{"id":100138,"date":"2026-02-14T14:25:03","date_gmt":"2026-02-14T08:55:03","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=100138"},"modified":"2026-02-14T14:25:06","modified_gmt":"2026-02-14T08:55:06","slug":"regulation-of-banking-business","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/","title":{"rendered":"Regulation of Banking Business, Important for JAIIB AFM 2026"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_77 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#Download_Regulation_of_Banking_Business_eBook\" >Download Regulation of Banking Business eBook<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#What_does_Regulation_of_Banking_Business_mean\" >What does Regulation of Banking Business mean?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#In_which_JAIIB_module_is_the_%E2%80%9CRegulation_of_Banking_Business%E2%80%9D_topic_covered\" >In which JAIIB module is the \u201cRegulation of Banking Business\u201d topic covered?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#What_is_the_legal_framework_for_regulation_of_banking_business_in_India\" >What is the legal framework for regulation of banking business in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#What_is_the_power_of_RBI_to_issue_directions_to_banks\" >What is the power of RBI to issue directions to banks?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#How_is_acceptance_of_deposits_regulated_under_banking_law\" >How is acceptance of deposits regulated under banking law?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#What_are_the_nomination_provisions_under_the_Banking_Regulation_Act\" >What are the nomination provisions under the Banking Regulation Act?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#How_does_RBI_regulate_loans_advances_and_interest_rates\" >How does RBI regulate loans, advances, and interest rates?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Banking works on public trust. But trust alone is not enough. A strong legal system is required to control how banks function, lend money, accept deposits, and protect customers. In India, the banking system is mainly regulated by the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949. The Reserve Bank of India (RBI), along with the Government of India, has full authority to regulate banks from their beginning to their closure.<\/p>\n\n\n\n<p>For JAIIB AFM 2026, this topic is very important because many questions are directly based on sections of the Banking Regulation Act and RBI powers. In this blog, we have covered all the topics under Regulation of Banking Business in detail. Additionally, we have provided a direct link to download the eBook.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-download-regulation-of-banking-business-ebook\"><span class=\"ez-toc-section\" id=\"Download_Regulation_of_Banking_Business_eBook\"><\/span>Download Regulation of Banking Business eBook<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The direct link to download the Regulation of Banking Business PDF is given below.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/courses.oliveboard.in\/edge\/?c=dashboard&amp;i=jaiib&amp;dl=https:\/\/download.oliveboard.in\/pdf\/regulation-of-banking-business.pdf&amp;ok=1\" target=\"_blank\" rel=\"noreferrer noopener\">Download PDF<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_Regulation_of_Banking_Business_mean\"><\/span>What does Regulation of Banking Business mean?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Regulation of Banking Business refers to the legal framework through which banking activities in India are controlled and supervised to ensure financial stability, depositor protection, and proper governance. It is mainly governed by the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, under which the Reserve Bank of India regulates banks from their establishment to their closure, including control over deposits, loans, interest rates, and overall management.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/courses.oliveboard.in\/edge\/index_new.php?c=2068&amp;i=jaiib#Free?ref=contac-nai-jaiib\" target=\"_blank\" rel=\" noreferrer noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"900\" height=\"200\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2026\/01\/251210-1765344228-jaiib_2026_2.0_foundation_batch_english-desktop.webp\" alt=\"JAIIB 2026 Foundation Batch 2.0\" class=\"wp-image-234966\" srcset=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2026\/01\/251210-1765344228-jaiib_2026_2.0_foundation_batch_english-desktop.webp 900w, https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2026\/01\/251210-1765344228-jaiib_2026_2.0_foundation_batch_english-desktop-768x171.webp 768w\" sizes=\"auto, (max-width: 900px) 100vw, 900px\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_which_JAIIB_module_is_the_%E2%80%9CRegulation_of_Banking_Business%E2%80%9D_topic_covered\"><\/span>In which JAIIB module is the \u201cRegulation of Banking Business\u201d topic covered?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The topic \u201cRegulation of Banking Business\u201d is part of the <a href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-afm-syllabus\/?ref=contac-nai-jaiib-rbb\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB AFM Paper<\/a>, Module C, which focuses on legal and regulatory aspects of banking operations. This section explains the regulatory framework governing banks in India, the powers of the RBI, key provisions of the Banking Regulation Act, control over deposits and advances, nomination rules, and interest rate regulation, making it essential for both exam preparation and practical banking understanding.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Field<\/strong><\/td><td><strong>Details<\/strong><\/td><\/tr><tr><td>Paper \/ Module<\/td><td>Accounting &amp; Financial Management for Bankers (AFM) \u2013 Module C<\/td><\/tr><tr><td>Focus Areas<\/td><td>Regulatory framework, RBI powers, legal control over banking operations<\/td><\/tr><tr><td>Topics Covered<\/td><td>\u2013 Overview of Regulation of Banking Business<br>\u2013 RBI Act, 1934 and Banking Regulation Act, 1949<br>\u2013 Power of RBI to issue directions (Sections 21, 35A, 36)<br>\u2013 Regulation of deposits and unclaimed deposits (Section 26)<br>\u2013 Nomination provisions (Sections 45ZA, 45ZC, 45ZE)<br>\u2013 Regulation of loans and advances (Sections 20, 20A, 21)<br>\u2013 Regulation of interest rates<\/td><\/tr><tr><td><strong><a href=\"https:\/\/www.oliveboard.in\/jaiib-exam-date\/?ref=contac-nai-jaiib-rbb\" target=\"_blank\" rel=\"noreferrer noopener\">Exam Dates 2026<\/a><\/strong><\/td><td>May Cycle: 10th May 2026<br>November Cycle: 28th November 2026<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/jaiib-mock-test\/?ref=contac-nai-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">Attempt A Free JAIIB Mock Test<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-legal-framework-for-regulation-of-banking-business-in-india\"><span class=\"ez-toc-section\" id=\"What_is_the_legal_framework_for_regulation_of_banking_business_in_India\"><\/span>What is the legal framework for regulation of banking business in India?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Banking in India is controlled by specific laws. These laws give power to the RBI and the Government of India to regulate, supervise, and control banks. The RBI works as the central bank of the country and performs the role of regulator, supervisor, and facilitator of the banking system. These laws apply to banks from the time they start operations until they close down.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Law<\/strong><\/td><td><strong>Role<\/strong><\/td><\/tr><tr><td>Reserve Bank of India Act, 1934<\/td><td>Establishes RBI and gives it central banking powers<\/td><\/tr><tr><td>Banking Regulation Act, 1949<\/td><td>Controls how banks operate and function<\/td><\/tr><tr><td>RBI<\/td><td>Regulates, supervises, and facilitates banking<\/td><\/tr><tr><td>Government of India<\/td><td>Exercises legislative and overall control<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>For a detailed preparation strategy, visit <a href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-afm-preparation\/\">JAIIB AFM Preparation<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-power-of-rbi-to-issue-directions-to-banks\"><span class=\"ez-toc-section\" id=\"What_is_the_power_of_RBI_to_issue_directions_to_banks\"><\/span>What is the power of RBI to issue directions to banks?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The RBI has legal authority to give instructions to banks. These powers are clearly mentioned in different sections of the Banking Regulation Act, 1949. The purpose of these powers is to protect depositors, control lending, and ensure that banks do not act against public interest. RBI can also stop harmful banking activities.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Section<\/strong><\/td><td><strong>What it Says<\/strong><\/td><td><strong>Meaning in Simple Words<\/strong><\/td><\/tr><tr><td>Section 21<\/td><td>Power to control advances<\/td><td>RBI can direct banks on how much and to whom loans can be given<\/td><\/tr><tr><td>Section 35A<\/td><td>Power to issue directions<\/td><td>RBI can give instructions to protect depositors and ensure proper management<\/td><\/tr><tr><td>Section 36<\/td><td>Power to caution or prohibit<\/td><td>RBI can warn or stop banks from certain transactions<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-is-acceptance-of-deposits-regulated-under-banking-law\"><span class=\"ez-toc-section\" id=\"How_is_acceptance_of_deposits_regulated_under_banking_law\"><\/span>How is acceptance of deposits regulated under banking law?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Deposits are the foundation of banking. Although the Banking Regulation Act does not have a separate detailed section only for deposit acceptance, RBI regulates it using its general powers under Section 35A. Banks must also follow rules related to unclaimed deposits.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There is no specific detailed section only for deposit acceptance.<\/li>\n\n\n\n<li>RBI uses Section 35A to regulate deposit-related matters.<\/li>\n\n\n\n<li>RBI can issue directions in public interest.<\/li>\n<\/ul>\n\n\n\n<p>Also Check:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Study Material<\/strong><\/td><td><strong>Study Material<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-ie-ifs-questions\/?ref=contac-reg-jaiib-sm\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB IE and IFS Important Questions PDF<\/a><\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-ppb-questions\/?ref=contac-nai-jaiib-sm\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB PPB Important Questions PDF<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-afm-questions\/?ref=contac-nai-jaiib-sm\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB AFM Important Questions PDF<\/a><\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-rbwm-questions\/?ref=contac-nai-jaiib-sm\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB RBWM Important Questions PDF<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-are-the-rules-for-unclaimed-deposits\">What are the rules for unclaimed deposits?<\/h3>\n\n\n\n<p>Banks must report unclaimed deposits every year as per the Banking Regulation Act. This ensures transparency and protects customer money.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Provision<\/strong><\/td><td><strong>Requirement<\/strong><\/td><\/tr><tr><td>Section 26<\/td><td>Banks must submit annual return of unclaimed deposits<\/td><\/tr><tr><td>Time Limit<\/td><td>Within 30 days after end of calendar year<\/td><\/tr><tr><td>Period Covered<\/td><td>Deposits not operated for 10 years<\/td><\/tr><tr><td>Fixed Deposits<\/td><td>10 years counted from date of maturity<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-nomination-provisions-under-the-banking-regulation-act\"><span class=\"ez-toc-section\" id=\"What_are_the_nomination_provisions_under_the_Banking_Regulation_Act\"><\/span>What are the nomination provisions under the Banking Regulation Act?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nomination facility protects customers in case of death. It allows a person to name someone who will receive the deposit, locker contents, or safe custody articles. This avoids legal complications and gives quick settlement.<\/p>\n\n\n\n<p>The Banking Regulation Act provides separate provisions for deposits and for safe custody\/lockers.<\/p>\n\n\n\n<p>Also Check:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Study Plan<\/strong><\/td><td><strong>Study Plan<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/www.oliveboard.in\/blog\/how-to-prepare-for-jaiib-ie-and-ifs-exam\/?ref=contac-nai-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB IE And IFS Study Plan<\/a><\/td><td><a href=\"https:\/\/www.oliveboard.in\/blog\/how-to-prepare-for-jaiib-ppb\/?ref=contss-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB PPB Study Plan<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-afm-preparation\/?ref=contac-nai-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB AFM Study Plan<\/a><\/td><td><a href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-rbwm-strategy\/?ref=contac-nai-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">JAIIB RBWM Study Plan<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-nomination-for-safe-custody-and-lockers\">Nomination for Safe Custody and Lockers<\/h3>\n\n\n\n<p>Under Sections 45ZC and 45ZE:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A person placing items in safe custody can nominate someone.<\/li>\n\n\n\n<li>A locker holder can nominate a person.<\/li>\n\n\n\n<li>After death, the nominee can receive articles or remove locker contents.<\/li>\n\n\n\n<li>The bank gets valid discharge after handing over to nominee.<\/li>\n\n\n\n<li>Governed by Banking Companies (Nomination) Rules, 1985 (Rules 3 &amp; 4).<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Section<\/strong><\/td><td><strong>Covers<\/strong><\/td><td><strong>Key Point<\/strong><\/td><\/tr><tr><td>45ZC<\/td><td>Safe custody articles<\/td><td>Nominee receives article after death<\/td><\/tr><tr><td>45ZE<\/td><td>Safety lockers<\/td><td>Nominee can remove locker contents<\/td><\/tr><tr><td>Nomination Rules 1985<\/td><td>Procedure<\/td><td>Governs form and method<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-nomination-for-deposits-section-45za\">Nomination for Deposits (Section 45ZA)<\/h3>\n\n\n\n<p>This section applies when deposits are held in the name of one or more persons.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Depositor(s) can nominate one person.<\/li>\n\n\n\n<li>In case of death, nominee gets rights over deposit.<\/li>\n\n\n\n<li>Nomination can be cancelled or modified.<\/li>\n\n\n\n<li>If nominee is minor, another person can be appointed to receive deposit on behalf of minor.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Section<\/strong><\/td><td><strong>Applies To<\/strong><\/td><td><strong>Important Feature<\/strong><\/td><\/tr><tr><td>45ZA<\/td><td>Deposits<\/td><td>Nominee entitled to deposit on death of depositor<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.oliveboard.in\/jaiib\/?ref=contac-nai-jaiib\" target=\"_blank\" rel=\"noreferrer noopener\">Explore JAIIB Online Courses<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-rbi-regulate-loans-advances-and-interest-rates\"><span class=\"ez-toc-section\" id=\"How_does_RBI_regulate_loans_advances_and_interest_rates\"><\/span>How does RBI regulate loans, advances, and interest rates?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Lending is a core banking function. To prevent misuse and risky lending, RBI controls loans and advances through specific sections of the Banking Regulation Act. RBI also regulates interest rates charged by banks.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-regulation-of-loans-and-advances\">Regulation of Loans and Advances<\/h3>\n\n\n\n<p>This section explains how the RBI controls and monitors the lending activities of banks to ensure responsible credit management and financial stability.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Section<\/strong><\/td><td><strong>Purpose<\/strong><\/td><td><strong>Meaning<\/strong><\/td><\/tr><tr><td>Section 21<\/td><td>Control of advances<\/td><td>RBI can limit or direct lending<\/td><\/tr><tr><td>Section 35A<\/td><td>General directions<\/td><td>Broad power to regulate lending activities<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Also Attempt<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Test Name<\/strong><\/td><td><strong>Link<\/strong><\/td><\/tr><tr><td>JAIIB IE and IFS Mock Test<\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-indian-economy-financial-system-mock-test\/?ref=contac\" target=\"_blank\" rel=\"noreferrer noopener\">Attempt Now<\/a><\/td><\/tr><tr><td>JAIIB PPB Mock Test<\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-principles-practices-of-banking-mock-test\/?ref=contac\" target=\"_blank\" rel=\"noreferrer noopener\">Attempt Now<\/a><\/td><\/tr><tr><td>JAIIB AFM Mock Test<\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-accounting-financial-management-mock-test\/?ref=contac\">Attempt Now<\/a><\/td><\/tr><tr><td>JAIIB RBWM Mock Test<\/td><td><a href=\"https:\/\/www.oliveboard.in\/jaiib-retail-banking-wealth-management-mock-test\/?ref=contac\">Attempt Now<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-restrictions-on-loans-and-remission-of-debt\">Restrictions on Loans and Remission of Debt<\/h3>\n\n\n\n<p>This section covers the legal limits placed on banks while granting loans and the conditions under which they can remit or write off debts, including the need for prior RBI approval.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Section<\/strong><\/td><td><strong>Provision<\/strong><\/td><td><strong>Explanation<\/strong><\/td><\/tr><tr><td>Section 20<\/td><td>Limits on loans and advances<\/td><td>Certain restrictions on giving loans<\/td><\/tr><tr><td>Section 20A<\/td><td>Remission of debt<\/td><td>Bank must take prior RBI approval before remitting any debt to its orders<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-regulation-of-interest-rates\">Regulation of Interest Rates<\/h3>\n\n\n\n<p>Under Section 21 read with Section 35A:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>RBI has authority to regulate interest rates.<\/li>\n\n\n\n<li>RBI can direct banks regarding lending rates.<\/li>\n<\/ul>\n\n\n\n<p>This ensures fair and controlled lending practices.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1771057272719\"><strong class=\"schema-faq-question\">1. Which two main Acts regulate banking business in India?<\/strong> <p class=\"schema-faq-answer\">Banking in India is regulated by the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1771057273715\"><strong class=\"schema-faq-question\">2. Which authority regulates and supervises banks in India?<\/strong> <p class=\"schema-faq-answer\">The Reserve Bank of India regulates and supervises banks in India.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1771057274770\"><strong class=\"schema-faq-question\">3. Who has overall legislative authority over banking in India?<\/strong> <p class=\"schema-faq-answer\">The Government of India has overall legislative control over banking.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1771057275490\"><strong class=\"schema-faq-question\">4. What does Section 35A of the Banking Regulation Act empower RBI to do?<\/strong> <p class=\"schema-faq-answer\">Section 35A empowers RBI to issue directions to protect depositors and ensure proper bank management.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1771057276066\"><strong class=\"schema-faq-question\">5. What is the purpose of Section 36 of the Banking Regulation Act?<\/strong> <p class=\"schema-faq-answer\">Section 36 allows RBI to caution or prohibit banks from certain transactions.<\/p> <\/div> <\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-exam-analysis-2026\/\">JAIIB Exam Analysis 2026, May Cycle, All Shifts Covered<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-ie-and-ifs-module-wise-study-guide\/\">JAIIB IE &amp; IFS Module-Wise Mind Maps, Download Free PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-free-quizzes\/\">Attempt JAIIB Free Practice Quizzes &amp; Download Paper-wise PDFs<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/indian-financial-system-handwritten-notes\/\">Indian Financial System Handwritten Notes, Download PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/jaiib-2026-expected-questions\/\">JAIIB 2026 Questions from Repetitive Topics, Download Free PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/ppb-previous-year-question-paper-pdf\/\">Attempt JAIIB PPB Previous Year Practice Quiz, Download PDF<\/a><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Banking works on public trust. But trust alone is not enough. A strong legal system is required to control how<\/p>\n","protected":false},"author":58,"featured_media":237449,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,10353],"tags":[],"class_list":["post-100138","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-jaiib","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Regulation of Banking Business, Important for JAIIB AFM 2026<\/title>\n<meta name=\"description\" content=\"This ebook provides you notes on Regulation of Banking Business, a chapter from JAIIB paper 3 Legal and Regulatory aspects of Banking\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oliveboard.in\/blog\/regulation-of-banking-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Regulation of Banking Business, Important for JAIIB AFM 2026\" \/>\n<meta property=\"og:description\" content=\"Banking works on public trust. 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