Specialised Statutes Around Banking in India: Complete Notes

The Banking Regulation Act governs the bank; the statutes around it govern everything that happens around it. How the bank's records are proved in a courtroom, how a borrower's conduct follows him from lender to lender, how money crosses the border, what happens to an account when its holder dies or forgets it, and how long every claim survives. Each is a short subject on its own; together they are the connective tissue between banking law and the general law, and the examiners' favourite ground precisely because candidates treat them as peripheral.

Figure 1: The five statutes around one account

1. The Bankers' Books Evidence Act, 2026

• The Bankers' Books Evidence Act, 2026 (Act 15 of 2026, assent 13 August 2026) came into force on 1 October 2026 and repealed the Act of 1891, saving pending proceedings and certificates already issued. The old Act had been brought into the electronic age by the Information Technology Act, 2000, which inserted the Section 2A certificates for printouts.
• Bankers' books, under Section 2, include ledgers and all records used in the ordinary business, physical or electronic, onsite or offsite, in virtual or cloud locations, and at backup and disaster recovery sites; a legal proceeding now includes arbitrations and investigations.
• A certified copy carries a certificate under Section 3: the First Schedule form for physical books, and the Second Schedule form for electronic books, which describes the system and confirms the integrity conditions of Section 7, signed by the branch or office head or another authorised officer. Section 6 bars rejecting a record merely because it is electronic.
• Section 5 receives the certified copy as prima facie evidence of the entry, to the same extent as the original, as Section 4 of the old Act did.
• Section 8 protects officers from producing books or appearing where the bank is not a party, save for a special cause the court records, now defined; Section 9 lets a court order inspection and copies, an exception to the banker's secrecy confined to the accounts and period named; and Section 11 gives the same powers to an officer of at least Superintendent of Police rank in an investigation.

2. Credit information: the Act of 2005

• A credit information company needs registration with the Reserve Bank under Sections 4 and 5; four are registered. Section 15 makes membership compulsory for every credit institution, and the Reserve Bank requires membership of all four, with Section 17 obliging members to furnish and update the information.
• Sections 19 and 20 carry the duties of accuracy, security and privacy; unauthorised access is punishable.
• Section 21 gives an applicant for credit a copy of the information the lender obtained, and a borrower correction: a request to update or correct must be acted on within 30 days. By direction, each company gives one free full credit report with the score every year, and alerts the customer whenever his report is pulled or default information is filed.
• The compensation framework of 26 October 2023, in force from April 2024, prices delay: ₹100 a calendar day beyond 30 days, the credit institution owning 21 days of the window and the company 9, paid within five working days of resolution. The companies answer to the Integrated Ombudsman since 2022, and since 1 January 2025 lenders report data fortnightly.

Figure 2: The bank's five roles across these statutes

3. Foreign exchange: the Act of 1999

• In force from 1 June 2000, replacing the regulation statute of 1973: management in place of rationing, and civil contravention in place of crime.
• Section 3 bars dealing except through an authorised person and bars payments to or for non residents outside the channel, the anti hawala core; Section 4 bars residents from holding foreign assets save as provided; Section 8 obliges realisation and repatriation of export proceeds.
• Current account transactions are free unless restricted, under Section 5 and the Rules of 2000 with their three schedules; capital account transactions are restricted unless permitted, under Section 6, the Government making the rules for non-debt instruments since October 2019 and the Reserve Bank for debt.
• Section 10 creates the authorised person, the bank as category one authorised dealer at the top, bound to take the declaration, refuse on non-compliance and report suspected contravention; Section 11 directions carry their own penalty.
• Section 13: penalty up to thrice the sum involved, or ₹2 lakh where not quantifiable, and ₹5,000 a day if continuing; Section 15: compounding, ordinarily by the Reserve Bank, within 180 days.
• The liberalised remittance scheme lets a resident individual remit USD 250,000 a financial year for permitted current and capital purposes; tax is collected at source above a ₹10 lakh threshold from April 2025, loan funded education exempt. The non resident keeps his Indian earnings in the ordinary account, his foreign earnings in the external rupee account or the foreign currency term deposit, where the exchange risk is the bank's.

4. Nomination, death and the forgotten account

• Sections 45ZA to 45ZF, rewritten by the Banking Laws (Amendment) Act, 2025 with effect from 1 November 2025: up to four nominees, simultaneous with percentage shares or successive for deposits, successive only for safe custody articles and lockers. Payment, return or access to the nominee is a full discharge, expressly without prejudice to claims against the nominee.
• Ram Chander Talwar v. Devender Kumar Talwar, (2010) 10 SCC 671: the nominee receives as against the bank and holds for those entitled under succession; nomination is machinery of payment, not a will.
• On death the bank looks in order: survivorship clause, nominee, simplified settlement under the Directions of 26 September 2025, up to ₹15 lakh (₹5 lakh in a cooperative bank) within 15 calendar days with interest for delay, and only beyond that a succession certificate, probate or court order.
• Under the instructions of 1 January 2024, an account with 2 years of customer silence is inoperative, reviewed and warned after one; activation is free, by know your customer update within 3 working days, and savings interest never stops.
• At 10 years the balance becomes an unclaimed deposit and moves under Section 26A to the Depositor Education and Awareness Fund, listed on the bank's site with a unique reference and searchable centrally on the portal opened in 2023; the owner claims from the bank at any time, with interest, the Fund refunding. Section 26 separately requires the annual return of accounts unoperated for 10 years.

5. Limitation on the bank's claims

Figure 3: The periods across these statutes

• 3 years for money claims: a demand loan from the date of the loan, instalments due date by due date or all at once on recall; the customer's deposit, by contrast, ages only from his demand under Article 22.
• 12 years to enforce a mortgage under Article 62; 30 years for redemption.
• Section 18: a written, signed acknowledgment of subsisting liability, made before expiry, starts a fresh period; Section 19 does the same for part payment evidenced in the payer's writing; Section 25(3) of the Contract Act is the only route after expiry, a signed promise to pay enforceable without fresh consideration.
• B. K. Educational Services v. Parag Gupta, (2019) 11 SCC 633: the Limitation Act applies to insolvency applications, Article 137, three years from default. Bishal Jaiswal, (2021) 6 SCC 366: a balance sheet entry can acknowledge the debt, as a question of fact, and Laxmi Pat Surana applies the extension against a guarantor too.
• Limitation bars the remedy, not the debt, extinction under Section 27 being confined to possession suits: so the bank's lien, set off, pledge and appropriation all continue to operate on what is already in its hands, and the securitisation statute's measures need a debt that is still alive.

Figure 4: The five mirrored pairs these statutes turn on

6. Quick Revision

1. The bankers' books statute spares the bank its originals; Chandradhar Goswami spares the borrower the bank's say so.
2. Credit reporting is compelled by law, so it breaches no secrecy; accuracy and the daily compensation are the counterweights.
3. The bank is the exchange law's first regulator: declare, refuse, report.
4. Nomination pays; succession owns. Survivorship comes before both.
5. Transfer to the Fund moves custody, never ownership, and no claim there ever dies.
6. A barred debt is still a debt: only the courtroom door has closed.

7. Frequently Asked Questions

Which of these statutes override the banker's duty of secrecy, and how?

Two of them, in opposite directions. The Bankers' Books Evidence Act, 2026 opens the books to a court or an investigating officer: an order for inspection under Section 9 is disclosure under compulsion of law, confined to the accounts and period the order names, and the officer's protection under Section 8 keeps the opening narrow. The Act of 2005 opens the conduct of the account to the lending system: Section 17 compels the bank to report, so the disclosure is lawful without consent, and the borrower's protection lies not in a veto but in accuracy, correction within 30 days, the daily compensation and the alerts. The exchange law adds a third, smaller window: the authorised dealer's duty to report a suspected contravention to the Reserve Bank.

A depositor dies leaving a nominee, a joint holder and quarrelling heirs. Who gets paid?

The joint holder, if the account carries a survivorship clause, because the contract itself entitles the survivor and the bank never reaches nomination. If the account was the deceased's alone, the nominee is paid and the bank is fully discharged under Section 45ZB, the quarrel among the heirs travelling with the money into the nominee's hands, where Ram Chander Talwar makes him accountable to them. Only where there is neither survivor nor nominee does the bank settle with the heirs directly, on simplified documents up to ₹15 lakh or its higher limit, and beyond it on a succession certificate. The bank adjudicates nothing; each step exists so that it never has to.

How does a bank keep an old working capital loan enforceable without suing?

By chaining extensions. Each signed balance confirmation is an acknowledgment under Section 18 and starts a fresh three years; each instalment or interest payment evidenced by the borrower's cheque or signed instruction does the same under Section 19; a restructuring signed by the borrower acknowledges again; and if the account slips into default, the borrower's own balance sheets showing the debt can carry the chain, on the Bishal Jaiswal principle, into an insolvency application whose own clock runs three years from default. The one thing the bank cannot do is mend a broken chain: an acknowledgment signed after a period has expired revives nothing, and only a fresh signed promise under Section 25(3) of the Contract Act creates a new obligation.

Why is the deposit rule in Article 22 so generous to the customer?

Because the customer controls nothing but the demand. The banker and customer stand as debtor and creditor, but the debt is payable at the branch, on demand, by the customer's mandate: until he asks, the bank is not in breach of anything and no cause of action exists, so there is nothing for limitation to run against. The rule also matches the commercial reality that a bank holds itself out as keeping money safe indefinitely; a limitation period running from the deposit would convert every long term saver's balance into the bank's windfall. The unclaimed deposit framework completes the picture: after ten years the money moves to the Fund for safekeeping and searchability, but the owner's claim, like the deposit itself, never ages.

Why must a litigant usually rely on certified copies rather than the bank's own ledgers?

Because the Bankers' Books Evidence Act deliberately keeps a bank's books inside the bank. Section 5 of the Act of 2026 makes a certified copy of an entry in a banker's book prima facie evidence of the entry and of the matters recorded, and Section 8 provides that, in a proceeding to which the bank is not a party, an officer of the bank cannot be compelled to produce the books themselves, or to appear as a witness to prove what they record, unless the court records a special cause. Section 9 then lets a party apply for an order to inspect and take copies of entries for the purposes of the proceeding. For electronic records, the copy must carry the Second Schedule certificate and meet the Section 7 conditions before it qualifies as a certified copy. The scheme protects the daily working of the bank and its customers' confidentiality while still giving courts reliable proof of what the accounts show, and it leaves the opposite party free to rebut the entries by other evidence.

8. Related Topics and Provisions

• The duties of a banker: secrecy, care and honouring cheques
• Rights of a banker: lien, set off and appropriation
• Deposit accounts and Know Your Customer requirements
• The Prevention of Money-Laundering Act, 2002 and the obligations of banks
• The Recovery of Debts and Bankruptcy Act, 1993 and the Insolvency Code
• Special types of customer and the operation of accounts