Section 25 of BRA : Section 25: Assets In India

Explanation using Example

Imagine a scenario where XYZ Bank, a banking company operating in India, is approaching the end of the September quarter. According to Section 25 of The Banking Regulation Act, 1949, XYZ Bank must ensure that its assets in India at the close of business on the last Friday of September (unless that Friday is a public holiday) are not less than 75% of its demand and time liabilities in India.

XYZ Bank's compliance team calculates the bank's assets and liabilities and finds that their assets in India amount to INR 100 billion, and their demand and time liabilities in India are INR 120 billion. This means XYZ Bank's assets in India are 83.33% (which is more than 75%) of its liabilities, and thus, the bank is compliant with the law.

Furthermore, XYZ Bank prepares to submit the required quarterly return to the Reserve Bank of India, detailing their assets and liabilities as of the last Friday of September. They ensure to do this within one month of the quarter's end to meet the regulatory requirement. If XYZ Bank were a regional rural bank, it would also send a copy of this return to the National Bank as stipulated by the Act.