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Legal Department has a major role in any bank not only when represents the bank against all the legal authorities and regulators, but also as a supporting department in all banking activities when legal staff members are:
- Reviewing any agreement conducted, before it is being finally signed by the senior management even with clients, suppliers or out sourcing institutions.
- Reviewing all contracts to assure that same are matched with local laws, including the staff contracts as well.
- Reviewing all banking products and procedures, before being finally approved by the senior management.
- Represented in all banking committees to review and assure any action from the legal point of view.
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Deposits and Loaning/lending, main functions of a bank
The legal function of a Bank is to ensure proper due diligence and documentation in furthering the business of the Bank and taking care of all consumer cases as well as recovery of all NPAs.
Authorized financial institutions and the business in which they engage, which encompasses the receipt of money fordeposit, to be payable according to the terms of the account; collection of checks presented for payment; issuance of loansto individuals who meet certain requirements; discount of Commercial Paper; and other money-related functions.
Banks have existed since the founding of the United States, and their operation has been shaped and refined by majorevents in U.S. history. Banking was a rocky and fickle enterprise, with periods of economic fortune and peril, between the1830s and the early twentieth century. In the late nineteenth century, the restrained money policies of the U.S. Treasury Department, namely an unwillingness to issue more bank notes to eastern-based national banks, contributed to a scarcityof cash in many Midwestern states. A few states went so far as to charter local banks and authorize them to print their ownmoney. The collateral or capital that backed these local banks was often of only nominal value. By the 1890s, there was afull-fledged bank panic. Depositors rushed to banks to withdraw their money, only to find in many cases that the banks didnot have the money on hand. This experience prompted insurance reforms that developed during the next fifty years. Thelack of a regulated money supply led to the passage of the Federal Reserve Act in 1913 (found in scattered sections of 12U.S.C.A.), creating the Federal Reserve Bank System.
Banks are usually incorporated, and like any corporation must be backed by a certain amount of capital (money or otherassets). Banking laws specify that banks must maintain a minimum amount of capital. Banks acquire capital by sellingcapital stock to shareholders. The money shareholders pay for the capital stock becomes the working capital of the bank.The working capital is put in a trust fund to protect the bank's depositors. In turn, shareholders receive certificates thatprove their ownership of stock in the bank. The working capital of a bank cannot be diminished. Dividends to shareholdersmust be paid only from the profits or surplus of the bank.
Legal function:
“Legal risk for a business may be defined as falling to: operate within the law, be aware of its legal obligations, honour contractual commitments, agree remedies for compensation with a supplier in the event of default, show evidence that it has operated within the law, or recognize and effectively manage legal threats.”
Logic of the Legal Risk Management "The essence of risk management lies in maximizing the areas where we have some control over the outcome while minimizing the areas where we have absolutely no control over the outcome and the linkage between effect and cause is hidden from us.” Bernstein, Peter L., 1996, Against the Gods: The Remarkable Story of Risk In the legal risk management, predictions of jurists which are based on analyzes and legally grounded regarding the weak points are based upon, and the company’s field of work is tried to be kept in the safe area with the works done in this sense. The logic of legal risk management is not different from the underlying logic of managing any risk.
The vital necessity
• You can not walk in the minefield without a detector even you should not. • The legal function is the detector of central banks in legal risk management.
Your question is not really clear, are you trying to ask what is the function of the legal arm of a bank or the legal function of the bank itself?For the formal the legal arm of the bank addresses litigation issues for the bank and also helps in verifying orders or documents from a court but for the later the bank performs no legal funtion to its customers.You need help with the law go meet a lawyer...
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