banking amendment act 2012

7/30/2019 banking amendment act 2012

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BANKING AMENDMENT ACT

2012

Submitted to: Submitted by:

Mr Rajpreet Chatwal Ishadeep Kaur

Irvanpreet Kaur

Jaspreet singh

Harmandeep


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WHATISBANKING

A bank is a financial institution and a financial

intermediary that accepts deposits and channels

those deposits into lending activities


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WHYAMENDMENTS?

Increased operational efficiency, profitability and

productivity

Superior customer services

Better cross-selling ability Improved management/accountability

Risk management

Minimal transaction cost


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BANKING REGULATION ACT, 1949

The Banking Regulation Act, 1949 came into force on

March 16, 1949. It contained various aspects related to

Banking Companies in India. This is regulatory act Its

purpose is to Provide safety in the interest of depositors

Prevent misuse of powers by managers of banks

Act does not supersede but supplement to Companies

Act, 1956Initially named Banking Companies Act, 1949

but from March 1, 1966, the name of the Act was

changed to Banking Regulation Act, 1949.
http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_1956http://www.lawnotes.in/Companies_Act,_1956


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SALIENT FEATURESOF BANKING

REGULATION ACT, 1949

Restrictions on banks to grant loan to person

interested in management of the bank

Every bank to maintain a percentage of its demand

and time liabilities by way of cash, gold,

unencumbered securities 25%-40% as on last

Friday of 2nd preceding fortnight

Every bank has to publish its balance sheet as on

March 31st


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CONTD

Balance sheet is to be got audited from qualified

auditors

Banks not to pay any commission, brokerage,

discount etc. more than 2.5% of paid up value of

one share


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INDIANBANKINGNOW

Narrow banking

Relationship banking

Hi-tech banking

E Age-banking Mobile banking

Network banking

Online banking

Universal banking


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E BANKINGDEVELOPMENTS

ALPMs and back office computerization

Need to improve customer service

Advent of pc in 1980s

Competition and reforms


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Introduction of computerization

Clearing houses

ATMs

Electronic fund transfer

Bank-net

SWIFT (society for worldwide interbank finicial telecom) Electronic mail

Credit cards

Tele banking

Online banking


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WHY TECHNOLOGYINBANKS?

To transform financial services industry in the

networked world

Banks to be customer centric

Provide services across a range of channels To be futuristic


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BENEFITSTOCUSTOMERS

More convenience and flexi timings

Better awareness of products and services

Up-to-date information on accounts

Low cost of accessing accounts


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BANKING AMENDMENT ACT (BILL) 2012

Statement given by P. Chidambaram

Strengthen financial sector Establishing large size bank

Increasing voting right of investors


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SALIENT (AMENDMENT FEATURESOF BANKING

LAWS) BILL 2012

Increase shareholders voting rights.

More corporate houses to run banks

Can remove entire Board of a Bank

Prior approval of RBI necessary if a person wants

to purchase more than 5% shares of a bank.


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CONTD

RBI can conduct special audits of cooperative banks.

Bank will have to pay penalty interest rate, if it doesnt

maintain CRR on daily basis.

Cooperative societies cannot carryout banking activitieswithout license from RBI.

A DepositorEducation and Awareness Fund to receive

money from deposit accounts not operated for more

than 10 years.


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LATEST RATES

Bank Rate 8.75

CRR 4

SLR 23

Repo Rate 7.75 Reverse Repo Rate 6.75


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NEWBANKINGLICENCES

By passing the Banking Amendment Bill 2012 that RBI

would issue only a handful of licenses and given that there

are a large number of hopefuls, the competition for new

banking licenses would be very intense.

The contenders for bank license are list below


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RBIGUIDELINES

TO GETA BANKING LICENSE

A minimum capital of Rs. 500 crore, 49% cap on foreign

shareholding.

listing within two years of receiving the banking license

Mandatory 25% branches into rural areas Groups that have significant (10 per cent or more)

income or assets or both from real estate construction

and broking activities in the last three years shall not be

eligible to promote banks.


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CONTD

The bank shall be required to maintain a minimum capitaladequacy ratio of 12 per cent for a minimum period of

three years after the commencement of its operations.

Private groups with diversified Indian ownership, sound

credentials and integrity that have a successful track

record for at least 10 years.

Ref=http://www.moneymantra.co.in/detailsPage.php?id=2730&title=Special%20Story&wrt=MM%20Bure

au


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THECONTENDERSFORBANKLICENSEARELIST

BELOW


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SHRIRAM GROUP

Strengths: Shriram Group's whole business model

mainly caters to financially secluded bottom of the

pyramid consumer segment. It has over 1,200 branches

in rural areas through its companies.

Weakness: Shriram Group comprises multiple entities of

which, only two are listed (STFC & SCUF), hence the

structure is complicated and it could be difficult to club all

the business in non-operating holding company (NOHC)

as per RBI requirement.


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L&T FINANCE

Strengths: L&T Finance is professionally managed group

with diversified holdings and no promoters. Its holding

structure is closely aligned with the current RBI's proposal

of non-operating holding company structure.

Weakness: It has a very small branch network (around 110

branches) compared to other contenders who have a

network of over 500 branches. Less than one-third of its

book is rural-focused, and hence does not score very high

on financial inclusion.


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BAJAJ FINSERV

Strengths: Bajaj Finserv has a well-diversified range of

financial services. At the group level, it has an existing

customer base of 15 million+ and presence in over1,000+ locations through its subsidiaries.

Weakness: Bajaj has been focusing on the affluent

customers segment, and scores low on financial

inclusion. It has has almost 25% of its book focused

toward financing purchase of products of other group

companies.


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TATA CAPITAL

Strengths: Tata Capital is a household name and is

the most trusted brand in the country. The group

through its various companies has presence in several

industries with consumer base of over 150 million.

Weakness: Tata Capital is a 100% subsidiary of Tata

Sons. It has multiple entities in the financial services

business, which makes the NOHC structure

complicated.

Ref= http://www.moneycontrol.com/news/business/6-contenders-for-bank-license-

strengthsweaknesses_793669-5606.html


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Documents

banking amendment act 2012