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MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION

Session: TWENTY NINE. MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION. OSMAN BIN SAIF. Summary of last Session. Foreign Exchange Regulation Act. Agenda of this Session. The negotiable Instruments ACT, Financial Institutions Ordinance 2001.

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MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION

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  1. Session: TWENTY NINE MBF-705LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF

  2. Summary of last Session • Foreign Exchange Regulation Act

  3. Agenda of this Session • The negotiable Instruments ACT, • Financial Institutions Ordinance 2001.

  4. BARE ACT THE NEGOTIABLE INSTRUMENTS ACT, 1881 (XXVI OF 1881) (9th December, 1881)

  5. An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques.

  6. Preamble • Whereas it is expedient to define and amend the law relating to promissory notes, bills of exchange and cheques; It is hereby enacted as follows:- • For Statement of Objects and Reasons, see Gaz. of India, 1876, p. 1886; • For the Reports of the Select Committee, see lbid 1877, Pt. V,p 1878., Pt. V, p. 145, 1879, Pt. V, p.75; 1881, Pt. V.p. 85.

  7. THE NEGOTIABLE INSTRUMENTS ACT, 1881 • Chapters 17 • Sections 139

  8. THE NEGOTIABLE INSTRUMENTS ACT, 1881 • 1. Short title:- This Act may be called the Negotiable Instruments Act, 1881.

  9. THE NEGOTIABLE INSTRUMENTS ACT, 1881 • Commencement:- It extends to the whole of Pakistan, but nothing herein contained affects [the provisions of Sections 24 and 35 of the State Bank of Pakistan Act, 1956]; and it shall come into force on the first day of March, 1882.

  10. THE NEGOTIABLE INSTRUMENTS ACT, 1881 • 1A. Application of the Act:- Every negotiable instrument shall be governed by the provisions of this Act, and no usage or custom at variance with any such provision shall apply to any such instrument.

  11. 4. "Promissory note • " A "promissory note" is in an instrument in writing (not being a bank-note or a currency note) containing an unconditional undertaking signed by the maker, to pay on demand or at a fixed or determinable future time] a certain sum of money only to, or to the order of a certain person, or to the bearer of the instrument

  12. 5. A "bill of exchange • " is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at a fixed or determinable future time] a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

  13. 6. "Cheque" • A "cheque" is a bill of exchange drawn on a specified banker and not expressed payable otherwise than on demand.

  14. 7. "Drawer" • "Drawee" The marker of a bill of exchange or cheque is called the "drawer;" the person thereby directed to pay is called the "drawee.“ "Drawee in case of need," When in the bill or in any endorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need such person is called a "drawee in case of need".

  15. "Acceptor" • After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf he is called the "acceptor."

  16. "Payee." • The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid is called the "payee."

  17. "Holder" • The "holder" of a promissory note, bill of exchange or cheque means the payee or endorsee who is in possession of it or the bearer thereof.

  18. 61. Presentment for acceptance • A bill of exchange payable after sight must, if no time or place is specified therein for presentment, be presented to the drawee thereof for acceptance, if he can, after reasonable search, be found, by a person entitled to demand at within a reasonable time after it is drawn and in business hours on a business day. In default of such presentment, no party thereto is liable thereon to the person making such default.

  19. 78. To whom payment could be made • Subject to the., provisions of section 82, clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument.

  20. 79. Interest when rate specified or not specified • Subject to the provision of any law for the time being in force relating to the relief of debtors, and without prejudice to the provisions of section 34 of the Code of Civil Procedure, 1908.

  21. 91. Dishonour by non-acceptance • A bill of exchange, is said to be dishonoured by non-acceptance when the drawee or one of several, drawees not being partners, makes default in acceptance upon being duly required to accept the bill, or where presentment is excused and the bill is not accepted.

  22. 22. "Maturity" • The maturity of a promissory note or bill of exchange is the date at which it falls due. • Days of grace--- Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

  23. THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES)ORDINANCE, 2001ORDINANCE NO.  XLVI  OF 2001ANORDINANCE

  24. The Financial Institutions Ordinance 2001 • WHEREAS it is expedient to repeal and with certain modifications, re-enact the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, for the purposes hereinafter appearing;

  25. The Financial Institutions Ordinance 2001 • AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;

  26. The Financial Institutions Ordinance 2001 • NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999 and Provisional Constitution Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following Ordinance:-

  27. SECTIONS OF THE ACT • SECTIONS 29 • VARIOUS SUB SECTIONS

  28. Short title, extent and commencement.- • (1) This Ordinance may be called the Financial Institutions (Recovery of Finances) Ordinance, 2001. • (2)             It extends to the whole of Pakistan. • (3)             It shall come into force at once.

  29. 3.   Duty of a customer.- • (1) It shall be the duty of a customer to fulfil his obligations to the financial institution. • (2)   Where the customer defaults in the discharge of his obligation, he shall be liable to pay, for the period from the date of his default till realization of the cost of funds of the financial institution as certified by the State Bank of Pakistan from time to time, apart from such other civil and criminal liabilities that he may incur under the contract or rules or any other law for the time being in force.

  30. 3.   Duty of a customer.- • (3)   For purposes of this section a judgment against a customer under this Ordinance shall mean that he is in default of his duty under sub-section (1), and the ensuing decree shall provide for payment of the cost of funds as determined under sub-section (2).

  31. 4. Ordinance to override other laws.- •  The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

  32. 5.      Establishment of Banking Court.- • (1) The Federal Government may, by notification in the Official Gazette, establish as many Banking Courts as it considers necessary to exercise jurisdiction under this Ordinance and appoint a Judge for each of such Courts and where it establishes more Banking Courts  than one, it shall specify in the notification the territorial limits within which each of the Banking Courts shall exercise its jurisdiction.

  33. 5.      Establishment of Banking Court.- • (2) Where more Banking Courts than one have been established to exercise jurisdiction in the same territorial limits, the Federal Government shall define the territorial limits of each such Court.

  34. 5.      Establishment of Banking Court.- • (3) Where more Banking Courts than one have been established in the same or different territorial limits, the High Court may, if it considers it expedient to do so in the interest of justice or for the convenience of the parties or of the witnesses, transfer any case from one Banking Court to another.

  35. 6.      Resignation and removal of Judges.- • (1) A person, not being a District Judge, appointed as a Judge of a Banking Court under section 5 may, by notice in writing under his hand addressed to the Federal Government, resign from his office.

  36. 6.      Resignation and removal of Judges.- • (2)   A person appointed as a Judge of a Banking Court under section 5 may be removed from office in consultation with the Chief Justice of the High Court.

  37. 7.      Powers of Banking Courts.- • (1)  Subject to the provisions of this Ordinance, a Banking Court shall • (a)   in the exercise of its civil jurisdiction  have all the powers vested in a civil Court under the Code of Civil Procedure, 1908 (Act V of 1908);

  38. 7.      Powers of Banking Courts.- • (b)   in the exercise of its criminal jurisdiction, try offences punishable under this Ordinance and shall, for this purpose have the same powers as are vested in a Court of Sessions under the Code of Criminal Procedure, 1898 (Act V of 1898):

  39. Summary of this Session • The negotiable Instruments ACT, • Financial Institutions Ordinance 2001.

  40. THANK YOU

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