman Senior External Manager: Nandini Mangla, Vrinda Khanna External Manager: Deepti Internal Manager: Dhatri Ghosh, Shree latha Sampath

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Researchers • Nishchal kukade • Neeraj Kanwar • Nitishu sharma • Sasmita Samal • Jayanti • Rudrakant Chaubey • Srishti Bhardwaj • Padmavathi • Nishita Verma • Surya pratap • Anshika tiwari • Murtuza Gadyali • Sakshi trivedi • Avantika

Editors • Afseen • Somesh • Abhavaya

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Contents

Meaning and purpose of banking law in India……………………………..6-7 Evolution of Banking Law in India…………………………………………8-13 RBI as the Central of the Country…………………………………....13-15 Debt Recovery Tribunals…………………………………………………...16-18 Lok Adalats under Legal Services Authority Act…………………………..18-19 Role played by international conventions over the banking law in India…..19-22 Mobile phone payments (m-payments) multi jurisdictional survey………..22-27 Dishonour Of Cheques: Director’s Liability In Case Of Dishonour……….27-30 Securitization Of A Cross Border Transaction……………………………..31-37 Do recent amendments in banking serve the purpose? Does the schemes and policies elevate the need and status of banking law presently?...... 37-38 Comparing banking law in India to developed countries of the world and effect of constitution over the banking law………………………………………..38-39 IBRD and IDA………………………………………………………………40-44 Banking Law……...………………………………………………………...44-45 Role of central and state government in banking law. Do state make separate law for it's own?...... 45-46 MCQ’s…………………………………………………………………...….47-60 Fun Corner……………………………………………………………….....61-62

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Meaning and purpose of Banking unorganized retail sector has a major Law in India untapped potential for adopting digital mobile wallets for payments. Approximately 63 percent of retailers are interested in accepting digital payments. The Indian banking system was declared stable by global rating agency Moody's in 2017. Four Indian were also upgraded from Baa3 to Baa2. The government has allocated Rs. 3 trillion to the Mudra scheme in the Union Budget 2018, which offers financial assistance to small businessmen who want to expand their businesses. MSMEs have also received Rs. 3,794 crores in credit support, money, and interest subsidies from the Banking Law is a law specialization that government. one can seek after at the UG and PG level. The Indian government and regulator have Banking Law is a specialty law taken a range of steps to improve the specialization that rundowns the laws that banking sector. For example, a two-year oversee how banks and other law plan to strengthen public sector banks foundations functions and direct business. through reforms and a capital injection of According to Reserve Rs 2.11 lakh crore would enable banks to ("RBI") estimates, India's banking sector is play a significant role in the financial adequately capitalized and controlled. The system. The Lok Sabha has also approved current financial and economic conditions are far superior to those of any other nation on the planet. Credit, industry, and liquidity risk studies and surveys all show that Indian banks have weather the global downturn well and can easily recover from difficult situations. India is one of the world's most fastest growing economies. After the Prime Minister's measure of Demonetisation in 2016, the digital payment emerged overnight. According to FSI reports, India has advanced the most among the 25 nations, with India's Immediate Payment Services ("IMPS") being the only one listed at Level 5 in the Faster Payments Innovation Index ("FPII"). Furthermore, the RBI has permitted additional features such as unrestricted fund transfers between wallets recapitalization bonds for public sector and bank accounts, suggesting that these banks worth Rs 80,000 crores. wallets are poised to become major players According to statistics, the banking sector in the financial ecosystem. for lawyers in India will expand to be a According to a study by the Centre for booming sector in the coming year. For all Digital Financial Inclusion, the law students, it is a lucrative and appealing

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career choice. Even when things aren't The state government establishes and going well, it's said to be a top field that manages cooperative banks that exist only attracts lawyers. in one state. When banks do well, they need a large The RBI, on the other hand, is in charge of number of lawyers. They need more licencing and business activities. attorneys when things aren't going so good! The Banking Act was enacted as a It is a well-known reality that businesses complement to existing banking legislation. thrive when banks fail, assets become distressed, and client’s default on payments. The banking sector for lawyers can be said to be recession-proof and here to stay. • The Banking Regulation Act, 1949 The Banking Regulation Act, 1949 is an enactment in India that directs all financial Banks are a vital part of the Indian firms in India. Passed as the Banking financial system. Companies Act 1949, it came into power A well-functioning banking system is from 16 March 1949 and changed to advantageous to the country's economic Banking Regulation Act 1949 from 1 growth. March 1966. It is relevant in Jammu and Stakeholders in the Society come in a Kashmir from 1956. variety of shapes and sizes. At first, the law was material just to Banks can be used for many purposes. banking organizations. Be that as it may, Banks function as financial intermediaries 1965 it was corrected to make it relevant to between the public and private sectors. cooperative banks and to present other Depositors and creditors are two groups of changes. In 2020 it was revised to bring the people. agreeable banks under the oversight of the In today's global business world, banks do . more than just take deposits and lend The Act creates a system for the money. supervision and control of commercial provide a plethora of extra value-added . services to their customers. The Companies Act of 1956 is replaced by The Reserve Bank of India is the country's this Act. The Act exempts primary . agricultural credit societies and cooperative The central bank of the nation has a variety land mortgage banks. of functions, including that of the central The Act empowers the Reserve Bank of bank. India (RBI) to licence banks, regulate Indian regulator, supervisor, and facilitator shareholding and voting rights of of the Indian system of Banking. shareholders, supervise board and management appointments, regulate bank operations, issue auditing orders, and monitor moratoriums, mergers, and liquidations, issue regulations in the public interest and on banking policy, as well as impose fines. By incorporating Section 56 to the Act in 1965, it was expanded to include cooperative banks.

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Evolution of Banking Law in India of Bank of Hindustan in 1770 which ceased to exist in 1830. The East India Company INTRODUCTION: established the three presidency banks: Banks and banking institutions in India (1806), have been assumed as substantial (1840) and (1843) which importance on account of globalization and in 1921 united into one Imperial Bank of phenomenal growth witness in the trade and India and later merged under the same commerce sector. The modern law banking name ‘’ also known as has been introduced by the British, during SBI. That’s why SBI is the known to be one the era of East India Company. One of the of the oldest banks of the India. Along with best things which was introduced by these many more banks came into being British. The first banking system was after 1857 revolt like introduced in Calcutta as Bank of Calcutta (1865) from 1894 in 1806. Then another bank was established with the headquarter at Lahore (currently in in Bombay as new bank of Bombay in Pakistan). From 1885 to 1913 many banks 1867. Then, the government regulated the came into existence and liquidated due to functions and the regulating functions and the absence of a regulatory body. Then, the operation of Bank, so it paved the way for Reserve bank of India was established on enacting The Presidency Banks Act, 1876. April 1 1935 in accordance with the In this Article, we are going to discuss provisions of the Reserve Bank of India, about the evolution of banking law in India. 1934. The aim of the RBI is to operate the BANKING LAW currency and credit system in India. Bank is the financial organization, which Though originally RBI was privately accepts money which can be withdrawn on owned but afterward nationalized on 1st demand and lends money on request to the January 1949, making it an autonomous individual. Banking system is the base of body. All the shares in the capital of the the economy of any country. Bank of Bank were deemed transferred to the Hindustan in 1770, by the East India Central Government on payment of a Company at Calcutta under the European suitable compensation. Reserve Bank of Management was the first bank to be India is directly under the Ministry of established or from where the origin of the Finance and RBI always had to consult the banking system can be traced. government before taking policy decisions. The entire period of evolution of the THE PRE-INDEPENDENCE PHASE: banking industry is still ongoing, and each This is about the establishment of banks day new changes can be seen in the banking before the independence. Even before sector for the betterment of the economic independence, more than 600 banks were growth of the country. The banking system established even before the advancement of of our country is divided into commercial technologies. This shows the technical banks (public banks & private banks), knowledge of ancient people. The first cooperative banks, regional rural banks, foundation was started with the etc. One of the key reasons that brought-up establishment of Bank of Hindustan in the evolution of the Indian banking sector Calcutta in 1770. But the operations has is the ‘Nationalization of Banks’. Let’s get been ceased only in 1832. After this the going with the history of banking. has been established. However, Oudh was the PRE-INDEPENDENCE: commercial bank in India. Later, Allahabad While in the period of 1786 to 1986, has Bank was established in 1865 and Punjab been step for the major developments in the National Bank in 1894. Some banks have modern banking system in India. The been merged into one entity like Bank of banking system started with the foundation Bengal, Bank of Bombay, Bank of Madras.

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The which was now State Bank of India, which is currently the known as State Bank of India. With the largest Public sector Bank. recommendation of the Hilton Young The reasons as to why many major banks Commission, in 1935, The Reserve Bank of failed to survive during the pre- India. During the period of pre- independence period, the following Independence, the banking system was conclusions can be drawn: failed due to the lack of confidence among • Indian account holders had become the public, and the people’s regulation with fraud-prone the money lenders and unorganized • Lack of machines and technology players. And the people in the era doesn’t • Human errors & time-consuming gave that much importance to money and • Fewer facilities savings. Because they have cultivated in • Lack of proper management skills their own and the transfer of things among them were common in practice, especially, 2. AFTER INDEPENDENCE PHASE- the slavery system by British made them to 1947 TO 1991 crave only for freedom and made them to After the independence the lack the interest in money. The heavy nationalization of the bank became the taxation made the middle-class people and main feature. The nationalization become low-class people, to starve for normal life the most important thing in the era. The without debt. So, the implementation of need for nationalization is banks catered to banking process for saving money is not business, and in critical sectors (agriculture, utilized by the people during the era. small-scale industries and exports were The first Indian Commercial bank which lagging, and most importantly the money was wholly owned and managed by Indian lenders exploited a great mass which made was the . It was also the path for nationalization of The Reserve called India’s truly Swadeshi Bank. Bank of India in 1949. The State Bank of India is India’s oldest Later, in 1949 Banking Companies Act was bank. It is the merger of Bank of Calcutta, passed which was later renamed to Banking Bank of Bombay and Bank of Madras Regulation Act 1949 as the provision of the which was established under the East India Indian Companies Act 1913 was found Company. This bank was also called the inadequate and unsatisfactory to regulate Imperial Bank. the banking business in India. This Act • The General Bank of India (1786- conferred a wide range of supervisory and 1791) regulatory powers to the RBI over the other • (1881- banks. The Act made RBI statutory and 1958) regulatory authority of the Indian banking • Bank of Bengal (1809) system. • Bank of Bombay (1840) Government of India took major steps to • Bank of Madras (1843) build a strong banking system in India. The During the British rule in India, The East structure of the Indian banking system is India Company had established three divided into commercial banks and banks: Bank of Bengal, Bank of Bombay cooperative banks. Commercial banks and Bank of Madras and called them the mean the banks that offer services to the Presidential Banks. These three banks were general public. It further includes Public later merged into one single bank in 1921, Sector Banks like SBI, BOI etc.; private which was called the “Imperial Bank of banks like ICICI, Kodak, etc.; foreign India.” banks like City bank, HSBC etc. and The Imperial Bank of India was later regional rural banks. On the other side nationalized in 1955 and was named The corporate banks are the banks that are established under the Cooperative Societies

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Act whose main aim is not to earn profits established to help internal trade sale and (no profit no loss) thorough banking purchase of foreign exchange. business. It can be urban cooperative and And the commercial banks are nationalized the state cooperative. only in July, 1969 while the reign of Indira The Nationalization of the banks changed Gandhi after two decades. Some banks the history of the banking system in India. have been established to promote activities In 1969 then Prime Minister Indira Gandhi in order to promote economy hence it made nationalized the 14 largest commercial the establishment of NABARD in 1982 to banks. Nationalization is the process of support agricultural works. And EXIM transforming the private stake into the bank was built in 1982 for export and in public basically increasing the share of import. was set up government in the banking sector. The in 1988 for the Housing sector, and SIDBI purpose behind such a step was to break the was established in 1990 for small-scale ownership control of the bank by few industries. families and concentration of wealth and Nationalization was a significant step in the economic power in a few hands. banking sector, and it helped improve During 1955 the central government people’s confidence in the system. The entered the banking business with economic growth started access in small nationalization of the Imperial bank of RBI and critical industries. And made the took a 60% stake and formed a new bank growth across the global banking sector. SBI. The nationalization of banks enlarged Following the Pre-Independence period the sphere of public sector banking which was the post-independence period, which prior to 1969 was confined to only the state observed some significant changes in the bank of India. banking industry scenario and has till date The process of nationalization in the long developed a lot. run led to economic stability and also At the time, when India got independence, strengthened the economy of India. But, it all the major banks of the country were led was highly criticized as it was the time privately which was a cause of concern as when Indian was at war with China and the people belonging to rural areas were Pakistan which led to political anger. Many still dependent on money lenders for pointed out bank nationalization being the financial assistance. political strategy to pull down the business With an aim to solve this problem, the then houses who backed her opponents. Government decided to nationalize the The third Phase also includes the present Banks. These banks were nationalized phase. The government of India took the under the Banking Regulation Act, 1949. banking sector to the other level which has Whereas, the Reserve Bank of India was given away to the foreign investment and nationalized in 1949. modernized way to handle the transition. Following it was the formation of State The introduction of ATM, internet banking, Bank of India in 1955 and other 14 banks E-banking, mobile banking gave a new life were nationalized between the time to the banking system which we all are duration of 1969 to 1991. These were the experiencing. The government opened up banks whose national deposits were more the economy for the foreign investors and than 50 crores. private to freely invest in India. It has also Given below is the list of these 14 Banks brought many policies to help small nationalized in 1969: entrepreneurs and businessmen. 1. Allahabad Bank NABARD was established in 1982 to give 2. Bank of India credit to the farmers to support agricultural 3. work. Small Industry Development Bank of 4. India (SIDBI). Exchange Bank was 5. Central Bank of India

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6. RBI in 2013-14, allowed a license for IDFC 7. bank and . 8. The story didn’t end here, with an aim to 9. make sure that every Indian gets access to 10. Punjab National Bank finance, the RBI introduced two new set of 11. banks – and small banks, 12. and this marked the fourth phase in the 13. United Bank banking industry. 14. UCO Bank 1. Payments Bank In the year 1980, another 6 banks were These banks allowed nominal deposit. nationalized, taking the number to 20 These types of banks don’t provide credit banks. These banks included: cards but allows to operate the current 1. account and savings account. But made 2. progress in services like ATM Services, 3. net-banking and mobile banking. Bharti 4. Oriental Bank of Comm. Airtel made the first payment through 5. Punjab & Sind Bank online in India. There are six most active 6. payments bank currently like Aditya Birla Apart from the above mentioned 20 banks, Payments Bank, , there were seven subsidiaries of SBI which , Fino Payments were nationalized in 1959: Bank, Payments Bank, Payments 1. Bank. 2. 3. State Bank of Bikaner & Jaipur 2. 4. These banks are niche banks, with basic 5. State Bank of banking service, which include acceptance 6. State Bank of of deposits and lending. The primary 7. objective is to serve the unserved, such as All these banks were later merged with the small business units, small and marginal State Bank of India in 2017, except for the farmers, micro and small industries, and , which was unorganized sectors. Following are the merged in 2008 and State Bank of Indore, small finance bank currently operational in which was merged in 2010. India are Ujjivan Small Finance Bank, Jana 3. Third phase – The LPG (1991) Era and Small Finance Bank, Equitas Small Beyond Finance Bank, AU Small Finance Bank, The remarkable change in the Indian Capital Small Finance Bank, Fincare Small economy was about in 1991.The private Finance Bank, ESAF Small Finance Bank, players in the banking sector has been North East Small Finance Bank, Suryoday opened up by the government with the Small Finance Bank, Utkarsh Small inviting of foreign and private investors to Finance Bank. I believe rapid digitization in invest in India. The RBI provided banking banks coupled with the new model of license to ten private entities like ICICI, banking will continue to remain the key HDFC, , IndusInd Bank, and theme for the fourth and ongoing phase of DCB. In 1998, the Narsimham committee the banking industry. again recommended the entry of more In 1920, the Imperial Bank was established private players. Thus, the RBI provided a which merged three Presidency banks of license to in 2001 Calcutta, Bombay and Madras by passing and in 2004. After a decade, the of the Imperial Bank of India Act. The third round of licensing took place. The Reserve Bank of India Act, 1934 was passed which led to the formation of

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Reserve Bank of India also known as the Some of the benefits of nationalization of Central Bank. RBI was given the power to banks were spreading of branch network of acquired right to issue notes and acted as banks throughout the nation including the Government to the Bank. The State Bank of rural areas, wide deployment of credit India was passed in 1955 which led to the across the country, increased mobilization repeal of Imperial Bank and its assets of resources. vested in SBI. TYPES OF BANKS NATIONALIZATION OF BANKS Central Banking Services- The Central One of the most crucial evolutions which Bank issues currency and bank notes, led to the foundation of current Banking discharges treasury functions of the system in India was the Nationalization of Government and acts as the banker’s bank. Banks in 1969. Subsequently, in 1980 six Reserve Bank of India is the Central more private banks were nationalized. The Banking Institution in India. Supreme Court in the case of All India Commercial Banking Services- It includes Bank Officers’ Confederation v. Union of services like receiving and giving of India, remarked that the object of Banking various types of loans and advances. It also Companies (Acquisition and Transfer of performs some non-banking services like Undertakings) Act was to nationalize the locker facilities, online payments of bills. banks to render the largest good to the Such banks also advise on investment and largest number of people. The object of re-investment, transfer and allotment of Section 9 of the Act which is regarding funds. Central Government’s power to make a During ancient time there was Barter scheme for constitution of Board of System which prevailed in society. As there Directors, is to give the Board a truly was no concept of money or due to the lack representative character so as to reflect the of a common unit of currency goods and genuine interests of the various persons services were exchanged against the goods manning or dealing with the bank as an and services. The barter system has the industry and a commercial enterprise. concept of ‘exchange of goods with the Impact of Nationalization goods ‘. People exchange their goods or There were various reasons why the services with others for the wants of their Government chose to nationalize the banks. goods. Given below is the impact of Nationalizing The system was the failure due to the Banks in India: several reasons like: • This led to an increase in funds and Mismatch of the wants of the people thereby increasing the economic condition e.g.: A being the soap seller wants to of the country exchange the soaps for wheat on the other • Increased Efficiency side B being the apple seller wants to sells • Helped in boosting the rural and his apples for the soap but here both the agricultural sector of the country sellers has to wait for the match of their • It opened up a major employment wants opportunity for the people Difficulty in Pricing • The Government used profit gained It creates a difficulty in balancing in the by Banks for the betterment of the people value of the goods being exchanged. • The competition was decreased, and Saving for the future work efficiency had increased Barter system one of the biggest drawbacks This post-Independence phase was the one is saving the wealth for the future that led to major developments in the generation. banking sector of India and also in the Ancient Indians were the earliest issuers of evolution of the banking sector. coins in the world, along with Chinese and Lydian. The first Indian coin’s punch-

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marked coins called Puranas, Karshapans networks. The banking development made or Pana – were minted in the 6th century a huge impact align with the law BC by the Mahajanapadas of ancient India. development and made its own provisions The coins were of silver and of irregular in order to provide security and to avoid shape. unwanted fear. Hence, the progress of Later, many coins were introduced by the history shows the clear map of the Kings and Rajas as per being ruled with development in this society especially in their varieties of inscriptions in Sanskrit or India. Urdu. The advent of British East India Company in 1600 then introduced the new currency named ‘rupaiya’ which grew in RBI as the Central Bank of the popularity to other British colonies too. Country During the 18th century for the first time ‘Paper Money’ was introduced in the British India. After 1857 revolt, Rupee made official currency of colonies of India, with the head of King George VI. Later in 1987, the Indian currency was introduced with the portrait of Mahatma Gandhi and Ashok Pillar watermark. The exchange of goods for the goods is known as the barter system. It had prevailed during the ancient time when there was no common unit which cannot be used in return for the exchange of goods and INTRODUCTION services. Nationalization is the process by which Reserve Bank of India popularly known by gives the government more control than to the abbreviation RBI.RBI is India’s central the private individual. During the year 1966 bank. RBI is like Federal Reserve Bank when Indian was governed under the (FED) of US or Bank of England (BOE) of Congress government 14 banks were United Kingdom. European Union has nationalized. Once the banks were European Central Bank. Central Bank of established in the country, regular any country performs the function of monitoring and regulations need to be guardian of country’s economy and followed to continue the profits provided by stabilizes it by using various policies. The the banking sector. The last phase or the central bank of any country acts as an ongoing phase of the banking sector advisor to the Government on the issues development plays a significant role. related to the economy. RBI was established on 1st April 1935. RBI was CONCLUSION: conceived as per the guidelines elucidated Banking law is a booming thing in India. by Dr. Ambedkar in his book named “The There is a big revolution in the History of Problem of the Rupee – Its origin and its Banking law, the security, and development solution”. RBI came into being on the basis were made a progress. The little progress of recommendation made by the “Royal made a huge impact in the development of Commission on Indian Currency & bank. Bank was the major thing in the Finance” in 1926. This commission was economic zone of saving money and loans also called as Hilton Young Commission on in the needed time. The security level the name of Chairperson of the commission increases along with the development in Edward Hilton Young. RBI was society as along with the development of nationalized on 1st January 1949. The

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emblem of RBI is Panther and Palm tree. RBI’s logo was derived from East India Company Double Mohur (Stamp). The Central Office of RBI was established in Calcutta first and then permanently moved to in 1937. RBI is not a Commercial Bank.

STRUCTURE OF RBI If we look at the structure of RBI then we come to know that RBI is administered by RBI’S ROLE AS THE CENTRAL BANK a central Board of Directors. The directors OF THE COUNTRY are appointed for a tenure of 4(four) year by RBI has seven primary functions. Each the Government of India in keeping with function has been envisaged with an aim of the Reserve Bank of India Act. The general managing a particular part of the economy. superintendence and direction of the RBI is These Functions are enumerated as under – entrusted on 21member Central Board of 1. Issues Currency. Directors. 2. Formulates Monetary Policy. The Central Board consists of: 3. Maintains Foreign Exchange. Governor. 4. Regulates and Supervises of the financial 4(four) Deputy Governors. Systems. 2(two) Finance Ministry 5. Regulates and supervises of Payment of representatives. Settlement Systems. 4(four) Directors to represent local 6. Allied Functions. boards headquartered at Mumbai, , 7. Developmental Role. and New Delhi. Now let us take a detailed look on each of 10(ten) Government-nominated the role of RBI. directors to represent important elements from India’s economy. Issues Currency The RBI only holds the authority to issue RBI has four zonal offices: New Delhi for new currency notes and coins, exchanges or North, Chennai for South, Kolkata for East destroy currency not fit for circulation. and Mumbai for West. The Reserve Bank Apart from RBI, Ministry of Finance has of India has 19 regional offices and 11 sub- the authority vested upon them by the offices at present. The executive head of statute to issue the notes and coins of RBI is Governor. The Governor is denomination of 1(on) rupee. associated by 4 deputy governors. The bank Aim: To maintain in public sufficient has two training colleges for its officers: supplies of currency notes and coins and in good quality. Reserve Bank Staff College at Formulates Monetary Policy Chennai. RBI prepares, executes and monitors the monetary policy. This policy is the most College of Agricultural Banking at important instrument that the RBI has. By Pune. making use of this policy RBI manages the interest rates offered by banks on loans and The First Governor of RBI was Sir Osborne deposits and which affects the inflation and Smith (1935 – 1937). The First Indian deflation in the country. In plain words, Governor of RBI was C.D. Deshmukh lower rates give rise to higher inflation and (1943 – 1949). vice versa.

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Aim: To maintain price stability while includes dealing with financial securities keeping in mind the target of growth. issued by the Government like treasury Maintains Foreign Exchange bills, infrastructure bonds, etc. RBI closely monitors and handles the flow Banker to the banks: To maintain of foreign currency in Indian economy by banking accounts of all scheduled banks. It enforcing the Foreign Exchange also manages the minimum reserve capital Management Act, 1999. It comes as the part balance required to be held by the banks of RBI’s function to ensure that the with the RBI. exchange rate value of Indian National Developmental Role: In this role Rupee is maintained in the international RBI carries out a wide range of promotional markets. functions to support national objectives. Aim: To provide aide in external trade and This function consists of work like payment and promote orderly development providing timely credit to the productive and maintenance of foreign exchange sectors of the economy, creating market in India. institutions to build financial infrastructure Regulates and Supervises of the like Unified Payment Interface (UPI), Financial System National Electronic Fund Transfer (NEFT), RBI suggests broad standards of banking etc., increasing availability to affordable operations within which the country’s and working on financial banking and financial system functions and inclusion of all classes of the society. operates. It ascertains that the banks are Conclusion following the issued guidelines by In conclusion, one can safely assume that overlooking their financial operations and RBI has fulfilled its role as country’s in cases of banking failures, RBI comes central bank really well. RBI has withstood ahead to safeguard the depositors’ money the test of the time and came out tall. RBI by bailing out the distressed bank. successfully steered out country’s economy Aim: To maintain public belief in the out of troubled water such as Balance of system, protect depositors’ interest and Payment crisis of 90s, Harshad Mehta provide cost-effective banking services to security scam or the Depression of the public. 2008.RBI barring some aberrations has Regulates and Supervises of remained autonomous and always Payment and Settlement Systems maintained independence and took RBI brings forth improved and updated safe independent decision not succumbing to and efficient modes of payment systems in governmental pressure. RBI is pivotal to the country to meet the requirements of the India’s robust economic growth and it’s public at large. This includes implementing crucial that it continues to perform its role various advanced technologies like the effectively in order to help the nation National Electronic Fund Transfer (NEFT), achieve double digit growth and push Real Time Gross Settlement (RTGS) or the towards becoming the developed country latest Unified Payment Interface (UPI) or overlooking the operations of National Financial Switch (NFS) which is necessary for ATMs. Aim: To maintain public trust in payment and settlement system Allied Functions Banker to the Government: RBI acts as merchant banker function for the central and the state governments; it also acts as their (Union and States) banker. This

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DEBT RECOVERY TRIBUNAL DEBT RECOVERY TRIBUNAL established under the RDDBFI ACT 1993. DEBT RECOVERY TRIBUNAL is special type of court of effecting recovery of dues of bank and financial institution. The DRT established by the Government of India on 24th June 1993. The DRT is Quasi-Judicial body for the recovery of banking loans which are default by the borrowers of the bank. After the announcement of new economic policy, the news model of economic reforms, commonly known as Introduction and History LPG. Many loans default by the borrowers Bank and financial institutions have been and the DRT act came as a remedy to deal facing considerable difficulties in with the loan default case. By DRT the recovering loans and enforcement of bank and the financial institution can securities charge with them and because of recover their debt with the help of the debt the difficulties the committee on financial recovery tribunal. If any bank face default system has considered to setting up special by the borrower then for the recovery of tribunal with special power to adjudication debt bank can file case in the DEBT such matter and rapid recovery as critical to RECOVERY TRIBUNAL against the successful implementation of financial borrower. The DRT involve case of the sector reform and for the work out a recovery of the due with minimum claim of suitable mechanism by which the bank will 20 lakh or more than 20 lakhs. If the free from difficulties of recovering loans. In minimum claim is under 20 lakhs then bank 1981 a committee under the chairmanship cannot file in DRT. The bank has to follow of Sri T Tiwari had suggested to setting up normal civil court procedure for the tribunal for recovery of debt owing to bank recovery of debt which is due. and financial institute using summary PRESIDING OFFICER: - procedure for speedy recovery. The The head of the DRT is known as Presiding recommendation of Tiwari committee officer which is appointed by the endorsed by the Narasimha committee Government of India. The person for the and by the recommendation of the position of presiding officer should be committee in 1993, RECOVERY OF qualify to be district court judge. The DEBTS DUE TO BANK AND presiding officer assent by the recovery FINANCIAL INSTITUTIONS (RDDBFI) officer and one registrar. The term for the BILL introduced in the Parliament and presiding officer is 5 year. passed by the Parliament with the assent of The procedur fee for the DRT is the President on 27th August 1993. THE mminimum 12000 and the maximum fee is RECOVERY OF DEBT DUE TO BANK 1,50,000. The DRT is bind to announce AND FINANCIAL INSTITUTION ACT decree within 180 days after the date of also known as DEBT RECOVERY ACT filing case in the DRT. If the case decided passed for the recovery of both secured and in the favour of bank or financial institution unsecured debt. It came on the statue book the DRT issues RECOVERY as THE RECOVERY OF DEBT DUE CERTIFICATE. The recovery certificate TO BANK AND FINANCIAL give right to the recovery officer to send INSTITUTION ACT 1993. summon to the borrower for sell or possession on the property of borrower for DEBT RECOVERY TRIBUNAL the recovery of debt or the recovery officer have right to arrest the borrower. The

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recovery certificate is the decree which is passed by the DRT and the recovery officer TRIBUNAL JURISDICTION help in the recovery of due through There are 39 DRTs and 5 DRATs. execution of decree passes by DRT. JURISDICTION OF DRATs The borrower and the Bank have the right ●DRAT ALLAHABAD ( JURISDICTION to challenge the decision of the DRT in OVER 6 DRTs) DEBT RECOVERY APPELLATE DRT Allahabad, DRT Dehradun, DRT TRIBUNAL (DRAT) within 30 days. Jablpur, DRT Lucknow , DRT Patna, DRT Ranchi. ●DRAT CHENNAI (JURISDICTION DEBT RECOVERY OVER 9 DRTs) APPELLATE TRIBUNAL DRTs at Chenni(1,2,3), DRT at Banglore (DRAT) (1,2), DRT , DRT at (1,2), and DRT . In DRAT the appeal can be made against ●DRAT DELHI ( JURISDICTION OVER decision of the DRT within 30 days of the 7 DRTs) decree of the DRT. The DRAT is headed by DRTs at Delhi(1,2), DRT at Chandigarh the CHAIRPERSON which is appointed by (1,2,3) and DRT Jaipur. the Government of India. If the borrower ●DRAT KOLKATA (JURISDICTION appeal then he has to deposit 50% of the OVER 9 DRTs) judgement amount which can be reduced to DRTs at Kolkata (1,2,3), DRT Cuttack, 25% by DRAT. DRT Guwahati, DRTs at Hyderabad (1,2), CHAIRPERSON OF DRAT: DRT Siliguri and DRT Visakhapatnam. DRAT is headed by chairperson. The ●DRAT MUMBAI ( JURISDICTION qualification of the chairperson of the OVER 8 DRTs) DRAT is equal to HIGH COURT JUDGE. DRT at Mumbai(1,2,3), DRT at The chairperson of DRAT is equal to the Ahmedabad(1,2), DRT Aurangabad, DRT high court judge, the person should be on Pune , DRT Nagpur. the INDIAN LEGAL SERVICE GRADE-

1 at least for 3 year and the PRESIDING RECENT DEVELOPMENT IN DRT OFFICER at DRT for at least 3 year. The AND DRAT term for the chairperson is of 5 year or the ◇ E- DRT project has been implemented person's age to the 65-year-old. in all DRTs and DRATs ◇ Project aim to bring improved access, efficiency and transparency. ◇ E- DRT provide access to e-filling, e- payment of fees, list generation and e-case information system that enable viewing of case status, order and judgement. The DEBT RECOVERY TRIBUNAL is an important tool for the rapid recovery of the default loan, the DRT is special type of court which established by the Government of India. The DRT is suitable mechanism through which the dues to the bank and financial institution could be released without delay. The DRT established after the examination of the legal and other difficulties faced by the bank and financial institution. By the suggestion of the

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committee in 1993 the DRT established for litigants for conciliatory settlement for the recovery of dues of bank and financial disputes. It is one of the alternative institution by follow a summary procedure. redressal mechanisms. In 1987 legal services authority act was enacted to relinquish a statutory base to legal aid programs throughout the country on a uniform basis. This Act was finally LOK ADALATS UNDER LEGAL enforced on 9th November, 1995 after SERVICES AUTHORITY ACT certain amendments were made. The Chief Justice of India Mr. R. N. Mishra had played a key role in enactment of the act. The first Lok Adalat was held on March 14, 1982 at Junagarh in Gujrat. Lok Adalat’s had been very successful in settlement of motor accident claims cases, matrimonial/family disputes, bank recovery cases and so on. The establishment of Lok Adalat encouraged the settlement of disputes through negotiation, arbitration and conciliation and Legal Aid Scheme was first introduced by securing the legal rights of poor, down Justice P. N. Bhagwati under Legal Aid trodden and weaker section of the society. Committee formed in 1971. The Legal JURISDICTION Services Authorities Act was enacted to Lok Adalat had been referred as the constitute legal services authorities for people’s courts. The jurisdiction of these providing free and competent legal services Lok Adalat is parallel to courts organizing to weaker sections of the society, to make them. It extends to any case which is being sure that opportunities for securing justice heard by that court under its jurisdiction. weren’t denied to any citizen by reason of Matters relevant to offences not economic or other disabilities and to compoundable under law are an exception prepare Lok Adalat to ensure that the to the present jurisdiction. They can’t be operation of the legal judicial system adjudicated in Lok Adalat. promotes justice to any or all. ACCESS TO POWERS JUSTICE FOR ALL is the motto of legal The powers of the Lok Adalat were similar services authority. to a civil court. It had been defined within the section 22 of the legal services authority act. Every proceedings of the Lok Adalat shall be deemed to be judicial proceedings with the aim of summoning of witnesses, discovery of documents, reception of evidences and requisitioning of public record. The proceedings of the Lok Adalat were considered to be judicial proceedings. PROCEDURE The parties must first file the dispute or at least verbally mention the matter before the The introduction of Lok Adalat added a court. Any one of the party may also file an brand-new chapter to the dispensation application for referring the dispute to Lok system of this country and succeeded in Adalat and court after hearing all the providing a supplementary forum to the parties, if the basic requirement is fulfilled

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and if there is any chance of settlement, most underprivileged Indians to approach then parties may refer the dispute to Lok to courts. On February 10th, 2018, Lok Adalat. The Lok Adalat then sits and tries Adalat’s were set up across India and they to come to a proper settlement which is in cleared a record 12 lakhs of cases within a accordance with the principles of justice day. During last three years, Regular Lok and equality. If they are unable to settle the Adalat’s had settled 20,00,437 cases and dispute, then the dispute is returned to the National Lok Adalat’s had settled court. 81,55,052 cases pending in high courts and ADVANTAGES lower courts. 337 Permanent Lok Adalat’s Lok Adalat’s provide justice at no cost, if a are currently functioning in various states matter is pending within the court of law and UTs. The initiative of establishment of called Lok Adalat and is settled Lok Adalat’s is indeed a praiseworthy act subsequently. It also saves time taken by in advancing the constitutional principles of lengthy court procedures. The parties can "Equal access to justice" for all in the directly interact through their counsels, country. which is not possible in the regular court of References: law. This dynamic nature of Lok Adalat http://kelsa.gov.in allows them to conciliate both party http://www.the leaflet.in interests and pass awards which are http://pib.gov.in acceptable to both parties. Lok Adalat acts http://www.legalserviceindia.com as a conciliator between the parties. LANDMARK JUDGEMENT In Abdul Hasan and National Legal Role played by international Services Authority v. Delhi Vidyut Board conventions over the banking law and others case the Hon’ble Delhi High Court had given a landmark decision in India highlighting the importance of Lok Adalat In the 1960s, it was observed that certain movement. In this case the petitioner had sectors of the economy like agriculture, filed a writ petition for restoration of small scale industries and weaker sections electricity at his premises, which was of society were ignored by the banking disconnected by the Delhi Vidyut Board on system, to an extent that the entire account of non-payment of the Electricity agriculture sector only availed 2.1% of the Bill. Inter alia, the grievances of the citizens entire credit extended by the banks in the weren’t only confined to the Delhi Vidyut year 1951. There was a clear need to Board but also directed against the state prevent: monopolistic trends the agencies like Municipal Corporation, concentration of economic power misuse DDA, MTNL, GIC and other bodies, Court of economic resources. In the year 1969, notices were directed to be issued to the government passed The Banking NALSA and Delhi State Legal Service Companies (Acquisition and Transfer of Authority. The scholarly observations of Undertakings) Ordinance, His Lordship Mr. Justice Anil Dev Singh 1969 nationalized all the banks with deserve special commendations and are deposits greater than 500 million, a total worthy of note. He passed the order giving of 14 banks i.e. 84% of all branches and directions for setting up of permanent Lok 70% of the country’s deposits. As per the Adalat. Prime Minister, the objectives of the reform were: Mobilization of public CONCLUSION savings to the maximum extent. Banking Lok Adalat’s had played a major role in operations need to be granted by larger ensuring justice in remote areas of India social purpose. Credit availability for big making it possible and practical for the and small companies of the private sector

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are met. Credit need of all sectors are reforms and then subsequent adoption of fulfilled. Promotion of entrepreneurs. The international practices and standards like government passed subsequent enabling entry of foreign banks, legislation The Banking Companies enhancing private bank operations, (Acquisition and Transfer of Undertakings) reducing government’s stake in banking Act, 1980 to further nationalize six other and adoption of Basel norms I and II are banks namely Andra Bank, Corporation some examples of it. Bank, New Bank of India, Oriental Bank of Deregulation of the market During Commerce, Punjab & Sind Bank and License Raj, the banks needed to obtain Vijaya Bank. After this, 91% of total licenses and go through extensive deposits came under the nationalized government procedures for all banking and banks. Nationalization achieved some of financing activities like the determination its objectives like the expansion of of pricing, determination of interest rates, branches, the total number of branches of restriction on certain activities and the commercial banks was 8,262 in June 1969 compliances to start or shut down the and it increased to 30,303 in June 1979. operations. After the liberalization steps The average population served per bank were taken to re- establish autonomy in the branch approximately 65,000 which banking sector, it was one of the decreased to 17,000 by the end of 1979. recommendations by the Narasimham The percentage of branches in rural areas Committee like accessing the capital increased from 22. 4% in June 1969 to market, interest rates were determined by 44.1% in June 1979. Another result of the banks and not the government. And nationalization was the increase in total most importantly the individual branch lending to the priority sector was 14% in licensing was liberalized to a large extent June 1969 and it increased to 30.9% at the allowing banks to determine the number end of June 1978. In March 1979, the Govt. and the locations based on commercial suggested 33% of total credit to be viability. Diversification of services directed to the priority sector which was provided by the banks. increased to 40% by 1980. The reform Post globalization the banks diversified in was severely criticized due to decrease in their services, diversification of services efficiency of the entire banking sector, i.e. are of the following three types: Narrow the profits decreased and there was a huge spectrum diversification Narrow Spectrum increase in NPA due to lending to priority Diversification (“NSD”) is the sectors and concessional rate of interests. diversification of services by banks in a Impact of globalization field related to banking itself. These are There was a profound impact of usually vertical integrations by banking globalization on the banking sector of the industry players. Two examples of this can country, some of them are: Integration of be: Universal banking- multi- purpose and the financial market Globalization, as multi- functional providing banking and stated above, aims to form a more financial services, it serves the needs of connected market by free cross border corporates and individuals both. SBI movement of capital, technology and other provides universal banking services. resources. The financial market is no Retail Banking- focus on banking for the exception as the markets were opened for general public and not a large company or foreign investors. The investors were corporations, it includes checking and allowed to invest in foreign markets, this savings accounts, personal loans, credit was achieved by relaxing the existing cards etc. Broad spectrum diversification policy norms of closed economies, and Broad Spectrum Diversification (“BSD”) developing international standards for includes the services which are unrelated business. The Indian LPG economic to banking, some examples of such

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services are: Merchant banking- banking become global Liberalization has not activities related to securities transactions only provided access to the foreign banks and the stock market. Bank of to Indian market but also provided Indian Baroda provides merchant banking to its banks access to foreign banks and an customers. Insurance Services- banks have opportunity to expand their organization. started to extend insurance services and In the year 1991, there was the negligible these are quite popular in the general global presence of Indian banks and by public, SBI Life Insurance, HDFC Life 2020 there are in total 136 branches of Sanchay and ICICI Prudential Life are one Indian Banks at oversea centers with both of the best insurances in the market. Bank of Baroda and State Bank of India Alliance Diversification Alliance having 36 i.e. the highest number of Diversification (“AD”) refers to branches. SBI has branches in 19 countries diversification by banks by tie-ups, joint including Singapore ( highest number of ventures or other alliances with other branches, 6) the United States of America, banking or non-banking entities. Thus South Korea, Belgium, Bangladesh etc. these can be NSD or BSD just there are Bank of Baroda has a considerable multiple entities involved. SBI Life is a JV overseas presence in 14 countries with Cardiff and SBI Asset Management is including the United States of America, a JV with Societe Generale. The entry of United Arab Emirates, United Kingdom, foreign banks Currently, there are 37 Singapore, Thailand, Malaysia, China, foreign banks and over 270 banking Australia etc. It also has subsidiaries in 8 branches operating in the Indian market, foreign countries. Impact on Public Sector however, in the year 1980, the number of banks Indian Public Sector Banks (“PBS”) foreign banks was merely 14 banks which went through sizable changes like significantly increased in 1990 to 24 and its independence in conducting its operations, highest to 41 in 2000. According to RBI, and the compulsory priority sector lending before liberalization, the share of foreign was reduced. This enabled the PSBs to banks in total commercial banks was 9.5 look for more commercial viability in % in 1980 which increased to 13.9% in their operations which were earlier more 2000. The entry of private banks In the connected by the social policies the 1990s new policies for licensing private government aimed to achieve through banks were issued in 1993 which only their policies norms. The Banking allowed 8 private banks to function and Companies Act 1970/ 80 amendment after India’s commitments under WTO enabled the PSBs to raise funds from the w.r.t. Foreign investment etc. the foreign by way of securities or debt banks were allowed to open 12 branches a instruments. year, the share of private bank’s deposits Improvement of the banking sector- Due of the total deposits was 4% and it to a reduction in cost, overhead expenses increased to 18% in 2010. Increase and interest margins or domestic banks. competition Reduction in entry barriers There has been greater transparency in the in the banking sector led to an increase in banking operations after the globalization the number of participants like several due to the Central Vigilance Commission new private banks and foreign banks (“CVC”) direction of following open which led to an increase in efficiency and policy by the banks, including disclosures competition in the market. The with regards to the net Non Performing government also strengthened the PSBs Assets, the maturity profile of loans, by lending its capital to them and also investments, and financial details of enabling them to raise capital from the subsidiaries as well. The entry of well public. Functional autonomy of PSBs was established foreign banks and private also considerably increased. Indian banks banks established by huge corporates

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raised the level of services provided to the IBC is one of the contributors to it. customers and forced the existing banks to raise their services to the same level as well. Introduction of IBC And Need for IBC Mobile Payments A recent and one of the largest reforms in Mobile payments are popular way to accept the banking sector is the introduction of payments because they’re secure, fast and Insolvency and Bankruptcy Code, 2016. convenient. The legislation particularly deals with Adapting mobile payment technology is corporate insolvency and one of its major extremely valuable for our business. This objectives was to provide ease and faster article covers everything we need to know exit for the businesses. Globalization only about mobile payments from mobile money allows the investors to invest transfers to how to accept NFC mobile internationally but the choice of where to payments at our business. It is also referred invest resides on the investors themselves. as mobile money, mobile money transfer, As a result, there is a competition among and mobile wallet. the countries to make their markets the best option for the investors. The earlier Mobile payment is adopted through out the insolvency regime in the country was world in different ways. Mobile payment extremely complex and led to a delay in solutions are helpful in extending financial the completion of the process almost 4 services throughout the world. These and a half years which was substantially payment networks are often used more than other developed countries like for micropayments. It is becoming an the USA and UK where the periods were instrument for Payment Service 1and a half year and 1 year respectively. Providers (PSPs) and other market Therefore, there was a clear need to participants. It provides a direct simplify and consolidate the insolvency and improvement to the operations efficiency, bankruptcy law particularly for body ultimately resulting in cost savings and corporates to increase foreign investment. increase in business volume. Impact of IBC

The code provided an exhaustive It can be used in a peer-to-peer context or framework for corporate insolvency and for paying at a brick-and-mortar business. bankruptcy and even revival of sick In a peer-to-peer mobile payment, we could companies, the clarity of legislation is an be making an e-transfer via our bank. In a important aspect foreign investors look mobile payment we are using an app on our into when investing in a country. The mobile device instead of cash or a card to code was proved useful in inviting new pay for specific goods or services at the investments in the market and increasing checkout counter. The business need a India’s international position in the World specific type of point-of-sale device to Bank’s Ease in Doing Business, in 2015 the process the payment transaction. ranking was 142nd and within five years of functioning of the Code the country is What is a mobile wallet? on 63rd position. According to the World A mobile wallet is a on our Bank, an average of 42.5% of the filled phone. In a mobile wallet app, we can amount was recovered through IBC in securely add and then store the bank details 2018-19 as compared to 14.5% under associated with our debit or credit card. SARFAESI, 3.5% under DRT and 5.3% in Some mobile wallet apps allow us to add Lok Adalats. Although there are several more than one card. So instead of using our factors attributable to such improvement physical card to make purchases, we can pay via our mobile device. If we want to

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accept mobile wallet payments at our enabled credit or debit card. And to accept business, we need to have a point-of-sale an NFC mobile payment at our business, we system that’s equipped with the technology need a payments reader like the Square that can process the transaction. contactless and chip reader. Contactless payments are secure as EMV chip card A mobile wallet is an app that stores our payments. It has some upsides when it debit and credit card details so that we can comes to usage and speed. pay for things digitally using a mobile device. To use a mobile wallet, we can Following are the most popular examples of download a mobile wallet app on our phone NFC contactless payments. and add debit or credit card information which will be stored securely. In order to 1. Apple Pay access the mobile wallet and pay we need to provide thumbprint authorization, facial recognition authorization or other security Apple Pay works on the iPhone as well as measures. the Apple Watch. To pay with Apple Pay, we need to add our debit or credit card to Mobile wallet technology the Wallet app on our device. When we’re The technology that underpins mobile at a store that accepts Apple Pay, then wallet payments is NFC. NFC stands holding our iOS device over the payments for near field communication. NFC enables reader while holding our finger on the two devices like our phone and a payments Touch ID button. If we are using a phone reader to communicate wirelessly when with Face ID or an Apple Watch, we can they’re close together that’s where the either unlock the phone using our face, a “near” part of NFC comes in. Mobile passcode. device has to near the reader to process the payment. NFC is a subset of RFID (radio- In both cases we need to double click the frequency identification). side button in order to activate the unlock feature. This adds another layer of RFID is a technology that allows us to protection. If a seller is setting up using identify things through radio waves. RFID Apple Pay, then he need a Square reader has been used for scanning items in grocery enabled for NFC. Customers can pay stores and luggage on baggage claims. through a checkout page using the “Buy Most of the company has their own mobile with Apple Pay” Button. If we run an online payments apps. But the most popular store, we can accept Apple Pay through our are Apple Pay and . To accept app or website without a reader. the payments merchant must have Square that offers a payments processor and system that can accept mobile payments. All we 2. Google Pay need to start accepting Apple Pay and Google Pay at our business is Google’s mobile wallet technology, Google Square’s mobile payments reader and our Pay, is available on all NFC-enabled mobile device. devices that runs on Android. To use

Google Pay, we need to open the app on our What is NFC mobile payments? phone and complete the transaction by NFC payments are payments that occur holding our device over the payments between a mobile device and an equipped reader. It requires the user to have a secure payments processor. To make a contactless lock screen. payment, we need to have a mobile wallet app on our device, or use a contactless-

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Contactless cards How to use Square’s mobile payment system Credit and debit cards are enabled with NFC technology. To check our card is 1. Purchase Square’s contactless and contactless-enabled or not then we need to chip reader. look for the wave-like logo printed on the 2. Download the Square Point of Sale front or back of our card. To pay we need app for iOS or Android. to hold our card over the payments reader 3. Ring up customer in the Square app. until we hear a beep. When it’s time to pay, our customer can hold their mobile device near of the reader to complete the How do mobile payments work? transaction. 4. Receive the deposits as soon as the To pay with our mobile device at a store’s next business day. With in two checkout counter then we need to hold our business days Square sends device close to the NFC-enabled payments payments to our . terminal. The reader should be within 2 inches of the source to set the transaction in Why use mobile payments? motion. Since there’s no physical contact between our device and the payments During day-to-day transactions mobile reader, mobile wallet payments are often transfers allows us to forgo the hassle of referred to as contactless payments. Mobile cash and checks, and get paid quicker. wallet transaction is that our device and the Mobile payments are the best due to its NFC-enabled point of sale are essentially features: talking to each other.

They’re fast Using that specific radio frequency, we talked about, they pass encrypted information back and forth to process the Mobile payments are the fastest way to pay payment. This all takes just seconds. Speed as it takes few seconds. They’re a bit faster is one of the important parts of NFC than swipe payments and EMV chip payments. With in a fraction of the time payments. And for businesses that have magstripe and chip card transactions are checkout lines QSRs retailers then done. payments will become much more attractive as they can move the line faster which means more sales in a shorter period How to accept mobile payments of time.

To accept mobile payments, we need to get a point-of-sale device that’s equipped with They’re convenient NFC technology. This doesn’t have to be expensive. Once we get our Square mobile payments reader, it’s super-easy to start People are carrying around cash less and accepting Apple Pay and Google Pay right less. People carry their phones everywhere. away. This happens when green light Mobile payment is the most convenient appears on the reader then customer hold way to pay. There’s no need to go to an the phone over the reader to pay. The whole ATM to pay someone back we can do that transaction is completed in just seconds. by sending an e-transfer through our bank’s

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app on our phone. And there’s no need of phones don’t have to touch the point of sale wallet at the checkout counter we can just to transfer information but they have to be tap on our phone to pay. within a few inches of the terminal. NFC involves instantaneous transfer of encrypted data to point-of-sale devices. But They’re secure chip and PIN technology takes longer time to process. Mobile payments have multiple layers of dynamic encryption to secure the payment. Sound waves-based payments They’re far more secure than magstripe payments, and EMV chip card payments. If Sound wave-based payment is also called we’re using a mobile payments app with as sound signal-based mobile payments. It face ID like Apple Pay, it’s arguably more represents a newer, cutting-edge solution secure than an EMV chip card payment. for most mobile phone. In this, transactions are processed with unique sound waves. It contains encrypted data about the payment. The Future of Mobile Payments It is sent from a terminal to the mobile phone to convey payment details. It converts customer’s phone and data into Mobile payments have revolutionized the analogue signals and then the transaction businesses through payment processing. takes place. We are able to make payments safely without facing much difficulties as they are Instead of using inbuilt technology we just faster and convenient. Many apps are need a simple software installation. There’s created related to mobile payment that no need for any extra hardware. It is an allow us to save payment information. We affordable solution especially in the areas just need to check in and check out the where people can’t afford the latest options to proceed further. To accept NFC smartphones, but rely on basic technology mobile payments as well as EMV chip to process payments. cards at our store, we need to order the Square contactless and chip reader. Magnetic secure transmission (MST) Different types of mobile payments payments To make payments simple and smooth MST takes place when a phone emits a various ways have been developed to allow magnetic signal imitating the magnetic strip consumers to pay conveniently through a on the credit card. Then the card terminal phone. There are many types of mobile picks up and processes same as card is payments both for remote and face-to-face swiped through the machine. Card payments. Let’s look at the different ways machines need to be updated frequently to we can pay with a mobile phone. accept MST without facing much difficulties. Magnetic secure transmission Near-field communication (NFC) is as secure as NFC because they both use a payments secure tokenisation system. It is safer than credit and debit cards. NFC payments is growing rapidly. NFC technology is inbuilt in Apple Pay, Mobile wallets Samsung Pay and Google Pay. NFC phones communicate with NFC-enabled card A mobile wallet is also called digital wallet. machines. It requires close-proximity radio It stores payment information on a mobile frequency identification. The mobile device, usually in an app. It uses many

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technologies in the payment process. Payment links Digital wallets are very secure to use. They commonly work through complex Overlapping with internet payments, we encryption and tokenisation. We can attach have payment links. It is also known as pay credit card, debit card, loyalty card, by link. It is commonly referred to a boarding passes, tickets and other button/link sent in an email, text message, important documents in mobile wallets. messaging app or over social media. When the receiver clicks the link, a checkout page Quick response (QR) code payments opens up then the recipient have to enter their card details to process a transaction. QR codes have many uses. It is found in The transaction total can be set in advance advertising, on product labels. It can be by sending the link. But in some cases used to pay for things. It works with the details has to be entered manually. help of banking apps where our cards are already associated and other apps by stores SMS payments and providers where our card details can be connected. To make payment we have to SMS payments is also called premium aim the camera carefully to match the SMS. It simply means paying for products indicators on our phone screen to scan the or services via a text message. Once a text code. Some people report feeling this is a message with the relevant information is hassle, especially since we have first sent to the payee phone number, the opened the relevant app before we can start payment amount is added to our mobile scanning. phone bill. So in effect, we’re paying through our phone network provider, E-commerce businesses use QR codes at perhaps through direct debit or pay-as-we- their website checkout to manually enter go the way we usually pay for our phone the card details. For card-not-present use. SMS payment is one of the most transactions, this is more secure because in popular methods of using mobile phones to our phone our card details are securely pay. In this user needs a phone with text connected to confirm we are the owner of capability and prepaid SIM card or phone the card and we’re not typing our contract. unencrypted card details on a device screen. Direct carrier billing Internet payments Direct carrier billing (DCB) is also called Many people simply pay on the internet in direct operator billing. It is a way to pay their phone browser or within apps, through our mobile carrier instead of using provided there’s WiFi or a 3G/4G network bank or card details. A way to do this is to signal. There are several ways to pay this enter our phone number on a payment page way. For instance, we can manually enter or in an app, where after we go through a card details on a website to pay for an order. few authentication steps to confirm we’re It automatically attach the card with mobile the owner of that number for instance, by app. It is referred as wireless application confirming a text message. Then the protocol (WAP) payments. WAP is amount is deducted from our phone bill or available on smartphone and accessible prepaid SIM card with SMS payments. with the help of internet. Earlier payment was made through a WAP browser or app Mobile banking together classed as WAP payments. But now phones use a mark-up language with Mobile banking is popular for transferring full access to the internet. money between private individuals or

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paying bills. Mobile banking is simply an which are accepted to have been the app provided by the user’s bank, through advanced cheque’s premise. which we can conduct financial Dishonor of cheques is a crime under transactions directly from our bank Indian laws, and the payee can sue for the account. Each bank has their own sign-up dishonor of the cheque. A natural person procedures for their app to verify we are the and the juristic person can be sued for the owner of the bank account. But once signed dishonor of cheques under the Negotiable up, it is usually easy to log in on our phone Instrument Act U/S 138and 141 of the act. and view our account balance and transaction history, make bank transfers, DISHONOUR OF CHEQUE: and anything else that our bank allows. An individual endures a lot if a cheque gave Every bank has their own limits for what we in favor of himself is dishonored because of can do through the app. the inadequacy of assets in the record of the cheque’s cabinet. To debilitate such dishonored, it has been made an offense by altering the Negotiable Instrument Act by the Banking, Public Monetary DISHONOUR OF CHEQUES: Organization, and Negotiable Instrument DIRECTORS LIABILITY IN Laws (Revision ) Act, 1988. CASE OF DISHONOUR Another Part VII comprising Sections 138 to 142 has been embedded in the INTRODUCTION: Negotiable Instrument Act. Section 138 Cheques are one of the effective makes the dishonor of cheque an offense. mechanisms for everyday deals, just as for The payee or holder at the appropriate time any remaining money-related exchanges. It can have a response against the cabinet, tracks everything about additionally gives who might be expected to take verification of exchanges. To keep from the responsibility for the violation. U/S 138 – compromise or skipping of the cheque, the Where any cheques drawn by an individual administrators thought that it was on a record kept up by him with a broker for fundamental and provide guidelines and the installment of any measure of cash to laws to issue identified with the utilization someone else from out of that represent the of Cheques which is portrayed in release, in entire or part, of any obligation Negotiation Instrument Act 1881. As or other responsibility, is returned by the indicated by Section 6 of Negotiation bank neglected, either in view of the Instrument Act 1881, the Cheque is measure of cash remaining to the credit of characterized as a “cheque” is a bill of trade that record is inadequate to respect the drawn on a predetermined investor and not cheque or that it surpasses the sum communicated to be payable in any case organized to be paid from that account by than on request and it incorporates the an understanding made with that bank, such electronic picture of a shortened cheque and person will be considered to have submitted a cheque in the electronic structure. an offense and will, without bias to some The word cheque has derived from the other arrangement of this Demonstration be Persian word ‘check,’ a composed promise rebuffed with detainment [a term might be to pay for merchandise when conveyed to stretched out to 2 years], or with fine which maintain a strategic distance from cash may reach to double the measure of the being moved across hazardous terrain. cheque, or with both. During the first century Advertisement, Section 141 of the Negotiable Instruments banks in Persia and encompassing districts (N.I.)Act 1881 says that offenses by acknowledged letters known as Sakks, organizations. It manages the dishonoring of cheques drawn by the organization. This

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part stretches out the risk to each person cabinet organization and is reached out to who, when the offense was submitted, was officials of the organization. The usual answerable for the business's lead, which standard in the bodies of evidence, likewise reaches out towards the critical including criminal risk, is against vicarious administrative positions like that of the obligation; that is, nobody is to be expected Director. criminally to take responsibility for DISHONOUR OF CHEQUES: demonstrating another. This typical DIRECTORS LIABILITY IN CASE OF guideline is, notwithstanding, subject to DISHONOUR: exemption by virtue of explicit The Directors are designated to control and arrangement being made in resolutions take care of the multitude of undertakings stretching out risk to other people. Section identified with the organization. On the off 141 of the Debatable Instrument Act,1881 chance that any such offense happens (“N.I. Act”) directs offenses by identified with the dishonor of cheque, the organizations.2 Director is additionally expected to take The word ‘Director’ is characterized U/S 2 responsibility. As indicated by the Supreme (13) of the Organizations Act, 1956 as: Court, all Directors engaged with the “Director incorporates any individual everyday running can be made obligated for possessing the situation of Director, by a dishonored/bounced cheque, yet not one whatever name called.” There is no who surrendered before the cheque was widespread standard that an overseer of an given.1 As per Section 141 of the organization is responsible for its ordinary Negotiable Instrument Act, 1881, “each undertakings. There is no wizardry as such individual who was accountable for the in a specific word, be it Director, Director, organization and liable for its business, at or Secretary. Everything relies on different the time the offense was submitted, will be jobs allotted to the officials in an at risk alongside the company. On the off organization. An organization may have chance that the Director was not in control Directors or Secretaries for various offices, during the hour of the crime, the individual which implies, it might have more than one would not be at risk regardless of whether Director or Secretary. These officials may the Director's name is appended to it. likewise be approved to give cheques under Further, in provision 2, the Directors, their marks concerning undertakings of administrators, and some other individuals their separate divisions.3 holding office by whose assent, intrigue, This ability to give Negotiable instruments carelessness has caused the offense, then is to be found in the Organizations Act the person will be responsible. itself. In Oriol Ventures v. Bombay Legitimate and smooth working of all Commercial Bank Ltd.4, the Supreme deals, especially of the cheque as Court of India alluded to Section 26 of the instruments, fundamentally rely on the Act and held that this Section doesn’t gatherings' trustworthiness and indicate to make any arrangement of genuineness. Without a doubt, the dishonor meaningful or procedural law. The last of a cheque by the bank causes inestimable piece of the Section only draws out that an misfortune, injury, and burden to the payee, organization can’t guarantee a position to and the whole believability of the deals give a cheque under its initial section. The inside and outside the nation endures a law is about the applicable arrangements of genuine difficulty. An organization, being a the English Organizations Act itself as counterfeit individual made by law, acts discussed in the current case. Accordingly, through its Directors and officials who are a gander at Section 89 of the Organizations liable for the lead of the organization's Act is appropriate at this point. matter. A criminal risk by virtue of Unmistakably all together for an dishonor of cheque principally falls on the organization to be limited by a Negotiable

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instrument, it must have been given for its direction of the matter of the organization, sake, and two conditions should be just as the organization will be considered fulfilled: to be blameworthy of the offense and so on” 1. That the instrument should be What is required is that the people who are drawn, made, acknowledged, or supported tried to be made criminally obligated u/s for the sake of/by/in the interest of/record 141 ought to be at the time the offense was of the organization. perpetrated, accountable for and mindful to 2. The individual making, drawing, the organization for the lead of the matter underwriting, or tolerating such an of the organization. instrument should have the position given Each individual associated with the to him by the organization in such a organization will not fall inside the ambit of manner. This authority can either be the arrangement. It is just those who were express or suggested. accountable for and liable for the In the Blacks’ law dictionary, the term organization's lead of business at the hour ‘vicarious obligation’ is characterized as: of commission of an offense who will be at “The inconvenience of responsibility on risk for criminal activity. It follows from one individual for the noteworthy direct of this that if an overseer of an Organization another, in light of on a connection between who was not accountable for and was not the two people. Circuitous or attributed liable for the lead of the organization's lawful duty regarding demonstrations of matter at the critical time, won’t be another, for instance, the responsibility of a obligated under the arrangement. The worker for the demonstrations of a obligation emerges from being accountable business, or, a head for misdeeds and for and answerable for the organization's agreements of a specialist.” 5 lead of business at the appropriate time Section 141 of the Negotiable Instrument when the offense was submitted and not act makes a characteristic individual based on simply holding an assignment or vicariously obligated for the offense u/s 138 office in an organization. On the other of the Demonstration perpetrated by the hand, an individual not holding any office organization furnished such individual has or position in an Organization might be at some nexus with the wrongdoing. The risk that the off chance that he fulfills the nexus of the individual accused of the fundamental prerequisite of being violation may emerge in the accompanying accountable for and liable for the direct manners: business of an Organization at the Possibly he is accountable for, and was appropriate time. Obligation relies upon the mindful to, the organization; The offense job one plays in an Organization's has been submitted with the assent or undertakings and not on assignment or intrigue of or is owing to, or because of any status. In the event that being a Director or disregard with respect to, any Director, Administrator or Secretary was sufficient to supervisor secretary, or another official of project criminal risk, the part would have the organization. said as much. Rather than “each The keyword in section 141 of the act, individual,” the section would have said, which happens in part, is “each “each Director, Secretary or Manager in an individual/every person.” These are general Organization is liable,” etc. The council words and take each individual associated knows that it is an instance of criminal with an organization inside their compass. responsibility, which implies genuine Accordingly, these words have been outcomes so exceptionally far as the appropriately qualified by utilization of the individual looked to be made at risk is phrase “who, at the time the offense was concerned. Thusly, just people who can be carried out, was accountable for and was supposed to be associated with the dependable to the organization for the

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commission of wrongdoing at the critical lead of the issues of the organization to time have been exposed to the activity. 6 expect him to take responsibility, and In different cases, the Supreme Court held without a particular averment in the protest, that the words were accountable for and no director is obligated u/s 138 of the were dependable to the organization for the Negotiable Instruments Act, 1881 except if direction of the matter of the organization he is a directing manager or Joint directing allude to an individual who is in general manager or he is a signatory to the Cheque. control of the organization's everyday The Directors can build up the way that business. The Court called attention to that. they are not blameworthy either by going However, an individual might be a Director through the preliminary under the steady and, in this way, has a place with the gaze of the Officer Court in which the gathering of people making the protest is recorded or by moving toward the arrangement followed by the organization, Supreme Court u/s 482 at the most punctual yet may not be accountable for the matter before the beginning of the preliminary to of the organization; that an individual might suppress the procedures against him as he be a supervisor who is responsible for the is no chance associated with the methods business yet may not be in general charge started under the steady gaze of the Judge of the company; and that an individual Court under section 138 is to be read with might be an official who might be Section 141 of the Negotiable Instruments accountable for just some piece of the Act, 1881. business It is, in any case, seen by the Supreme Court that the words in area REFERENCE: 141(1) of the Negotiation need not be fused 1. in a protest as sorcery words. Be that as it https://economictimes.indiatimes.c may, simultaneously, the substance of the om/news/politics-and-nation/directors-can- charges read, all in all, should reply and be-held-liable-for-dishonour-of-cheque- satisfy the prerequisites of the elements of rules-sc/articleshow/44894320.cms. the said arrangement. 7 2. G.P Sahi, Vicarious Liability Of EXCEPTION TO THE LIABILITY OF Director And Officers On Bounced THE DIRECTOR: Cheques. A Director won’t be at risk for the shaming 3. S.M.S. Pharmaceuticals Ltd. v. of cheques in two conditions which are Neeta Bhalla and others’., [(2005) 8 S.C.C. depicted beneath 89] 1. At the point when the offense has 4. submitted without his insight. 5. Bryan A. Garner, Black’s Law 2. At the point when he has practiced Dictionary, Ed. Eight, at pp. 1023. all due constancy to keep away from it. 6. Supra note: 3 CONCLUSION: 7. K. P. G. Nair v. Jindal Menthol After the change of 2002 and inclusion of India Ltd. [2001] 104 Comp Cas 290; such reformatory, the arrangement has [2001] offered alleviation to the drawee. It has additionally helped in abridging the unscrupulous expectation of doing extortion. The means can be made as wonderful strides in the financial area. It is a settled law that not every Director of an organization is obligated if there should arise an occurrence of dishonor of cheque. The onus is on the complainant to demonstrate that a director is liable for the

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SECURITIZATION OF CROSS STRUCTURES AND ISSUES BORDER TRANSACTION International Securitization "Our ports and our borders are the There is a need to establish the SPV in the foreign market where the SPV intends to most unprotected fronts in the war issue securities because the capital markets on terror." of some foreign countries may be more established and might provide a better source of finance. International securitization, also known as cross-border securitization, enables the company to generate funds at a lower cost from capital markets in foreign countries. Cross-border securitized transactions traditionally develop because of opportunities present in existing international business practices. The INTRODUCTION general structure of these transactions is: Transnational or cross-border securitization (a) The company originating the asset is in benefits emerging markets to a large extent. one country; In the recent past there has been a (b) A trust or other special purpose entity substantial movement towards in another country purchases the internationalization of securitization and, originator’s receivables; therefore, a resultant boost in cross-border (c) The payers on the receivables are securitization transactions has occurred. outside the originator’s country; This is predominantly because many (d) The receivables are largely countries do not have a developed capital denominated in the same currency as the market. Cross-border securitization is a securities; complex process and involves multiple (e) The trust receives payments directly legal systems with unfamiliar terms and from the payers and make distributions unfamiliar rules. Furthermore, the dynamic directly to investors. and fast changing domain of securitization causes difficulty when trying to attain a firm grasp in the securitization process. A firm dealing in international securitization should familiarize itself with relevant local laws in order to grasp the fundamental legal principles of cross-border finance. Cross-border securitization represents an example of a financial innovation to which the law responds with its own brand of innovation. This chapter describes the structure and nature of securitization, and the process by which legal change strives for a balance between flexibility and experimentation, and uniformity and predictability. The chapter explains why the balance in the law governing SECURITIZATION securitization and its spreading cross- The term ‘securitization’ has been defined border activities is tilted towards flexibility ‘as a process of homogenizing and at the price of predictability.

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packaging financial instruments into a new In such cases, however, the transaction tangible one. In securitization, a company documents must ensure that the loan partly deconstructs itself by separating forwarded by the SPV is adequately certain types of highly liquid assets from secured. The loan advanced by the SPV the risks generally associated with the must be secured by a charge on the company.. This is achieved through the receivables so that the SPV becomes a establishment of a separate entity known as secured creditor of the originator. Further, a Special Purpose Vehicle (SPV)] to which the SPV must ensure that local law permits these assets of the company are transferred. the SPV, as an interested creditor, to The SPV, in turn, issues securities to raise enforce its charge against the receivables in funds from the capital markets. Thus, the the event of bankruptcy of the originator. company uses these assets to raise funds in The SPV must be organized in such a way the capital markets at a lower cost than if that the likelihood of bankruptcy is remote. the company had raised funds by directly This is because the interest of the issuing the debt itself. The company retains prospective buyers for the securities issued the savings generated by these lower costs by the SPV is a function of the degree to while the buyers of the securities, issued by which the SPV is bankruptcy proof and the SPV, benefit by holding such sheltered from the demands of the investments with lower risk. originator’s creditors, in the event the The process of securitization involves a originator becomes bankrupt. typical transaction wherein a company, The SPV should be a legal entity, distinct seeking to raise funds, transfers assets to the and independent from the originator. This SPV-organized especially for this purpose prevents creditors of the originator from to reduce the likelihood of bankruptcy. The having claims against the SPV; that enables transferring company is called the creditors to file an involuntary bankruptcy originator because it is the original petition against the SPV. Therefore, the company that supplies the assets. The assets SPV must observe all appropriate third- themselves are typically payment party formalities with the originator. These obligations, which are owed to the additional steps help to reduce the risk that originator by third parties. Generically, the originator, if bankrupt, will either cause these obligations are referred to as the SPV to voluntarily file for bankruptcy. receivables or financial assets. The entities After the assets or receivables are obligated to pay the receivables are known transferred to the SPV, the SPV will issue as obligors. securities, usually debt or debt-like The transfer is intended to separate the instruments, to raise funds. The funds assets from risks associated with the generated by the SPV, through the issuance originator. The originator will often of securities, are transferred to the company structure the transfer so that it constitutes a as consideration for the sale of the true sale, which is a sale that is sufficient receivables when the securitization is under bankruptcy and commercial law to structured through a sale. The funds remove the assets from the originator’s generated by the SPV will be transferred as bankruptcy estate. Therefore, special consideration for a loan if the securitization consideration must be given to ensure that is structured through a secured loan. In the the transferred assets are protected from the event the securitization transaction is claims of the creditors of the originator. structured through a sale, these securities Instead of structuring the securitization are redeemable from collections on the transaction through a sale, the parties may receivables purchased by the SPV. If the structure the securitization through a securitization transaction is structured secured loan, thus, reducing the transaction through a secured loan, these securities are costs.

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redeemable from the repayment of the loan first to receive a return on income, but with by the originator. the lowest rate of that income. An investor Should the originator default on repayment that has a higher risk appetite may choose of the loan, the SPV would enforce its to invest in BBB securities, meaning that charge on the receivables and the securities they will have to wait until the investors in would be redeemed from collections on the higher rated securities have been paid off, receivables. As a result, potential buyers of but in return they will receive a higher rate the securities should look to the cash flow of income of their securities. from the purchased receivables and not 3. Compliance with restrictions relating to necessarily to the credit of the originator for the quantum of debt - An originator may be repayment. The risk that these payments restricted by its indenture covenants from may not be made on time is an important incurring or securing debt beyond a factor in valuing the receivables and a specified level. As such, securitization potential buyer must seek to evaluate the through the sale of receivables would aggregate rate of default. Therefore, enable the originator to raise funds in statistically, a large pool of receivables, due compliance with such covenants because to many obligors for which payment is the originator sells the receivables and does reasonably predictable, is preferable to a so without incurring debt; the debt is pool of a smaller number of receivables due incurred by the SPV. from a few obligors. 4. Facilitates compliance of capital- MERITS adequacy guidelines –If the originator is a 1.It creates liquidity in the marketplace for bank or similar financial institution, the the assets being securitized. This helps a originator may be required to maintain risk- company with debt on its books remove based capital under the capital-adequacy that debt from its balance sheet and acquire guideline. Thus, the sale of receivables to new funding in place of that debt. This is done by transforming that debt into securities through the process described above. As a result, the company would have received liquid funds in exchange for the debt that it has moved into securities. Even more attractively, removing that debt of its balance sheets may help to raise that company’s credit rating, thus allowing it to raise funds more cheaply than if that debt had remained on its balance sheets. the SPV, such as loans reflected as assets on However, transforming that debt into a bank’s financial statements, would lower securities need not mean removing the the amount of capital that must be account associated with that debt. Hence, maintained under these guidelines and these companies remove the risk of the reduce the bank’s effective cost of funds. debt, turn it liquid, but still earn income 5. Credit exposure –The originators raise through the maintenance of that account. funds upon the sale or transfer of the 2.These debts can be layered into different securities to the SPV and limit the credit tranches with different risks. These offer exposure to the risks. Typically, following great choice to investors as through these securitization, the originator’s credit tranches’ investors have access to returns exposure will be limited to any credit and risk that more closely match their enhancement it may provide. The process appetites. For example, an ultra-cautious of securitization helps in diversifying the investor may choose to invest in securities portfolio and reduces the risk associated rated at AAA, meaning that they will be the with the credit.

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6. Asset-liability matching –Securitization panic that spreads far beyond these transactions are generally based on securities, and can end up affecting an matching the payments on the securities entire market. In effect, this is what issued to the actual cash flows on the happened in the 2007 financial crisis. underlying assets (e.g., securitized loans). That approach inherently achieves asset- Securitization is an exceptionally clever liability matching with respect to the process that has very significant benefits for securitized assets. Asset-liability matching practically everyone involved. It takes debt allows a lender to fund itself more off a balance sheet and replaces it with efficiently and to pass some of the cost liquidity. It provides third-party investors savings on to its customers. with clearly rated investments that pay 7.Higher returns to the investors –The according to the risk that they are willing to investors would invest in securities that shoulder. And it leads to greater choice and give them the maximum yield. Thus, the competitive rates for borrowers, whose investor would invest in security receipts if loans are now treated as far more of an asset it is found that there are better returns in the than as a liability. However, the securitization agreement than in other complications of the process can lead to securities. There are credit agencies that opacity that can severely raise the risk to help the investors make a consolidated investors in the securities themselves. choice and, hence, they invest after they are Nonetheless, with proper oversight and satisfied that it would produce better yields. expertise, these risks can be so carefully DEMERITS AND RISK managed that they are reduced to the Perhaps the biggest disadvantage, leading absolute minimum. to the biggest risks, that securitization One team that offers the expertise required brings is complexity. The process of to carry out the securitization process with securitization is remarkably complex. The the lowest risk and the greatest benefit for process can become even more complicated investors is Pomegranate. Pomegranate when there is significant government SCC p.l.c. is a securitization cell platform intervention involved, perhaps in loans that comprising a team of experts in all areas of have social and political implications. By the process. It offers third parties the the end of such a process, all the opportunity to undertake a securitization complications and complexities that have transaction with minimum risk and gone into it would have produced securities maximum efficiency. If you are interested so enormously complicated that it is all but in incorporating, setting up and maintaining impossible to assess accurately their level a dedicated Securitization vehicle or an of risk. Thus, the tranches of such a securitization might very well end up with risk ratings that do not correctly reflect their true level of risk. Needless to say incorrect risk ratings are of severe peril to investors. As long as the economy is going well, such securities will produce income as expected. However, once an economy stalls or contracts, repayments will be inevitably missed, and if the tranches have been incorrectly assessed than this will hit not just those investors who put their money into higher risk tranches, but even those investors who invested in the lowest risk ones. This can set off a concatenation of

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helps understand why a less uniform law is effective in this area. 1. Uniform Law v. The Parties' Choices: Decentralized Markets v. Central Authorities.

The issue of imposed uniform law versus parties' choices is closely related to the issue of the interaction of market and central authorities as lawmakers for SCC, contact us to see what our services business transactions. Professor Robert can do for you. Cooter has argued that the "law merchant" HOW CAN CROSS-BORDER designed by parties in a lawmaking SECURITIZATION EXIST WITHOUT decentralized market is more efficient than, A UNIFORM LAW? and therefore preferable to, law enacted by By definition, cross-border securitization a central power, such as a community, or a is not governed by one legal system. n51 government. In Professor Cooter's opinion, Securitization may take various shapes and central lawmakers should absorb the forms and have different effects on substance of laws created in a market participants depending on which of its parts process, generally in a permissive rather resides on which countries' shores. than mandatory mode. Uniform centralized Theoretically, cross-border securitization law and market laws of the parties' choice transactions can be effected with no pose costs and offer benefits. Uniform laws governing country law, or under a very lax are more predictable, reducing the parties' fully enabling country law. Yet, neither costs of information, uncertainty, and market nor institutional intermediation can learning. In contrast, less predictable be created, let alone flourish, without market-unique arrangements require parties uniform, predictable, stable rules of to engage in continuous inventing, and to behavior that govern their participants' incur higher negotiation and enforcement activities. How, then, did cross-border costs because the behavior of others is not securitization arise in the first place? And subject to default rules, and is less how come it is spreading so fast to so many predictable. Uniform laws, however, countries, including those without the full increase the parties' costs by imposing one financial and legal infrastructure that size on many transactions, regardless of fit securitization requires? or parties' needs; by limiting experiments A. Creating Securitization Law and innovations; and by delaying quick The law of cross-border securitization adaptation that is crucial in volatile consists of many country laws, usually situations. Further, uniform laws chosen by private actors. Therefore, the established by a centralized lawmaker are identity and substance of these laws are not not likely to be as efficient as market laws. uniform. Two general related questions Centralized laws present compromises arise in this context: When is uniform, necessary to reach acceptance by a larger standardized law preferred to non-standard number of stakeholders with different, and law of the parties' choices? A related perhaps conflicting, incentives and question is: how should decentralized agendas. Most legal systems develop markets and centralized authorities interact through both centralized and market as lawmakers and enforcers? This section lawmaking. Cross-border securitization, highlights these difficult issues in the however, provides an example of a leading context of cross-border securitization, and decentralized lawmaking where the predominant forces that shape the law are

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anchored in ad hoc market transactions. emerging as customs, which, in turn, There are a number of reasons for this are adopted as model contracts and development. First, cross-border rules by trade and professional securitization is an innovation that allows associations, organizations of actors to greatly minimize, if not fully escape, centralized country laws, in favor of intermediaries, international ad hoc alternative legal systems. Just as and standing committees, and securitization reduces the costs of doing regulators' organizations. All these business under inefficient intermediation represent a modern "law merchant," systems, cross-border securitization eventually absorbed into domestic laws reduces the costs of doing business under that facilitate securitization. The inefficient country laws. These costs seem movement to unification has appeared to be greater than the costs of non-uniform applicable law. Second, especially in its on various fronts. Regulators are initial stages, cross-border securitization fostering unification on the requires that parties be free to design the international level; others are applicable law, even at the expense of advocating alternatives to uniform uniformity. That allows parties to substantive securities regulation by experiment, and to reduce their learning reducing investors' information costs costs by contracting on applicable domestic through private actors such as rating laws. Third, securitization in general is less sensitive to the benefits of uniformity. agencies and investment company Because securitization is fragmented, the managers. number of countries have law governing the process can be fragmented as well, to fit the actors' needs. For example, for public distribution of asset-backed securities sponsors are likely to choose a jurisdiction with active securities markets, such as the United Kingdom or the United States whose laws are adequate to accommodate this aspect of securitization. For private placement of securities to large sophisticated investors, sponsors may seek jurisdictions that do not strictly regulate securities issuance and amended their laws along the models sales, because these investors may choose of private and international models. to require of sponsors the information they need. Fourth, because securitization is a Puerto Rico has recently adopted the "wholesale" business involving large Uniform Commercial Code. Some amounts, the cost of non-uniform law can countries have adjusted their laws in be distributed over a large number of light of the models. Some have adopted ultimate investors. foreign laws in full, directly or by reference. Some countries chose to 2. The Quest for Uniformity maintain their laws rather than While actors continue to create ad hoc accommodate the securitization unique transactions, they also process but have allowed domestic gradually work towards more uniform actors to securitize financial assets by laws. Accepted and repeated designs or transferring the assets to offshore contracts become "vanilla" documents, centers.

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CONCLUSION carried out, it can be concluded that lex International securitization enables a juris is and will continue to be a strong company to raise funds at lower costs from influence in the evolution of the capital markets in foreign countries. The international securitization laws; it will structuring of an international emerge as a forerunner in the formulation securitization basically revolves around of the international rules that cut across two issues: first, determining the nations to regulate specific global jurisdictions in which the cross-border activities. As the process of securitization securitization operates, and second, becomes uniform, the issues related to ascertaining the applicable law and securitization also become uniform. Since structuring the securitization in consonance the laws addressing these issues vary with it. There are numerous factors – such between countries, the establishment of a as restrictive regulations for the protection universally accepted international code of investors, the relevant tax implications, specifically designed to govern these and the amenities available in that country concerns at an international level would – that influence the choice of country for greatly facilitate transnational raising funds through securitization. securitization. The UNCITRAL convention Consequently, the whole socio-economic is a significant step towards harmonizing condition of a country should be analyzed the laws governing international before choosing to structure a cross-border receivables financing, thereby facilitating securitization. With respect to the the growth of cross-border securitization in regulation of the international general. securitization transactions, it is to be concluded that the international securitization law governs the international BANKING REGULATION ACT securitization. Furthermore, the various AMENDMENT BILL 2020 processes of securitization are subject to the law of the country where they occur. There Mainly two changes are introduced has been dynamic growth and development It allow the central bank of India which is of the international securitization laws by reserve bank of India can initiate the means of lex juris, much like the scheme of reconstruction and development of the law relating to internet amalgamation without putting it under transactions. In contrast to the process of mortarium. creating the domestic laws and the The second aspect is regarding the power international treaties, the process of under the banking regulation act. RBI has creating lex juris is flexible. The process the power under banking regulation Act, avoids the procedural and political RBI has the power in case of co-operative straitjackets of the domestic and bank earlier if a bank is in same sort of trouble the RBI used to impose mortarium due to which the bank can not make any investment lending and further further condition are imposed. RBI bring plans like reconstruction during the period of international institutions. Lex juris mortarium and there is a financial represents fundamental values that disruption in during the time of command a consensus. If lex juris rules moratorium. deviate from these fundamental values, RBI for reconstruction and amalgamation domestic law will keep a check on this without imposing mortarium deviation. Thus, based on the research work Co-operative banks come under the ambit of two acts;

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1-BANKING REGULATION ACT 2-CO-OPERATIVE SOCITIES ACT,1965 So, the bill gives more power to RBI So, banking related function give to RBI -Paves the way for new banking license and management related power given to -Rises the voting the rights in banks state government -Provide for issue of bonus shares by public In 1996, An amendment was being made in sectors banks banking laws and co-operative bank comes under banking regulation Act 1949 Now the thing is why the amendment was Comparing Banking law in India made as the management powers belong to state government i.e. who will appoint to developed countries of the CEO, qualification for the appointment for World bank management and further the main play a vital role in the economic concern was regarding audit. development of a country. They accumulate Hence, to present the interest of deposition the idle savings of the people and make this amendment has been made. them available for investment. They also These will be applicable an create new demand deposits in the process -urban co-operative banks of granting loans and purchasing Multi state co-operative bank investment securities. As a key component If CEO to be appointed then permission of the financial system, banks allocate should be taken from the banking funds from savers to borrowers in an regulation and auditing will be done as per efficient manner. ... They provide the guideline of RBI and the RBI can specialized financial services, which reduce supersede the board in consultation with the the cost of obtaining information about both state government the issues with the co- savings and borrowing opportunities. operative bank regarding liquidity. They Given below the functions of the banks in have to be dependent upon loans from other India: bunks money of the depositors • Acceptance of deposits from the Now, Allowance has been given to co- public. operative banks that they can issue their • Provide demand withdrawal shares (preference share/special share). if facility. RBI wants then it can give exemption to any co-operative banks from the position of • Leading facility. the act Older provision was that the co-operative • Transfer of funds. banks were not allowed to open their new • Issue of drafts. brach out of village location without the permission of RBI but now this provision • Provide customers with locker has been discarded facilities. Banking regulation bill will not be applicable on • Dealing with foreign exchange. -PACS (Primary Agriculture Credit Role/Importance of Banking. Banks Society) provide funds for the business and play an -Coperative societies whose principle important role in the development of a business is long term financing and nation. It acts as an intermediary between agricultural development people having surplus money and those -new rule has been made that they can not requiring money for various business use the words like bank, banker or banking activit By encouraging inducement to save in their name and cannot at as entity that and also mobilising savings from the clears cheque public, bank help to increase the aggregate

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rate of investment in the economy. It may It was enacted to constitute RBI with also be noted that banks not only mobilise objectives to regulate the issue of bank the saved funds from the public, but also notes, keeping reserves to ensure stability themselves create deposits or credit which in the monetary system and operate the serve as money. Banks are closely linked nation's currency and credit system with our everyday lives and Activities. effectively. The Act mainly covers the Drawing salaries, paying bills, buying constitution, powers and functions of the homes, building up savings and taking out RBI. addition, thereto, the following loans all involve transactions with Banks. regulations also govern banking in India: Businesses also rely on the banking system the Bankers Books Evidence Act 1891; the for settlement of their transactions and Recovery of Debts Due to Banks and meeting other financial needs. Bank’s are Financial Institutions Act 1993; the “special” because they manage the payment Securitisation and Reconstruction of system through which most economic Financial Assets and Enforcement of payments are made. ... So, banks are clearly Security Interest Act 2002; the Payment special because of their importance to the and Settlement Detailed guidelines have way our economy transfers payments for been issued by RBI on Safe Deposit Locker goods and services. For the sake of the facility offered by the Banks, including comparison, we will focus on the per-capita prohibition of linking allotment of lockers income, population growth, the to placement of fixed deposits, fixed composition of the population, human deposits as security for lockers, wait list of development, R&D, equity flows, lockers, operations, due diligence, merchandise trade, and GDP shares of monitoring/break-open of un-operated different countries. lockers The preamble of the Reserve Bank of India describes its main functions as: ..to regulate the issue of Bank Notes and India pales in comparison, with 167 keeping of reserves with a view to securing commercial banks, 87,768 business offices monetary and 0.8 million employees. ... The non- performing asset ratio of stability in India and generally to operate the countries' banks too is comparable. the currency and credit system of the NPAs of Indian banks stood at 2.5% in country to its advantaged 2010 while those of the Chinese were 1.7%.

According to the survey by the World Economic Forum, Canada has the world's best banking system. It is followed by Sweden, Luxembourg and Australia. Canada received 6.8 out of total 7 points and topped the list.

The Banking Regulation Act, 1949 is a legislation in India that regulates all banking firms in India. Passed as the Banking Companies Act 1949, it came into force from 16 March 1949 and changed to Banking Regulation Act 1949 from 1 March 1966. It is applicable in jammu and Kashmir from 1956.

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International Bank for Reconstruction justice, human rights, and the rule of and Development (IBRD) and the law International Development Association (IDA) that provides financial and technical The most important rationale assistance to client countries. The mission for regulation in banking is to address of the World Bank is to end extreme concerns over the safety and stability poverty and promote shared prosperity. of financial institutions, Justice and the rule of law are key to the financial sector as a whole, or the achieving these twin goals. A lack of justice payments system. Regulation is necessary is a central dimension of poverty, and to reduce or eliminate that risk. system. increasing evidence points to the Regulation protects the Fed and the fdic importance of accountable and effective against losses that will occur when it lends justice institutions in creating the enabling to banks that later fail. the payment system environment for a range of development in which banks transfer funds among outcomes – from improved basic services to themselves. increased private sector investment and reduced corruption. The primary regulatory purpose is defined as the achievement of quality control of a Over the past 25 years the Bank has subject system, its process or its product. supported a range of activities in justice Quality control via regulation is achieved reform and rule of law through lending and through one or a combination of analytical and advisory work. These approaches: (1) accountability, (2) include support for reform of justice sector organizational development, (3) institutions, as well as integrated parts of protectionism. projects focusing on public sector reform, Globalisation in the Indian economy governance and anti-corruption, citizen Globalisation in India can be traced back to security, economic development, urban and the liberalization of the economy in the social development, poverty reduction, 1990s, along with all the demands of IMF gender equality, and natural resource and World Bank included tariff and management, among others. subsidies reduction and several other trade The World Bank’s core work in justice and liberation measures and considerable steps the rule of law rests with the Governance to be taken to enable foreign investors and Global Practice. Our work focuses on: financial institutions like banks to create a market share in India. • Improving the performance of justice sector institutions • Advising on criminal justice reform Pre-globalisation banking sector and citizen security Pre-independence banking • Generating learning and designing interventions to promote access to In India, the banks are not a novel concept justice and legal empowerment but have been around from Vedic period but they were not the same as the modern • Promoting justice in development sectors such as land, extractives, institution of the bank, at the end of 18th and urban development century there were hardly any banks in India. Some banks were opened but failed • Reforming the justice sector for better business and investment to survive as it being a foreign concept was climate not trusted by the common people and due to exposure to speculative venture deposits • Leading global knowledge, learning and measurement initiatives on were also lost.

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At the time of colonisation European banks operated in India with the objective to aid colonial rulers in facilitating the construction and development activities. The first bank was English Agency House in Calcutta and Bombay in the 18th century. In the next century, Presidency banks were established. There were three major presidency banks in India, Bank of Madras and Bank of Calcutta which were merged into Imperial Bank of India and also Reserve Bank of India was established as the central bank of the country in 1935. But this was not considered a sufficient measure due to proximate relation between the commercial houses and financial License Raj institutions resulting in advancing credit License Raj means the rule of licenses or facilities to these houses in a biased manner permits, the nomenclature evidenced for the and not to the general public. shift of powers from the Bruisers (in ) to the Government and the statutes. Nationalisation of banks Another reason for the extensive use of the term to refer to the period from 1947 to In the 1960s, it was observed that certain 1990s is the extensive licenses required to sectors of the economy like agriculture, establish a business, expand the business or small scale industries and weaker sections any other commercial activity leading to of society were ignored by the banking red-tapes. system, to an extent that the entire agriculture sector only availed 2.1of the entire credit extended by the banks in the The Constitutional Assembly made a year 1951. There was a clear need to conscious decision not to declare a prevent: permanent economic system though largely socialism was followed. During this period the industrial revolution was at its peak 1. monopolistic trends resulting in the establishment of new 2. the concentration of economic industries and steep need of credit for the power corporates. 3. misuse of economic resources

In the year 1969, the government All the sectors were heavily regulated by passed The Banking Companies the government policies especially the (Acquisition and Transfer of Undertakings) foreign investment and import and export Ordinance, 1969 nationalised all the banks and the banking and finance sector was no with deposits greater than 500 million, a exception. total of 14 banks i.e. 84% of all branches and 70% of the country’s deposits. By the time of independence, there were over 600 commercial banks however there As per the Prime Minister, the objectives of was not much public trust in the the reform were: institutions. Therefore, the government transformed Imperial Bank to State Bank of India in 1955. • Mobilisation of public savings to the maximum extent.

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• Banking operations need to be Effect of Constitution over banking law granted by larger social purpose. • Credit availability for big and small The Constitution does not give Congress companies of the private sector are the expressed power to charter a bank; met. however, the Constitution does grant • Credit need of all sectors are Congress the powers to tax and to spend, to fulfilled. borrow money, and “to coin Money [and] • Promotion of entrepreneurs. regulate the Value thereof” (Article I, Section 8, Clause 5).It is possible to both The government passed subsequent over-regulate and under-regulate banks. legislation The Banking Companies Congress can put in place too many (Acquisition and Transfer of Undertakings) banking rules and regulations that increases Act, 1980 to further nationalise six other administrative costs for banks and increases banks namely Andra Bank, Corporation profitability, causing banks to fail. Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank and Vijaya Bank. After this, 91% of total deposits came under the nationalised banks.

Nationalisation achieved some of its objectives like the expansion of branches, the total number of branches of commercial banks was 8,262 in June 1969 and it increased to 30,303 in June 1979.

The average population served per bank branch approximately 65,000 which decreased to 17,000 by the end of 1979. The percentage of branches in rural areas increased from 22.4% in June 1969 to As per the reports of the Reserve Bank of 44.1% in June 1979. India (“RBI”), India’s banking sector is sufficiently capitalised and well-regulated. The financial conditions and the economy Another result of nationalisation was the in the present moment are far better than increase in total lending to the priority any country in the world. Be it credit, sector was 14% in June 1969 and it market or liquidity risk studies and surveys, increased to 30.9% at the end of June 1978. they all suggest Indian banks have In March 1979, the Govt.suggested 33% of withstood the global downturn efficiently total credit to be directed to the priority and can recover quickly from difficult sector which was increased to 40% by conditions. India is said to be one of the 1980. fastest growing economies in the world. The digital payment evolved overnight The reform was severely criticized due to after the Prime Minister’s measure of decrease in efficiency of the entire banking Demonetisation in 2016. According to FSI sector, i.e. the profits decreased and there reports, India developed the most in the 25 was a huge increase in NPA due to lending countries with India’s Immediate Payment to priority sectors and concessional rate of Services (“IMPS”) being the only one interests. which is placed at Level 5 in the Faster

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Payments Innovation Index (“FPII”). Also, distressed and clients default on payments. RBI has allowed more features such as It can be said that the banking sector for unlimited fund transfers between wallets lawyers is recession proof and is here to and bank accounts, these wallets are stay. expected to become really strong players in the financial ecosystem. The unorganised retail sector has a huge untapped potential History of Banking in India of adopting digital mobile wallets for payments, as per a report by the Centre for The history of banking goes back to the Digital Financial Inclusion. Around 63 per vedic age where practices like usury and cent of retailers are interested in using loan deeds were prevalent. The vedic era digital modes of payment. and the maurya era also witnessed banking activities. The first bank to be set up in

India was the Bank of Hindustan in the year In 2017, Global rating agency Moody’s 1770 at Calcutta and it was wound up in announced that the Indian Banking system 1830-32. By 1843, there were 3 main banks was stable. They also upgraded four Indian under the British East India company which banks from Baa3 to Baa2. Under the union were Bank of Calcutta, Bank of Bombay budget 2018, the government has allocated and the Bank of Madras. In 1921, the three Rs 3 trillion towards Mudra scheme, which banks were merged to form the Imperial provides financial assistance to small Bank of India. In 1955, the Imperial Bank businessmen who want to grow their of India was no longer a private entity as it business. The government has also invested was nationalised and renamed as State Rs 3,794 crores towards credit support, Bank of India. The State Bank of India is capital and interest subsidy to MSMEs. the oldest bank in India. Evolution of Banking Law in India The government and regulator have The Indian banking system has evolved undertaken several measures to strengthen from a caterpillar to a butterfly in the last the Indian Banking sector. Such as a two- two centuries. In the ancient times, banking year plan to strengthen the public sector was mainly handled by businessmen such banks through reforms and capital infusion as the Sharoffs, Mahajans, Seths, Sahukars, of Rs 2.11 lakh crore that will let the banks etc. They performed the usual function of play a large role in the financial system by lending money to traders and craftsmen and giving a boost to the MSME sector. Lok sometimes placed their funds at disposal for Sabha has also approved Rs 80,000 crores the war chest of the kings. of recapitalisation bonds for public sector Modern-day banking started around the last banks. decades of the 18th century, with the Looking at the Statistics, Banking sector for General Bank of India and Hindustan Bank lawyers will grow to be a booming sector in coming into existence. Then the three the Indian Economy in the coming year. It presidency banks were made which were – is a lucrative and attractive career option for Bank of Madras, Bombay and Calcutta. The all the law students. It is said to be a top presidency banks acted as quasi-central sector and attractive for lawyers even when banks for quite a while. They merged into it is not doing so well. When banks do well, what was called as Imperial Bank of India they need many lawyers. When they are not in 1925. The swadeshi movement inspired doing so well, they need more lawyers! It is the Indian business community to form a proven fact, that firms do well when banks of their own from 1906 to 1911. A banks do not do well, assets are said to be number of banks established then have still

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managed to survive till date, which includes Banking law is the broad term for laws that Canara Bank, Indian Bank, Bank of Baroda govern how banks and other financial and the Central Bank of India etc. institutions conduct business. Banks must comply with a myriad of federal, state and even local regulations. Lawyers perform a A landmark event which marks the wide variety of functions that relate to evolution of banking happened in 1934 creating, following and enforcing when a decision to set up Reserve Bank of regulations.

Multiple federal agencies oversee banking regulations. A bank or other financial institution might fall under regulations of the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve System or the Office of the Comptroller of the Currency India was taken. It started functioning in (OCC). Banks must know what federal and 1935. RBI has since been the central bank state regulations they must comply with. of the country and the regulator of the Many federal banking regulations are found banking sector. It derives its powers from in chapter 12 of the U.S. Code. the RBI Act, 1934. Evolution of Banking Law in India The Indian banking system has evolved from a caterpillar to a butterfly in the last two centuries. In the ancient times, banking Conclusion was mainly handled by businessmen such Banking law is a booming career even in as the Sharoffs, Mahajans, Seths, Sahukars, the recession, it is safe to say that a career etc. They performed the usual function of in banking law is evergreen. For a young, lending money to traders and craftsmen and industrious and ambitious lawyer, SKY’s sometimes placed their funds at disposal for the limit. It is highly beneficial to learn the the war chest of the kings. rules of the game at this point. Modern-day banking started around the last decades of the 18th century, with the Demand is expected to skyrocket in the General Bank of India and Hindustan Bank years to come. Leading Banks of the world coming into existence. Then the three such as , Citigroup; Even presidency banks were made which were – enterprises like Goldman Sachs, and Bank of Madras, Bombay and Calcutta. The Federal National Mortgage Association; presidency banks acted as quasi-central Even startups which made it big in the banks for quite a while. They merged into market such as PayPal had lawyers as their what was called as Imperial Bank of India CEOs. This shows what kind of in 1925. The swadeshi movement inspired opportunities lie in this line. You just have the Indian business community to form to know the ropes around the banking law banks of their own from 1906 to 1911. A sector. number of banks established then have still managed to survive till date, which includes Canara Bank, Indian Bank, Bank of Baroda and the Central Bank of India etc.

BANKING LAW

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A landmark event which marks the for temporary periods, as and when evolution of banking happened in 1934 necessary and it also manages the public when a decision to set up Reserve Bank of debt of the country. Remember, the central India was taken. It started functioning in 1935. RBI has since been the central bank of the country and the regulator of the banking sector. It derives its powers from the RBI Act, 1934. The two other major events in the modern banking era are the nationalisation of 14 largest commercial banks in 1969, through the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969. Later another set of 4 banks were merged, taking this count to 20. At this point, more than 90% of all banking government can borrow any amount of business in India was controlled by money from RBI by selling its rupees Government of India. securities to the latter. Post the government’s liberalisation BANKER TO THE CENTRAL GOVERNMENT Under the administrative arrangements, the Central Government is required to maintain a minimum cash balance with the Reserve Bank. Currently, this amount is Rs.10 crore on a daily basis and Rs.100 crore on Fridays, as also at the annual account closing day of the Centre and the Reserve policies, a host of private players entered Bank (end of March and June). into the India banking market where RBI Under a scheme introduced in 1976, every made sure that they were being closely ministry and department of the Central watched and strictly regulated. Further, Government has been allotted a specific there were regular checks on the public sector bank for handling its compliance of various guidelines and any transactions. Hence, the Reserve Bank does irregularities would have lead to the not handle government’s day-to-day disqualification of their licences. transactions as before, except where it has been nominated as banker to a particular ROLE OF CENTRAL AND STATE IN ministry or department. BANKING LAW As banker to the Government, the Reserve Central bank functions as a banker to the Bank works out the overall funds position government—both central and state and sends daily advice showing the governments. It carries out all banking balances in its books, Ways and Means business of the government. Government Advances granted to the government and keeps their cash balances in the current investments made from the surplus fund. account with the central bank. Similarly, The daily advices are followed up with central bank accepts receipts and makes monthly statements. payment on behalf of the governments. BANKER TO THE STATE Also, central bank carries out exchange, GOVERNMENTS remittance and other banking operations on All the State Governments are required to behalf of the government. Central bank maintain a minimum balance with the gives loans and advances to governments Reserve Bank, which varies from state to

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state depending on the relative size of the Conversion bill has provisions that can land state budget and economic activity. To tide offenders in jail for upto five years. over temporary mismatches in the cash The Uttar Pradesh government has passed a flow of receipts and payments, the Reserve bill against 'Love Jihad'. The Unlawful Bank provides Ways and Means Conversion bill has provisions that can land Advances/Overdraft to the State offenders in jail for upto five years. The law Governments. The WMA scheme for the against forced religious conversions was State Governments has provision for approved days after Chief Minister Yogi Special Drawing Facility (SDF) and Adityanath issued a warning. Normal WMA. The SDF is extended "The UP Cabinet has decided to introduce against the collateral of the government an ordinance against unlawful religious securities held by the State Government. To conversions," State Cabinet Minister encourage the State’s participation to the Siddharth Nath Singh said. Consolidated Sinking Fund and Guarantee Apart from the jail term, the ordinance also Redemption Fund, incremental investments has provision of Rs 15,000 penalty for in these funds are also eligible to avail SDF. forceful religious conversion. For After the SDF limit is exhausted, the State conversions of minors and women of Government is provided a normal WMA. SC/ST community, there will be a penalty The normal WMA limits are based on of Rs 25,000 penalty and jail term, Singh three-year average of actual revenue and said. capital expenditure of the state. The Earlier, Uttar Pradesh Chief Minister Yogi withdrawal beyond the WMA limit is Adityanath had declared his government considered an overdraft. A State would come out with a law to deal with Government account can be in overdraft for ‘love jihad’ and used funeral a maximum 14 consecutive working days chant ‘Ram Naam Satya Hai’ to threaten with a limit of 36 days in a quarter. The rate of interest on WMA is linked to the Repo Rate. Surplus balances of State Governments are invested in Government of India 14-day Intermediate Treasury Bills automatically in accordance with the instructions. DOES STATE MAKE SEPARATE LAW FOR IT'S OWN ? When state makes request - When the legislatures of two or more states pass those who don’t respect their daughters and resolutions requesting the Parliament to sisters. "We will bring an effective law. It enact laws on a matter in the State List , is my warning to those who play with the then the Parliament can make laws for honour and dignity of sisters and daughters regulating that matter . A law so enacted by hiding their real names and identities… applies only to those states which have If they do not mend their ways, their ‘Ram passed the resolutions. Naam Satya’ journey will start," FOR EXAMPLE- Adityanath had addressing a public rally. (LOVE JIHAD) Yogi Adityanath govt passes bill on Several states, including Arunachal Unlawful Conversion to check 'love jihad', Pradesh, Odisha, Madhya Pradesh, jail upto 5 years for violatorsThe Uttar Chhattisgarh, , Himachal Pradesh, Pradesh government has passed a bill Jharkhand, and Uttarakhand, already have against 'Love Jihad'. The Unlawful in place “anti-conversion laws” that regulate religious conversion.

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MCQ 7. WHICH SECTION OF THE RBI ACT ALLOWS THE RBI TO FORM RULES 1. WHICH IS THE FIRST BANK TO REGARDING THE EXCHANGE OF INTRODUCE CREDIT CARD IN INDIA? DAMAGED AND IMPERFECT NOTES? A. BANK OF INDIA A. 17 B. INDUSLAND BANK B.21 C. CENTRAL BANK OF INDIA C.28 D. AXIS BANK ANS – (C) ANS- (D) 8. WHICH SECTIN HAS BEEN 2. THE ATM PIN IS ----- DIGIT CODE AMENDED RECENTLY/ NUMBER USED FOR THE ATM A.47 FACILITY BY A CUSTMER B.45 A. FOUR C.39 B. FIVE ANS- (B) C. SIX 9.WHICH SECTION WAS ADDED IN D. SEVEN THE BANKING REGULATION ACT TO ANS- (A) INCLUDE THE CORPORATE BANKS 3. WHAT IS THE FUNCTION OF ATM UNDER ITS PERVIES? WORLDWIDE? A. SEC 61 A. FUNDS TRANSFER B.SEC 56 B. MINI-STATEMENT C. SEC 35 C. CASH-WITHDRAWAL ANS –(B) D. PASSBOOK UPDATE 10. THE BANKING REGULATION ACT ANS- (C) WAS INITIALLY PASSED BY WHAT 4. RTGS MEANS NAME A. REAL TOWORDS GROSS A. BANKING FIRM ACT 1949 SETTLEMENT B. BANKING COMPONENTS ACT 1949 B. REAL TURN GROSS SETTELEMENT C. NONE C. REAL TECHNIQUE GROSS ANS- (B) SETTLEMENT 11.WHICH OF THE FOLLOWING IS D. REAL TIME GROSS SETTLEMENT THE CLEARING AGENCY FOR ANS- (D) GOVERNMENT 5. THE SECTION OF THE RESERV A.GOI BANK OF INDIA ACT, 1934 STATES B.RBI THAT THE RESERVE BANK OF INDIA C.CCIL HAS BEEN PROHIBITED FROM ANS-(C) A. MANKING LOANS OR ADVANCES 12.WHICH ACT ALLOWS BANKS AND B. ALLOWING INTREST ON DEPOSITS OTHER FINACIAL INSTITUTION TO OR CURRENT ACCOUNTS AUCTION RESIDENTIAL OR C. NONE COMMERCIAL PROPERTIES TO D BOTH A AND B RECOVER LOANS? ANS – (D) A. INDUSTRIAL DISPUTE ACT 6. RUPEE COINS ARE THE LEGAL B. RBI ACT TENDER IN INDIA UNDER THE C. SARFEST ACT PROVISION OF ANS- (C) A. THE RBC ACT 1934 13.FATCA STANDS FOR B. NEGOTIATION INSTRUMENT ACT, A. FOREIGN ACCOUNT TAX 1999 COMPLIANCE ACT C. INDIAN COINAGE ACT 1906 B. FOREIGN ACCOUNT TRADE ANS- (C) COMPANY ACT

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C. FISCAL ACCOUNT TAX b) Globalization. COMPLIANCE c) International trade. ANS-(A) d) None of the options given are correct. 13. BANK RATE IS DECIDED BY Answer:(a) A.RBI 22. What is the name of the famous book B.GOI published just before the end of the Second C.SBI World War, by Karl Polanyi? ANS- (A) a) The Great Depression. 14. EXPAND THE TERM EMI b) The Great Markets. A. EASILY MONTHLY INSTALMENT c) Transformation and Markets. B. EQUALY MONTHLY INVESTMENT d) The Great Transformation. C.EQUATED MONTHLY Answer:(d) INSTALMENT 23. Which countries had their own East ANS- (C) India companies by the eighteenth century? 15. WHICH OF THE FOLLOWING a) Britain. TERM IS USED IN BANKING FIELD b) The Netherlands, Denmark, and A. INTREST RATE SWAP Portugal. B. INPUT DEVICES c) France and Sweden. C. ZERO HOUR d) All of the options given are correct ANS-(A) Answer:(d) 16. WHICH OF THE FOLLOWING 24. When the housing market boom first BANK WAS INAGURATED BY began to unravel globally in 2007, banks MAHATMA GANDHI IN 1919 discovered their overexposure to what? A. STATE BANK a) Derivatives. B. INPUT DEVICES b) Shoddy buildings. C. UNION BANK OF INDIA c) Politically motivated loans. ANS- (C) d) 'Toxic assets' of mortgage-backed 18. WHICH OF THE FOLLOWING securities. PUBLIC SECTOR BANKS HAS THE Answer:(d) LARGEST NO OF BRACHES IN 25.What is 'The Quad' at the World Trade FOREIGN COUNTRIES Organization (WTO)? A. BANK OF INDIA a) The coffee shop at the WTO. B. BANK OF BARADA b) The decision-making structure C. PUBLIC NATIONAL BANK. composed of the US, the EU, Brazil, and ANS- (B) India. 19. WHAT DOES M IN M-BANKING c) The four most powerful countries within FACILITY STANDS FOR the WTO. A. MONEY d) The four department directors within the B. MARGINAL WTO. C.MOBLE PHONE Answer:(b) ANS- (C) 26.Which of the following are major public 20. HEAD OFFICE OF RBI IS LOCATED global governance agencies for trade and AT finance? Please select all that apply. A. MUMBAI a) Group of 8 (G8). B.NEW DELHI b) International Organization of Securities C. DEHRADUN Commissions (IOSCO). ANS-(A) c) WHO. 21.What are cross-border transactions? d) All of the options given are correct. a) Movement across borders of countries of Answer:(a) goods, people, money, investments, etc.

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27.What was the response to the crisis innovation to which the law responds with conditions of the 1970s? its own brand of innovation. a) Increased government intervention. a) financial b) A turn against government intervention b) architectural in the economy. c) disruptive c) To ignore economics entirely. d)incremental d) None of the options given are correct. Answer: (a) Answer:(b) 33.Zeta takes debt off a balance sheet and 28.By how much did the value of the replaces it with ______. currency of Thailand, South Korea, the a)Solidity Philippines, and Malaysia fall during the b)Liquidity Asian financial crisis of 1997/1998? c)Both of these a) 60 per cent. d)None of these b) 20 per cent. Answer: (b) c) 30 per cent. 34.Full form of SPV d) 32 per cent. a) Special Purpose Vehicle Answer:(c) b) Securitization Purpose Vehicle 29.How do governments lure foreign c) Social Person Vehicle investment? Please select all that apply. d) None of these a) By devaluing their currency. Answer : (a) b) By relaxing labour and environmental 35.It is well known that ______cause standards. maximum flocculation shortly after their c) By reducing restrictions on repatriation addition to fiber slurries. of profits. a) Anionic polymer d) All of the options given are correct. b) Cationic polymer Answer:(b) c) Lyophobic 30.Order the following events in global d) Lyophilic trade and finance. Answer: (b) i. Establishment of electronic stock 36.Presiding officer of DRT is appointed exchange by___ ii. Formation of WTO a) By government of India iii. The first McDonald's b) By the committee of Bankers a) i, ii, iii. c) By the RBI b) ii, iii, i. d) By President of India c) iii, i, ii. Solution:- (a) d) iii, ii, i. 37.DEBT RECOVERY TRIBUNAL Answer: (c) assent by the President on_ 31. Cross-border factoring involves (a) 16th January 1994 a)Using a network of factors in other (b) 27th August 1993 countries. (c) 24th June 1993 b)Bartering goods and services with factors (4) 12th August 1993 in other countries. Solution:- (b) c)Sale by exporters of long-term 38.For Debt Recovery Tribunal the receivables to factors in other countries. presiding officer hold office for term or 5 d)Consignment to factors in other year or until he attain the age of 62 year , countries. which ever is less. a) correct Answer: (a) b) incorrect 32.Cross-border securitization represents c) 3 years and 65 years respectively an example of a ______d) 7 years whereas 62 year of age is correct

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Solution:- (a) a) Narsimban 39. Appeal before the appellate tribunal to b) Sri T Tiwari be disposed off finally from the date of c) D.C Dass receipt of appeal within d) Sir Edward a) 3 months Solution:- (b) b) 4 months 47. DRT works for recovery of___ c) 180 days a) Secured debt d) 1 year b) Unsecured debt Solution:- (c) c) both secured and unsecured debt 40. Debt Recovery Tribunal establish for. d) money transfer a) recovery of loans and enforcement of Solution:- (c) security charges 48. What recent development implemented b) to manage the banks in all DRTs and DRATs to improve access, c) to manage cases of civil court efficiency and transparency. d) none of the above a) E-DRT Project Solution:- (a) b) webpage 41.The head of the DEBT RECOVERY c) webinars on DRTs APPELLATE TRIBUNAL is. d) schemes under DRTs a) presiding officer Solution:- (a) b) high court judge 49. DRT decision can challenge in DRAT c) chairperson within. d) President a) 20 days Solution:- (c) b) 30 days 42.The DRT and DRAT is c) 1 month a) Quasi judicial body d) 45 days b) Judicial body Solution:- (b) c) both 50. RECOVERY CERTIFICATE issue by. d) None of the above a) By DRAT Solution: (a) b) By Recovery officer 43.The presiding officer assist by. c) By DRT a) Recovery officer and one registrar d) None of the above b) Recovery officer Solution:- (c) c) one registrar 51.DRT is. d) Prime Minister a) Special type of court for effecting Solution:- (a) recovery of dues 44.There are_DRTs and _DRATs b) Important tool for recovery a)20,6 c) legal process by which bank can claim b)39,4 their debt rapidly c)40,6 d) All of the above d)39,5 Solution:- (d) Solution:- (d) 52. Bank can file case in DRT for minimum 45. DRAT DELHI Jurisdiction over____ claim of. a)7 DRTs a) 20 lakh or more then 20 lakh b) 10 DRTs b) 10 lakh c) 3 DRTs c) 15 lakh d) 1 DRT d) 50 lakh and more Solution:- (a) Solution:- (a) 46. The committee in 1981 in chairmanship 53. Qualification of Chairperson of DRAT of______had suggested to setting up is equal to. tribunal for recovery of debt. a) Supreme Court Judge

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b) Civil Court Judge 60.Where was the initial head office of c) High Court Judge RBI? d) None of the above a) Delhi Soluion:- (c) b) Surat 54. Qualification of Presiding Officer of c) Calcutta (now Kolkata) DRT is equal to. d) Mumbai a) District Court Judge b) High Court Judge c) Supreme Court judge Ans. C d) Prime Minister of India Solution:- (a) 61.Who was the first Indian Governor RBI 55.The full form of RDDBFI is a) C. D. Deshmukh a) Recovery of debt due to bank and b) Vilas Rao Deshmukh financial institution c) Raghu Ram Rajan b) Recieveing of dept due to bank and d) D.Subba Rao foreign industry c) none of above Ans. A Solution:- (a) 62. RBI was formed on the basis of which 56. When was the RBI established? book? a)1st April 1935. a) Poverty and Unbritish rule in st b)31 Jan1945 India. c)1st April 1949 b) The problem of rupee and it’s d)31st April 1949 solution. Ans. A c) Discovery of India. 57.Who was the Chairperson of “Royal d) The wounded civilization. Commission on Indian Currency and Finance” ? Ans. B 63.when was the Headquarter of RBI a) Sir John Simon. shifted to Mumbai? b) Louis Mountbaten a) 1st April 1937 c) Edward Hilton Young. b) 1st April 1947 st d) Warren Hastings. c) 1 April 1935 d) 1st April 1934 Ans . C 58.When was RBI nationalized ? a)1st Dec1949. Ans. C b)1st Jan 1949 64.How many deputy Directors are c)31stJan 1949 appointed in RBI d)31st Dec1949 a) 2 Ans. B. b) 5 59. What is the tenure of the Directors of c) 3 the RBI d) 4 a)5years. b)3 years. Ans. D c)6 years. d)4years. 65. How many representatives of Finance ministry are there in RBI. Ans. D. a) 2 b )5

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c) 4 Ans. D d) 0 71. Security Printing and Mining Ans. A Corporation of India Limited’s 66. Which are the correct zonal offices of (SPMCIL) currency press’s western RBI ? division is situated in which city? a)Chandigarh , Surat, Patna, a) Pune . b) Nasik’ b) Shimla, Baroda, Burdhmaan, c) Mumbai Koiambatoor d) Devas c) Delhi, Mumbai, Kolkata, Chennai. Ans. B d) Gurugram, Pune, Jalpaiguri, Mysore. 72. How many small coin deposits are in Ans. C India ? 67. Finance ministry can issue the note of a) 2782 which denomination? b) 2800 a) Rs.10 c) 2500 b) Rs.5 d) None c) Rs.20 d) Rs.1 Ans. A 73. The “Royal Commission on Indian Ans. D Currency & Finance” is also known as ? 68. Which one of these is not the function a) Simon Commission of RBI b) Hilton Young a) Fiscal Policy Commission b) Monetary Policy c) Cripps Mission c) Foreign Exchange d) None of these. management d) Developmental Ans. B Function 74. Who is the parental ministry of RBI ? a) PMO. Ans – A b) President House 69. RBI has two trainee colleges for its c) Ministry of Finance officers for training purpose one is at Chennai , the other one is in which city ? d) RBI is autonomous

Ans. C a) Mumbai 75. Who is the current governor of RBI b) Delhi c) Gandhinagar a) Shaktikanta Das d) Pune b) Arvind Panigrahi c) Rajeev Gauba Ans. D 70. Who regulates printing money in India d) Amitanh Kant ? Ans. A a) PMO 76.The Banking Companies b) Home Ministry. (Acquisition and Transfer of c) President of India Undertakings) Act was passed in the d) RBI year:

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a) 1960 d) Alliance Diminution b) 1970 82.The Banking Companies c) 1980 (Acquisition and Transfer of d) 1990 Undertakings) Ordinance was passed in: 77.Nationalisation was criticised due a) 1960 to: a) decrease in efficiency b) 1979 of the entire banking c) 1969 sector d) 1980 b) Decreased profits 83.SBI has branches in ______how many countries: c) Increased lending a) 17 d) All of the above b) 18 78.Which of these is not a impact of c) 19 globalisation on the banking sector: a) Integration of the d) 20 financial market 84.Bank of Baroda has a considerable Globalisation overseas presence in ______countries: a) 13 b) Markets were opened b) 14 for foreign investors c) 15 c) Free cross border d) 16 movement of capital, 85.Bank of Baroda has subsidiaries in technology and other ______foreign countries: resources a) 7 d) Decreased profits and b) 8 increased lendings c) 9 79.After the liberalisation steps were d) 10 taken to: 86.'CVC' stands for: a) Re- establish autonomy a) Central Verification in the banking sector Commission b) Increase efficiency b) Central Vigilance c) Promote cross border Commission transactions c) Civil Vigilance d) Increase profits Commission 80.'BSD' stands for: d) Civil Verification a) Broad spectrum Commission division 87.The Insolvency and Bankruptcy b) Broad spectrum Code was introduced in: diversification a) 2015 c) Brand special b) 2016 diversification c) 2017 d) Brand special division d) 2018 81.'AD' stands for: 88.The Insolvency and Bankruptcy a) Alliance Division Code provides a: b) Alliance Dissemination a) Non- exhaustive c) Alliance Diversification framework

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b) Exhaustive framework 95.The nationalisation of banks was c) Expandary framework done to prevent: d) Exemplary framework a) monopolistic trends 89.'PBS' stands for: b) the concentration of a) Public Service Bank economic power b) Private Sector Bank c) misuse of economic c) Public Sector Bank resources d) Private Service Bank d) All of the above 90.In which year the presence of Indian Banks was negligible in the global world: 95.A promissory note, bill of a) 1992 exchange or cheque payable either b) 1991 to order or to bearer is called? c) 1993 d) 1994 a) Negotiable Instrument 91.In which year the policies for b) Bank Reconciliation licensing private banks were c) Bearer introduced: d) Document a) 1991 b) 1992 96.How many total sections are c) 1993 there in the Negotiable Instruments d) 1994 Act? 92.Post globalisation the banks diversified in their services, a) 147 diversification of services were of the b) 137 how many types: c) 148 a) Two d) 150 b) Three c) Four 97.Which section of Negotiable d) Five Instruments Act deals with 93.Liberalisation steps were Promissory Note? recommended by which committee: a) Malimath Committee a) Section 4 b) Narasimham b) Section 5 Committee c) Section 6 c) Central Committee d) Section 7 d) Law Committee 94.License Raj led to: 98.In which section bill of exchange a) Deregulation of banks is dealt with in Negotiable b) Deregulation of the Instruments Act? market c) Discontinuance of a) Section 5 services b) Section 7 d) Dissemination of c) Section 9 services d) Section 11

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99.What does Section 6 deals within 104.Which section of Negotiable the Negotiable Instruments Act? Instruments Act deals with Presumptions as to Negotiable a) Cheque Instruments? b) Promissory note c) Bearer a) Section 118 d) Document b) Section 119 c) Section 120 100.Which section in the Negotiable d) Section 121 Instruments Act deals with Negotiable Instruments? 105.Which section of Negotiable Instruments Act deals with a) Section 13 Dishonouring of Cheque? b) Section 12 c) Section 16 a) Section 138 d) Section 21 b) Section 139 c) Section 141 101.Drawee is defined in which d) Section 137 section of the Negotiable Instruments Act? 106.Which of the following is/are true about the Negotiable Instruments Act, a) Section 7 the Promissory Note is … b) Section 9 c) Section 4 (I) Definition of Promissory Note is d) Section 10 given in section 8 of the Negotiable Instrument Act 102.Which section of Negotiable Instruments Act deals with Dishonour by non-payment? (II) Containing an unconditional undertaking a) Section 92 b) Section 95 (III) To pay a certain sum of money c) Section 78 only to a specific person or the d) Section 52 bearer

103.Which section of Negotiable (IV) The seller is bound to accept Instruments Act deals with Cheque the promissory note crossed generally?

a) Section 123 (V) A document was written and b) Section 125 signed by the payer/maker c) Section 141 d) Section 131 (I), (II) and (III)

(II), (III) and (V)

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(II), (III), and (IV) (I), (II) and (IV)

(I), (III) and (IV) (II) and (III)

107.The Negotiable Instruments (III) and (IV) (Amendment) Bill, 2017 inserted a provision allowing a court trying an 109.If the holder of a bill of offence related to cheque bouncing, to exchange allows the drawee direct the drawer (person who writes the cheque) to pay interim compensation to more than ___ hours, exclusive the complainant. The interim of public holidays, to consider compensation will not exceed ___% of whether he will accept the same, the cheque amount? all previous parties not consenting to such allowance a. 15% are thereby discharged from b. 25% liability to such holder. c. 30% a) 24 d. 20% b) 12 c) 36 108. Which of the following is/are true d) 48 about Bill of Exchange?

(I) A bill of exchange requires in its 110.If a Minor draw, indorse, inception two parties. deliver and negotiate Negotiable Instruments, it binds (II) A bill of exchange or “draft” is a written __ order by the drawer to the drawee to pay money to the payee. a) All the parties except minor b) All the parties including (III) Bills of exchange are used primarily in international trade, and are written orders minor by one person to his bank to pay the bearer c) Minor Only a specific sum on a specific date. d) Minor and Only Drawer

(IV) Definition of ‘ Bill of Exchange’ is 111.Which of the following mentioned in Section 6 of the Negotiable is/are false about Dishonour of Instrument Act. Cheque ?

(I) and (IV)

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(I) Section 138 defines Dishonour of 113.A cheque dated subsequent to the date of its issue is cheque for insufficiency, etc., of funds in the account. A Post dated cheque

B Blank cheque (II) Such cheque has been presented to the bank within a period of twelve months from C Crossed cheque the date on which it is drawn or within the D Account payee cheque period of its validity, whichever is earlier 114.Banking transaction that takes placed in a virtual (III) Imprisonment for such offence may be ambience on the website of a banking company is termed as extended for period of five year A Internet Banking (IV) Section 138 apply unless – the drawer B Telephone Banking of such cheque fails to make the payment of the said amount of money to the payee or, C Mobile Banking as the case may be, to the holder in due D Modern Banking course of the cheque, within fifteen days of the receipt of the said notice. 115. The primary relationship between a banker and customer starts from the time [A] when customer visits that bank (I) and (IV) [B] when customer opens account [C] when customer visits that bank to made queries (II) and (III) [D] All of the above Answer: Option [B] (II),(III) and (IV) 116. Which one of the following is the most important relationship between banker and Only (IV) customer [A] Debtor and Creditor 112.Dishonour of cheque by a [B] Bailee and Bailor banker without any justifiable [C] Agency and Principal reason is called? [D] Trustee and Beneficiary Answer: Option [A] A Valid dishonour of cheques 117.Dishonour of cheque by a banker without any justifiable reason is called [A] Valid dishonour of cheques B Unmindful dishonour of cheques [B] Unmindful dishonour of cheques [C] Negligence dishonour of cheques C Negligence dishonour of cheques [D] Wrongful dishonour of cheques Answer: Option [D] D Wrongful dishonour of cheques 118. ______is the right of a person to retain the property of another

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person in his possession untill the debt from (a) Yogi Adityanath that owner of that property is repaid (b) Charan Singh [A] Lien (c) Ram Nayak [B] Retainment (d) Anandiben Patel [C] Retrenchment Answer: (a) [D] Libel Answer: Option [A] 125.The Unlawful Conversion bill has 119.The idea behind the bankers right to provisions that can land offenders in jail for set-off is to enable the banker to reduce the upto ______amount due to him from (a) 7 years a customer (b)5years [A] Gross (c)2 years [B] Net (d) Lifetime [C] Partial Answer: (b) [D] None of the above 126.'The UP Cabinet has decided to Answer: Option [B] introduce an ordinance against unlawful religious conversions" said by 120. The ______rule is followed (a)Ram Nayak in appropriation of accounts if neither (b)T.V Rajeshwar debtor nor creditors does not makes any (c)Yogi Adityanath specific appropriation (d)Siddharth Nath Singh [A] Pagets Answer: (d) [B] Kinlay 127.Which state is not included in "anti [C] Sheldon convension law" [D] Claytons (a)Rajasthan Answer: Option [D] (b)Gujarat 121.The right of set-off customers account (c)Jharkhand can be exercised only by a A. Creditors (d)Uttrakhand [A] Creditors Answer: (a) [B] Debtors 128.What is the motto of legal services [C] Banker authority? [D] Customer • Law provides justice Answer: Option [C] • Justice for all 122.The State shall endeavour to secure for • Access to justice for all the citizens a Uniform Civil Code • Equal justice throughout the territory of India as per Answer: Access to justice for all (A) Article 40 129.First Lok Adalat was held on which (B) Article 43 date (C) Article 44 • March 14, 1982 (D) Article 48 • March 14, 1992 Answer:(c) • March 14, 1995 123.Who is the head of a Legislative • March 14, 1987 Assembly? Answer: March 14, 1982 (a) Minister 130.Where was First Lok Adalat held? (b) MLA

(c) Chief Minister • Jamnagar (d) All of these • Junagarh Answer (c) • Jamunanagar 124.Who passes bill on unlawfull • Ahemdabad conversion to check 'love jihad'? Answer: Junagarh

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131.Powers of Lok Adalat is mentioned in 138.Who introduced legal aid scheme which section of legal services authority act • Justice Anil Dev Singh • Section 10 • Justice Naiyyar • Section 12 • Justice P. N. Bhagwati • Section 21 • Justice R. N. Mishra • Section 22 Answer: Justice P. N. Bhagwati Answer: Section 22 139.When was legal services authorities act 132.At what cost, Justice is provided to was enacted? people • November 9, 1995 • Free • November 19, 1995 • 5000 • November 9,1987 • 10000 • November 19, 1987 • 100000 Answer: November 9, 1995 Answer: free 140.Lok Adalat acts as ...... between the 133.Lok Adalat is a feature of parties • Legal services act • Arbitrator • Legal Authorities act • Litigator • Legal services authorities act • Conciliator • None of these • Dispute creator Answer: Legal services authorities act Answer: Conciliator 134.Legal Aid committee formed in which 141.Lok Adalat is for year • Economically weaker section of the • 1971 society • 1972 • Rich • 1981 • Aristocratic people • 1961 • Elite class Answer: 1971 Answer: Economically weaker section of 135.Lok Adalat were also known as the society • Court 142.Lok Adalat is like a • Adalat • Court • People’s court • Agency • People’s Adalat • Group of people Answer: People’s Court • None of the above 136.Which of the following is not the Answer: Court power of Lok Adalat? 143.What is the full form of MMID • Summon witnesses A. Money Massage Identity • Discovery of documents B. Mobile Money Interface • Reception of evidences C. Mobile Massage Identifier • Issue grants D. Mobile Money Identifier Answer: Issue grants Answer: C. Mobile Massage Identifier 137.Who gave the landmark judgment in 144. What is the full form of UPI Abdul Hasan and NLSA v. Delhi Vidyut A. Unified Payment Interface Board B. Unique Payment Interface • Justice Anil Dev Singh C. United Payment Interface • Justice Naiyyar D. Unified Processing Interface • Justice P. N. Bhagwati Answer: A. Unified Payment Interface 145. UPI is an initiative of • Justice R. N. Mishra A. RBI Answer: Justice Anil Dev Singh B. SEBI

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C. IRDA D. NPCI Answer: D. NPCI 146. VPA stands for A. Virtual Payment Address B. Virtual Processing Address C. Vital Payment Authority D. Visible Payment Authority Answer: A. Virtual Payment Address 147. In BHIM Baroda Pay, what is the full form of BHIM A. Bharat Intensive Mobility B. Bharat Interface for Money C. Bharat Intercom for Message D. Bharat Intercom for Money Answer: B. Bharat Interface for Money 148. Full form of IPG A. International Payment Gateway B. Internet Payment Gateway C. Internet Processing Gateway D. Internet Payment Grid Answer: B. Internet Payment Gateway 149. Debit card PIN generation through BOB ATM is called A. Pink PIN B. Green PIN C. Red PIN D. Blue PIN Answer: B. Green PIN 150. Baroda Travel Easy card valid for a period of __ year from date of issue A. 1 B. 3 C. 5 D. 10 Answer: B. 3 151. Baroda Travel Easy card is not available in A. Euros B. Sterling Pound C. US Dollars D. Arab Emirate Dirhams Answer: D. Arab Emirate Dirhams 152. Maximum account that can be linked to single BOB debit card A. 10 B. 9 C. 5 D. 1 Answer: B. 9

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61

62

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