Every major deal, every corporate loan, and every financial safeguard rests on one thing: Banking Law.
It's the complex machinery behind the economy. It’s high-stakes, high-risk, and high-reward.
Most law schools just read you the manual. At the Tanmoy Mukherjee Institute of Juridical Science (TMIJS), we teach you how to turn the key.
We are proud to announce our new specialized course in Banking Law.
Here are the main goals that banking laws and regulations aim to achieve:
1. Financial Stability (Systemic Protection)
This is the most critical objective. Banking law aims to prevent the collapse of the entire financial system. It does this by:
Preventing "Systemic Risk": Stopping the failure of one bank from causing a domino effect that brings down other banks.
Capital Adequacy: Requiring banks to hold a minimum amount of their own capital (like a safety cushion) to absorb unexpected losses.
Liquidity Requirements: Ensuring banks have enough cash or easily sellable assets to meet sudden withdrawal demands from depositors.
2. Depositor and Consumer Protection
This objective focuses on protecting the public who entrusts their money to banks.
Safeguarding Deposits: Implementing rules (and often deposit insurance schemes) to ensure people don't lose their savings if a bank fails.
Building Public Confidence: A strong legal framework makes people trust the banking system, which is essential for it to function.
Ensuring Fair Practices: Prohibiting deceptive, unfair, or discriminatory practices in lending and other banking services. This includes transparency in fees and interest rates.
3. Maintaining Integrity and Preventing Crime
Banks are gatekeepers of the money supply, making them a target for criminal activity. Banking law aims to:
Prevent Money Laundering (AML): Implementing strict "Know Your Customer" (KYC) rules to stop criminals from "washing" illegal money through the bank.
Combat Terrorist Financing (CTF): Tracking and blocking the flow of funds intended for terrorist activities.
Enforcing Good Governance: Setting standards for bank management and boards of directors to prevent fraud, mismanagement, and reckless risk-taking.
4. Economic and Monetary Policy
Banking law provides the tools for the central bank (like the Reserve Bank of India) to manage the nation's economy.
Controlling Credit and Money Supply: Allowing the central bank to influence interest rates and the amount of money banks can lend, which helps control inflation and stimulate growth.
Directing Credit: Ensuring that credit flows to essential sectors of the economy (like agriculture, infrastructure, or small businesses) as per national policy.
5. Regulating the Business of Banking
Finally, the law defines what a "bank" is and how it must operate on a day-to-day basis.
Licensing: Controlling who is allowed to start and operate a bank.
Supervision: Giving regulators the power to monitor banks, conduct audits, and intervene if a bank is in trouble.
Orderly Resolution: Creating a clear legal process for managing a failing bank, either by merging it with a healthy one or winding it down without causing panic.
