Banking and Negotiable Instruments Act

Unit 1 — Introduction

1.1 Origin of the word „Bank‟ – evolution of Banking institution · 1.2 Classification of Banking – 1.2.1 Commercial Banking – Central Bank – 1.2.2 The Reserve Bank of India – its Organization – Functions of Central Bank 1.2.3 Banking Systems – Branch Banking and Unit Banking – Chain Banking and Group Banking – Deposit Banking – Investment Banking and Mixed Banking – their features and functions.

• Introduction — Concept of Banking
• Structure of Indian Banking system
• Types of Common Banking Institutions

Unit 2 — The Banking Regulation Act, 1949 – Applicability to different kinds of Banks.

2.1 General Provisions : Definitions – Banking, Banking Company, Banking Policy, Branch Office, Company, Demand and Time Liability – small scale industrial concern. Business in which a Banking company may engage – Use of the word “Bank”, “Banker”, “Banking” and “Banking Company” Prohibition of Trading Disposal of Banking Assets. Requirements as to paid-up capital and reserves.Regulation of Capital and Voting Rights of shareholders. · 2.2 Restriction on commission, brokerage, discount etc. on sale of shares. Prohibition of charge on unpaid capital. 2.2.1 Prohibition of floating charge on assets. Restriction as to payment of Dividend – 2.2.2 Reserve Fund – Restriction on the nature of subsidiary companies. · 22.3 Management and Control: Restrictions on certain forms of employment – constitution of Board of Directors – Chairman – 2.2.4 Exemption from holding qualifications shares for Chairman Etc. – overriding effect of Sec. 10A and 10B over other laws, contracts etc. 2.2.5 Prohibition of common Directors Restriction on Loans and advances – Determination of Policy by the Reserve Bank of India regarding Loans and Advances – Assets of a Banking Company – Maintenance of liquid Assets. 2.2.6 Power of the Reserve Bank: Election of new Director – 2.2.7 Cash Reserve – Licensing of Banking Companies – Cancellation of License – 2.2.8 Opening of new and Transfer of Existing Business – 2.2.9 Power to call for information – Power of Inspection – Power to give directions – Power to Remove Managerial and other persons – Power to Appoint Additional Directors – Suspension of Business – 2.2.10.Winding up – Powers of the High Court in Winding up – Nomination for Payment of Directors‟ Money. · 2.3 Banking Regulation (Amendment) Ordinance 2017

• Banking Regulation Act, 1949

Unit 3 — Negotiable Instruments Act, 1881

3.1 Definition – The Essential Characteristics – Kinds – Difference Between Bill of Exchange andCheque, Bill of exchange and Promissory note – 3.1.1. Parties to a Negotiable Instrument – 3.1.2 Holder and Holder in Due Course – Privileges of a Holder in Due Course – 3..1.3 Competence of Parties to Negotiable Instrument – (Minor, Lunatic, Insolvent, Joint Stock Company, Agent, Partnership Firm, Legal Representative, Joint Hindu Family). 3.1.4 Liabilities of Parties to Negotiable instrument. 3.1.5 Presentment for Acceptance and Payment – 3.1.6 Negotiation Assignment and Negotiation – 3.1.7. Endorsement and its Kinds – Once a bearer always a bearer – · 3.2 Discharge of Parties – Different modes of Discharge – · 3.3 Dishonour of instruments – Liabilities of Bankers – 3.3.1 As Paying Banker – When a Banker can Refuse to pay Customer‟s Cheque. ( 3.3.2 Liabilities as Collecting Banker – Crossing of Cheque – Liabilities of Bankers on Crossed Cheques. 3.3.3 Payment of Customer‟s Cheque – the Paying Banker‟s Risks – The Precaution to be taken.

• Negotiable Instruments Act, 1881

Unit 4 — Relationship with Bank

4.1 Relationship between Banker and Customer – Meaning of the Term “Customer” – General Relationship between a Banker and Customer – · 4.2 Obligation of Banker – Obligation to HonourCheque – 4.2.1. Garnishee Order – Stopping Payment of Cheque – Obligation to Maintain secrecy of Accounts – 4.2.2. Limitation of Banker‟s Obligation as Regards Secrecy – 4.3.3. Disclosure as Legal Necessity. 4.4.4. Disclosure as a Banking Practice – Disclosure in Public Interest – Consequence of Wrongful Dishonor of Cheques – 4.4.5 Rights of Bankers – Right of General Lien – Right of Set-off – Right of appropriation – 4.5.6. Appropriation by the Debtor and the Creditor.

Unit 5 — Special Cutomers, Charge and Mortgage

5.1 Special Types of Banker‟s Customers – 5.1.1.Minors – Married Woman – Pardanashin Woman – Illiterate Persons – Drunkards – Lunatics – Executors and Administrators – 5.1.2.Customer‟s Attorneys – Joints Accounts – Joint Hindu Family – Partnership Firm – 5.1.3.Payment of Firm‟s Debts and Separate Debts – Joint Stock Companies 5.1.4.Modes of Charging Securities – Lien, Pledge Hypothecation – Mortgage – · 5.2 “Charge” – Meaning – Mortgage and Charge – Assignment – 5.2.1. Contract of Indemnity and Guarantee – 5.2.2. Situations Under Which Letters of Indemnity are obtained. Referred Cases : Ram RatanVs. Director of Enforcement (AIR 1966, SC 495) Chidambara Vs. Ranga (AIR 1966, SC 193) PankajMehraVs. State of Maharashtra (AIR 2000, SC 1953) Verra Exports Vs. T. Kalavathy (AIR 2002, SC 38)

• Mortgage and Charge [Sections 58 — 104]