Banking Regulation Act, 1949
Licensing and Cancellation Powers
The Banking Regulation Act, 1949 is the primary legislation governing the functioning, regulation, and supervision of commercial and payments banks in India. Section 22 specifically deals with the licensing of banking companies.
- Section 22(1): No company shall carry on banking business in India without obtaining a licence from the RBI.
- Section 22(3): Lists the conditions under which the RBI may refuse to grant or may cancel a licence — including detrimental conduct of affairs (22(3)(b)), management prejudicial to depositors (22(3)(c)), absence of public purpose (22(3)(e)), and non-compliance with licence conditions (22(3)(g)).
- Section 22(4): Empowers the RBI to cancel a licence already granted if any of the 22(3) grounds are found to exist — the provision invoked in this case.
- Section 38: Provides for compulsory winding up of a banking company on a petition by the RBI to the High Court.
- Section 45: Empowers the RBI to apply to the Central Government for moratorium and subsequently prepare a scheme of amalgamation, as an alternative to winding up.
- The Banking Regulation Act was comprehensively amended in 1994, 2012, and 2020 (the 2020 amendment brought cooperative banks also under RBI regulation).
● Tracked since April 24, 2026 · last seen May 12, 2026 · updates as the daily brief publishes
See it in today’s brief.
Daily current affairs with every static concept explained in place.
Read the daily brief