The Indian banking industry has seen pivotal shift from nationalisation to liberalisation and further development of different forms of banks such as the small payments bank, specific sectoral banks (such as NABARD, EXIM Bank, etc.). The permeation of information and communication technology (ICT) has had its share of impact on banking and today the government is not only promoting but also creating channels to foster online banking and commercial transactions throughout the country. The government has used a two-pronged approach to bring the citizenry within the ambit of the banking system. On the one hand, it has promoted the use of bank account numbers for transfer of funds, especially cash through different schemes and on the other hand, it has allowed the rural population to open bank accounts on zero balance basis. The number of total bank accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 333.8 million as on November 28, 2018.

With the developments that the industry has seen regulations related to various facets of the industry have eventually developed. The umpteen number of legislations that regulate the industry reflect the complex nature of the banking industry in India. More than 35 legislation affect the operation of the banking industry directly or indirectly . But it is this complexity that makes the system and the banking industry strong, effective, and robust in India. The IMF has not only commended RBI for the strengthened supervision and regulation that it has maintained over the industry over the years as also it has commented that the prudential regulations reflect closely the international standards and best practices in the areas of capital adequacy framework as well as market, interest rate, and operational risks.

The regulations that affect banking operations may be categorised as outlined under –


  • Regulations related to the establishment of banks and its internal operation with the Central Bank (in case of India, the Reserve Bank of India) and other banks representing the vertical and horizontal bank to bank relation.
  • Regulations related to bank and customer relationship – Banking Ombudsman, Consumer Protection Act, 1986, etc.
  • Regulations related to bank operations – Loans, recovery of debts, applicable tax laws, Negotiable Instruments Act, 1881, etc.
  • Regulations and guidelines issued by various ministries regulating the interaction of various beneficiaries under various schemes with the banks.
  • International regulations related to banking industry – BASEL norms, Forex markets and regulations therein, etc.
  • Regulations issued by various governmental agencies (department, ministries, or organisations) related to internet banking – Information Technology Act, 2000, and other laws.

India Brand Equity Foundation, Banking Sector in India, March 2019, https://www.ibef.org/industry/banking-india.aspx

Banking Act, Department of Financial Services, Ministry of Finance, Government of India, https://financialservices.gov.in/act-rule/Banking/Banking-Acts

IMF Country Report No. 18/4, India: Financial Sector Assessment Program, January 2018, PDF missing



  • Regulations issued by various governmental agencies (department, ministries, or organisations) related to internet banking – Information Technology Act, 2000, and other laws.