The Banking Regulation Act prohibits any co-operative society to engage in the business of banking, unless it has obtained a license and is registered with the Reserve Bank of India. It is also mandated that such co-operative societies shall use the words ‘bank’, ‘banker’, or ‘banking’ in its name in order to carry on its banking business. However, the Negotiable Instruments Act states that any person/ artificial person involved in the banking business shall be deemed to be a banker.
These provisions of the two statutes seem to be in conflict, hence, the Judiciary interpreted them with the principle of harmonious construction of statutory interpretation. The rule of harmonious interpretation hold that they should be interpreted so that each has a separate effect, and neither is redundant or nullified. Therefore, when it comes to Negotiable Instruments Act, the court has a wide ambit in relation to who can be considered as a banker.
