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

Kaveri Bank Ltd wants to open a temporary counter for a mela in Nashik, a town where it has no existing place of business, and the counter will run for 10 days. Under section 23 of the Banking Regulation Act, 1949, what is the position?

Prior RBI permission is required. The one-month temporary-counter exemption in section 23(1) applies only where the bank already has a place of business in that city, town or village or its environs. Kaveri Bank has none in Nashik, so the general rule applies despite the short duration.

  1. AThe proviso exempts it because the duration is under one month
  2. BThe proviso does not apply because the bank has no existing place of business in that city, town or village or its environs, so prior RBI permission is neededCorrect
  3. CPermission is needed only if the counter accepts deposits above a limit
  4. DNo permission is needed because a mela is a public occasion

Explanation

The proviso exempts a temporary place only within a city, town or village or its environs where the bank already has a place of business. Since Kaveri Bank has none in Nashik, the exemption fails despite the short duration, and the general rule requiring prior RBI permission for a new place of business applies.

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