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Friday, July 31, 2015

Bank Holiday On Saturday

Bank Holiday on 2nd and 4th Saturdays
There have been a lot of discussions, which can at best be called personal opinions and own interpretations of individuals, on declaration of holiday for banks on 2nd and 4th Saturdays.
In this regard, let me say that both State and Central Governments are empowered to declare holidays for banks.
...
Bank Holidays are declared under Section 25 of N.I. Act, 1881.
When a state government declares holiday under N.I. Act, it is valid for that particular state only. But when the central government declares a holiday under N.I. Act, it is called a National Holiday and it is applicable to the entire nation.
Now, let us see what this Section 25 says.
QUOTE
When day of maturity is a holiday i.e. when the day on which a Promissory Note or Bill of Exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day.

Explanation.—The expression “Public holiday” includes Sundays 1[***] and any other day declared by the 2[Central Government], by notification in the Official Gazette, to be a public holiday.
UNQUOTE
Now, it is clear that by issuing a simple notification in the Official Gazette, the Government of India can declare holiday for banks on 2nd and 4th Saturdays of each month. It will be on a permanent basis, just like Sundays - in the sense, the dates will remain fixed and certain.

It does not require any amendment to N.I. Act, as is being claimed and campaigned by many of our 'informed leaders'.
So, my point is, if GOI wants to declare holiday for banks, it can do it by issuing a simple gazette notification. It's a simple process, taking not much time at all.
Does any one believe that IBA and Ministry of Finance, New Delhi did not go into the implications, merits and demerits of declaration of holiday for banks on 2nd and 4th Saturdays every month, before IBA and UFBU signed a settlement to this effect (MOU on 23.02.2015 and Joint Note on 25.05.2015) and without applying their mind, they simply arrived at the settlement?
By Pannvalan

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