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CS Professional · Banking and Insurance - Laws and Practice · Banking Operations

Ganga Bank Ltd plans to open a stall counter at a week-long trade exhibition in Jaipur, a city where it already has a branch, to offer banking facilities to visitors. The counter will operate for 20 days. Which statement is correct under section 23 of the Banking Regulation Act, 1949?

No RBI permission is needed. The proviso to section 23(1) exempts a temporary place of business opened for up to one month, at an exhibition, conference or mela, in a city where the bank already has a place of business. Twenty days in Jaipur fits all these conditions.

  1. ANo RBI permission is needed because the proviso exempts a temporary place of business for a period not exceeding one month in such a caseCorrect
  2. BRBI permission is needed because any new place of business needs it without exception
  3. CNo permission is needed for any temporary place of business, whatever its duration or location
  4. DPermission is needed from the Central Government because the counter is temporary

Explanation

The proviso to section 23(1) exempts a temporary place of business opened for not more than one month within a city, town or village (or environs) where the bank already has a place of business, for an exhibition, conference, mela or like occasion. Here 20 days is under one month and Jaipur already has a branch. Exemption is limited by duration and location, so the 'no exception' and 'any duration' options are wrong.

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