Banking and the Law – An Expert’s Views

Prof. Nageswara Rao Vunnava

Former Professor & Head

Department of Law
Osmania University, Hyderabad.
 Hyderabad,
06/01/08.

… The legal regulation of banking operations is only one,

albeit important, aspect that those at the helm of affairs at
various management levels within the banking sector will
have to comply with. The managers and other staff and the
legal counsel will have to be conversant with a host of other
enactments on a day-to-day basis in their dealings with the
customers, and lack of adequate knowledge can certainly
land them in avoidable trouble.

… While there are many scholarly treatises on the various

aspects of the subject of banking, what a busy bank manager
needs is a book that presents the innumerable legal issues that
crop up on a routine basis in the discharge of his duties and
provides him with a ready reckoner for pinpointing the
problem and identifying the correct solution.

The book has to be long enough to present the issues

comprehensively and short enough to readily lay our hands
on the solutions. It is common knowledge that the
responsibilities of the managerial personnel at all levels have
become extremely onerous even in routine matters as
banking activity has become very complex in its variety,
extent and depth. The Damocles Sword of the unthinkable
civil and penal legal consequences is always hanging over
their heads.

There is no doubt that the book written by Sri GRK Murty

will fill the void and give the much-needed guidance and
confidence to the bankers, legal counsel and the lay
customers in confronting the day-to-day problems, with the
confidence that they are armed with the requisite legal
knowledge.

The present work of Sri GRK Murty is the outcome of his

experience, garnered in the course of his long and successful
service as a banker at all levels, covering a variety of
responsibilities. It is, indeed, unique that Sri Murty combines
in himself the academic virtues of a scholar with the dyed-in-
the-wool, hard-boiled experience of a professional banker.
The outcome of this combination is a presentation that covers
the whole network of issues, small and big, that a banker is
confronted with, and provides authentic, easy-to-access,
pragmatic and reliable solutions. These issues arise out of the
fact that an array of innumerable legal provisions come into
play even in apparently innocuous situations, and Sri Murthy,
because of his extensive scholarship and formidable
experience in banking, has been able to identify and pinpoint
the problems and the laws applicable to them.

A host of enactments such as the Indian Contract Act,

Negotiable Instruments Act, Companies Act, Partnership Act,
Societies Registration Act, Registration Act, Transfer of
Property Act, Consumer Protection Act, Evidence Act,
Foreign Exchange Management Act (FEMA), Information
Technology Act, Right to Information Act, Securitization and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI), Hindu Law and other
applicable Rules and Regulations have been dealt with by
highlighting the relevant provisions of the enactments. The
applicable provisions have been discussed with exceptional
clarity and pithy analysis, and presented to the banker with
even non-legal background, avoiding the unnecessary legal
jargon, in a manner that he will be able to apply them to a
situation and find a ready-made solution. The author has also
referred to many leading decisions of the High Courts and
Supreme Court and of the tribunals to enlighten the reader
on the judicial interpretation of the relevant provisions of the
legislation.

The present treatise has been conveniently classified by the

learned author into fifteen chapters each dealing with the
different facets of banks and banking, starting from the simple
and not-so-simple definitions through various tricky aspects of
the negotiable instruments and partnerships, companies and
societies and to complicated provisions of FEMA and
SARFAESI Acts. The author has taken care to enlighten the
professional readers with various stages of civil litigation like
pre-filing, filing, interface with advocates and counsel, post-
filing and conduct of proceedings, and the eventual decrees
and orders and the all important stage of their enforcement
by the banker and against the banker. A lesser author would
have been lost in the labyrinth of a bewildering range of legal
problems involved, but Sri Murthy has ensured that the
discussion has always been pruned and focused to suit the
particular requirements of the reader.

Sri Murty deserves our gratitude for authoring this work with
scholarship, pragmatic approach and meticulous care, and I
am sure that this very well written book would be widely
appreciated and found extremely useful by the professional
banker, advocates, legal counsel of banks and other
institutions, students and the lay public.

Contents

1. Banker, Banking and Customer

2. Negotiable Instruments
3. Partnership Firm
4. Companies Act, 1956
5. Registration Act, 1908
6. Indian Contract Act, 1872: Basic Principles of a Contract
7. Indian Contract Act: Basic Principles of Pledge and Guarantee
8. Hypothecation
9. Mortgages
10. Consumer Protection Act, 1986
11. Documentation
12. E-Banking: IT Act, 2000
13. FEMA
14. SARFAESI Act, 2002
15. Civil Litigation

For Excerpts from the Book “Banking and the Law” Please Visit:
www.karpuramanjari.blogspot.com