MA0037- BANKING RELATED LAWS AND PRACTICES

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ASSIGNMENT

DRIVE	SUMMER 2014
PROGRAM	MBADS – (SEM 3/SEM 5) / MBAFLEX / MBAN2 – (SEM 3)
SUBJECT CODE & NAME	MA0037- BANKING RELATED LAWS AND PRACTICES
SEMESTER	3
BK ID	B1618
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q. 1 Refer a bill of exchange and discuss its features. Elucidate the difference between a cheque and a bill of exchange.

Ans : Bill of exchange :

A bill of exchange or "draft" is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque (check in American English), defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today. A bill of exchange is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three parties—the drawer, the drawee, and the payee. The

Q. 2 A person deposits some jewellery with a bank as a security for a debt. After repaying the debt, he demands the return of the jewellery. He owes some other debts to the bank. Is he entitled to recover the jewels from the bank? Discuss the lien and differentiate types of lien. Explain Rule in Clayton's case.

Ans : Lien and its types :

Type of charge that gives a bank automatic claim over a borrower's property or assets that come in bank's possession in the normal course of its business. Bankers' lien is both a possessory lien and special lien: the bank has the right to seize and sell the defaulting borrower's property in its possession, after giving a reasonable notice but without going through the foreclosure procedure. Enforcement of a banker's lien, however, may depend on the type of the property and the reason it was handed over to (or came in possession of) the bank. Bills of exchange, credit cash-balances, negotiable securities (such as cleared checks and drafts), and promissory notes, may be claimed under this lien.

Q.3 A mortgage a certain plot of building land to B and afterwards erects a house on the plot. For the purpose of his security, B is entitled to the house as well as the plot. Discuss the right of mortgager and mortgagee.

Ans : Right of mortgager :

The mortgagor has the nine rights. They are:-

1.The mortgagor has the right of redemption of the mortgaged property after payment of mortgaged money. He can take delivery of possession of the mortgaged property and the return of all the title deeds.

2. the mortgagor has the right to direct the mortgagee to

Q.4 Bangalore based Janalakshmi Financial Services has recently completed a securitization transaction worth INR 250 million with IFMR Capital. Closed on August 18th, IFMR Capital’s latest transaction Delta Pioneer IFMR Capital 2010, is backed by 35,560 microloans originated by Janalakshmi, a microfinance NBFC (Non-Banking Financial Company). Explain registration of securitisation company or reconstruction company. Discuss the documents involved in this transaction.

Ans : Registration of securitisation Company and documents required :

1. No securitisation company or reconstruction company shall commence or carry on the business of securitisation or asset reconstruction without:

a. obtaining a certificate of registration granted under this section; and

b.    having the owned fund of not less than two crore rupees or such other amount not exceeding fifteen per cent. of total financial assets acquired or to be acquired by the securitisation company or reconstruction company, as the Reserve Bank may, by notification, specify:

Provided that the Reserve Bank may, by notification, specify different amounts of owned fund for different class or classes of securitisation companies or

Q.5 Are digital records admitted as evidence under Banker’s book of evidence act? Discuss the conditions in the printout.

Ans :  Although the Evidence Act has been in force for many years, it has often been amended to acknowledge important developments. Amendments have been made to the Evidence Act to introduce the admissibility of both electronic records and paper-based documents.

Banker’s book of evidence act :

In this Act, unless there is something repugnant in the subject or context :

1. Company means any company means any company as defined in Sec. 3 of the Companies Act, 1956 and includes a foreign company within these meaning, of Sec.

591 of that Act;

Q.6 Rohit is not a customer of the bank. He is a university student. He applies for a banker’s cheque at the extension counter of a bank. He was refused at the first instance but the bank realised its mistake and agreed to issue the banker’s cheque. The process took more than 4 hours. What is the recourse available to Rohit? What type of documentary evidence can Rohit produce? What is the procedure for Redressal of grievances under Banking ombudsman scheme?

Ans : Recourse available to Rohit :

There is banking ombudsman scheme available to the customers if they are not satisfied or are having any complaint against bank , or the authority has misbehaved. Most of us have experiences of bank executives, who have not provided us good services at some point of time. We face issues like activating our dormant account, issue of cheque book, adding nominee name, refunding overdraft charges, delay in remittance from abroad, closing bank account, etc. At times, we do not get a proper resolution from the bank. In such case need to know to whom can we file a complaint to resolve our issue.

Documentary evidence :

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