Laws and regulations that outline the legal requirements to be met.

They may also be implemented by many policies, standards , directives and guidelines.

Regulatory framework is necessary for the preparation of financial statements. Financial statements are used by investors, lenders and customers and must be helpful for those stakeholders for making decisions. Statements should be comparable and provide basic information.

Reserve Bank of India Banking Regulation Act 1949 Cash Reserve Ratio Statutory Liquidity Ratio Bank Rate Prime Lending Rate Repo Rate

Originally constituted as a shareholders bank in India. Under Reserve Bank of India Act 1934 to regulate issue of bank notes and keeping of reserves. The bank was nationalised on 1st January,1949

The Law relating to banking is outcome of the gradual process of evolution . Banking Companies Act was passed in 1949 and it has changed to Banking Regulation Act 1949. Section 8: banking company emerging directly or indirectly. Section 11: provisions to ensure adequacy of minimum paid

Section 22: comprehensive system of licensing of banks by RBI. Section 23: requires every banking company to take RBIs permission. Section 35: the RBI may eitherat its initiatives or at the instance of the Central government.

How is CRR used as a tool of credit control? CRR was introduced in 1950 primarily as a measure to ensure safety and liquidity of bank deposits, however over the years it has become an important and effective tool for directly regulating the lending capacity of banks and controlling the money supply in the economy.

Statutory Liquidity Ratio is the amount of liquid assets , such as cash , precious metals or other approved securities , that a financial institution must maintain as reserves other than the the cash with the central bank. Objectives: 1.To restrict expansion of bank credit. 2.To augment the investment of banks in Government securities. 3.To ensure solvency of banks.

Bank rate , also referred to as the discount rate,is the rate of interest which a central bank charges on loans and advances that it extends to commercial banks and another financial banks intermediaries.

The interest rate that commercial banks charge their best , most credit worthy customers . Generally a banks best customers consist of large corporations . The rate is determined by the Federal Reserves decision to raise or lower prevailing interest rates for short-term borrowing.

The repo rate is the rate at which the bank market lends short term money to RESERVE BANK OF INDIA.

Repo rate is powerful signal from Reserve BANK OF INDIA on the interests rates outlook.

Objectives of bank regulation The objectives of bank regulation, and the emphasis, vary between jurisdictions. The most common objectives are: Prudentialto reduce the level of risk bank creditors are exposed to (i.e. to protect depositors) Systemic risk reductionto reduce the risk of disruption resulting from adverse trading conditions for banks causing multiple or major bank failures Avoid misuse of banksto reduce the risk of banks being used for criminal purposes, e.g. laundering the proceeds of crime To protect banking confidentiality Credit allocationto direct credit to favored sectors

Minimum requirements Supervisory review Market discipline

Instruments and requirements of bank regulation Capital requirement Reserve requirement Financial reporting and disclosure requirements

In the Internet Banking system , information is considered as an asset and so worthy of protection. According to online banking Banking Association member institutions rated security as the most important issue of online banking. Privacy and protection against fraud.