Section 22 of BRA : Section 22: Licensing Of Banking Companies

Explanation using Example

Imagine a scenario where a new company, "QuickBank Financials," aims to establish a banking business in India. Before commencing operations, QuickBank must apply to the Reserve Bank of India (RBI) for a banking licence as mandated by Section 22 of the Banking Regulation Act, 1949.

QuickBank submits its application detailing its business model, management structure, and financial projections. The RBI reviews the application and conducts an inspection to ensure QuickBank meets the conditions listed in the Act, such as having sufficient capital and a management team that will not act against depositor or public interest.

After a thorough evaluation, the RBI grants QuickBank a licence with certain conditions attached, like maintaining minimum capital levels and periodic reporting of its financial health. QuickBank successfully launches and operates in compliance with the RBI's regulations.

Years later, if QuickBank fails to adhere to the conditions of its licence or if its business practices harm the interests of depositors, the RBI has the authority to cancel QuickBank's licence. QuickBank would then have the opportunity to appeal this decision to the Central Government within thirty days.