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Section 35A Banking Regulation Act 1949: RBI power to give directions

Section 35A (Power of the Reserve Bank to give directions) under Part II (Business of Banking Companies) of the Banking Regulation Act 1949 :—

❝(1) Where the Reserve Bank is satisfied that—

(a) in the public interest; or
(aa) in the interest of banking policy; or
(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or
(c) to secure the proper management of any banking company generally,

it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.

(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.❞



The Banking Regulation Act, 1949 (Act No. 10 of 1949) was amended by various other enactments subsequently as mentioned hereunder:

- Banking Companies (Amendment) Act, 1950 (No. 20 of 1950);
- Banking Companies (Amendment) Act, 1953 (52 of 1953);
- State Bank of India Act, 1955 (No. 23 of 1955);
- Jammu and Kashmir (Extension of Laws) Act, 1956 (No. 62 of 1956);
- State Bank of Hyderabad Act, 1956 (No. 79 of 1956);
- Banking Companies (Amendment) Act, 1956 (No. 95 of 1956);
- Banking Companies (Amendment) Act, 1959 (No. 33 of 1959);
- State Bank of India (Subsidiary Banks) Act, 1959 (No. 38 of 1959)
- Banking Companies (Second Amendment) Act, 1960 (No. 37 of 1960);
- Banking Companies (Amendment) Act, 1961 (No. 7 of 1961);
- Deposit Insurance and Credit Guarantee Corporation Act, 1961 (No. 47 of 1961);
- Banking Companies (Amendment) Act, 1962 (No. 36 of 1962);
- Banking Laws (Miscellaneous Provisions) Act, 1963 (No. 55 of 1963);
- Banking Laws (Application to Co-operative Societies) Act, 1965 (No. 23 of 1965);
- Banking Laws (Amendment) Act, 1968 (No. 58 of 1968);
- National Bank for Agriculture and Rural Development Act, 1981 (No. 61 of 1981);
- Banking Laws (Amendment) Act, 1983 (No. 1 of 1984);
- Industrial Reconstruction Bank of India Act, 1984 (No. 62 of 1984);
- National Housing Bank Act, 1987 (No. 53 of 1987);
- Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (No. 66 of 1988);
- Small Industries Development Bank of India Act, 1989 (No. 39 of 1989);
- Banking Regulation (Amendment) Act, 1991 (No. 54 of 1991);
- Banking Regulation (Amendment) Act, 1994 (No. 20 of 1994);
- Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (No. 24 of 2004);
- Special Economic Zones Act, 2005 (No. 28 of 2005);
- Banking Regulation (Amendment) Act, 2007 (No. 17 of 2007);
- Banking Laws (Amendment) Act, 2012 (No. 4 of 2013);
- Banking Regulation (Amendment) Act, 2017 (No. 30 of 2017).


  1. How to withdraw full amount of our personal accounts, if they fail to prove.

    1. Rajender Singh9/24/2019

      RBI issues the direction for a certain period and restrict the bank's operations for that period only, during which it may carry investigation into the affairs of the bank to find irregularities / violations of laws.

      If RBI is unable to prove the irregularities of the bank, then it will have to lift the direction and the banking operation will normalise. Until then the customers will have to wait.

      RBI has placed PMC bank under directions for 6 months from 23 Sep 2019. During this period, there will be restrictions on withdrawals unless the RBI allows it by relaxing the terms of their directions.

      If they fail to prove anything, they'll allow back the bank to operate fully and then you can withdraw full amount of your personal account.

  2. What if RBI found irregularity from bank .are customer money safe ?

    1. Manohar9/25/2019

      If RBI finds any violations by bank, the bank will be penalised and RBI may prescribe additional restrictions on the disbursal and collection of money by the bank.

      It may be said that the customer money is safer than before as the bank's operations are closely watched by RBI and RBI may direct proper guidelines to be followed by the bank in disbursing customer money.

  3. Who will responsible to pay customer money ? Bank ? RBI ?

    1. Jeevan Das9/25/2019

      The bank itself is ultimately responsible for repayment of money back to the customer. But the RBI may put certain restriction or guidelines to be followed by the bank in carrying out its operation. Whatever RBI will decide, it will decide keeping in view the best interest of the company.


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