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Banking Regulation Act, 1949 – Part-V – Section 45ZA to 56 (Updated as on April 15, 2025)

The Banking Regulation Act, 1949 (BR Act, 1949) governs the working of banks in India. In a series of articles, we will briefly go through some of the important provisions of the BR Act, 1949. This is the fifth and last article in the series.

Part 3B - Provisions Relating to Certain Operations of Banking Companies

Section 45ZA – Nomination for payment of depositors' money (updated as on April 15, 2025)

  • Where a deposit is held by a banking company to the credit of one or more persons, the depositor / all the depositors together, may nominate one or more persons not exceeding 4, either successively or simultaneously to whom in the event of his / their death, the amount of deposit may be returned by the banking company.
  • Where the nomination is made successively in favour of more than one person, the nomination shall be effective only in favour of one person in the order of priority specified in section 45ZG. 
  • Where the nomination is made simultaneously in favour of more than one person, the nomination shall be effective in favour of all such persons in proportion to which it is declared (in percentage). If any nominee dies before receiving deposit from the banking company, the nomination in respect of such nominee alone shall become ineffective and the amount of deposit purported to be nominated in favour of deceased nominee shall be treated as if nomination had not been made in respect of that portion of deposit.
  • Where the nominee is a minor, the depositor shall appoint any person to receive the amount of deposit in the event of his death during the minority of the nominee.

Section 45ZC – Nomination for return of articles kept in safe custody with banking company (updated as on April 15, 2025)

  • Where any person leaves any article in safe custody with a banking company, such person may nominate one or more persons not exceeding 4, successively to whom, in the event of his death, such article may be returned by the banking company.
  • Where the nominee is a minor, the person shall appoint any person to receive the article deposited in the event of his death during the minority of the nominee.

Section 45ZE – Release of contents of safety lockers (updated as on April 15, 2025)

  • Where one or more individuals hire a locker from a banking company, the individual or all the individuals together, may nominate one or more persons not exceeding 4, successively, to whom, in the event of the death of the sole hirer or the death of all the hirers, the banking company may give access to the locker and liberty to remove the contents of the locker.
  • Where any such locker is hired from a banking company by two or more individuals jointly and under the contract of hire, the locker is to be operated under the joint signatures of two or more of such hirers, such hirers may nominate one or more persons to whom, in the event of their death, the banking company may give, jointly with the surviving joint hirers, access to the locker and liberty to remove the contents of such locker.

Section 45ZG – Priority of successive nominations (updated as on April 15, 2025)

  • Where the nomination is made in favour of more than one person successively under section 45ZA(1) / 45ZC(1) / 45ZE(1), the nomination shall be effective only in favour of one person in the following order of priority –
    • Nomination of the first nominee shall be effective if that nominee survives the person or persons who made the nomination.
    • Nomination of the second nominee shall become effective only after the death of the first nominee.
    • Nomination of any nominee lower in the order of nomination shall become effective only after the death of all the nominees whose names are higher in the order of nomination. 
  • Where the order of nomination is not mentioned, persons shall be deemed to have been nominated in the order in which their names appear in the nomination. 

Part 4 - Miscellaneous

Section 46 – Penalties 

Offense Punishment
Whoever in any return / balance-sheet / other document / information furnished willfully makes a materially false statement or omits a material statement. Imprisonment up to 3 years or fine up to Rs.1 crore, or both.
If any person fails to produce any book / account / other document / statement / information under section 35(2) or to answer any question relating to the business of a banking company which is asked by an officer making an inspection / scrutiny under section 35. Fine up to Rs.20 lakh for each offence.
Further fine up to Rs.50,000 for every day during which the offence continues.
If any deposits are received by a banking company in contravention of an order under section 35(4)(a), every director / other officer of the banking company (unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent it). Fine up to twice the amount of the deposits so received.
If any other provision of this Act is contravened or if any default is made in –
(i) Complying with any requirement of this Act or of any order / rule / direction made / condition imposed thereunder.
(ii) Carrying out the terms of / obligations under a scheme sanctioned under section 45(7). 		Fine up to Rs.1 crore or twice the amount involved in such contravention / default where such amount is quantifiable, whichever is more.
Further fine up to Rs.1 lakh for every day during which the contravention / default continues.

Section 47A – Power of Reserve Bank to impose penalty 

  • RBI may impose penalty on the banking company for –
Offense Punishment
Contravention / default under section 46(2) Penalty up to Rs.20 lakh for each offence.
Further penalty up to Rs.50,000 for every day, after the first day, during which the contravention / default continues.
Contravention under section 46(3) Penalty up to twice the amount of the deposits in respect of which such contravention was made.
Contravention / default under section 46(4) Penalty up to Rs.1 crore or twice the amount involved in such contravention / default where such amount is quantifiable, whichever is more.
Further penalty up to Rs.1 lakh for every day, after the first day, during which the contravention / default continues.

  • Complaint shall not be filed against any banking company in any court of law in respect of any contravention / default in respect of which any penalty has been imposed by RBI under this section.
  • Any penalty imposed by RBI under this section shall be payable within 14 days from the date on which notice issued by RBI demanding payment of the sum is served on the banking company.
  • In the event of failure of the banking company to pay the sum within such period, it may be levied on a direction made by the principal civil court. 

Section 49B – Change of name by a banking company 

The Central Government shall not signify its approval to the change of name of any banking company unless RBI certifies that it has no objection to such change.

Section 49C - Alteration of memorandum of a banking company

Any application for the confirmation of the alteration of the memorandum of a banking company shall not be maintainable unless RBI certifies that there is no objection to such alteration.

Section 51A – Powers of Reserve Bank not to apply to International Financial Services Centre

The powers exercisable by RBI under this Act –

  • Shall not extend to an International Financial Services Centre set up under section 18(1) of the Special Economic Zones Act, 2005.
  • Shall be exercisable by the International Financial Services Centres Authority established under section 4(1) of the International Financial Services Centres Authority Act, 2019, in so far as regulation of financial products, financial services and financial institutions that are permitted in the International Financial Services Centres are concerned.

Part 5 - Application of the Act to Co-Operative Banks

Section 56 – Act to apply to co-operative societies subject to modifications

The provisions of this Act shall apply to co-operative societies as they apply to banking companies subject to the modifications.


References

Reserve Bank of India. (2021, April 19). 'The Banking Regulation Act, 1949'. Retrieved from https://rbi.org.in/Scripts/OccasionalPublications.aspx?head=Banking%20Regulation%20Act

The Gazette of India. (2025, April 15). 'THE BANKING LAWS (AMENDMENT) ACT, 2025'. Retrieved from https://thc.nic.in/Central%20Governmental%20Acts/Banking%20Laws%20(Amendment)%20Act,%202025.pdf


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