MEANING OF A BANKING COMPANY :

A banking company is defined as a company which transacts the business of banking in India . Section 5 (b) of The Banking Regulation Act, 1949 defines the term banking as “accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.

Section -7 of this Act makes it essential for every company carrying on the business of banking in India to use aspart of its name at least one of the words – bank, banker, banking or banking company. Section 49A of the Act prohibits any institution other than a banking company to accept deposit money from public withdrawable by cheque. The essence of banking business is the function of accepting deposits from public with the facility of withdrawal of money by cheque. In other words, the combination of the functions of acceptance of public deposits and withdrawal of the money by cheques by any institution cannot be performed without the approval of Reserve Bank.