Section 5 of BRA : Section 5: Interpretation

Explanation using Example

Imagine a scenario where a new financial startup, QuickCash Pvt. Ltd., is planning to offer financial services in India. They intend to accept deposits from the public and offer loans. To determine if they need to comply with the Banking Regulation Act, 1949, they refer to Section 5 of the Act.

Upon reviewing the definitions, QuickCash Pvt. Ltd. realizes that their business model falls under the definition of "banking" because they will be accepting deposits for the purpose of lending or investment, repayable on demand or otherwise, and withdrawable by various means such as cheque or draft.

They also understand that they would be considered a "banking company" as they are a company which will transact the business of banking in India. This means they must register as a banking company and adhere to the regulations prescribed under the Banking Regulation Act, 1949, including obtaining the necessary licenses and following the banking policies specified by the Reserve Bank of India (RBI).

Furthermore, QuickCash Pvt. Ltd. learns that any loans they provide that are secured by assets must have a market value that is not less than the loan amount, as per the definition of "secured loan or advance" in the Act.

This example demonstrates how a company engaging in financial activities would use Section 5 of the Banking Regulation Act, 1949, to understand the legal definitions and requirements for operating within the banking sector in India.