Session - 2 - FIN 441 Bank Management & Electronic Banking...

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Bank Management & Electronic Banking FIN 441
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2 Session 2 Banks and Legal Environment Bangladesh Perspective
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3 Session 2 : Banks & Legal Environment Banks’ legal environment (framework) comprises many laws. Some of these laws are specifically meant for the banks only. Some of these are general laws applicable to all including the banks. 1. Laws specifically required by the banks: a. Negotiable Instruments Act – 1881 b. Bankers’ Books Evidence Act – 1891 c. Bank Company Act – 1991 d. Money Laundering Prevention Act – 2002 e. Money Loan Court Act – 2003 f. Bank Deposit Insurance Act - 2000
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4 Session 2 : Banks & Legal Environment 1. Laws specifically required by the banks: In addition, Bangladesh Bank Order – 1972 – though an internal law for the central bank – is also specifically required by the banks to ascertain its functions and powers as a controlling bank. Another law which is also specifically required by the banks and NBFIs is : Financial Institutions Act - 1993
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5 Session 2 : Banks & Legal Environment 2. General Laws required by the banks: The general laws, which are necessary for the banks are – Contract Act – 1872 The Limitation Act – 1908 Partnership Act – 1932 Law of agency Companies Act – 1994 Insolvency Act - 1997
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6 Session 2 : Banks & Legal Environment Pause and Think What are the objectives of the regulatory laws?
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7 Session 2 : Banks & Legal Environment Objectives of the regulatory laws a. Safeguarding depositors’ interest b. Restricting concentration of wealth c. Stopping misuse of power d. Stopping illegal transactions through banks e. Avoiding bank failures
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8 Session 2 : Banks & Legal Environment Brief Introduction to Banking Laws 1. Negotiable Instruments Act – 1881: This law deals with the provisions pertaining to the negotiable instruments, namely: Bill of Exchange Cheque Promissory note Rights and responsibilities of each of the parties to a negotiable instrument are contained in the Act in order to facilitate the transactions.
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9 Session 2 : Banks & Legal Environment Brief Introduction to Banking Laws 2. Bankers’ Books Evidence Act - 1891: This law has allowed the banks to produce before a Court as evidence the certified copies of transactions in their books of accounts. 3. Bank Company Act – 1991: It contains detailed provisions as to what can or cannot be done by a bank. The provisions include areas like: functions of banks, capital requirement, election of directors, appointment of managing director, director’s facility, maintenance of reserves, etc.
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10 Session 2 : Banks & Legal Environment Brief Introduction to Banking Laws 4. Financial Institutions Act – 1993: This act is related with all the non-bank financial institutions. This act provides guidelines, rules and regulations regarding the licensing, capital and reserve requirement, loan disbursement, accounts and audit, etc.
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This note was uploaded on 04/22/2011 for the course BBA FIN 441 taught by Professor Dewanmostafiz during the Fall '10 term at BRAC University.

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Session - 2 - FIN 441 Bank Management & Electronic Banking...

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