National Banks of US are governed by the principles of the National Bank Act. The National Bank Act came into effect from 3rd. June 1864, to provide “a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof”.
A national bank is entitled to control a financial subsidiary. It can even hold an interest in such financial subsidiary. However, the national bank and the depository institution affiliate of the national bank must be well capitalized and properly managed. Moreover, the national bank needs to receive the endorsement of the Comptroller of the Currency for the financial subsidiary.
A national bank is restricted to indulge itself in the following activities:-
• deal in lottery tickets;
• deal in bets as a substitute in a lottery;
• announce or advertise the existence of any lottery;
• announce or advertise the identity of any winner in a lottery;
It can be mentioned here that the term lottery has been defined as “any arrangement whereby three or more persons advance money or credit to another in exchange for the possibility or expectation that one or more but not all of the participants will receive by reason of their advances more than the amounts they have advanced.”
