A BRIEF EXPLANATION REGARDING THE ‘ROLE OF RESERVE BANK IN INDIA TO CONTROL THE BANKING INSTITUTION’

Abstract

Banking is as old as the civilization itself. As early as 2000 B.C, the Babylonians developed a system of banks. Banking was in existence in India during Vedic period. The term ‘Bank’ has been explained in different ways. In India, there is no proper explanation of the term ‘Bank’ in any statute. The provision of Section 3 of the NI Act 1981 has explained ‘Banker’ includes any person acting as a banker and any post office saving bank. The Central Bank is Apex Bank of the country. It is the Reserve Bank of India (RBI) in India. The banking Regulation Act 1949 empowers the RBI to control the banking institution of India. Every banking company should deposit the prescribed minimum paid-up capital and reserved with the RBI either in cash or in the form of unencumbered approved securities. By order, the RBI require any banking company to call a general meeting of the shareholders of the company within such time. The RBI may specify different criteria for acquisition of shares or voting rights in different percentages. The RBI may determine the policy in relation to advance to be followed by banking companies generally or by any banking company in particular.