Career As A Banking Lawyer In India: All You Need To Know

What Is Banking Law?

Banking law is the broad term for laws that govern how banks and other financial institutions conduct business. In India, banking is a Union subject- therefore banks and other financial institutions are centrally regulated and have to function in accordance with a myriad of statutes, guidelines and regulations. Lawyers perform a wide variety of functions that relate to creating, following and enforcing regulations.

Banking practice involves some of the largest and complex transactions, requiring exhaustive knowledge of the Indian finance market and the ever-evolving regulatory framework for financial institutions as well as for stakeholders. Cross-border transactions are also frequent and requires international expertise.

This article aims at exploring a career in banking for legal graduates and related details. Read on!

Why Should One Pursue A Career In Banking Law?

• It is a very good career option for law students who are from a background of Commerce, who are somewhat familiar with the concept of financial transactions and working with numbers in general.
• It is a very technical and highly regulated sector that requires highly specialized legal expertise. Regulations are frequently changed and practices are constantly evolving.
• Frauds, cyber-attacks and crimes related to banking has been on the rise, and banks have been facing claims regarding the same in large volumes. Consumer disputes involving banks are also very high in number. All of these make it necessary for banks and NBFCs to engage armies of lawyers.
• It is an adhered duty of all finance lawyers to take care that their bank abides by all the statutory norms of the government and the detailed guidelines of RBI and there is no illegal activity going on. This makes it clear how vast opportunities are in the Banking Sector for attorneys and legal professionals in India because RBI guidelines and statutory provisions must be executed from the beginning to the end of the banking system.
• Law is a common area for all financial advisers and planners. A lawyer in a banking institution is not always limited to give legal advice or handle lawsuits representing banks in courts, they are entrusted with versatile work roles.

Skills Required For Banking Law

Some key attributes would be:

• Excellent attention to detail and the fine print of agreements
• A good understanding of the different types of loan and the way that banks structure them
• The ability to understand the ambitions and goals of your client in order to advise them on whether the risks and benefits of a deal are worthwhile and ultimately in their best interests
• Good personal skills to build and maintain relationships with clients as well as being able to condense complex information into practical advice that a client can understand and act on.

Scope Of Banking Law

Banking laws are usually enacted with a number of different objectives, which include:

• Making the system transparent for customers
• Reducing the risk faced by consumers
• Preventing illicit practices, such as money laundering
• Ensuring the privacy of clients is protected
• The prevention of crime
• The promotion of lending practices in line with social and economic priorities
• Providing access to banking for all
• Creating fair lending agreements, especially under revolving credit facilities
• Preventing the abuse of the system through loans to friends or shareholders
• Giving consumers the ability to raise disputes making debt collection practices fairer

What Is The Various Kind Of Work Done By Banking Lawyers?

Because the banking and insurance law framework is diverse and comprehensive in the country

• Reviewing bank policies- Reviewing internal policies of the bank or the implementation of the new rules and regulations introduced by government authorities is one of the primary functions of banking lawyers.
• Review and draft lease deeds- Amongst other contractual work, reviewing and drafting lease deeds is also something that is regularly done by the in-house legal teams at banks and other financial institutions.
• Preparation of pleadings & drafting
• Negotiating contracts- Contract negotiation is the process through which two or more parties deliberate over the contents of a contract to reach a legally binding agreement on the terms of their relationship. The main goal of contract negotiations is for each party to be satisfied with the rights and obligations assigned to them.
• Settlement of Non-Performing Assets (NPA)- A non-performing loan is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full.
• Handling issues related to SARFAESI Act
• Handling issues related to Negotiable Instrument Act
• Dealing with RTI Act, Banking Ombudsman- In case of any dispute brought against the bank, the lawyers engage in a resolution process with the banking ombudsman.
• Handling Debt Recovery Tribunal
• Advising on leveraged financing
• Handling Bankruptcy litigation
• Recovery of loans– When a borrower is unable to repay a loan, the lending institution initiates a loan recovery process. RBI guidelines for loan recovery ensure that the process is beneficial to the lender while also respecting the borrower’s legal rights and obligations. Lawyers working in this sphere require in-depth knowledge and understanding of the Recovery Of Debts And Bankruptcy Act, 1993.
• Alternative Dispute Resolution- Lok Adalat
• Restructuring a business
• Clearance of debt
• Vetting legal documents
• Structuring Limited Liability Partnership
• Fund developments
• Dispute Resolution

How To Prepare For A Career In Banking Law

An aspiring financial lawyer must have a Graduation degree from a recognized university, LLB degree or LLB graduation degree from a recognized university, cleared the Bar council examination of any state, be successfully enrolled in the Bar association of a state and must have earned their license to practice.

Apart from the basic educational qualifications, the following can be done to build a specialising in banking and insurance law:

• Securing The Right Grades

A career in banking law mandates the right grades especially with commerce-related subjects and other legal subjects such as contract law. It is further mandatory for the student to opt for banking law as an elective subject

• Pursuing Higher Education

Those who have completed their Undergraduate studies in law can further pursue a Master’s degree in Business laws or Banking laws for a more in-depth understanding of the subject going above and beyond what was taught at the UG level.

• Gaining The Relevant Experience– While knowledge is important, so is experience. In fact, banking law is one such field of work where hands-on experience is immensely valued. As a law student, you may choose to work with banking law teams of law firms or in-house teams to get an idea how actual tasks are conducted and also to understand whether you are a correct fit for this sector. Internships are also immensely valuable in building the relevant skillset and making valuable connections.
• Writing Research Papers– Writing research papers on a subject you are trying to build an expertise in is a tried and tested strategy. Writing quality research papers, no more than 2 in a semester, will add to your credibility. Make sure these research papers are published in a credible and well-known journal or platform for future reference.
• Engaging In Co-Curriculars- There are several co-curriculars are regularly organised in law schools. These can be engaged with to enhance one’s learning and get a first-hand idea of how things work on the ground. Some such competitions include the- International Banking and Investment Law Moot Court Competition, Client Counselling Competitions, etc.
• Build Practical Knowledge and Skills- Over and above the education gained at the college/university level, many students also opt to pursue additional Certificate Courses or Diploma Courses which focus on familiarising the student with the practical concepts in the sector and building the skills required to work in this sphere.

Where Can A Banking/Insurance Lawyer Work?

• Public Or Private Sector Banks- As a banking lawyer working in an actual bank, you may be expected to handle the transactional paperwork, standardise documents, create and implement policies, answer the queries, keep up with the regulations, ensure compliance and handle the disputes. You can become a law officer in a public sector bank by appearing in the IBPS specialist officer’s exam. The post is of Scale 1 rank. As part of the job, you will be responsible for providing legal advice to the bank as well as handle its legal issues. ICICI, HDFC, YES Bank, SBI, PNB are some of the major recruiters of lawyers and almost all of them have established massive legal teams over the years.
• Non-Banking Financial Companies- Non-banking financial companies (NBFCs), also known as nonbank financial institutions (NBFIs), are financial institutions that offer various banking services but do not have a banking license. Generally, these institutions are not allowed to take traditional demand deposits—readily available funds, such as those in checking or savings accounts—from the public. This limitation keeps them outside the scope of conventional oversight from federal and state financial regulators.
• FinTech Start-ups- FinTech Start-Ups such as PayTM, PhonePe, BharatPe and other institutions are on a constant drive of market expansion and customer acquisition. Therefore they always value talented lawyers on their team who have a unique skillset and help them move forward by fulfilling the necessary compliances in a smooth manner.
• Law Firms- Corporate law firms have two major departments for which you can prepare – project finance and banking and finance. Young lawyers struggle to understand the industry and therefore face challenges in performing everyday tasks. They also struggle to understand the big picture and commercials behind a large deal. In fact, even after a few years of experience, their understanding of the banking and finance industry and the legal work required is piecemeal. It is therefore important to get an early start in developing the right skill. Given below are some of the top firms that hire banking lawyers:

• Litigation- Litigators can also represent corporate clients and their borrowers in connection with loan documentation work or enforcement-related matters at different forums such as the Debt Recovery Tribunal or the National Company Law Tribunal. As a litigator, you can represent borrowers or promoters who have provided guarantees against enforcement actions initiated by the bank in respect of defaults.
• Colleges/Universities- Law schools and universities in India are always on the look-out for experienced and skillset candidates who can come onboard as faculty for imparting quality education on the subject to the students. Some one who is an established professional in the banking law sector can apply to such colleges for the position of visiting faculty for helping students understand the practical aspects and nuances of this sector.

Salary And Remuneration In The Banking Law Sector

While banking law is an extremely competitive and stressful legal avenue to work in, it is also immensely rewarding. Even at entry-level positions, the packages and incentives that is offered by law firms and in-house organisations is impressive and on the higher end. With the increase in expertise and seniority in the organisation, the salary keeps increasing.

Given below is more salary information based on the experience of the candidate:

Source: Shiksha

In conclusion, it can be said that banking law is an evergreen career. For an industrious and talented lawyer, sky is the limit. At the time, when the economy is regaining its foothold post the Covid-19 pandemic, there are a plethora of opportunities available across the market. Leading global banks like Bank of America and Citigroup, foreign and enterprises like Goldman Sachs and Federal National Mortgage Association, and even startups like CCAvenue and Paypal have had lawyers as their Chief Executive Officers. This shows how well established this career option has become for lawyers who know their way around in the banking law sector.

YLCC would like to thank its Content Team for their valuable insights in this article.