Banking Law- Anusha M Virupannavar Assistant

Transcript:Banking Law- Anusha M Virupannavar Assistant:
Banking Law- Anusha M Virupannavar Assistant Professor KLE Society’s Law,Bengaluru Evolution of banking institutions “bancus” or “banque” which means bench. Early bankers, the Jews transacted their business on benches in the market place. When banker was unable to meet his obligation, his bench was broken up by people; it is called “bankrupt.” The word “bank” is originally derived from the German word “back” meaning joint stock fund. 2000 B.C., the Babiloninas had developed a banking system. Temples of Babylon were used as banks. Great temples Ephesus & of Delphi were the most powerful of the Greek banking institution . Early history of banking Spread of irreligion destroyed the public sense of security in depositing valuables in temple & priest were no where acting as financial agents. Aristotle’s dictum-charging of interest was unnatural and consequently immoral. Even now Mohammedans in obedience to the commands contained in their religious books, refuse to accept interest on money loans. The India banking law is based to a very large extent upon the English Banking Law. Beside Banking Law, the Law of Contract, the Law of Torts and other branches of commercial and civil laws are applicable to banks as to others. Evolution of Banking law Law merchant or Lex mercatoria customs of merchants ratified by courts and become part of general law. Lord Mansfield’s ruling Post industrial revolution period, banking law largely judge made law. Took into consideration customs of merchants of the advanced European Countries. Royal exchanger In England, Edward III-Royal Exchanger for the benefit of the Crown. Goldsmiths Land ceased to be the only form of wealth, merchants began to hold part of their “capital” in cash. Merchants entrusted their cashiers with large sums, later misappropriated. Development of British Banking City merchants decided to keep their cash with goldsmiths, who had strong rooms and doors and employed watchmen. Early beginning of “Issue” and “Deposit” banking Large sums of money were left with the goldsmiths for safe custody, against signed receipts- “goldsmiths’ notes”. Notes- embodying an undertaking to return money to depositor or to bearer on demand. Transformed from receipt to a bank note- considerable circulation. Large money were left with them. Following Dutch bankers-thought it is profitable to lend which is to be repaid within a fixed time. In order to attract more depositors they began to offer interest on deposits. Current banking In 1672, English banking received a rude setback. Charles