Every banking company has to prepare its balance sheet and profit and loss account annually as at the end of the calendar year or at the end of twelve months as on a date notified by the Central Government.
The accounts have to be audited by auditors duly qualified to be auditors of companies. Three copies of the balance sheet, profit and loss account and the auditor's report have to be submitted as returns to the Reserve Bank and to the Registrar of Companies.
Banking companies have also to furnish other returns like return on maintenance of cash reserve, maintenance of liquid assets, etc. The Reserve Bank is authorised to inspect or conduct, scrutiny of banking companies, their books and accounts.
The Board for Financial Supervision set up by the Reserve Bank by statutory regulations framed under the Reserve Bank of India Act supervises the affairs of banking companies.
The Government may acquire the undertakings of banking companies in certain circumstances based on a report from the Reserve Bank.
The Central Government may also order moratorium on banking companies on the application of the Reserve Bank.
During moratorium, the Reserve Bank may prepare a scheme for amalgamation, which may be sanctioned by the Central Government.
Such an amalgamation scheme will have overriding effect on any laws, agreements, etc.
The Reserve Bank may also apply to the High Court for winding up of a banking company when it is not able to pay its debts and also in certain other circumstances.
The Reserve Bank of India Act and the Banking Regulation Act impose certain penalties for contravention or default committed by banking companies or other persons.
Board for Financial Supervision It is constituted by RBI. The board consists of Chairman (Governor of RBI), Vice Chairman (one of the Dy. Governor of RBI), Four directors from the Central Board. The board performs functions and exercises the powers of supervision and inspection under the RBI Act and the BR Act. The board meets at lease once in a month. Three members of whom one Chairman / vice-chairman shall form a quorum for the meeting.