Banking Act 1979

1 Control of deposit-taking and meaning of " deposit"

(1) Except as provided by section 2 below, no person may accept a deposit in the course of carrying on a business which is a deposit-taking business for the purposes of this Act.

(2) Subject to subsection (3) below, a business is a deposit-taking business for the purposes of this Act if—

(a) in the course of the business money received by way of deposit is lent to others, or

(b) any other activity of the business is financed, wholly or to any material extent, out of the capital of or the interest on money received by way of deposit.

(3) Notwithstanding that paragraph (a) or paragraph (b) of subsection (2) above applies to a business, it is not a deposit-taking business for the purposes of this Act if, in the normal course of the business.—

(a) the person carrying it on does not hold himself out to accept deposits on a day to day basis; and

(b) any deposits which are accepted are accepted only on particular occasions, whether or not involving the issue of debentures or other securities.

(4) Subject to subsection (5) below, in this Act "deposit" means a sum of money paid on terms—

(a) under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and

(b) which are not referable to the provision of property or services or to the giving of security ;

and references in this Act to money deposited and to the making of deposits shall be construed accordingly.

(5) Except in so far as any provision of this Act otherwise provides, in this Act " deposit " does not include—

(a) a loan made by the Bank, a recognised bank or a licensed institution; or

(b) a loan made by a person for the time being specified in Schedule 1 to this Act; or

(c) a loan made by a person, other than a person falling within paragraph (a) or paragraph (b) above, in the course of a business of lending money carried on by him; or

(d) a sum which is paid by one company to another at a time when one is a subsidiary of the other or both are subsidiaries of another company ; or

(e) a sum which is paid to an institution by a person who at the time it is paid is a director, controller or manager of the institution or the wife, husband, son or daughter of such a person.

(6) For the purposes of subsection (4)(b) above, money is paid on terms which are referable to the provision of property or services or to the giving of security if, and only if.—

(a) it is paid by way of advance or part payment for the sale, hire or other provision of property or services of any kind and is repayable only in the event that the property or services is or are not in fact sold, hired or otherwise provided; or

(b) it is paid by way of security for payment for the provision of property or services of any kind provided or to be provided by the person by whom or on whose behalf the money is accepted; or

(c) it is paid by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise.

(7) Any person who accepts a deposit in contravention of subsection (1) above shall be liable—

(a) on summary conviction to a fine not exceeding the statutory maximum; and

(b) on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both.

(8) The fact that a deposit is taken in contravention of this section shall not affect any civil liability arising in respect of the deposit or the money deposited.