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CS Professional · Banking and Insurance - Laws and Practice · Overview of Indian Banking System

Himalaya Credit Co-operative Bank is a co-operative bank, and Sahyadri Bank Ltd is a banking company as defined in the Banking Regulation Act. Under Section 45H of the Reserve Bank of India Act, 1934, how does Chapter IIIB (regulating non-banking institutions) apply to them?

Chapter IIIB does not apply to either entity. Section 45H of the RBI Act excludes banking companies as defined in the Banking Regulation Act and co-operative banks, among others, from that chapter. Both are regulated as banks, so the non-banking provisions do not govern them.

  1. AIt applies to both, as they accept deposits
  2. BIt applies to the co-operative bank only
  3. CIt applies to the banking company only
  4. DIt does not apply to either of themCorrect

Explanation

Section 45H states that Chapter IIIB does not apply to the State Bank, a banking company as defined in section 5 of the Banking Regulation Act, a corresponding new bank, a subsidiary bank, a Regional Rural Bank or a co-operative bank, a primary agricultural credit society or a primary credit society. Both entities fall in the excluded list.

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