The Banking Regulation Act, 1949

(Act No. 10 of 1949)

Last Updated 30th September, 2020 [act292]

[10th March, 1949]

An Act to consolidate and amend the law relating to banking [* * *].
Whereas it is expedient to consolidate and amend the law relating to banking [* * *];
It is hereby enacted as follows:-
LATIVE HISTORY ▼
SHEET ▼
Part I

Preliminary
1. Short title, extent and commencement. - (1) This Act may be called The
Banking [Regulation] Act, 1949.
[(2) It extends to the whole of India [* * *].]
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint in this behalf.
t & Reasons ▼
2. Application of other laws not barred. - The provisions of this Act shall be in addition
to, and not, save as hereinafter expressly provided, in derogation of the [Companies Act,
1956 (1 of 1956)], and any other law for the time being in force.
[3. Act not to apply to certain cooperative societies. - Notwithstanding anything
contained in the National Bank for Agriculture and Rural Development Act, 1981 (61 of
1981), this Act shall not apply to -
(a) a primary agricultural credit society; or
(b) a co-operative society whose primary object and principal business is providing of
long-term finance for agricultural development,
if such society does not use as part of its name, or in connection with its business, the
words "bank", "banker" or "banking" and does not act as drawee of cheques.]
4. Power to suspend operation of Act. - (1) The Central Government, if on a
representation made by the Reserve Bank in this behalf it is satisfied that it is expedient
so to do, may by notification in the Official Gazette suspend for such period, not exceeding
sixty days, as may be specified in the notification, the operation of all or any of the
provisions of this Act, either generally or in relation to any specified banking company.
(2) In a case of special emergency, the Governor of the Reserve Bank, or in his absence
a Deputy Governor of the Reserve Bank nominated by him in this behalf may, by order in
writing, exercise the powers of the Central Government under sub-section (1) so, however,
that the period of suspension shall not exceed thirty days, and where the Governor or the
Deputy Governor, as the case may be, does so, he shall report the matter to the Central
Government forthwith, and the order shall, as soon as may be, be published in the Gazette
of India.
(3) The Central Government may, by notification in the Official Gazette, extend from time
to time the period of any suspension ordered under sub-section (1) or sub-section (2) for
such period, not exceeding sixty days at any one time, as it thinks fit so, however, that the
total period does not exceed one year.
(4) A copy of any notification issued under sub-section (3) shall be laid on the table
of [Parliament] as soon as may be after it is issued.
5. Interpretation. - [In this Act], unless there is anything repugnant in the subject or
context,-
[(a) "approved securities" means the securities issued by the Central Government or
any State Government or such other securities as may be specified by the Reserve
Bank from time to time;]
(b) "banking" means the accepting, for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or otherwise, and
withdrawable by cheque, draft, order or otherwise;
(c) "banking company" means any company which transacts the business of
banking [in India].
Explanation. - Any company which is engaged in the manufacture of goods or carries on
any trade and which accepts deposits of money from the public merely for the purpose of
financing its business as such manufacturer or trader shall not be deemed to transact the
business of banking within the meaning of this clause;
[(ca) "banking policy" means any policy which is specified from time to time by the
Reserve Bank in the interest of the banking system or in the interest of monetary
stability or sound economic growth, having due regard to the interests of the
depositors, the volume of deposits and other resources of the bank and the need
for equitable allocation and the efficient use of these deposits and resources;]
[(cc) "branch" or "branch office", in relation to a banking company, means any branch
or branch office, whether called a pay office or sub-pay office or by any other name,
at which deposits are received, cheques cashed or moneys lent, and for the
purposes of section 35 includes any place of business where any other form of
business referred to in sub-section (1) of section 6 is transacted;]
[(d) "company" means any company as defined in section 3 of the Companies Act,
1956 (1 of 1956); and includes a foreign company within the meaning of section 591
of that Act;]
[(da) "corresponding new bank" means a corresponding new bank constituted under
section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970 (5 of 1970); or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980);]
[* * *]
(f) "demand liabilities" means liabilities which must be met on demand, and "time
liabilities" means liabilities which are not demand liabilities;
[(ff) "Deposit Insurance Corporation" means the Deposit Insurance Corporation
established under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of
1961);]
 [* * *]
[(ffb) "Exim Bank" means the Export-Import Bank of India established under section 3
of the Export-Import Bank of India Act, 1981 (28 of 1981);]
[(ffc) "Reconstruction Bank" means the Industrial Reconstruction Bank of India
established under section 3 of the Industrial Reconstruction Bank of India Act, 1984
(62 of 1984);]
[(ffd) "National Housing Bank" means the National Housing Bank established under
section 3 of the National Housing Bank Act, 1987 (53 of 1987);]
(g) "gold" includes gold in the form of coin, whether legal tender or not, or in the form
of bullion or ingot, whether refined or not;
[(gg) "managing agent" includes,-
(i) secretaries and treasurers,
(ii) where the managing agent is a company, any director of such company, and
any member thereof who holds substantial interest in such company,
(iii) where the managing agent is a firm, any partner of such firm;]
[(h) "managing director", in relation to a banking company, means a director who, by
virtue of an agreement with the banking company or of a resolution passed by the
banking company in general meeting or by its Board of directors or, by virtue of its
memorandum or articles of association, is entrusted with the management of the
whole, or substantially the whole of the affairs of the company, and includes a
director occupying the position of a managing director, by whatever name called:]
[Provided that the managing director shall exercise his powers subject to the
superintendence, control and direction of the Board of directors;]
[(ha) "National Bank" means the National Bank for Agriculture and Rural Development
established under section 3 of the National Bank for Agriculture and Rural
Development Act, 1981 (68 of 1981);]
[* * *]
(j) "prescribed" means prescribed by rules made under this Act;
[(ja) "regional rural bank" means a regional rural bank established under section 3 of
the Regional Rural Banks Act, 1976 (21 of 1976);]
[* * *]
[(l) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of
the Reserve Bank of India Act, 1934 (2 of 1934);]
[* * *]
(n) "secured loan or advance" means a loan or advance made on the security of assets
the market value of which is not at any time less than the amount of such loan or
advance; and "unsecured loan or advance" means a loan or advance not so
secured;
 [(ni) "Small Industries Bank" means the Small Industries Development Bank of India
established under section 3 of the Small Industries Development Bank of India Act,
1989 (39 of 1989);]
[(na) "small-scale industrial concern" means an industrial concern in which the
investment in plant and machinery is not in excess of seven and a half lakhs of
rupees or such higher amount, not exceeding twenty lakhs of rupees, as the Central
Government may, by notification in the Official Gazette, specify in this behalf, having
regard to the trends in industrial development and other relevant factors;
[(nb) "Sponsor Bank" has the meaning assigned to it in the Regional Rural Banks Act,
1976 (21 of 1976);
(nc) "State Bank of India" means the State Bank of India constituted under section 3
of the State Bank of India Act, 1955 (23 of 1955);]
[(nd)] "subsidiary bank" has the meaning assigned to it in the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959);
[(ne)] "substantial interest",-
(i) in relation to a company, means the holding of a beneficial interest by an
individual or his spouse or minor child, whether singly or taken together, in the
shares thereof, the amount paid-up on which exceeds five lakhs of rupees or
ten per cent. of the paid-up capital of the company, whichever is less;
(ii) in relation to a firm, means the beneficial interest held therein by an individual
or his spouse or minor child, whether singly or taken together, which
represents more than ten per cent. of the total capital subscribed by all the
partners of the said firm;]
[(o) all other words and expressions used herein but not defined and defined in the
Companies Act, 1956 (1 of 1956), shall have the meanings respectively assigned
to them in that Act.]
[* * *]
[5A. Act to override memorandum, articles, etc. - Save as otherwise expressly
provided in this Act,-
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary
contained in the memorandum or articles of a banking company, or in any
agreement executed by it, or in any resolution passed by the banking company in
general meeting or by its Board of Directors, whether the same be registered,
executed or passed, as the case may be, before or after the commencement of the
Banking Companies (Amendment) Act, 1959 (33 of 1959); and
(b) any provision contained in the memorandum, articles, agreement or resolution
aforesaid shall, to the extent to which it is repugnant to the provisions of this Act,
become or be void, as the case may be.]
Part II

Business of Banking Companies

6. Forms of business in which banking companies may engage. - (1) In addition to
the business of banking, a banking company may engage in any one or more of the
following forms of business, namely:-
(a) the borrowing, raising, or taking up of money; the lending or advancing of money
either upon or without security; the drawing, making, accepting, discounting, buying,
selling, collecting and dealing in bills of exchange, hoondees, promissory notes,
coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates,
scrips and other instruments, and securities whether transferable or negotiable or
not; the granting and issuing of letters of credit, traveller's cheques and circular
notes; the buying, selling and dealing in bullion and specie; the buying and selling
of foreign exchange including foreign bank notes; the acquiring, holding, issuing on
commission, underwriting and dealing in stock, funds, shares, debentures,
debenture stock, bonds, obligations, securities and investments of all kinds; the
purchasing and selling of bonds, scrips or other forms of securities on behalf of
constituents or others, the negotiating of loans and advances; the receiving of all
kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the
providing of safe deposit vaults; the collecting and transmitting of money and
securities;
(b) acting as agents for any Government or local authority or any other person or
persons; the carrying on of agency business of any description including the
clearing and forwarding of goods, giving of receipts and discharges and otherwise
acting as an attorney on behalf of customers, but excluding the business of
a [managing agent or secretary and treasurer] of a company;
(c) contracting for public and private loans and negotiating and issuing the same;
(d) the effecting, insuring, guaranteeing, underwriting, participating in managing and
carrying out of any issue, public or private, of State, municipal or other loans or of
shares, stock, debentures, or debenture stock of any company, corporation or
association and the lending of money for the purpose of any such issue;
(e) carrying on and transacting every kind of guarantee and indemnity business;
(f) managing, selling and realising any property which may come into the possession
of the company in satisfaction or part satisfaction of any of its claims;
(g) acquiring and holding and generally dealing with any property or any right, title or
interest in any such property which may form the security or part of the security for
any loans or advances or which may be connected with any such security;
(h) undertaking and executing trusts;
(i) undertaking the administration of estates as executor, trustee or otherwise;
(j) establishing and supporting or aiding in the establishment and support of
associations, institutions, funds, trusts and conveniences calculated to benefit
employees or ex-employees of the company or the dependents or connections of
such persons; granting pensions and allowances and making payments towards
 insurance; subscribing to or guaranteeing moneys for charitable or benevolent
objects or for any exhibition or for any public, general or useful object;
(k) the acquisition, construction, maintenance and alteration of any building or works
necessary or convenient for the purposes of the company;
(l) selling, improving, managing, developing, exchanging, leasing, mortgaging,
disposing of or turning into account or otherwise dealing with all or any part of the
property and rights of the company;
(m) acquiring and undertaking the whole or any part of the business of any person or
company, when such business is of a nature enumerated or described in this sub-
section;
(n) doing all such other things as are incidental or conducive to the promotion or
advancement of the business of the company;
(o) any other form of business which the Central Government may, by notification in
the Official Gazette, specify as a form of business in which it is lawful for a banking
company to engage.
(2) No banking company shall engage in any form of business other than those referred
to in sub-section (1).
[7. Use of words "bank", "banker", "banking" or "banking company". - (1) No
company other than a banking company shall use as part of its name [or in connection
with its business] any of the words "bank", "banker" or "banking" and no company shall
carry on the business of banking in India unless it uses as part of its name at least one of
such words.
(2) No firm, individual or group of individuals shall, for the purpose of carrying on any
business, use as part of its or his name any of the words "bank", "banking" or "banking
company".
(3) Nothing in this section shall apply to-
(a) a subsidiary of a banking company formed for one or more of the purposes
mentioned in sub-section (1) of section 19, whose name indicates that it is a
subsidiary of that banking company;
(b) any association of banks formed for the protection of their mutual interests and
registered under section 25 of the Companies Act, 1956 (1 of 1956).]
8. Prohibition of trading. - Notwithstanding anything contained in section 6 or in any
contract, no banking company shall directly or indirectly deal in the buying or selling or
bartering of goods, except in connection with the realisation of security given to or held by
it, or engage in any trade, or buy, sell or barter goods for others otherwise than in
connection with bills of exchange received for collection or negotiation or with such of its
business as is referred to in clause (i) of sub-section (1) of section 6:
[Provided that this section shall not apply to any such business as is specified in
pursuance of clause (o) of sub-section (1) of section 6.]
Explanation. - For the purposes of this section, "goods" means every kind of movable
property, other than actionable claims, stocks, shares, money, bullion and specie, and all
instruments referred to in clause (a) of sub-section (1) of section 6.
9. Disposal of non-banking assets. - Notwithstanding anything contained in section 6,
no banking company shall hold any immovable property howsoever acquired, except such
as is required for its own use, for any period exceeding seven years from the acquisition
thereof or from the commencement of this Act, whichever is later or any extension of such
period as in this section provided, and such property shall be disposed of within such
period or extended period, as the case may be:
Provided that the banking company may, within the period of seven years as aforesaid,
deal or trade in any such property for the purpose of facilitating the disposal thereof:
Provided further that the Reserve Bank may in any particular case extend the aforesaid
period of seven years by such period not exceeding five years where it is satisfied that
such extension would be in the interest of the depositors of the banking company.
[10. Prohibition of employment of managing agents and restrictions on certain
forms of employment. - (1) No banking company-
(a) shall employ or be managed by a managing agent; or
(b) shall employ or continue the employment of any person-
(i) who is, or at any time has been, adjudicated insolvent, or has suspended
payment or has compounded with his creditors, or who is, or has been,
convicted by a criminal Court of an offence involving moral turpitude; or
(ii) whose remuneration or part of whose remuneration takes the form of
commission or of a share in the profits of the company:
[Provided that nothing contained in this sub-clause shall apply to the payment by a banking
company of-
(a) any bonus in pursuance of a settlement or award arrived at or made under any law
relating to industrial disputes or in accordance with any scheme framed by such
banking company or in accordance with the usual practice prevailing in banking
business;
(b) any commission to any broker (including guarantee broker), cashier-contractor,
clearing and forwarding agent, auctioneer or any other person, employed by the
banking company under a contract otherwise than as a regular member of the staff
of the company; or]
(iii) whose remuneration is, in the opinion of the Reserve Bank, excessive; or
(c) shall be managed by any person-
[(i) who is a director of any other company not being-
(a) a subsidiary of the banking company, or
(b) a company registered under section 25 of the Companies Act, 1956 (1 of
1956):
Provided that the Prohibition in this sub-clause shall not apply in respect of any such
director for a temporary period not exceeding three months or such further period not
exceeding nine months as the Reserve Bank may allow; or]
(ii) who is engaged in any other business or vocation; or
(iii) [whose term of office as a person managing the company is ]for a period exceeding
five years at any one time:
[Provided that the term of office of any such person may be renewed or extended by
further periods not exceeding five years on each occasion subject to the condition that
such renewal or extension shall not be sanctioned earlier than two years from the date on
which it is to come into force:
Provided also that where the term of office of such person is for an indefinite period, such
term, unless it otherwise comes to an end earlier, shall come to an end immediately on
the expiry of five years from the date of his appointment or on the expiry of three months
from the date of commencement of section 8 of the Banking Laws (Miscellaneous
Provisions) Act, 1963 (55 of 1963), whichever is later:]
Provided further that nothing in this clause shall apply to a director, other than the
managing director, of a banking company by reason only of his being such director.
Explanation.-For the purpose of sub-clause (iii) of clause (b), the expression
"remuneration", in relation to person employed or continued in employment, shall include
salary, fees and perquisites but shall not include any allowances or other amounts paid to
him for the purpose of reimbursing him in respect of the expenses actually incurred by him
in the performance of his duties.
(2) In forming its opinion under sub-clause (iii) of clause (b) of sub-section (1), the Reserve
Bank may have regard among other matters to the following:-
(i) the financial condition and history of the banking company, its size and area of
operation, its resources, the volume of its business, and the trend of its earning
capacity;
(ii) the number of its branches or offices;
(iii) the qualifications, age and experience of the person concerned;
(iv) the remuneration paid to other persons employed by the banking company or to
any person occupying a similar position in any other banking company similarly
situated; and
(v) the interests of its depositors.
[[* * *]
(6) Any decision or order of the Reserve Bank made under this section shall be final for
all purposes.]
[10A. Board of directors to include persons with professional or other experience. -
(1) Notwithstanding anything contained in any other law for the time being in force, every
banking company,-
(a) in existence on the commencement of section 3 of the Banking Laws (Amendment)
Act, 1968 (58 of 1968), or
(b) which comes into existence thereafter, shall comply with the requirements of this
section:
Provided that nothing contained in this sub-section shall apply to a banking company
referred to in clause (a) for a period of three months from such commencement.
(2) Not less than fifty-one per cent. of the total number of members of the Board of
directors of a banking company shall consist of persons, who-
(a) shall have special knowledge or practical experience in respect of one or more of
the following matters, namely:-
(i) accountancy,
(ii) agriculture and rural economy,
(iii) banking,
 (iv) co-operation,
(v) economics,
(vi) finance,
(vii) law,
(viii) small-scale industry,
(ix) any other matter the special knowledge of, and practical experience in, which
would, in the opinion of the Reserve Bank, be useful to the banking company:
Provided that out of the aforesaid number of directors, not less than two shall be persons
having special knowledge or practical experience in respect of agriculture and rural
economy, co-operation or small-scale industry; and
(b) shall not-
(1) have substantial interest in, or be connected with, whether as employee, manager or
managing agent,-
(i) any company, not being a company registered under section 25 of the
Companies Act, 1956 (1 of 1956), or
(ii) any firm, which carries on any trade, commerce or industry and which, in
either case, is not a small-scale industrial concern, or
(2) be proprietors of any trading, commercial or industrial concern, not being a small-scale
industrial concern.
[(2-A) Notwithstanding anything to the contrary contained in the Companies Act, 1956 (1
of 1956), or in any other law for the time being in force,-
(i) no director of a banking company, other than its chairman or whole-time director,
by whatever name called, shall hold office continuously for a period exceeding eight
years;
(ii) a chairman or other whole-time director of a banking company who has been
removed from office as such chairman, or whole-time director, as the case may be,
under the provisions of this Act shall also cease to be a director of the banking
company and shall also not be eligible to be appointed as a director of such banking
company, whether by election or co-option or otherwise, for a period of four years
from the date of his ceasing to be the chairman or whole-time director, as the case
may be.]
(3) If, in respect of any banking company, the requirements, as laid down in sub-section
(2), are not fulfilled at any time, the Board of directors of such banking company shall re-
constitute such Board so as to ensure that the said requirements are fulfilled.
(4) If, for the purpose of re-constituting the Board under sub-section (3), it is necessary to
retire any director or directors, the Board may, by lots drawn in such manner as may be
prescribed, decide which director or directors shall cease to hold office and such decision
shall be binding on every director of the Board.
(5) Where the Reserve Bank is of opinion that the composition of the Board of directors of
a banking company is such that it does not fulfil the requirements of sub-section (2), it
may, after giving to such banking company a reasonable opportunity of being heard, by
an order in writing, direct the banking company to so re-constitute its Board of directors
as to ensure that the said requirements are fulfilled and, if within two months from the date
of receipt of that order, the banking company does not comply with the directions made
by the Reserve Bank, that Bank may, after determining, by lots drawn in such manner as
may be prescribed, the person who ought to be removed from the membership of the
Board of directors, remove such person from the office of the director of banking company
and with a view to complying with the provision of sub-section (2), appoint a suitable
person as a member of the Board of directors in the place of the person so removed
whereupon the person so appointed shall be deemed to have been duly elected by the
banking company as its director.
(6) Every appointment, removal or reconstitution duly made, and every election duly held,
under this section shall be final and shall not be called into question in any Court.
(7) Every director elected or, as the case may be, appointed under this section shall hold
office until the date up to which his predecessor would have held office, if the election had
not been held, or, as the case may be, the appointment had not been made.
(8) No act or proceeding of the Board of directors of a banking company shall be invalid
by reason only of any defect in the composition thereof or on the ground that it is
subsequently discovered that any of its members did not fulfil the requirements of this
section.
10B. Banking company to be managed by whole-time chairman. - [(1)
Notwithstanding anything contained in any law for the time being in force or in any contract
to the contrary, every banking company in existence on the commencement of the
Banking Regulation (Amendment) Act, 1994 (20 of 1994), or which comes into existence
thereafter shall have one of its directors, who may be appointed on a whole-time or a part-
time basis, as chairman of its Board of directors, and where he is appointed on a whole-
time basis, as chairman of its Board of directors, he shall be entrusted with the
management of the whole of the affairs of the banking company:
Provided that the chairman shall exercise his powers subject to the superintendence,
control and direction of the Board of directors:
Provided further that nothing in this sub-section shall apply to a banking company in
existence on the commencement of the said section for a period of three months from
such commencement.
(1-A) Where a chairman is appointed on a part-time basis,-
(i) such appointment shall be with the previous approval of the Reserve Bank and be
subject to such conditions as the Reserve Bank may specify while giving such
approval;
(ii) the management of the whole of the affairs of such banking company shall be
entrusted to a managing director who shall exercise his powers subject to the
superintendence, control and direction of the Board of directors..]
(2) [Every chairman of the Board of directors who is appointed on a whole-time basis and
every managing director] of a banking company shall be in the whole-time employment of
such company and shall hold office for such period, not exceeding five years, as the Board
of directors may fix, but shall, subject to the provisions of this section, be eligible for re-
election or re-appointment:
Provided that nothing in this sub-section shall be construed as prohibiting a chairman from
being a director of a subsidiary of the banking company or a director of a company
registered under section 25 of the Companies Act, 1956 (1 of 1956).
(3) Every person holding office on the commencement of section 3 of the Banking Laws
(Amendment) Act, 1968 (58 of 1968), as managing director of a banking company shall-
(a) if there is a chairman of its Board of directors, vacate office on such
commencement, or
 (b) if there is no chairman of its Board of directors, vacate office on the date on which
the chairman of its Board of directors is elected or appointed in accordance with the
provisions of this section.
(4) [Every chairman who is appointed on a whole-time basis and every managing director
of a banking company appointed under sub-section (1-A)] shall be a person who has
special knowledge and practical experience of-
(a) the working of a banking company, or of the State Bank of India or any subsidiary
bank or a financial institution, or
(b) financial, economic or business administration:
Provided that a person shall be disqualified for being a [chairman who is appointed on a
whole-time basis or a managing director], if he-
(a) is a director of any company other than a company referred to in the proviso to
sub-section (2), or
(b) is a partner of any firm which carries on any trade, business or industry, or
(c) has a substantial interest in any other company or firm, or
(d) is a director, manager, managing agent, partner or proprietor of any trading,
commercial or industrial concern, or
(e) is engaged in any other business or vocation.
[(5)[(5) A [chairman of the Board of directors appointed on a whole-time basis or a
managing director] of a banking company may, by writing, under his hand addressed to
the company, resign his office, [* * *].
[(5-A)[(5) A [chairman of the Board of directors appointed on a whole-time basis or a
managing director] whose term of office has come to an end, either by reason of his
resignation or by reason of expiry of the period of his office, shall, subject to the approval
of the Reserve Bank, continue in office until his successor assumes office.]
(6) Without prejudice to the provisions of section 36-AA, where the Reserve Bank is of
opinion that any person who is, or has been elected to be, the [[chairman of the Board of
directors who is appointed on a whole-time basis or the managing director] of a banking
company is not a fit and proper person to hold such office, it may, after giving to such
person and to the banking company a reasonable opportunity of being heard, by order in
writing, require the banking company to elect or appoint any other person as the [chairman
of the Board of directors who is appointed on a whole-time basis or the managing
director] and if, within a period of two months from the date of receipt of such order, the
banking company fails to elect or appoint a suitable person as the [chairman of the Board
of directors who is appointed on a whole-time basis or the managing director], the Reserve
Bank may, by order, remove the first-mentioned person from the office of the [chairman of
the Board of directors who is appointed on a whole-time basis or the managing director] of
the banking company and appoint a suitable person in his place whereupon the person
so appointed shall be deemed to have been duly elected or appointed, as the case may
be, as the [chairman of the Board of directors who is appointed on a whole-time basis or
the managing director] of such banking company and any person elected or [appointed as
chairmen on a whole-time basis or managing director] under this sub-section shall hold
office for the residue of the period of office of the person in whose place he has been so
elected or appointed.
(7) The banking company and any person against whom an order of removal is made
under sub-section (6) may, within thirty days from the date of communication to it or to
him of the order, prefer an appeal to the Central Government and the decision of the
Central Government thereon, and subject thereto, the order made by the Reserve Bank
under sub-section (6), shall be final and shall not be called into question in any Court.
(8) Notwithstanding anything contained in this section, the Reserve Bank may, if in its
opinion it is necessary in the public interest so to do, permit the [chairman of the Board of
directors who is appointed on a whole-time basis or the managing director] to undertake
such part-time honorary work as is not likely to interfere with his duties as [such chairman
or managing director].
(9) Notwithstanding anything contained in this section, where a person [appointed on a
whole-time basis, as chairman of the Board of directors or managing director] dies or
resigns or is by infirmity or otherwise rendered incapable of carrying out his duties or is
absent on leave or otherwise in circumstances not involving the vacation of his office, the
banking company may, with the approval of the Reserve Bank, make suitable
arrangements for carrying out the [duties of chairman or managing director] for a total
period not exceeding four months.
[10BB. Power of Reserve Bank to appoint [[chairman of the Board of directors
appointed on a whole-time basis or a managing director] of a banking company . -
(1) Where the office of the [chairman of the Board of directors appointed on a whole-time
basis or a managing director] of a banking company is vacant, the Reserve Bank may, if
it is of opinion that the continuation of such vacancy is likely to adversely affect the
interests of the banking company, appoint a person, eligible under sub-section (4) of
section 10-B to be so appointed, to be the [chairman of the Board of directors appointed
on a whole-time basis or a managing director] of the banking company and where the
person so appointed is not a director of such banking company, he shall, so long as he
holds the office of the [chairman of the Board of directors appointed on a whole-time basis
or a managing director], be deemed to be a director of the banking company.
(2) The [chairman of the Board of directors appointed on a whole-time basis or a managing
director] so appointed by the Reserve Bank shall be in the whole-time employment of the
banking company and shall hold office for such period not exceeding three years, as the
Reserve Bank may specify, but shall, subject to other provisions of this Act, be eligible for
reappointment.
(3) The [chairman of the Board of directors appointed on a whole-time basis or a managing
director] so appointed by the Reserve Bank shall draw from the banking company such
pay and allowances as the Reserve Bank may determine and may be removed from office
only by the Reserve Bank.
(4) Save as otherwise provided in this section, the provisions of section 10-B shall, as far
as may be, apply to the [chairman of the Board of directors appointed on a whole-time
basis or a managing director] appointed by the Reserve Bank under sub-section (1) as
they apply to a [chairman of the Board of directors appointed on a whole-time basis or a
managing director] appointed by the banking company.]
[10C. Chairman and certain directors not to be required to hold qualification
shares. - [A chairman of the Board of directors who is appointed on a whole-time basis or
a managing director] of a banking company (by whomsoever appointed) and a director of
a banking company (appointed by the Reserve Bank under section 10-A) shall not be
required to hold qualification shares in the banking company.]
10D. Provisions of sections 10-A and 10-B to override all other laws, contracts, etc. -
Any appointment or removal of a [director, chairman of the Board of directors who is
appointed on a whole-time basis or a managing director] in pursuance of section 10-A or
section 10-B [or section 10-BB] shall have effect and any such person shall not be entitled
to claim any compensation for the loss or termination of office, notwithstanding anything
contained in any law or in any contract, memorandum or articles of association.]
11. Requirement as to minimum paid-up capital and reserves. - (1) Notwithstanding
anything contained in [section 149 of the Companies Act, 1956 (1 of 1956)], no banking
company in existence on the commencement of this Act, shall, after the expiry of three
years from such commencement or of such further period not exceeding one year as the
Reserve Bank, having regard to the interests of the depositors of the company, may think
fit in any particular case to allow, carry on business [in India], and no other banking
company shall after the commencement of this Act, commence or carry on business [in
India], [unless it complies with such of the requirements of this section as are applicable
to it].
[(2) In the case of a banking company incorporated outside India-
(a) the aggregate value of its paid-up capital and reserves shall not be less than fifteen
lakhs of rupees and if it has a place or places of business in the city of Bombay or
Calcutta or both, twenty lakhs of rupees; and
(b) [the banking company shall deposit and keep deposited with the Reserve Bank
either in cash or in the form of unencumbered approved securities, or partly in cash
and partly in the form of such securities-
(i) an amount which shall not be less than the minimum required by clause (a);
and
(ii) as soon as may be after the expiration of each [*] year, an amount calculated
at twenty per cent. of its profit for that year in respect of all business transacted
through its branches in India, as disclosed in the profit and loss account
prepared with reference to that year under section 29:]
Provided that any such banking company may at any time replace-
(i) any securities so deposited by cash or by any other unencumbered approved
securities, or partly by cash and partly by other such securities, so, however, that
the total amount deposited is not affected;
(ii) any cash so deposited by unencumbered approved securities of an equal value.]
[(2-A) Notwithstanding anything contained in sub-section (2), the Central Government
may, on the recommendation of the Reserve Bank, and having regard to the adequacy of
the amounts already deposited and kept deposited by a banking company under sub-
section (2), in relation to its deposit liabilities in India, declare by order in writing that the
provisions of sub-clause (ii) of clause (b) of sub-section (2) shall not apply to such banking
company for such period as may be specified in the order.]
(3) In the case of any banking company to which the provisions of sub-section (2) do not
apply, the aggregate value of its paid-up capital and reserves shall not be less than-
(i) if it has places of business in more than one State, five lakhs of rupees, and if any
such place or places of business is or are situated in the city of Bombay or Calcutta
or both, ten lakhs of rupees;
(ii) if it has all its places of business in one State none of which is situated in the city
of Bombay or Calcutta, one lakh of rupees in respect of its principal place of
business, plus ten thousand rupees in respect of each of its other places of business
situated in the same district in which it has its principal place of business, plus
twenty-five thousand rupees in respect of each place of business situated
elsewhere in the State otherwise than in the same district:
Provided that no banking company to which this clause applies shall be required to have
paid-up capital and reserves exceeding an aggregate value of five lakhs of rupees:
Provided further that no banking company to which this clause applies and which has only
one place of business, shall be required to have paid-up capital and reserves exceeding
an aggregate value of fifty thousand rupees:
[Provided further that in the case of every banking company to which this clause applies
and which commences banking business for the first time after the commencement of the
Banking Companies (Amendment) Act, 1962 (36 of 1962), the value of its paid-up capital
shall not be less than five lakhs of rupees;]
(iii) if it has all its places of business in one State, one or more of which is or are
situated in the city of Bombay or Calcutta, five lakhs of rupees, plus twenty-five
thousand rupees in respect of each place of business situated outside the city of
Bombay or Calcutta, as the case may be:
Provided that no banking company to which this clause applies shall be required to have
paid-up capital and reserves exceeding an aggregate value of ten lakhs of rupees.
Explanation. - For the purposes of this sub-section, a place of business situated [in a
State] other than that in which the principal place of business of the banking company is
situated shall, if it is not more than twenty-five miles distant from such principal place of
business, be deemed to be situated within the same State as such principal place of
business.
(4) Any amount deposited and kept deposited with the Reserve Bank under [* * *] sub-
section (2) by any banking company incorporated [outside India] shall, in the event of the
company ceasing for any reason to carry on banking business [in India], be an assent of
the company on which the claims of all the creditors of the company [in India] shall be a
first charge.
[(5) For the purposes of this section,-
(a) "place of business" means any office, sub-office, sub-pay office and any place
of business at which deposits are received, cheques cashed or moneys lent;
(b) "value" means the real or exchangeable value, and not the nominal value
which may be shown in the books of the banking company concerned.]
(6) If any dispute arises in computing the aggregate value of the paid-up capital and
reserves of any banking company, a determination thereof by the Reserve Bank shall be
final for the purposes of this section.
[12. Regulation of paid-up capital, subscribed capital and authorised capital and
voting rights of shareholders. - (1) No banking company shall carry on business in India,
unless it satisfies the following conditions, namely:-
(i) that the subscribed capital of the company is not less than one-half of the
authorised capital, and the paid-up capital is not less than one-half of the
subscribed capital and that, if the capital is increased, it complies with the
conditions prescribed in this clause within such period not exceeding two
years as the Reserve Bank may allow;
[(ii) that, notwithstanding anything contained in the Companies Act, 1956, the capital
of such banking company consists of-
(a) equity shares only; or
(b) equity shares and preference shares:
Provided that the issue of preference share shall be in accordance with the guidelines
framed by the Reserve Bank specifYing the class of preference shares, the extent of issue
of each class of such preference shares (whether perpetual or irredeemable or
redeemable), and the terms and conditions subject to which each class of preference
shares may be issued :-
Provided further that no holder of the preference share, issued by the company, shall be
entitled to exercise the. voting right specified in clause (b) of sub-section (2) of section 87
of the Companies Act, 1956;]
(2) No person holding shares in a banking company shall, in respect of any shares held
by him, exercise voting rights [on poll] [in excess of [ten per cent.] of the total voting rights
of all the shareholders of the banking company.
[Provided that the Reserve Bank may increase, in a phased manner, such ceiling on voting
rights from ten percent to twenty-six per cent.]
(3) Notwithstanding anything contained in any law for the time being in force or in any
contract or instrument no suit or other proceeding shall be maintained against any person
registered as the holder of a share in a banking company on the ground that the title to
the said share vests in a person other than the registered holder:
Provided that nothing contained in this sub-section shall bar a suit or other proceeding-
(a) by a transferee of the share on the ground that he has obtained from the registered
holder a transfer of the share in accordance with any law relating to such transfer;
or
(b) on behalf of a minor or a lunatic on the ground that the registered holder holds the
share on behalf of the minor or lunatic.
(4) Every chairman, managing director or chief executive officer by whatever name called
of a banking company shall furnish to the Reserve Bank through that banking company
returns containing full particulars of the extent and value of his holding of shares, whether
directly or indirectly, in the banking company and of any change in the extent of such
holding or any variation in the rights attaching thereto and such other information relating
to those shares as the Reserve Bank may, by order, require and in such form and at such
time as may be specified in the order.]
[12A. Election of new directors. - The Reserve Bank may, by order, require any banking
company to call a general meeting of the shareholders of the company within such time,
not less than two months from the date of the order, as may be specified in the order or
within such further time as the Reserve Bank may allow in this behalf, to elect in
accordance with the voting rights permissible under this Act fresh directors, and the
banking company shall be bound to comply with the order.
(2) Every director elected under sub-section (1) shall hold office until the date up to which
his predecessor would have held office, if the election had not been held.
(3) Any election duly held under this section shall not be called in question in any Court.]
[12B. Regulation of acquisition of shares or voting rights. (1) No person (hereinafter
referred to as "the applicant") shall, except with the previous approval of the Reserve
Bank, on an application being made, acquire or agree to acquire, directly or indirectly, by
himself or acting in concert with any other person, shares of a banking company or voting
rights therein, which acquisition taken together with shares and voting rights, if any, held
by him or his relative or associate enterprise or person acting in concert with him, makes
the applicant to hold five per cent. or more of the paid-Up share capital of such banking
company or entitles him to exercise five per cent. or more of the voting rights in such
banking company.
Explanation 1. - For the purposes of this sub-section,-
(a) "associate enterprise" means a company, whether incorporated or not, which,-
(i) is a holding company or a subsidiary company of the applicant; or
(ii) is a joint venture of the applicant; or
 (iii) controls the composition of the Board of Directors or other body governing
the applicant; or
(iv) exercises, in the opinion of the Reserve Bank, significant influence on the
applicant in taking financial or policy decisions; or
(v) is able to obtain economic benefits from the activities of the applicant;
(b) "relative" shall have the meaning assigned to it in section 6 of the Companies Act,
1956;
(c) persons shall be deemed to be "acting in concert" who, for a common objective or
purpose of acquisition of shares or voting rights in excess of the percentage
mentioned in this sub-section, pursuant to an agreement or understanding (formal
or informal), directly or indirectly cooperate by acquiring or agreeing to acquire
shares or voting rights in the banking company.
Explanation 2. - For the purposes of this Act, joint venture means a legal entity in the
nature of a partnership engaged in the joint undertaking of a particular transaction for
mutual profit or an association of persons or companies jointly undertaking some
commercial enterprise wherein all contribute assets and share risks.
(2) An approval under sub-section (1) may be granted by the Reserve Bank if it is satisfied
that-
(a) in the public interest; or
(b) in the interest of banking policy; or
(c) to prevent the affairs of any banking company being conducted in a manner
detrimental or prejudicial to the interests of the banking company; or
(d) in view of the emerging trends in banking and international best practices; or
(e) in the interest of the banking and financial system in India, the applicant is a fit and
proper person to acquire shares or voting rights :-
Provided that the Reserve Bank may call for such information from the applicant as it may
deem necessary for considering the application referred to in sub-section (1):
Provided further that the Reserve Bank may specifY different criteria for acquisition of
shares or voting rights in different percentages.
(3) Where the acquisition is by way of transfer of shares of a banking company and the
Reserve Bank is satisfied that such transfer should not be permitted, it may, by order,
direct that no such share shall be transferred to the proposed transferee and may further
direct the banking company not to give effect to the transfer of shares and in case the
transfer has been registered, the transferee shall not be entitled to exercise voting rights
on poll in any of the meetings of the banking company.
(4) The approval for acquisition of shares may be subject to such conditions as the
Reserve Bank may deem fit to impose, including a condition that any further acquisition of
shares shall require prior approval of the Reserve Bank and that the applicant continues
to be a fit and proper person to hold the shares or voting rights.
(5) Before issuing or allotting any share to any person or registering the transfer of shares
in the name of any person, the banking company shall ensure that the requirements of
sub-section (I) are complied with by that person and where the acquisition is with the
approval of the Reserve Bank, the banking company shall further ensure that the'
conditions imposed under sub-section (4), if any, of such approval are fulfilled.
(6) The decision of the Reserve Bank on the application made under sub-section (1) shall
be taken within a period of ninety days from the date of receipt of the application by the
Reserve Bank :-
Provided that in computing the period of ninety days, the period taken by the applicant for
furnishing the information called for by the Reserve Bank shall be excluded.
(7) The Reserve Bank may specify the minimum percentage of shares to be acquired in a
banking company if it considers that the purpose for which the shares are proposed to be
acquired by the applicant warrants such minimum shareholding.
(8) The Reserve Bank may, if it is satisfied that any person or persons acting in concert
with him holding shares or voting rights in excess of five per cent. of the total voting rights
of all the shareholders of the banking company, are not fit and proper to hold such shares
or voting rights, pass an order directing that such person or persons acting in concert with
him shall not, in the aggregate, exercise voting rights on poll in excess of five per cent. of
the total voting rights of all the shareholders of the banking company :-
Provided that the Reserve Bank shall not pass any such order without giving an
opportunity of being heard to such person or persons acting in concert with him.]
13. Restriction on commission, brokerage, discount, etc., on sale of shares. -
Notwithstanding anything to the contrary contained in [sections 76 and 79 of the
Companies Act, 1956 (1 of 1956)], no banking company shall pay out directly or indirectly
by way of commission, brokerage, discount or remuneration in any form in respect of any
shares issued by it, any amount exceeding in the aggregate two and one-half per cent of
the [price at which the said shares are issued].
[Explanation. - For the removal of doubts, it is hereby declared that the expression "price
at which the said shares are issued" shall include amount or value of premium on such
shares.]
14. Prohibition of charge on unpaid capital. - No banking company shall create any
charge upon any unpaid capital of the company, and any such charge shall be invalid.
[14A. Prohibition of floating charge on assets. - (1) Notwithstanding anything
contained in section 6, no banking company shall create a floating charge on the
undertaking or any property of the company or any part thereof, unless the creation of
such floating charge is certified in writing by the Reserve Bank as not being detrimental to
the interests of the depositors of such company.
(2) Any such charge created without obtaining the certificate of the Reserve Bank shall be
invalid.
(3) Any banking company aggrieved by the refusal of a certificate under sub-section (1)
may, within ninety days from the date on which such refusal is communicated to it, appeal
to the Central Government.
(4) The decision of the Central Government where an appeal has been preferred to it
under sub-section (3) or of the Reserve Bank where no such appeal has been preferred
shall be final.]
15. Restrictions as to payment of dividend. - [(1)] No banking company shall pay any
dividend on its shares until all its capitalised expenses (including preliminary expenses,
organisation expenses, share-selling commission, brokerage, amounts of losses incurred
and any other item of expenditure not represented by tangible assets) have been
completely written off.
[(2) Notwithstanding anything to the contrary contained in sub-section (1) or in the
Companies Act, 1956 (1 of 1956), a banking company may pay dividends on its shares
without writing off-
(i) the depreciation, if any, in the value of its investments in approved securities in any
case where such depreciation has not actually been capitalised or otherwise
accounted for as a loss;
 (ii) the depreciation, if any, in the value of its investments in shares, debentures or
bonds (other than approved securities) in any case where adequate provision for
such depreciation has been made to the satisfaction of the auditor of the banking
company;
(iii) the bad debts, if any, in any case where adequate provision for such debts has
been made to the satisfaction of the auditor of the banking company.]
[16. Prohibition of common directors. - [(1) No banking company incorporated in India
shall have as a director in its Board of directors any person who is a director of any other
banking company.
(1-A) No banking company referred to in sub-section (1) shall have in its Board of
directors, more than three directors who are directors of companies which among
themselves are entitled to exercise voting rights in excess of twenty per cent. of the total
voting rights of all the shareholders of that banking company.]
(2) If immediately before the commencement of the Banking Companies (Amendment)
Act, 1956 (95 of 1956), any person holding office as a director of a banking company is
also a director of companies which among themselves are entitled to exercise voting rights
in excess of twenty per cent. of the total voting rights of all the shareholders of the banking
company, he shall, within such period from such commencement as the Reserve Bank
may specify in this behalf-
(a) either resign his office as a director of the banking company; or
(b) choose such number of companies as among themselves are not entitled to
exercise voting rights in excess of twenty per cent. of the total voting rights of all the
shareholders of the banking company as companies in which he wishes to continue
to hold the office of a director and resign his office as a director in the other
companies.]
[(3) Nothing in sub-section (1) shall apply to, or in relation to, any director appointed by
the Reserve Bank.]
[17. Reserve Fund. - (1) Every banking company incorporated in India shall create a
reserve fund and [* * *] shall, out of the balance of profit of each year as disclosed in the
profit and loss account prepared under section 29 and before any dividend is declared,
transfer to the reserve fund a sum equivalent to not less than twenty per cent. of such
profit.
[(1-A) Notwithstanding anything contained in sub-section (1), the Central Government
may, on the recommendation of the Reserve Bank and having regard to the adequacy of
the paid-up capital and reserves of a banking company in relation to its deposit liabilities,
declare by order in writing that the provisions of sub-section (1) shall not apply to the
banking company for such period as may be specified in the order:
Provided that no such order shall be made unless, at the time it is made, the amount in
the reserve fund under sub-section (1), together with the amount in the share premium
account is not less than the paid-up capital of the banking company.]
(2) Where a banking company appropriates any sum or sums from the reserve fund or the
share premium account, it shall, within twenty-one days from the date of such
appropriation, report the fact to the Reserve Bank, explaining the circumstances relating
to such appropriation:
Provided that the Reserve Bank may, in any particular case, extend the said period of
twenty-one days by such period as it thinks fit or condone any delay in the making of such
report.
[18. Cash reserve. - (1) Every banking company, not being a scheduled bank, [shall
maintain in India on a daily basis] by way of cash reserve with itself or by way of balance
in a current account with the Reserve Bank, or by way of net balance in current accounts
or in one or more of the aforesaid ways, a sum equivalent to at least [such per cent.] of
the total of its demand and time liabilities in India as on the last Friday of the second
preceding fortnight [as the Reserve Bank may specify, by notification in the Official
Gazette, from time to time, having regard to the needs of securing the monetary stability
in the country] and shall submit to the Reserve Bank before the twentieth day of every
month a return showing the amount so held on alternate Fridays during a month with
particulars of its demand and time liabilities in India on such Fridays or if any such Friday
is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at the close
of business on the preceding working day.
Explanation. - In this section, and in section 24,-
(a) "liabilities in India" shall not include-
(i) the paid-up capital or the reserves or any credit balance in the profit and loss
account of the banking company;
(ii) any advance taken from the Reserve Bank [***] or from the Exim Bank [or
from the Reconstruction Bank] [or from the National Housing Bank] or from
the National Bank [, or from the Small Industries Bank] by the banking
company;
(iii) in the case of a Regional Rural Bank, also any loan taken by such bank from
its Sponsor Bank;
(b) "fortnight" shall mean the period from Saturday to the second following Friday, both
days inclusive;
(c) "net balance in current accounts" shall, in relation to a banking company, mean the
excess, if any, of the aggregate of the credit balances in current account maintained
by that banking company with the State Bank of India or a subsidiary bank or a
corresponding new bank over the aggregate of the credit balances in current
account held by the said banks with such banking company;
(d) for the purposes of computation of liabilities, the aggregate of the liabilities of a
banking company to the State Bank of India, a subsidiary bank, a corresponding
new bank, a regional rural bank, another banking company, a co-operative bank or
any other financial institution notified by the Central Government in this behalf, shall
be reduced by the aggregate of the liabilities of all such banks and institutions to
the banking company;
(e) the expression "co-operative bank" shall have the meaning assigned to it in clause
(cci) of section 56.
[(1A) If the balance held by such banking company at the close of business on any day is
below the minimum specified under sub-section (1), such banking company shall, without
prejudice to the provisions of any other law for the time being in force, be liable to pay to
the Reserve Bank, in respect of that day, penal interest at a rate of three per cent. above
the bank rate on the amount by which such balance falls short of the specified minimum,
and if the shortfall continues further, the penal interest so charged shall be increased to a
rate of five per cent. above the bank rate in respect of each subsequent day during which
the default continues.
(1B) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied,
on an application in writing by the defaulting banking company, that such defaulting
banking company had sufficient cause for its failure to comply with the provisions of sub-
section (1), it may not demand the payment of the penal interest.
(IC) The Reserve Bank may, for such period and subject to such conditions as may be
specified, grant to any banking company such exemptions from the provisions of this
section as it thinks fit with reference to all or any of its offices or with reference to the whole
or any part of its assets and liabilities.]
(2) The Reserve Bank may, for the purposes of this section and section 24, specify from
time to time, with reference to any transaction or class of transactions, that such
transaction or transactions shall be regarded as liability in India of a banking company
and, if any question arises as to whether any transaction or class of transactions shall be
regarded for the purposes of this section and section 24 as liability in India of a banking
company, the decision of the Reserve Bank thereon shall be final.]
19. Restriction on nature of subsidiary companies. - [(1) A banking company shall not
form any subsidiary company except a subsidiary company formed for one or more of the
following purposes, namely:-
(a) the undertaking of any business which, under clauses (a) to (o) of sub-section (1)
of section 6, is permissible for a banking company to undertake, or
(b) with the previous permission in writing of the Reserve Bank, the carrying on of the
business of banking exclusively outside India, or
(c) the undertaking of such other business, which the Reserve Bank may, with the
prior approval of the Central Government, consider to be conducive to the spread
of banking in India or to be otherwise useful or necessary in the public interest.
Explanation. - For the purposes of section 8, a banking company shall not be deemed, by
reason of its forming or having a subsidiary company, to be engaged indirectly in the
business carried on by such subsidiary company.]
(2) Save as provided in sub-section (1), no banking company shall hold shares in any
company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding
thirty per cent. of the paid-up share capital of that company or thirty per cent. of its own
paid-up share capital and reserves, whichever is less:
Provided that any banking company which is on the date of the commencement of this
Act holding any shares in contravention of the provisions of this sub-section shall not be
liable to any penalty therefor if it reports the matter without delay to the Reserve Bank and
if it brings its holding of shares into conformity with the said provisions within such period,
not exceeding two years, as the Reserve Bank may think fit to allow.
(3) Save as provided in sub-section (1) and notwithstanding anything contained in sub-
section (2), a banking company shall not, after the expiry of one year from the date of the
commencement of this Act, hold shares, whether as pledgee, mortgagee or absolute
owner, in any company in the management of which any managing director or manager
of the banking company is in any manner concerned or interested.
[(4) Save as provided in clause (c) of sub-section (1), a banking company may form a
subsidiary company to carry on the business of credit information in accordance with the
Credit Information Companies (Regulation) Act, 2005 (30 of 2005).]
[20. Restrictions on loans and advances. - (1) Notwithstanding anything to the contrary
contained in section 77 of the Companies Act, 1956 (1 of 1956), no banking company
shall,-
(a) grant any loans or advances on the security of its own shares, or
 (b) enter into any commitment for granting any loan or advance to or on behalf of-
(i) any of its directors,
(ii) any firm in which any of its directors is interested as partner, manager,
employee or guarantor, or
(iii) any company [not being a subsidiary of the banking company or a company
registered under section 25 of the Companies Act, 1956 (1 of 1956), or a
Government company of which [,or the subsidiary or the holding company ]of
which any of the directors of the banking company is a director, managing
agent, manager, employee or guarantor or in which he holds substantial
interest, or
(iv) any individual in respect of whom any of its directors is a partner or guarantor.
(2) Where any loan or advance granted by a banking company is such that a commitment
for granting it could not have been made if clause (b) of sub-section (1) had been in force
on the date on which the loan or advance was made, or is granted by a banking company
after the commencement of section 5 of the Banking Laws (Amendment) Act, 1968 (58 of
1968), but in pursuance of a commitment entered into before such commencement, steps
shall be taken to recover the amounts due to the banking company on account of the loan,
or advance together with interest, if any, due thereon within the period stipulated at the
time of the grant of the loan or advance, or where no such period has been stipulated,
before the expiry of one year from the commencement of the said section 5:
Provided that the Reserve Bank may, in any case, on an application in writing made to it
by the banking company in this behalf, extend the period for the recovery of the loan or
advance until such date, not being a date beyond the period of three years from the
commencement of the said section 5, and subject to such terms and conditions, as the
Reserve Bank may deem fit:
Provided further that this sub-section shall not apply if and when the director concerned
vacates the office of the director of the banking company, whether by death, retirement,
resignation or otherwise.
(3) No loan or advance, referred to in sub-section (2), or any part thereof shall be remitted
without the previous approval of the Reserve Bank, and any remission without such
approval shall be void and of no effect.
(4) Where any loan or advance referred to in sub-section (2), payable by any person, has
not been repaid to the banking company within the period specified in that sub-section,
then, such person shall, if he is a director of such banking company on the date of the
expiry of the said period, be deemed to have vacated his office as such on the said date.
Explanation. - In this section-
(a) "loans or advance" shall not include any transaction which the Reserve Bank may,
having regard to the nature of the transaction, the period within which, and the
manner and circumstances in which, any amount due on account of the transaction
is likely to be realised, the interest of the depositors and other relevant
considerations, specify by general or special order as not being a loan or advance
for the purpose of this section;
(b) "director" include a member of any board or committee in India constituted by a
banking company for the purpose of managing, or for the purpose of advising it in
regard to the management of, all or any of its affairs.
(5) If any question arises whether any transaction is a loan or advance for the purposes
of this section, it shall be referred to the Reserve Bank, whose decision thereon shall be
final.]
[20A. Restrictions on power to remit debts. - (1) Notwithstanding anything to the
contrary contained in section 293 of the Companies Act, 1956 (1 of 1956), a banking
company shall not, except with the prior approval of the Reserve Bank, remit in whole or
in part any debt due to it by-
(a) any of its directors, or
(b) any firm or company in which any of its directors is interested as director, partner,
managing agent or guarantor, or
(c) any individual if any of its directors is his partner or guarantor.
(2) Any remission made in contravention of the provisions of sub-section (1) shall be void
and of no effect.]
21. Power of Reserve Bank to control advances by banking companies. - (1) Where
the Reserve Bank is satisfied that it is necessary or expedient in the public interest [or in
the interests of depositors] [or banking policy] so to do, it may determine the policy in
relation to advances to be followed by banking companies generally or by any banking
company in particular, and when the policy has been so determined, all banking
companies or the banking company concerned, as the case may be, shall be bound to
follow the policy as so determined.
(2) Without prejudice to the generality of the power vested in the Reserve Bank under sub-
section (1), the Reserve Bank may give directions to banking companies, either generally
or to any banking company or group of banking companies in particular, [as to-
(a) the purposes for which advances may or may not be made,
(b) the margins to be maintained in respect of secured advances,
(c) the maximum amount of advances or other financial accommodation which, having
regard to the paid-up capital, reserves and deposits of a banking company and other
relevant considerations, may be made by that banking company to any one
company, firm, association of persons or individual,
(d) the maximum amount up to which, having regard to the considerations referred to
in clause (c), guarantees may be given by a banking company on behalf of any one
company, firm, association of persons or individual, and
(e) the rate of interest and other terms and conditions on which advances or other
financial accommodation may be made or guarantees may be given.]
[(3) Every banking company shall be bound to comply with any directions given to it under
this section.]
[21A. Rates of interest charged by banking companies not to be subject to scrutiny
by Courts. - Notwithstanding anything contained in the Usurious Loans Act, 1918 (10 of
1918), or any other law relating to indebtedness in force in any State, a transaction
between a banking company and its debtor shall not be re-opened by any Court on the
ground that the rate of interest charged by the banking company in respect of such
transaction is excessive.]
22. Licensing of banking companies. - [(1) Save as hereinafter provided, no company
shall carry on banking business in India unless it holds a licence issued in that behalf by
the Reserve Bank and any such licence may be issued subject to such conditions as the
Reserve Bank may think fit to impose.]
(2) Every banking company in existence on the commencement of this Act, before the
expiry of six months from such commencement, and every other company before
commencing banking business [in India], shall apply in writing to the Reserve Bank for a
licence under this section:
Provided that in the case of a banking company in existence on the commencement of
this Act, nothing in sub-section (1) shall be deemed to prohibit the company from carrying
on banking business until it is granted a licence in pursuance of [this section] or is by
notice in writing informed by the Reserve Bank that a licence cannot be granted to it:
Provided further that the Reserve Bank shall not give a notice as aforesaid to a banking
company in existence on the commencement of this Act before the expiry of the three
years referred to in sub-section (1) of section 11 or of such further period as the Reserve
Bank may under that sub-section think fit to allow.
(3) Before granting any licence under this section, the Reserve Bank may require to be
satisfied by an inspection of the books of the company or otherwise that [* * *] the following
conditions are fulfilled, namely:-
[(a) that the company is or will be in a position to pay its present or future depositors
in full as their claims accrue;
(b) that the affairs of the company are not being, or are not likely to be, conducted in
a manner detrimental to the interests of its present or future depositors;]
[(c) that the general character of the proposed management of the company will not
be prejudicial to the public interest or the interest of its depositors;
(d) that the company has adequate capital structure and earning prospects;
(e) that the public interest will be served by the grant of a licence to the company to
carry on banking business in India;
(f) that having regard to the banking facilities available in the proposed principal area
of operations of the company, the potential scope for expansion of banks already in
existence in the area and other relevant factors the grant of the licence would not
be prejudicial to the operation and consolidation of the banking system consistent
with monetary stability and economic growth;
(g) any other condition, the fulfilment of which would, in the opinion of the Reserve
Bank, be necessary to ensure that the carrying on of banking business in India by
the company will not be prejudicial to the public interest or the interests of the
depositors.]
[(3-A) Before granting any licence under this section to a company incorporated outside
India, the Reserve Bank may require to be satisfied by an inspection of the books of the
company or otherwise that the conditions specified in sub-section (3) are fulfilled and that
the carrying on of banking business by such company in India will be in the public interest
and that the Government or law of the country in which it is incorporated does not
discriminate in any way against banking companies registered in India and that the
company complies with all the provisions of this Act applicable to banking companies
incorporated outside India.]
[(4) The Reserve Bank may cancel a licence granted to a banking company under this
section-
 (i) if the company ceases to carry on banking business in India; or
(ii) if the company at any time fails to comply with any of the conditions imposed upon
it under sub-section (1); or
(iii) if at any time, any of the conditions referred to in sub-section (3) [and sub-section
(3-A)] is not fulfilled:
Provided that before cancelling a licence under clause (ii) or clause (iii) of this sub-section
on the ground that the banking company has failed to comply with or has failed to fulfil any
of the conditions referred to therein, the Reserve Bank, unless it is of opinion that the delay
will be prejudicial to the interests of the company's depositors or the public, shall grant to
the company on such terms as it may specify, an opportunity of taking the necessary steps
for complying with or fulfilling such a condition.
(5) Any banking company aggrieved by the decision of the Reserve Bank cancelling a
licence under this section may, within thirty days from the date on which such decision is
communicated to it, appeal to the Central Government.
(6) The decision of the Central Government where an appeal has been preferred to it
under sub-section (5) or of the Reserve Bank where no such appeal has been preferred
shall be final.]
[23. Restrictions on opening of new, and transfer of existing, places of business. -
(1) Without obtaining the prior permission of the Reserve Bank-
(a) no banking company shall open a new place of business in India or change
otherwise than within the same city, town or village, the location of an existing place
of business situated in India; and
(b) no banking company incorporated in India shall open a new place of business
outside India or change, otherwise than within the same city, town or village in any
country or area outside India, the location of an existing place of business situated
in that country or area:
Provided that nothing in this sub-section shall apply to the opening for a period not
exceeding one month of a temporary place of business within a city, town or village or the
environs thereof within which the banking company already has a place of business, for
the purpose of affording banking facilities to the public on the occasion of an exhibition, a
conference or a mela or any other like occasion.
(2) Before granting any permission under this section, the Reserve Bank may require to
be satisfied by an inspection under section 35 or otherwise as to the financial condition
and history of the company, the general character of its management, the adequacy of its
capital structure and earning prospects and that public interest will be served by the
opening or, as the case may be, change of location, of the place of business.
(3) The Reserve Bank may grant permission under sub-section (1) subject to such
conditions as it may think fit to impose either generally or with reference to any particular
case.
(4) Where, in the opinion of the Reserve Bank, a banking company has, at any time, failed
to comply with any of the conditions imposed on it under this section, the Reserve Bank
may, by order in writing and after affording reasonable opportunity to the banking company
for showing cause against the action proposed to be taken against it, revoke any
permission granted under this section.
[(4-A) Any regional rural bank requiring the permission of the Reserve Bank under this
section shall forward its application to the Reserve Bank through the National Bank which
shall give its comments on the merits of the application and send it to the Reserve Bank:
Provided that the regional rural bank shall also send an advance copy of the application
directly to the Reserve Bank.]
(5) For the purposes of this section "place of business" includes any sub-office, pay office,
sub-pay office and any place of business at which deposits are received, cheques cashed
or moneys lent.]
24. Maintenance of a percentage of assets. - [* * *]
[* * *]
[(2-A) A scheduled bank, in addition to the average daily balance which it is, or may be,
required to maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934)
and every other banking company, in addition to the cash reserve which it is required to
maintain under section 18, shall maintain in India, assets, the value of which shall not be
less than such percentage not exceeding forty per cent of the total of its demand and time
liabilities in India as on the last Friday of the second preceding fortnight as the Reserve
Bank may, by notification in the Official Gazette, specify from time to time and such assets
shall be maintained, in such form and manner, as may be specified in such notification.]
[* * *]
[(3) For the purpose of ensuring compliance with the provisions of this section, every
banking company shall, not later than twenty days after the end of the month to which it
relates, furnish to the Reserve Bank in the prescribed form and manner a monthly return
showing particulars of its assets maintained in accordance with this section, and its
demand and time liabilities in India at the close of business on each alternate Friday during
the month, or if any such Friday is a public holiday, at the close of business on the
preceding working day:
Provided that every Regional Rural Bank shall also furnish a copy of the said return to the
National Bank.
(4)(a) If on any alternate Friday or, if such Friday is a public holiday, on the preceding
working day, the amount maintained by a banking company at the close of business on
that day falls below the minimum prescribed by or under [***] sub-section (2-A) such
banking company shall be liable to pay to the Reserve Bank in respect of that day's default,
penal interest for that day at the rate of three per cent. per annum above the bank rate on
the amount by which the amount actually maintained falls short of the prescribed minimum
on that day; and
(b) if the default occurs again on the next succeeding alternate Friday, or, if such
Friday is a public holiday, on the preceding working day, and continues on
succeeding alternate fridays or preceding working days, as the case may be, the
rate of penal interest shall be increased to a rate of five per cent. per annum above
the bank rate on each such shortfall in respect of that alternate Friday and each
succeeding alternate Friday or preceding working day, if such Friday is a public
holiday, on which the default continues.
(5)(a) Without prejudice to the provisions of sub-section (3), the Reserve Bank may require
a banking company to furnish to it a return in the form and manner specified by it showing
particulars of its assets maintained in accordance with this section and its demand and
time liabilities in India, as at the close of business on each day of a month; and
(b) without prejudice to the provisions of sub-section (4), on the failure of a banking
company to maintain as on any day, the amount so required to be maintained by or
under [***] sub-section (2-A) the Reserve Bank may, in respect of such default,
require the banking company to pay penal interest for that day as provided in clause
(a) of sub-section (4) and if the default continues on the next succeeding working
 day, the penal interest may be increased as provided in clause (b) of sub-section
(4) for the concerned days.
(6)(a) The penalty payable under sub-section (4) and sub-section (5) shall be paid within
a period of fourteen days from the date on which a notice issued by the Reserve Bank
demanding payment of the same is served on the banking company and in the event of
failure of the banking company to pay the same within such period, the penalty may be
levied by a direction of the principal Civil Court having jurisdiction in the area where an
office of the defaulting banking company is situated, such direction to be made only upon
an application made by the Reserve Bank in this behalf to the Court; and
(b) when the Court makes a direction under clause (a), it shall issue a certificate
specifying the sum payable by the banking company and every such certificate shall
be enforceable in the same manner as if it were a decree made by the Court in a
suit.
(7) When under the provisions of clause (b) of sub-section (4), penal interest at the
increased rate of five per cent., above the bank rate has become payable by a banking
company, if thereafter the amount required to be maintained on the next succeeding
alternate Friday, or if such Friday is a public holiday, the next preceding working day, is
still below the prescribed minimum, every director, manager or secretary of the banking
company, who is knowingly and wilfully a party to the default, shall be punishable with fine
which may extend to five hundred rupees and with a further fine which may extend to five
hundred rupees for each subsequent alternate Friday or the preceding working day, as
the case may be, on which the default continues.
(8) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on
an application in writing by the defaulting banking company, that the banking company
had sufficient cause for its failure to comply with the provisions of [***] sub-section (2-A),
the Reserve Bank may not demand the payment of the penal interest.
Explanation. - In this section, the expression "public holiday" means a day which is a public
holiday under the Negotiable Instruments Act, 1881 (26 of 1881).]
25. Assets in India. - [(1) The assets in India of every banking company at the close of
business on the last Friday of every quarter or, if that Friday is a public holiday under the
Negotiable Instruments Act, 1881 (26 of 1881), at the close of the business on the
preceding working day, shall not be less than seventy-five per cent. of its demand and
time liabilities in India.
(2) Every banking company shall, within one month from the end of every quarter, submit
to the Reserve Bank a return in the prescribed form and manner of the assets and liabilities
referred to in sub-section (1) as at the close of business on the last Friday of the previous
quarter, or, if that Friday is a public holiday under the Negotiable Instruments Act, 1881
(26 of 1881), at the close of business on the preceding working day:]
[Provided that every regional rural bank shall also furnish a copy of the said return to the
National Bank.]
(3) For the purposes of this section,-
[(a) "assets in India" shall be deemed to include export bills drawn in, and import bills
drawn on and payable in India and expressed in such currencies as the Reserve
Bank may from time to time approve in this behalf and also such securities as the
Reserve Bank may approve in this behalf notwithstanding that all or any of the said
bills or securities are held outside India;]
[(b) "liabilities in India" shall not include the paid-up capital or the reserves or any credit
balance in the profit and loss account of the banking company;]
 [(c)] "quarter" means the period of three months ending on the last day of March, June,
September or December.
26. Return of unclaimed deposits. - Every banking company shall, within thirty days
after the close of each calendar year, submit a return in the prescribed form and manner
to the Reserve Bank as at the end of such calendar year of all accounts [in India] which
have not been operated upon for ten years [* * *]:
Provided that in the case of money deposited for a fixed period the said term of ten years
shall be reckoned from the date of the expiry of such fixed period:
[Provided further that every regional rural bank shall also furnish a copy of the said return
to the National Bank.]
[26A. Establishment of Depositor Education and Awareness Fund. - (1) The Reserve
Bank shall establish a Fund to be called the "Depositor Establishment Education and
Awareness Fund" (hereafter in this section referred to as the of Depositor Education and
"Fund").
(2) There shall be credited to the Fund the amount to the credit of any account in India
with a banking company which has not been operated upon for a period of ten years or
any deposit or any amount remaining unclaimed for more than ten years, within a period
of three months from the expiry of the said period of ten years :-
Provided that nothing contained in this sub-section shall prevent a depositor or any other
claimant to claim his deposit or unclaimed amount or operate his account or deposit
account from or with the banking company after the expiry of said period of ten years and
such banking company shall be liable to repay such deposit or amount at such rate of
interest as may be specified by the Reserve Bank in this behalf.
(3) Where the banking company has paid outstanding amount referred to in subsection
(2) or allowed operation of such account or deposit, such banking company may apply for
refund of such amount in such manner as may be specified by the authority or committee
referred to in sub-section (5).
(4) The Fund shall be utilised for promotion of depositors' interests and for such other
purposes which may be necessary for the promotion of depositors' interests as may be
specified by the Reserve Bank from time to time.
(5) The Reserve Bank shall, by notification in the Official Gazette, specify an authority or
committee, with such members as the Reserve Bank may appoint, to administer the Fund,
and to maintain separate accounts and other relevant records in relation to the Fund in
such forms as may be specified by the Reserve Bank.
(6) It shall be competent for the authority or committee appointed under subsection (5) to
spend moneys out of the Fund for carrying out the objects for which the Fund has been
established.]
27. Monthly returns and power to call for other returns and information. - (1) Every
banking company shall, before the close of the month succeeding that to which it relates,
submit to the Reserve Bank a return in the prescribed form and manner showing its assets
and liabilities in India as at the close of business on the last Friday of every month or if
that Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at
the close of business on the preceding working day.
[(2) The Reserve Bank may at any time direct a banking company to furnish it within such
time as may be specified by the Reserve Bank, with such statements and information
relating to the business or affairs of the banking company (including any business or affairs
with which such banking company is concerned) as the Reserve Bank may consider
necessary or expedient to obtain for the purposes of this Act, and without prejudice to the
generality of the foregoing power may call for information every half-year regarding [the
investments of a banking company and the classification of its advances in respect of
industry, commerce and agriculture].
[(3) Every regional rural bank shall submit a copy of the return which it submits to the
Reserve Bank under sub-section (1) also to the National Bank and the powers exercisable
by the Reserve Bank under sub-section (2) may also be exercised by the National Bank
in relation to regional rural banks.]
[28. Power to publish information. - The Reserve Bank or the National Bank, or both, if
they consider it in the public interest so to do, may [publish-
(a) any information obtained by them under this Act in such consolidated form as they
think fit;]
(b) in such manner as they may consider proper, any credit information disclosed
under the Credit Information Companies (Regulation) Act, 2005 (30 of 2005).]
29. Accounts and balance-sheet. - (1) At the expiration of each calendar year [or at the
expiration of a period of twelve months ending with such [date] as the Central Government
may, by notification in the Official Gazette, specify in this behalf,] every banking company
incorporated [in India], in respect of all business transacted by it, and every banking
company incorporated [outside India], in respect of all business transacted through its
branches [in India], shall prepare with reference to [that year or period, as the case may
be,] a balance-sheet and profit and loss account as on the last working day of that year or
the period, as the case may be in the Forms set out in the Third Schedule or as near
thereto as circumstances admit:
[Provided that with a view to facilitating the transition from one period, of accounting to
another period of accounting under this sub-section, the Central Government may, by
order published in the Official Gazette, make such provisions as it considers necessary or
expedient for the preparation of, or for other matters relating to, the balance-sheet or profit
and loss account in respect of the concerned year or period, as the case may be.]
(2) The balance-sheet and profit and loss account shall be signed,-
(a) in the case of a banking company incorporated [in India], by the manager or the
principal officer of the company and where there are more than three directors of
the company, by at least three of those directors, or where there are not more than
three directors, by all the directors, and
(b) in the case of a banking company incorporated [outside India] by the manager or
agent of the principal office of the company [in India].
(3) Notwithstanding that the balance-sheet of banking company is under sub-section (1)
required to be prepared in a form other than the form [set out in Part I of Schedule VI to
the Companies Act, 1956 (1 of 1956)], the requirements of that relating to the balance-
sheet and profit and loss account of a company shall, insofar as they are not inconsistent
with this Act, apply to the balance-sheet or profit and loss account, as the case may be,
of a banking company.
[(3-A) Notwithstanding anything to the contrary contained in sub-section (3) of section 210
of the Companies Act, 1956 (1 of 1956), the period to which the profit and loss account
relates shall, in the case of a banking company, be the period ending with the last working
day of the year immediately preceding the year in which the annual general meeting is
held.]
[ Explanation.-In sub-section (3-A), "year" means the year or, as the case may be, the
period referred to in sub-section (1).]
(4) The Central Government, after giving not less than three months' notice of its intention
so to do by a notification in the Official Gazette, may from time to time by a like notification
amend the Form set out in the Third Schedule.
[29A. Power in respect of associate enterprises. - (I) The Reserve Bank may, at any
time, direct a banking company to annex to its financial statements or furnish to it
separately, within such time and at such intervals as may be specified by the Reserve
Bank, such statements and information relating to the business or affairs of any associate
enterprise of the banking company as the Reserve Bank may consider necessary or
expedient to obtain for the purpose of this Act.
(2) Notwithstanding anything to the contrary contained in the Companies Act, 1956, the
Reserve Bank may, at any time, cause an inspection to be made of I of 1956. any
associate enterprise of a banking company and its books of account jointly by one or more
of its officers or employees or other persons along with the Board or authority regulating
such associate enterprise.
(3) The provisions of sub-sections (2) and (3) of section 35 shall apply mutatis mutandis
to the inspection under this section.
Explanation.-"associate enterprise" in relation to a banking company includes an
enterprise which-
(i) is a holding company or a subsidiary company of the banking company; or
(ii) is a joint venture of the banking company; or
(iii) is a subsidiary company or a joint venture of the holding company of the banking
company; or
(iv) controls the composition of the Board of directors or other body governing the
banking company; or
(v) exercises, in the opinion of the Reserve Bank, significant influence on the banking
company in taking financial or policy decisions; or
(vi) is able to obtain economic benefits from the activities of the banking company.]
30. Audit. - [(1) The balance-sheet and profit and loss account prepared in accordance
with section 29 shall be audited by a person duly qualified under any law for the time being
in force to be an auditor of companies.]
[(1-A) Notwithstanding anything contained in any law for the time being in force or in any
contract to the contrary, every banking company shall, before appointing, re-appointing or
removing any auditor or auditors, obtain the previous approval of the Reserve Bank.
(1-B) Without prejudice to anything contained in the Companies Act, 1956 (1 of 1956), or
any other law for the time being in force, where the Reserve Bank is of opinion that it is
necessary in the public interest or in the interest of the banking company or its depositors
so to do, [it may at any time by order direct that a special audit of the banking company's
accounts, for any such transaction or class of transactions or for such period or periods
as may be specified in the order, shall be conducted and may by the same or a different
order either appoint a person duly qualified under any law for the time being in force to be
an auditor of companies or direct the auditor of the banking company himself to conduct
such special audit] and the auditor shall comply with such directions and make a report of
such audit to the Reserve Bank and forward a copy thereof to the company.
(1-C) The expenses of, or incidental to, [the special audit] specified in the order made by
the Reserve Bank shall be borne by the banking company.]
(2) The auditor shall have the powers of, exercise the functions vested in, and discharge
the duties and be subject to the liabilities and penalties imposed on, auditors of companies
by [section 227 of the Companies Act, 1956 (1 of 1956)], [and auditors, if any, appointed
by the law establishing, constituting or forming the banking company concerned.]
(3) In addition to the matters which under the aforesaid Act the auditor is required to state
in his report, he shall, in the case of a banking company incorporated [in India], state in
his report,-
(a) whether or not the information and explanation required by him have been found
to be satisfactory;
(b) whether or not the transactions of the company which have come to his notice have
been within the powers of the company;
(c) whether or not the returns received from branch offices of the company have been
found adequate for the purposes of his audit;
(d) whether the profit and loss account shows a true balance [of profit or loss] for the
period covered by such account;
(e) any other matter which he considers should be brought to the notice of the
shareholders of the company.
31. Submission of returns. - The accounts and balance-sheet referred to in section 29
together with the auditor's report shall be published in the prescribed manner and three
copies thereof shall be furnished as returns to the Reserve Bank within three months from
the end of the period to which they refer:
Provided that the Reserve Bank may in any case extend the said period of three months
for the furnishing of such returns by a further period not exceeding three months:
[Provided further that a regional rural bank shall furnish such returns also to the National
Bank.]
32. Copies of balance-sheets and accounts to be sent to Registrar. - [(1) Where a
banking company in any year furnishes its accounts and balance-sheet in accordance with
the provisions of section 31, it shall at the same time send to the Registrar three copies of
such accounts and balance-sheet and of the auditor's report, and where such copies are
so sent, it shall not be necessary to file with the Registrar, in the case of a public company,
copies of the accounts and balance-sheet and of the auditor's report, and, in the case of
a private company, copies of the balance-sheet and of the auditor's report as required by
sub-section (1) of section 220 of the Companies Act, 1956 (1 of 1956); and the copies so
sent shall be chargeable with the same fee and shall be dealt with in all respects as if they
were filed in accordance with that section.]
(2) When in pursuance of sub-section (2) of section 27 the Reserve Bank requires any
additional statement or information in connection with the balance-sheet and accounts
furnished under section 31, the banking company shall, when supplying such statement
or information, send a copy thereof to the Registrar.
33. Display of audited balance-sheet by companies incorporated [outside India]. -
Every banking company incorporated outside India shall, not later than the first Monday
in August of any year in which it carries on business, display in a conspicuous place in its
principal office and in every branch office [in India] a copy of its last audited balance-sheet
and profit and loss account prepared under section 29, and shall keep the copy so
displayed until replaced by a copy of the subsequent balance-sheet and profit and loss
account so prepared, and every such banking company shall display in like manner copies
of its complete audited balance-sheet and profit and loss account relating to its banking
business as soon as they are available, and shall keep the copies so displayed until copies
of such subsequent accounts are available.
34. Accounting provisions of this Act not retrospective. - Nothing in this Act shall
apply to the preparation of accounts by a banking company and the audit and submission
thereof in respect of any accounting year which has expired prior to the commencement
of this Act, and notwithstanding the other provisions of this Act, such accounts shall be
prepared, audited and submitted in accordance with the law in force immediately before
the commencement of this Act.
[34A. Production of documents of confidential nature. - (1) Notwithstanding anything
contained in section 11 of the Industrial Disputes Act, 1947 (14 of 1947), or any other law
for the time being in force, no banking company shall, in any proceeding under the said
Act or in any appeal or other proceeding arising therefrom or connected therewith, be
compelled by any authority before which such proceeding is pending to produce, or give
inspection of, any of its books of account or other document or furnish or disclose any
statement or information, when the banking company claims that such document,
statement or information is of a confidential nature and that the production or inspection
of such document or the furnishing or disclosure of such statement or information would
involve disclosure of information relating to-
(a) any reserves not shown as such in its published balance-sheet; or
(b) any particulars not shown therein in respect of provisions made for bad and
doubtful debts and other usual or necessary provisions.
(2) If, in any such proceeding in relation to any banking company other than the Reserve
Bank of India, any question arises as to whether any amount out of the reserves or
provisions referred to in sub-section (1) should be taken into account by the authority
before which such proceeding is pending, the authority may, if it so thinks fit, refer the
question to the Reserve Bank and the Reserve Bank shall, after taking into account
principles of sound banking and all relevant circumstances concerning the banking
company, furnish to the authority a certificate stating that the authority shall not take into
account any amount as such reserves and provisions of the banking company or may take
them into account only to the extent of the amount specified by it in the certificate, and the
certificate of the Reserve Bank on such question shall be final and shall not be called in
question in any such proceeding.
[(3) For the purposes of this section "banking company" includes the Reserve Bank, [* *
*], the Exim Bank, [the Reconstruction Bank], [the National Housing Bank], the National
Bank, [the Small Industries Bank], the State Bank of India, a corresponding new bank, a
regional rural bank and a subsidiary bank.]
35. Inspection. - (1) Notwithstanding anything to the contrary contained in [section 235 of
the Companies Act, 1956 (1 of 1956)], the Reserve Bank at any time may, and on being
directed so to do by the Central Government shall, cause an inspection to be made by
one or more of its officers of any banking company and its books and accounts; and the
Reserve Bank shall supply to the banking company a copy of its report on such inspection.
[(1-A)(a) Notwithstanding anything to the contrary contained in any law for the time being
in force and without prejudice to the provisions of sub-section (1), the Reserve Bank, at
any time, may also cause a scrutiny to be made by any one or more of its officers, of the
affairs of any banking company and its books and accounts; and
(b) a copy of the report of the scrutiny shall be furnished to the banking company if the
banking company makes a request for the same or if any adverse action is
contemplated against the banking company on the basis of the scrutiny.]
(2) It shall be the duty of every director or other officer [or employee] of the banking
company to produce to any officer making an inspection under sub-section (1) or a scrutiny
under sub-section (1-A) all such books, accounts and other documents in his custody or
power and to furnish him with any statements and information relating to the affairs of the
banking company as the said officer may require of him within such time as the said officer
may specify.
(3) Any person making an inspection under sub-section (1) [or a scrutiny under sub-
section (1-A)] may examine on oath any director or other officer [or employee] of the
banking company in relation to its business, and may administer an oath accordingly.
(4) The Reserve Bank shall, if it has been directed by the Central Government to cause
an inspection to be made, and may, in any other case, report to the Central Government
on any inspection [or scrutiny] made under this section, and the Central Government, if it
is of opinion after considering the report that the affairs of the banking company are being
conducted to the detriment of the interests of its depositors, may, after giving such
opportunity to the banking company to make a representation in connection with the report
as, in the opinion of the Central Government, seems reasonable, by order in writing-
(a) prohibit the banking company from receiving fresh deposits;
(b) direct the Reserve Bank to apply under section 38 for the winding up of the banking
company:
Provided that the Central Government may defer, for such period as it may think fit, the
passing of an order under this sub-section, or cancel or modify any such order, upon such
terms and conditions as it may think fit to impose.
(5) The Central Government may, after giving reasonable notice to the banking company,
publish the report submitted by the Reserve Bank or such portion thereof as may appear
necessary.
[ Explanation. - For the purposes of this section, the expression "banking company" shall
include-
(i) in the case of a banking company incorporated outside India, all its branches in
India; and
(ii) in the case of a banking company incorporated in India-
(a) all its subsidiaries formed for the purpose of carrying on the business of
banking exclusively outside India; and
(b) all its branches whether situated in India or outside India.]
[(6) The powers exercisable by the Reserve Bank under this section in relation to regional
rural banks may (without prejudice to the exercise of such powers by the Reserve Bank
in relation to any regional rural bank whenever it considers necessary so to do) be
exercised by the National Bank in relation to the regional rural banks, and accordingly,
sub-sections (1) to (5) shall apply in relation to regional rural banks as if every reference
therein to the Reserve Bank included also a reference to the National Bank.]
[35A. Power of the Reserve Bank to give directions. - (1) Where the Reserve Bank is
satisfied that-
(a) in the [public interest]; or
[(aa) in the interest of banking policy; or]
(b) to prevent the affairs of any banking company being conducted in a manner
detrimental to the interests of the depositors or in a manner prejudicial to the
interests of the banking company; or
(c) to secure the proper management of any banking company generally, it is
necessary to issue directions to banking companies generally or to any banking
company in particular, it may, from time to time, issue such directions as it deems
 fit, and the banking companies or the banking company, as the case may be, shall
be bound to comply with such directions.
(2) The Reserve Bank may, on representation made to it or on its own motion, modify or
cancel any direction issued under sub-section (1), and in so modifying or cancelling any
direction may impose such conditions as it thinks fit, subject to which the modification or
cancellation shall have effect.
[35AA. Power of Central Government to authorise Reserve Bank for issuing
directions to banking companies to initiate insolvency resolution process. - The
Central Government may, by order, authorise the Reserve Bank to issue directions to any
banking company or banking companies to initiate insolvency resolution process in
respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016.
Explanation. - For the purposes of this section, "default" has the same meaning assigned
to it in clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016.
35AB. Power of Reserve Bank to issue directions in respect of stressed assets. - (1)
Without prejudice to the provisions of section 35A, the Reserve Bank may, from time to
time, issue directions to any banking company or banking companies for resolution of
stressed assets.
(2) The Reserve Bank may specify one or more authorities or committees with such
members as the Reserve Bank may appoint or approve for appointment to advise any
banking company or banking companies on resolution of stressed assets.]
35B. Amendments of provisions relating to appointments of managing directors,
etc., to be subject to previous approval of the Reserve Bank. - (1) In the case of a
banking company-
(a) no amendment of any provision relating to [the maximum permissible number of
directors or] the [appointment or re-appointment or termination of appointment or
remuneration of a chairman, a] [managing director or any other director, whole-time
or otherwise] or of a manager or a chief executive officer by whatever name called,
whether that provision be contained in the company's memorandum or articles of
association, or in an agreement entered into by it, or in any resolution passed by
the company in general meeting or by its Board of directors shall have effect unless
approved by the Reserve Bank;
[(b) no appointment or re-appointment or termination of appointment of a chairman, a
managing or whole-time director, manager or chief executive officer by whatever
name called, shall have effect unless such appointment, re-appointment or
termination of appointment is made with the previous approval of the Reserve
Bank.]
[ Explanation. - For the purpose of this sub-section, any provision conferring any benefit
or providing any amenity or perquisite, in whatever form, whether during or after the
termination of the term of office [of the chairman or the manager] or the chief executive
officer by whatever name called or the managing director, or any other director, whole-
time or otherwise, shall be deemed to be a provision relating to his remuneration.]
(2) Nothing contained in sections [268 and 269, the proviso to sub-section (3) of section
309, sections 310 and 311, the proviso to section 387, and section 388] (insofar as section
388 makes the [provisions of sections 269, 310] and 311 apply in relation to the manager
of a company) of the Companies Act, 1956 (1 of 1956), shall [apply to any matter in
respect of which the approval of the Reserve Bank has to be obtained under sub-section
(1).]
[(2-A) Nothing contained in section 198 of the Companies Act, 1956 (1 of 1956), shall
apply to a banking company and the provisions of sub-section (1) of section 309 and of
section 387 of that Act shall, insofar as they are applicable to a banking company, have
effect as if no reference had been made in the said provisions to section 198 of that Act.]
(3) No act done by a person [as chairman or a managing or whole-time director] or a
director not liable to retire by rotation or a manager or a chief executive officer by whatever
name called, shall be deemed to be invalid on the ground that it is subsequently
discovered that his [appointment or re-appointment] had not taken effect by reason of any
of the provisions of this Act; but nothing in this sub-section shall be construed as rendering
valid any act done by such person after his [appointment or re-appointment] has been
shown to the banking company not to have had effect.
36. Further powers and functions of Reserve Banks. - (1) The Reserve Bank may-
(a) caution or prohibit banking companies generally or any banking company in
particular against entering into any particular transaction or class of transactions,
and generally give advice to any banking company;
(b) on a request by the companies concerned and subject to the provisions of
section [44-A], assist, as intermediary or otherwise, in proposals for the
amalgamation of such banking companies;
(c) give assistance to any banking company by means of the grant of a loan or advance
to it under clause (3) of sub-section (1) of section 18 of the Reserve Bank of India
Act, 1934 (2 of 1934);
[(d) [at any time, if it is satisfied that in the public interest or in the interest of banking
policy or for preventing the affairs of the banking company being conducted in a
manner detrimental to the interests of the banking company or its depositors it is
necessary so to do,] by order in writing and on such terms and conditions as may
be specified therein-
(i) require the banking company to call a meeting of its directors for the purpose
of considering any matter relating to or arising out of the affairs of the banking
company; or require an officer of the banking company to discuss any such
matter with an officer of the Reserve Bank;
(ii) depute one more of its officers to which the proceedings at any meeting of
the Board of directors of the banking company or of any committee or of any
other body constituted by it; require the banking company to give an
opportunity to the officers so deputed to be heard at such meetings and also
require such officers to send a report of such proceedings to the Reserve
Bank;
(iii) require the Board of directors of the banking company or any committee or
any other body constituted by it; to give in writing to any officer specified by
the Reserve Bank in this behalf at his usual address all notices of, and other
communications relating to, any meeting of the Board, committee or other
body constituted by it;
(iv) appoint one or more of its officers to observe the manner in which the affairs
of the banking company or of its offices or branches are being conducted and
make a report thereon;
 (v) require the banking company to make, within such time as may be specified
in the order, such changes in the management as the Reserve Bank may
consider necessary [* * *].
(2) The Reserve Bank shall make an annual report to the Central Government on the trend
and progress of banking in the country, with particular reference to its activities under
clause (2) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in
such report its suggestions, if any, for the strengthening of banking business throughout
the country.
(3) The Reserve Bank may appoint such staff at such places as it considers necessary for
the scrutiny of the returns, statements and information furnished by banking companies
under this Act, and generally to ensure the efficient performance of its functions under this
Act.]
[36A. Certain provisions of the Act not to apply to certain banking companies. - (1)
The provisions of section 11, sub-section (1) of section 12, and sections 17, 18, 24 and
25 shall not apply to a banking company-
(a) which, whether before or after the commencement of the Banking Companies
(Amendment) Act, 1959 (33 of 1959), has been refused a licence under section 22,
or prohibited from accepting fresh deposits, by a compromise, arrangement or
scheme sanctioned by a Court or by any order made in any proceeding relating to
such compromise, arrangement or scheme, or prohibited from accepting deposits
by virtue of any alteration made in its memorandum; or
(b) whose licence has been cancelled under section 22, whether before or after the
commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959).
(2) Where the Reserve Bank is satisfied that any such banking company as is referred to
in sub-section (1) has repaid, or has made adequate provision for repaying all deposits
accepted by the banking company, either in full or to the maximum extent possible, the
Reserve Bank may, by notice published in the Official Gazette, notify that the banking
company has ceased to be a banking company within the meaning of this Act, and
thereupon all the provisions of this Act applicable to such banking company shall cease
to apply to it, except as respects things done or omitted to be done before such notice.]
[Part II-A

Control Over Management

36AA. Power of Reserve Bank to remove managerial and other persons from
office. - (1) Where the Reserve Bank is satisfied that in the public interest or for preventing
the affairs of a banking company being conducted in a manner detrimental to the interests
of the depositors or for securing the proper management of any banking company it is
necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order,
remove from office, with effect from such date as may be specified in the order, [any
chairman, director], chief executive officer (by whatever name called) or other officer or
employee of the banking company.
(2) No order under sub-section (1) shall be made [unless the chairman, director] or chief
executive officer or other officer or employee concerned has been given a reasonable
opportunity of making a representation to the Reserve Bank against the proposed order:
Provided that if, in the opinion of the Reserve Bank, any delay would be detrimental to the
interests of the banking company or its depositors, the Reserve Bank may, at the time of
giving the opportunity aforesaid or at any time thereafter, by order direct that, pending the
consideration of the representation aforesaid, if any, [the chairman or, as the case may
be, director or chief executive officer] or other officer or employee, shall not, with effect
from the date of such order-
(a)[act as such chairman or director] or chief executive officer or other officer or
employee of the banking company;
(b) in any way, whether directly or indirectly, be concerned with, or take part in the
management of, the banking company.
(3)(a) Any person against whom an order of removal has been made under sub-section
(1) may, within thirty days from the date of communication to him of the order, prefer an
appeal to the Central Government.
(b) The decision of the Central Government on such appeal, and subject thereto, the
order made by the Reserve Bank under sub-section (1), shall be final and shall not
be called into question in any Court.
(4) Where any order is made in respect of [a chairman, director] or chief executive officer
or other officer or employee of a banking company under sub-section (1), he shall cease
to be [a chairman or, as the case may be, a director,] chief executive officer or other officer
or employee of the banking company and shall not, in any way, whether directly or
indirectly, be concerned with, or take part in the management of, any banking company
for such period not exceeding five years as may be specified in the order.
(5) If any person in respect of whom an order is made by the Reserve Bank under sub-
section (1) or under the proviso to sub-section (2) contravenes the provisions of this
section, he shall be punishable with fine which may extend to two hundred and fifty rupees
for each day during which such contravention continues.
(6) Where an order under sub-section (1) has been made, the Reserve Bank may, by
order in writing, appoint a suitable person in place of [the chairman or director] or chief
executive officer or other officer or employee who has been removed from his office under
that sub-section, with effect from such date as may be specified in the order.
(7) Any person appointed as [chairman, director or chief executive officer] or other officer
or employee under this section, shall-
(a) hold office during the pleasure of the Reserve Bank and subject thereto for a period
not exceeding three years or such further periods not exceeding three years at a
time as the Reserve Bank may specify;
(b) not incur any obligation or liability by reason only of his being a [chairman, director
or chief executive officer] or other officer or employee or for anything done or
omitted to be done in good faith in the execution of the duties of his office or in
relation thereto.
(8) Notwithstanding anything contained in any law or in any contract, memorandum or
articles of association, on the removal of a person from office under this section, that
person shall not be entitled to claim any compensation for the loss or termination of office.
36AB. Power of Reserve Bank to appoint additional directors. - (1) If the Reserve
Bank is of [opinion that in the interest of banking policy or in the public interest or] in the
interests of the banking company or its depositors it is necessary so to do, it may, from
time to time by order in writing, appoint, with effect from such date as may be specified in
the order, one or more persons to hold office as additional directors of the banking
company:
[* * *]
(2) Any person appointed as additional director in pursuance of this section-
 (a) shall hold office during the pleasure of the Reserve Bank and subject thereto for a
period not exceeding three years or such further periods not exceeding three years
at a time as the Reserve Bank may specify;
(b) shall not incur any obligation or liability by reason only of his being a director or for
anything done or omitted to be done in good faith in the execution of the duties of
his office or in relation thereto; and
(c) shall not be required to hold qualification shares in the banking company.
(3) For the purpose of reckoning any proportion of the total number of directors of the
banking company, any additional director appointed under this section shall not be taken
into account.
36AC. Part II-A to override other laws. - Any appointment or removal of a director, chief
executive officer or other officer or employee in pursuance of section 36-AA or section 36-
AB shall have effect notwithstanding anything to the contrary contained in the Companies
Act, 1956 (1 of 1956) or any other law for the time being in force or in any contract or any
other instrument.]
[Part IIAB]

Supersession Of Board Of Directors Of Banking Company

36ACA. Supersession of Board of Directors in certain cases - (1) Where the Reserve
Bank is satisfied, in consultation with the Central Government, that in the public interest
or for preventing the affairs of any banking company being conducted in a manner
detrimental to the interest of the depositors or any banking company or for securing the
proper management of any banking company, it is necessary so to do, the Reserve Bank
may, for reasons to be recorded in writing, by order, supersede the Board of Directors of
such banking company for a period not exceeding six months as may be specified in the
order : -
Provided that the period of supersession of the Board of Directors may be extended from
time to time, so, however, that the total period shall not exceed twelve months.
(2) The Reserve Bank may, on supersession of the Board of Directors of the banking
company under sub-section (1) appoint in consultation with the Central Government for
such period as it may determine, an Administrator (not being an officer of the Central
Government or a State Government) who has experience in law, finance, banking,
economics or accountancy.
(3) The Reserve Bank may issue such directions to the Administrator as it may deem
appropriate and the Administrator shall be bound to follow such directions.
(4) Upon making the order of supersession of the Board of Directors of a banking
company, notwithstanding anything contained in the Companies Act, 1956,-
(a) the chairman, managing director and other directors shall, as from the date of
supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of the
Companies Act, 1956 or this Act, or any other law for the time being in force, be
exercised and discharged by or on behalf of the Board of Directors of such banking
company, or by a resolution passed in general meeting of such banking company,
shall, until the Board of Directors of such banking company is reconstituted, be
exercised and discharged by the Administrator appointed by the Reserve Bank
under sub-section (2):
Provided that the power exercised by the Administrator shall be valid notwithstanding that
such power is exercisable by a resolution passed in the general meeting of such banking
company.
(5) The Reserve Bank may constitute, in consultation with the Central Government, a
committee of three or more persons who have experience in Jaw, finance, banking,
economics or accountancy to assist the Administrator in the discharge of his duties.
(6) The committee shall meet at such times and places and observe such rules of
procedure as may be specified by the Reserve Bank.
(7) The salary and allowances to the Administrator and the members of the committee
constituted under sub-section (5) by the Reserve Bank shall be such as may be specified
by the Reserve Bank and be payable by the concerned banking company.
(8) On and before the expiration of two months before the expiry of the period of
supersession of the Board of Directors as specified in the order issued under sub-section
(1), the Administrator of the banking company, shall call the general meeting of the
company to elect new directors and reconstitute its Board of Directors.
(9) Notwithstanding anything contained in any other law or in any contract, the
memorandum or articles of association, no person shall be entitled to claim any
compensation for the loss or termination of his office.
(10) The Administrator appointed under sub-section (2) shall vacate office immediately
after the Board of Directors of such banking company has been reconstituted."
[Part II-B

Prohibition Of Certain Activities In Relation To Banking Companies

36AD. Punishments for certain activities in relation to banking companies. - (1) No
person shall-
(a) obstruct any person from lawfully entering or leaving any office or place of business
of a banking company or from carrying on any business there, or
(b) hold, within the office or place of business of any banking company, any
demonstration which is violent or which prevents, or is calculated to prevent, the
transaction of normal business by the banking company, or
(c) act in any manner calculated to undermine the confidence of the depositors in the
banking company.
(2) Whoever contravenes any provision of sub-section (1) without any reasonable excuse
shall be punishable with imprisonment for a term which may extend to six months, or with
fine which may extend to one thousand rupees, or with both.
[(3) For the purposes of this section "banking company" includes the Reserve Bank, [* *
*] the Exim Bank, [the Reconstruction Bank,] [the National Housing Banks,] the National
Bank, [the Small Industries Bank,] the State Bank of India, a corresponding new bank, a
regional rural Bank and a subsidiary bank.]
Part II-C

Acquisition Of The Undertakings Of Banking Companies In Certain Cases

36AE. Power of Central Government to acquire undertakings of banking companies
in certain cases. - (1) If, upon receipt of a report from the Reserve Bank, the Central
Government is satisfied that a banking company-
 (a) has, on more than one occasion, failed to comply with the directions given to it in
writing under section 21 or section 35-A, insofar as such directions relate to banking
policy, or
(b) is being managed in a manner detrimental to the interests of its depositors,-
and that-
(i) in the interests of the depositors of such banking company, or
(ii) in the interest of banking policy, or
(iii) for the better provision of credit generally or of credit to any particular section
of the community or in any particular area, it is necessary to acquire the
undertaking of such banking company, the Central Government may, after
such consultation with the Reserve Bank as it thinks fit, by notified order,
acquire the undertaking of such company (hereinafter referred to as the
acquired bank) with effect from such date as may be specified in this behalf
by the Central Government (hereinafter referred to as the appointed day):
Provided that no undertaking of any banking company shall be so acquired unless such
banking company has been given a reasonable opportunity of showing cause against the
proposed action.
Explanation. - In this Part,-
(a) "notified order" means an order published in the Official Gazette;
(b) "undertaking", in relation to a banking company incorporated outside India, means
the undertaking of the company in India.
(2) Subject to the other provisions contained in this Part, on the appointed day, the
undertaking of the acquired bank and all the assets and liabilities of the acquired bank
shall stand transferred to, and vest in, the Central Government.
(3) The undertaking of the acquired bank and its assets and liabilities shall be deemed to
include all rights, powers, authorities and privileges and all property, whether movable or
immovable, including, in particular, cash balances, reserve funds, investments, deposits
and all other interests and rights in, or arising out of, such property as may be in the
possession of or held by, the acquired bank immediately before the appointed day and all
books, accounts and documents relating thereto, and shall also be deemed to include all
debts, liabilities and obligations, of whatever kind, then existing of the acquired bank.
(4) Notwithstanding anything contained in sub-section (2), the Central Government may,
if it is satisfied that the undertaking of the acquired bank and its assets and liabilities
should, instead of vesting in the Central Government, or continuing to so vest, vest in a
company established under any scheme made under this Part or in any corporation
(hereinafter in this Part and in the Fifth Schedule referred to as the transferee bank) that
Government may, by order, direct that the said undertaking, including the assets and
liabilities thereof, shall vest in the transferee bank either on the publication of the notified
order or on such other date as may be specified in this behalf by the Central Government.
(5) Where the undertaking of the acquired bank and the assets and liabilities thereof vest
in the transferee bank under sub-section (4), the transferee bank shall, on and from the
date of such vesting, be deemed to have become the transferee of the acquired bank and
all the rights and liabilities in relation to the acquired bank shall, on and from the date of
such vesting, be deemed to have been the rights and liabilities of the transferee bank.
(6) Unless otherwise expressly provided by or under this Part, all contracts, deeds, bonds,
agreements, powers of attorney, grants of legal representation and other instruments of
whatever nature subsisting or having effect immediately before the appointed day and to
which the acquired bank is a party or which are in favour of the acquired bank shall be of
as full force and effect against or in favour of the Central Government, or as the case may
be, of the transferee bank, and may be enforced or acted upon as fully and effectually as
if in the place of the acquired bank the Central Government or the transferee bank had
been a party thereto or as if they had been issued in favour of the Central Government or
the transferee bank, as the case may be.
(7) If, on the appointed day, any suit, appeal or other proceeding of whatever nature is
pending by or against the acquired bank, the same shall not abate, be discontinued or be,
in any way, prejudicially affected by reason of the transfer of the undertaking of the
acquired bank or of anything contained in this Part, but the suit, appeal or other proceeding
may be continued, prosecuted and enforced by or against the Central Government or the
transferee bank, as the case may be.
36AF. Power of the Central Government to make scheme. - (1) The Central
Government may, after consultation with the Reserve Bank, make a scheme for carrying
out the purposes of this Part in relation to any acquired bank.
(2) In particular, and without prejudice to the generality of the foregoing power, the said
scheme may provide for all or any of the following matters, namely:-
(a) the corporation, or the company incorporated for the purpose, to which the
undertaking including the property, assets and liabilities of the acquired bank may
be transferred, and the capital, constitution, name and office thereof;
(b) the constitution of the first Board of management (by whatever name called) of the
transferee bank, and all such matters in connection therewith or incidental thereto
as the Central Government may consider to be necessary or expedient;
(c) the continuance of the services of all the employees of the acquired bank
(excepting such of them as, not being workmen within the meaning of the Industrial
Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme) in the
Central Government or in the transferee bank, as the case may be, on the same
terms and conditions so far as may be, as are specified in clauses (i) and (j) of sub-
section (5) of section 45;
(d) the continuance of the right of any person who, on the appointed day, is entitled to
or is in receipt of, a pension or other superannuation or compassionate allowance
or benefit, from the acquired bank or any provident, pension or other fund or any
authority administering such fund, to be paid by, and to receive from, the Central
Government or the transferee bank, as the case may be, or any provident, pension
or other fund or any authority administering such fund, the same pension, allowance
or benefit so long as he observes the conditions on which the pension, allowance
or benefit was granted, and if any question arises whether he has so observed such
conditions, the question shall be determined by the Central Government and the
decision of the Central Government thereon shall be final;
(e) the manner of payment of the compensation payable in accordance with the
provisions of this Part to the shareholders of the acquired bank, or where the
acquired bank is a banking company incorporated outside India, to the acquired
bank in full satisfaction of their, or as the case may be, its claims;
 (f) the provision, if any, for completing the effectual transfer to the Central Government
or the transferee bank of any asset or any liability which forms part of the
undertaking of the acquired bank in any country outside India;
(g) such incidental, consequential and supplemental matters as may be necessary to
secure that the transfer of the business, property, assets and liabilities of the
acquired bank to the Central Government or transferee bank, as the case may be,
is effectual and complete.
(3) The Central Government may, after consultation with the Reserve Bank, by notification
in the Official Gazette, add to, amend or vary any scheme made under this section.
(4) Every scheme made under this section shall be published in the Official Gazette.
(5) Copies of every scheme made under this section shall be laid before each House of
Parliament as soon as may be after it is made.
(6) The provisions of this Part and of any scheme made thereunder shall have effect
notwithstanding anything to the contrary contained in any other provisions of this Act or in
any other law or any agreement, award or other instrument for the time being in force.
(7) Every scheme made under this section shall be binding on the Central Government or,
as the case may be, on the transferee bank and also on all members, creditors, depositors
and employees of the acquired bank and of the transferee bank and on any other person
having any right, liability, power or function in relation to, or in connection with, the
acquired bank or the transferee bank, as the case may be.
36AG. Compensation to be given to shareholders of the acquired bank. - (1) Every
person who, immediately before the appointed day, is registered as a holder of shares in
the acquired bank or, where the acquired bank is a banking company incorporated outside
India, the acquired bank, shall be given by the Central Government, or the transferee
bank, as the case may be, such compensation in respect of the transfer of the undertaking
of the acquired bank as is determined in accordance with the principles contained in the
Fifth Schedule.
(2) Nothing contained in sub-section (1) shall affect the rights inter se between the holder
of any share in the acquired bank and any other person who may have any interest in
such shares and such other person shall be entitled to enforce his interest against the
compensation awarded to the holder of such share, but not against the Central
Government, or the transferee bank.
(3) The amount of compensation to be given in accordance with the principles contained
in the Fifth Schedule shall be determined in the first instance by the Central Government,
or the transferee bank, as the case may be, in consultation with the Reserve Bank, and
shall be offered by it to all those to whom compensation is payable under sub-section (1)
in full satisfaction thereof.
(4) If the amount of compensation offered in terms of sub-section (3) is not acceptable to
any person to whom the compensation is payable, such person may, before such date as
may be notified by the Central Government in the Official Gazette, request the Central
Government in writing, to have the matter referred to the Tribunal constituted under
section 36-AH.
(5) If, before the date notified under sub-section (4), the Central Government receives
requests, in terms of that sub-section, from not less than one-fourth in number of the
shareholders holding not less than one-fourth in value of the paid-up share capital of the
acquired bank, or, where the acquired bank is a banking company incorporated outside
India, from the acquired bank, the Central Government shall have the matter referred to
the Tribunal for decision.
(6) If, before the date notified under sub-section (4), the Central Government does not
receive requests as provided in that sub-section, the amount of compensation offered
under sub-section (3), and where a reference has been made to the Tribunal, the amount
determined by it, shall be the compensation payable under sub-section (1) and shall be
final and binding on all parties concerned.
36AH. Constitution of the Tribunal. - (1) The Central Government may, for the purpose
of this Part, constitute a Tribunal which shall consist of a Chairman and two other
members.
(2) The Chairman shall be a person who is, or has been, a Judge of a High Court or of the
Supreme Court, and, of the two other members, one shall be a person, who, in the opinion
of the Central Government, has had experience of commercial banking and the other shall
be a person who is a chartered accountant within the meaning of the Chartered
Accountants' Act, 1949 (38 of 1949).
(3) If, for any reason, a vacancy occurs in the office of the Chairman or any other member
of the Tribunal, the Central Government may fill the vacancy by appointing another person
thereto in accordance with the provisions of sub-section (2), and any proceeding may be
continued before the Tribunal, so constituted, from the stage at which the vacancy
occurred.
(4) The Tribunal may, for the purpose of determining any compensation payable under
this Part, choose one or more persons having special knowledge or experience of any
relevant matter to assist it in the determination of such compensation.
36AI. Tribunal to have powers of a Civil Court. - (1) The Tribunal shall have the powers
of a Civil Court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908),
in respect of the following matters, namely:-
(a) summoning and enforcing the attendance of any person and examining him on
oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents.
(2) Notwithstanding anything contained in sub-section (1), or in any other law for the time
being in force, the Tribunal shall not compel the Central Government or the Reserve
Bank,-
(a) to produce any books of account or other documents which the Central
Government, or the Reserve Bank, claims to be of a confidential nature;
(b) to make any such books or documents part of the record of the proceedings before
the Tribunal; or
(c) to give inspection of any such books or documents to any party before it or to any
other person.
36AJ. Procedure of the Tribunal. - (1) The Tribunal shall have power to regulate its own
procedure.
(2) The Tribunal may hold the whole or any part of its inquiry in camera .
(3) Any clerical or arithmetical error in any order of the Tribunal or any error arising therein
from any accidental slip or omission may, at any time, be corrected by the Tribunal either
of its own motion or on the application of any of the parties.]
Part III

Suspension Of Business And Winding Up Of Banking Companies

[[36B.] High Court defined. - In this Part and in Part III-A "High Court", in relation to a
banking company, means the High Court exercising jurisdiction in the place where the
registered office of the banking company is situated or, in the case of a banking company
incorporated outside India, where its principal place of business in India is situated.]
37. Suspension of business. - (1) The [[High Court] may on the application of a banking
company which is temporarily unable to meet its obligations make an order (a copy of
which it shall cause to be forwarded to the Reserve Bank) staying the commencement or
continuance of all actions and proceedings against the company for a fixed period of time
on such terms and conditions as it shall think fit and proper, and may from time to time
extend the period so, however, that the total period of moratorium shall not exceed six
months.
(2) No such application shall be maintainable unless it is accompanied by a report of the
Reserve Bank indicating that in the opinion of the Reserve Bank the banking company will
be able to pay its debts if the application is granted:
Provided that the [High Court] may, for sufficient reasons, grant relief under this section
even if the application is not accompanied by such report, and where such relief is granted,
the [High Court] shall call for a report from the Reserve Bank on the affairs of the banking
company, on receipt of which it may either rescind any order already passed or pass such
further orders thereon as may be just and proper in the circumstances.
[(3) When an application is made under sub-section (1), the High Court may appoint a
special officer who shall forthwith take into his custody or under his control all the assets,
books, documents, effects and actionable claims to which the banking company is or
appears to be entitled and shall also exercise such other powers as the High Court may
deem fit to confer on him, having regard to the interests of the depositors of the banking
company.]
[(4) Where the Reserve Bank is satisfied that the affairs of a banking company in respect
of which an order under sub-section (1) has been made, are being conducted in a manner
detrimental to the interests of the depositors, it may make an application to the High Court
for the winding up of the company, and where any such application is made, the High
Court shall not make any order extending the period for which the commencement or
continuance of all actions and proceedings against the company were stayed under that
sub-section.]
[38. Winding up by High Court. - (1) Notwithstanding anything contained in section 391,
section 392, section 433 and section 583 of the Companies Act, 1956 (1 of 1956), but
without prejudice to its powers under sub-section (1) of section 37 of this Act, the High
Court shall order the winding up of a banking company-
(a) if the banking company is unable to pay its debts; or
(b) if an application for its winding up has been made by the Reserve Bank under
section 37 or this section.
(2) The Reserve Bank shall make an application under this section for the winding up of a
banking company if it is directed so to do by an order under clause (b) of sub-section (4)
of section 35.
(3) The Reserve Bank may make an application under this section for the winding up of a
banking company-
(a) if the banking company-
(i) has failed to comply with the requirements specified in section 11; or
(ii) has by reason of the provisions of section 22 become dis entitled to carry on
banking business in India; or
 (iii) has been prohibited from receiving fresh deposits by an order under clause (a) of
sub-section (4) of section 35 or under clause (b) of sub-section (3-A) of section 42
of the Reserve Bank of India Act, 1934 (2 of 1934); or
(iv) having failed to comply with any requirement of this Act other than the
requirements laid down in section 11, has continued such failure, or, having
contravened any provision of this Act has continued such contravention beyond
such period or periods as may be specified in that behalf by the Reserve Bank from
time to time, after notice in writing of such failure or contravention has been
conveyed to the banking company; or
(b) if in the opinion of the Reserve Bank-
(i) a compromise or arrangement sanctioned by a Court in respect of the banking
company cannot be worked satisfactorily with or without modifications; or
(ii) the returns, statements or information furnished to it under or in pursuance of the
provisions of this Act disclose that the banking company is unable to pay its debts;
or
(iii) the continuance of the banking company is prejudicial to the interests of its
depositors.
(4) Without prejudice to the provisions contained in section 434 of the Companies Act,
1956 (1 of 1956), a banking company shall be deemed to be unable to pay its debts if it
has refused to meet any lawful demand made at any of its offices or branches within two
working days, if such demand is made at a place where there is an office, branch or
agency of the Reserve Bank, or within five working days, if such demand is made
elsewhere, and if the Reserve Bank certifies in writing that the banking company is unable
to pay its debts.
(5) A copy of every application made by the Reserve Bank under sub-section (1) shall be
sent by the Reserve Bank to the Registrar.]
[38A. Court liquidator. - (1) There shall be attached to every High Court a Court liquidator
to be appointed by the Central Government for the purpose of conducting all proceedings
for the winding up of banking companies and performing such other duties in reference
thereto as the High Court may impose.
[* * *]
(4) Where having regard to the number of banking companies wound up and other
circumstances of the case, the Central Government is of opinion that it is not necessary
or expedient to attach for the time being a Court liquidator to a High Court, it may, from
time to time, by notification in the Official Gazette, direct that this section shall not have
effect in relation to that High Court.]
[39. Reserve Bank to be official liquidator. - [(1)] Notwithstanding anything contained
in section 38-A of this Act or in section 448 or section 449 of the Companies Act, 1956 (1
of 1956), where in any proceeding for the winding up by the High Court of a banking
company, an application is made by the Reserve Bank in this behalf, the Reserve Bank,
the State Bank of India or any other bank notified by the Central Government in this behalf
or any individual, as stated in such application shall be appointed as the official liquidator
of the banking company in such proceeding and the liquidator, if any, functioning in such
proceeding shall vacate office upon such appointment.]
[(2) Subject to such directions as may be made by the High Court, the remuneration of the
official liquidator appointed under this section, the cost and expenses of this establishment
and the cost and expenses of the winding up shall be met out of the assets of the banking
company which is being wound up, and notwithstanding anything to the contrary contained
in any other law for the time being in force, no fees shall be payable to the Central
Government, out of the assets of the banking company.]
[39A. Application of Companies Act to liquidators. - (1) All the provisions of the
Companies Act, 1956 (1 of 1956), relating to a liquidator, in so far as they are not
inconsistent with this Act, shall apply to or in relation to a liquidator appointed under
section 38-A or section 39.
(2) Any reference to the "official liquidator" in this Part and Part III-A shall be construed as
including a reference to any liquidator of a banking company.]
40. Stay of proceedings. - Notwithstanding anything to the contrary contained in [section
466 of the Companies Act, 1956 (1 of 1956)], the [High Court] shall not make any order
staying the proceedings in relation to the winding up of a banking company, unless
the [High Court] is satisfied that an arrangement has been made whereby the company
can pay its depositors in full as their claims accrue.
[41. Preliminary report by official liquidator. - Notwithstanding anything to the contrary
contained in section 455 of the Companies Act, 1956 (1 of 1956), where a winding up
order has been made in respect of a banking company whether before or after the
commencement of the Banking Companies (Second Amendment) Act, 1960 (37 of 1960),
the official liquidator shall submit a preliminary report to the High Court within two months
from the date of the winding up order or where the winding up order has been made before
such commencement, within two months from such commencement, giving the
information required by that section so far as it is available to him and also stating the
amount of assets of the banking company in cash which are in his custody or under his
control on the date of the report and the amount of its assets which are likely to be
collected in cash before the expiry of that period of two months in order that such assets
may be applied speedily towards the making of preferential payments under section 530
of the Companies Act, 1956 (1 of 1956), and in the discharge, as far as possible, of the
liabilities and obligations of the banking company to its depositors and other creditors in
accordance with the provisions hereinafter contained; and the official liquidator shall make
for the purposes aforesaid every endeavour to collect in cash as much of the assets of the
banking company as practicable.
41A. Notice to preferential claimants and secured and unsecured creditors. - (1)
Within fifteen days from the date of the winding up order of a banking company or where
the winding up order has been made before the commencement of the Banking
Companies (Second Amendment) Act, 1960 (37 of 1960), within one month from such
commencement, the official liquidator shall, for the purpose of making an estimate of the
debts and liabilities of the banking company (other than its liabilities and obligations to its
depositors), by notice served in such manner as the Reserve Bank may direct, call upon-
(a) every claimant entitled to preferential payment under section 530 of the Companies
Act, 1956 (1 of 1956), and
(b) every secured and every unsecured creditor, to send to the official liquidator within
one month from the date of the service of the notice a statement of the amount
claimed by him.
(2) Every notice under sub-section (1) sent to a claimant having a claim under section 530
of the Companies Act, 1956 (1 of 1956), shall state that if a statement of the claim is not
sent to the official liquidator before the expiry of the period of one month from the date of
the service, the claim shall not be treated as a claim entitled to be paid under section 530
of the Companies Act, 1956 (1 of 1956), in priority to all other debts but shall be treated
as an ordinary debt due by the banking company.
(3) Every notice under sub-section (1) sent to a secured creditor shall require him to value
his security before the expiry of the period of one month from the date of the service of
the notice and shall state that if a statement of the claim together with the valuation of the
security is not sent to the official liquidator before the expiry of the said period, then, the
official liquidator shall himself value the security and such valuation shall be binding on
the creditor.
(4) If a claimant fails to comply with the notice sent to him under sub-section (1), his claim
will not be entitled to be paid under section 530 of the Companies Act, 1956 (1 of 1956),
in priority to all other debts but shall be treated as an ordinary debt due by the banking
company; and if a secured creditor fails to comply with the notice sent to him under sub-
section (1), the official liquidator shall himself value the security and such valuation shall
be binding on the creditor.]
42. Power to dispense with meetings of creditors, etc. - Notwithstanding anything to
the contrary contained in [[section 460] of the Companies Act, 1956 (1 of 1956)], the [High
Court] may, in the proceedings for winding up a banking company, dispense with any
meetings of creditors or contributors [* * *] if it considers that no object will be secured
thereby sufficient to justify the delay and expense.
[43. Booked depositors' credits to be deemed proved. - In any proceeding for the
winding up of a banking company, every depositor of the banking company shall be
deemed to have filed his claim for the amount shown in the books of the banking company
as standing to his credit and, notwithstanding anything to the contrary contained
in [section 474 of the Companies Act, 1956 (1 of 1956)], the High Court shall presume
such claims to have been proved, unless the official liquidator shows that there is reason
for doubting its correctness.]
[43A. Preferential payments to depositors. - (1) In every proceeding for the winding up
of a banking company where a winding up order has been made, whether before or after
the commencement of the Banking Companies (Second Amendment) Act, 1960 (37 of
1960), within three months from the date of the winding up order or where the winding up
order has been made before such commencement, within three months therefrom, the
preferential payments referred to in section 530 of the Companies Act, 1956 (1 of 1956),
in respect of which statements of claims have been sent within one month from the date
of the service of the notice referred to in section 41-A, shall be made by the official
liquidator or adequate provision for such payments shall be made by him.
(2) After the preferential payments as aforesaid have been made or adequate provision
has been made in respect thereof, there shall be paid within the aforesaid period of three
months-
(a) in the first place to every depositor in the savings bank account of the banking
company a sum of two hundred and fifty rupees or the balance at his credit,
whichever is less; and thereafter,
(b) in the next place, to every other depositor of the banking company a sum of two
hundred and fifty rupees or the balance at his credit, whichever is less, in priority to
all other debts from out of the remaining assets of the banking company available
for payment to general creditors:
Provided that the sum total of the amounts paid under clause (a) and clause (b) to any
one person who in his own name (and not jointly with any other person) is a depositor in
the savings bank account of the banking company and also a depositor in any other
account, shall not exceed the sum of two hundred and fifty rupees.
(3) Where within the aforesaid period of three months full payment cannot be made of the
amounts required to be paid under clause (a) or clause (b) of sub-section (2) with the
assets in cash, the official liquidator shall pay within that period to every depositor under
clause (a) or, as the case may be, clause (b) of that sub-section on a pro rata basis so
much of the amount due to the depositor under that clause as the official liquidator is able
to pay with those assets; and shall pay the rest of that amount to every such depositor as
and when sufficient assets are collected by the official liquidator in cash.
(4) After payments have been made first to depositors in the savings bank account and
then to the other depositors in accordance with the foregoing provisions, the remaining
assets of the banking company available for payment to general creditors shall be utilised
for payment on a pro rata basis of the debts of the general creditors and of the further
sums, if any, due to the depositors; and after making adequate provision for payment on
a pro rata basis as aforesaid of the debts of the general creditors, the official liquidator
shall, as and when the assets of the company are collected in cash, make payment on
a pro rata basis as aforesaid, of the further sums, if any, which may remain due to the
depositors referred to in clause (a) and clause (b) of sub-section (2).
(5) In order to enable the official liquidator to have in his custody or under his control in
cash as much of the assets of the banking company as possible, the securities given to
every secured creditor may be redeemed by the official liquidator-
(a) where the amount due to the creditor is more than the value of the securities as
assessed by him or, as the case may be, as assessed by the official liquidator, on
payment of such value; and
(b) where the amount due to the creditor is equal to or less than the value of the
securities as so assessed, on payment of the amount due:
Provided that where the official liquidator is not satisfied with the valuation made by the
creditor, he may apply to the High Court for making a valuation.
(6) When any claimant, creditor or depositor to whom any payment is to be made in
accordance with [the provisions of this section], cannot be found or is not readily traceable,
adequate provision shall be made by the official liquidator for such payment.
(7) For the purposes of this section, the payments specified in each of the following
clauses shall be treated as payments of a different class, namely:-
(a) payments to preferential claimants under section 530 of the Companies Act, 1956
(1 of 1956);
(b) payments under clause (a) of sub-section (2) to the depositors in the savings bank
account;
(c) payments under clause (b) of sub-section (2) to the other depositors;
(d) payments to the general creditors and payments to the depositors in addition to
those specified in clause (a) and clause (b) of sub-section (2).
(8) The payments of each different class specified in sub-section (7) shall rank equally
among themselves and be paid in full unless the assets are insufficient to meet them, in
which case they shall abate in equal proportion.]
[(9) Nothing contained in sub-sections (2), (3), (4), (7) and (8) shall apply to a banking
company in respect of the depositors of which the Deposit Insurance Corporation is liable
under section 16 of the Deposit Insurance Corporation Act, 1961 (47 of 1961).
(10) After preferential payments referred to in sub-section (1) have been made or
adequate provision has been made in respect thereof, the remaining assets of the banking
company referred to in sub-section (9) available for payment to general creditors shall be
utilised for payment on pro rata basis of the debts of the general creditors and of the sums
due to the depositors:
Provided that where any amount in respect of any deposit is to be paid by the liquidator
to the Deposit Insurance Corporation under section 21 of the Deposit Insurance
Corporation Act, 1961 (47 of 1961), only the balance, if any, left after making the said
payment shall be payable to the depositor.]
[44. Powers of High Court in voluntary winding up. - (1) Notwithstanding anything to
the contrary contained in section 484 of the Companies Act, 1956 (1 of 1956), no banking
company may be voluntarily wound up unless the Reserve Bank certifies in writing that
the company is able to pay in full all its debts to its creditors as they accrue.
(2) The High Court may, in any case where a banking company is being wound up
voluntarily, make an order that the voluntary winding up shall continue, but subject to the
supervision of the Court.
(3) Without prejudice to the provisions contained in sections 441 and 521 of the
Companies Act, 1956 (1 of 1956), the High Court may of its own motion and shall on the
application of the Reserve Bank, order the winding up of a banking company by the High
Court in any of the following cases, namely:-
(a) where the banking company is being wound up voluntarily and at any stage during
the voluntary winding up proceedings the company is not able to meet its debts as
they accrue; or
(b) where the banking company is being wound up voluntarily or is being wound up
subject to the supervision of the Court and the High Court is satisfied that the
voluntary winding up or winding up subject to the supervision of the Court cannot
be continued without detriment to the interests of the depositors.]
[44A. Procedure for amalgamation of banking companies. - (1) Notwithstanding
anything contained in any law for the time being in force, no banking company shall be
amalgamated with another banking company, unless a scheme containing the terms of
such amalgamation has been placed in draft before the shareholders of each of the
banking companies concerned separately, and approved by a resolution passed by a
majority in number representing two-thirds in value of the shareholders of each of the said
companies, present either in person or by proxy at a meeting called for the purpose.
(2) Notice of every such meeting as is referred to in sub-section (1) shall be given to every
shareholder of each of the banking companies concerned in accordance with the relevant
articles of association indicating the time, place and object of the meeting, and shall also
be published at least once a week for three consecutive weeks in not less than two
newspapers which circulate in the locality or localities where the registered offices of the
banking companies concerned are situated, one of such newspapers being in a language
commonly understood in the locality or localities.
(3) Any shareholder, who has voted against the scheme of amalgamation at the meeting
or has given notice in writing at or prior to the meeting of the company concerned or to the
presiding officer of the meeting that he dissents from the scheme of amalgamation, shall
be entitled, in the event of the scheme being sanctioned by the Reserve Bank, to claim
from the banking company concerned, in respect of the shares held by him in that
company, their value as determined by the Reserve Bank when sanctioning the scheme
and such determination by the Reserve Bank as to the value of the shares to be paid to
the dissenting shareholder shall be final for all purposes.
(4) If the scheme of amalgamation is approved by the requisite majority of shareholders
in accordance with the provisions of this section, it shall be submitted to the Reserve Bank
for sanction and shall, if sanctioned by the Reserve Bank by an order in writing passed in
this behalf, be binding on the banking companies concerned and also on all the
shareholders thereof.
[* * *]
(6) On the sanctioning of a scheme of amalgamation by the Reserve Bank, the property
of the amalgamated banking company shall, by virtue of the order of sanction, be
transferred to and vest in, and the liabilities of the said company shall, by virtue of the said
order be transferred to, and become the liabilities of, the banking company which under
the scheme of amalgamation is to acquire the business of the amalgamated banking
company, subject in all cases to [the provisions of the scheme as sanctioned].
[(6-A) Where a scheme of amalgamation is sanctioned by the Reserve Bank under the
provisions of this section, the Reserve Bank may, by a further order in writing, direct that
on such date as may be specified therein the banking company (hereinafter in this section
referred to as the amalgamated banking company) which by reason of the amalgamation
will cease to function, shall stand dissolved and any such direction shall take effect
notwithstanding anything to the contrary contained in any other law.
(6-B) Where the Reserve Bank directs a dissolution of the amalgamated banking
company, it shall transmit a copy of the order directing such dissolution to the Registrar
before whom the banking company has been registered and on receipt of such order the
Registrar shall strike off the name of the company.
(6-C) An order under sub-section (4) whether made before or after the commencement of
section 19 of the Banking Laws (Miscellaneous Provisions) Act, 1963 (55 of 1963), shall
be conclusive evidence that all the requirements of this section relating to amalgamation
have been complied with, and a copy of the said order certified in writing by an officer of
the Reserve Bank to be a true copy of such order and a copy of the scheme certified in
the like manner to be a true copy thereof shall, in all legal proceedings (whether in appeal
or otherwise and whether instituted before or after the commencement of the said section
19), be admitted as evidence to the same extent as the original order and the original
scheme.]
[(7) Nothing in the foregoing provisions of this section shall affect the power of the Central
Government to provide for the amalgamation of two or more banking companies [* *
*] under section 396 of the Companies Act, 1956 (1 of 1956):
Provided that no such power shall be exercised by the Central Government except after
consultation with the Reserve Bank.]
[[44B.] Restriction on compromise or arrangement between banking company and
creditors. - [(1)] Notwithstanding anything contained in any law for the time being in force,
no [High Court] shall sanction a compromise or arrangement between a banking company
and its creditors or any class of them or between such company and its members or any
class of them [or sanction any modification in any such compromise or arrangement
unless the compromise or arrangement or modification, as the case may be,] is certified
by the Reserve Bank [in writing as not being incapable of being worked and as not being
detrimental to the interests of the depositors of such banking company.]
[(2) Where an application under [section 391 of the Companies Act, 1956 (1 of 1956)], is
made in respect of a banking company, the High Court may direct the Reserve Bank to
make an inquiry in relation to the affairs of the banking company and the conduct of its
directors and when such direction is given, the Reserve Bank shall make such inquiry and
submit its report to the High Court.]
[45. Power of Reserve Bank to apply to Central Government for suspension of
business by a banking company and to prepare scheme of [reconstruction] or
amalgamation. - (1) Notwithstanding anything contained in the foregoing provisions of
this Part or in any other law or [any agreement or other instrument], for the time being in
force, where it appears to the Reserve Bank that there is good reason so to do, the
Reserve Bank may apply to the Central Government for an order of moratorium in respect
of [a banking company].
(2) The Central Government, after considering the application made by the Reserve Bank
under sub-section (1), may make an order of moratorium staying the commencement or
continuance of all actions and proceedings against the company for a fixed period of time
on such terms and conditions as it thinks fit and proper and may from time to time extend
the period, so, however, that the total period of moratorium shall not exceed six months.
(3) Except as otherwise provided by any directions given by the Central Government in
the order made by it under sub-section (2) or at any time thereafter, the banking company
shall not during the period of moratorium make any payment to any depositors or
discharge any liabilities or obligations to any other creditors [or grant any loans or
advances or make investments in any credit instruments].
[(4) During the period of moratorium [or at any other time], if the Reserve Bank is satisfied
that -
(a) in the public interest; or
(b) in the interests of the depositors; or
(c) in order to secure the proper management of the banking company; or
(d) in the interests of the banking system of the country as a whole,-it is necessary so
to do, the Reserve Bank may prepare a scheme -
(i) for the reconstruction of the banking company, or
(ii) for the amalgamation of the banking company with any other banking
institution (in this section referred to as "the transferee bank").]
(5) The scheme aforesaid may contain provisions for all or any of the following matters,
namely:-
(a) the constitution, name and registered office, the capital, assets, powers, rights,
interests, authorities and privileges, the liabilities, duties and obligations of the
banking company on its reconstruction or, as the case may be, of the transferee
bank;
(b) in the case of amalgamation of the banking company, the transfer to the transferee
bank of the business, properties, assets and liabilities of the banking company on
such terms and conditions as may be specified in the scheme;
(c) any change in the Board of directors, or the appointment of a new Board of
directors, of the banking company on its reconstruction or, as the case may be, of
the transferee bank and the authority by whom, the manner in which, and the other
terms and conditions on which, such change or appointment shall be made and in
the case of appointment of a new Board of directors or of any director, the period
for which such appointment shall be made;
(d) the alteration of the memorandum and articles of association of the banking
company on its reconstruction or, as the case may be, of the transferee bank for
the purpose of altering the capital thereof or for such other purposes as may be
necessary to give effect to the reconstruction or amalgamation;
 (e) subject to the provisions of the scheme, the continuation by or against the banking
company on its reconstruction or, as the case may be, the transferee bank, of any
actions or proceedings pending against the banking company immediately before
the [reconstruction or amalgamation];
(f) the reduction of the interest or rights which the members, depositors and other
creditors have in or against the banking company before its reconstruction or
amalgamation to such extent as the Reserve Bank considers necessary in the
public interest or in the interest of the members, depositors and other creditors or
for the maintenance of the business of the banking company;
(g) the payment in cash or otherwise to depositors and other creditors in full
satisfaction of their claim-
(i) in respect of their interest or rights in or against the banking company before
its reconstruction or amalgamation; or
(ii) where there interest or rights aforesaid in or against the banking company
has or have been reduced under clause (f), in respect of such interest or rights
as so reduced;
(h) the allotment to the members of the banking company for shares held by them
therein before its reconstruction or amalgamation [whether their interest in such
shares has been reduced under clause (f) or not, of shares in the banking company
on its reconstruction or, as the case may be, in the transferee bank and where any
members claim payment in cash and not allotment of shares, or where it is not
possible to allot shares to any members, the payment in cash to those members in
full satisfaction of their claim-
(i) in respect of their interest in shares in the banking company before its
reconstruction or amalgamation; or
(ii) where such interest has been reduced under clause (f) in respect of their
interest in shares as so reduced;
(i) the continuance of the services of all the employees of the banking company
(excepting such of them as not being workmen within the meaning of the Industrial
Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme) in the
banking company itself on its reconstruction or, as the case may be, in the
transferee bank at the same remuneration and on the same terms and conditions
of service, which they were getting, or as the case may be, by which they were
being governed, immediately before the [reconstruction or amalgamation]:
Provided that the scheme shall contain a provision that -
(i) the banking company shall pay or grant not later than the expiry of the period
of three years from the date on which the scheme is sanctioned by the Central
Government, to the said employees the same remuneration and the same
terms and conditions of service [as are, at the time of such payment or grant,
applicable] to employees of corresponding rank or status of a comparable
banking company to be determined for this purpose by the Reserve Bank
(whose determination in this respect shall be final);
 (ii) the transferee bank shall pay or grant not later than the expiry of the aforesaid
period of three years, to the said employees the same remuneration and the
same terms and conditions of service [as are, at the time of such payment or
grant, applicable] to the other employees of corresponding rank or status of
the transferee bank subject to the qualifications and experience of the said
employees being the same as or equivalent to those of such other employees
of the transferee bank:
Provided further that if in any case under clause (ii) of the first proviso any doubt or
difference arises as to whether the qualification and experience of any of the said
employees are the same as or equivalent to the qualifications and experience of the other
employees of corresponding rank or status of the transferee bank [the doubt or difference
shall be referred, before the expiry of a period of three years from the date of the payment
or grant mentioned in that clause,] to the Reserve Bank whose decision thereon shall be
final;
(j) notwithstanding anything contained in clause (i) where any of the employees of the
banking company not being workmen within the meaning of the Industrial Disputes
Act, 1947 (14 of 1947), are specifically mentioned in the scheme under clause (i) or
where any employees of the banking company have by notice in writing given to the
banking company or, as the case may be, the transferee bank at any time before
the expiry of one month next following the date on which the scheme is sanctioned
by the Central Government, intimated their intention of not becoming employees of
the banking company on its reconstruction or, as the case may be, of the transferee
bank, the payment to such employees of compensation, if any, to which they are
entitled under the Industrial Disputes Act, 1947 (14 of 1947), and such pension,
gratuity, provident fund and other retirement benefits ordinarily admissible to them
under the rules or authorisations of the banking company immediately before
the [reconstruction or amalgamation];
(k) any other terms and conditions for the reconstruction or amalgamation of the
banking company;
(l) such incidental, consequential and supplemental matters as are necessary to
secure that the reconstruction or amalgamation shall be fully and effectively carried
out.
(6)(a) A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the
banking company and also to the transferee bank and any other banking company
concerned in the [reconstruction or amalgamation] , for suggestions and objections, if any,
within such period as the Reserve Bank may specify for this purpose;
(b) the Reserve Bank may make such modifications, if any, in the draft scheme as it
may consider necessary in the light of the suggestions and objections received from
the banking company and also from the transferee bank, and any other banking
company concerned in the amalgamation and from any members, depositors or
other creditors of each of those companies and the transferee bank.
(7) The scheme shall thereafter be placed before the Central Government for its sanction
and the Central Government may sanction the scheme without any modifications or with
such modifications as it may consider necessary, and the scheme as sanctioned by the
Central Government shall come into force on such date as the Central Government may
specify in this behalf:
Provided that different dates may be specified for different provisions of the scheme.
[(7-A) The sanction accorded by the Central Government under sub-section (7), whether
before or after the commencement of section 21 of the Banking Laws (Miscellaneous
Provisions) Act, 1963 (55 of 1963), shall be conclusive evidence that all that requirements
of this section relating to reconstruction, or, as the case may be, amalgamation have been
complied with and a copy of the sanctioned scheme certified in writing by an officer of the
Central Government to be a true copy thereof, shall, in all legal proceedings (whether in
appeal or otherwise and whether instituted before or after the commencement of the said
section 21), be admitted as evidence to the same extent as the original scheme.]
(8) On and from the date of the coming into operation of the scheme or any provision
thereof, the scheme or such provision shall be binding on the banking company, or, as the
case may be, on the transferee bank and any other banking company concerned in the
amalgamation and also on all the members, depositors and other creditors and employees
of each of those companies and of the transferee bank, and on any other person having
any right or liability in relation to any of those companies or the transferee bank [including
the trustees or other persons managing, or connected in any other manner with, any
provident fund or other fund maintained by any of those companies or the transferee
bank].
[(9) On and from the date of the coming into operation or, or as the case may be, the date
specified in this behalf in, the scheme], the properties and assets of the banking company
shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vest
in, and the liabilities of the banking company shall, by virtue of and to the extent provided
in the scheme, stand transferred to, and become the liabilities of, the transferee bank.
(10) If any difficulty arises in giving effect to the provisions of the scheme, the Central
Government may by order do anything not inconsistent with such provisions which
appears to it necessary or expedient for the purpose of removing the difficulty.
(11) Copies of the scheme or of any order made under sub-section (10) shall be laid before
both Houses of Parliament, as soon as may be, after the scheme has been sanctioned by
the Central Government, or, as the case may be, the order has been made.
(12) Where the scheme is a scheme for amalgamation of the banking company, any
business acquired by the transferee bank under the scheme or under any provision thereof
shall, after the coming into operation of the scheme or such provision, be carried on by
the transferee bank in accordance with the law governing the transferee bank, subject to
such modifications in that law or such exemptions of the transferee bank from the
operation of any provisions thereof as the Central Government on the recommendation of
the Reserve Bank may, by notification in the Official Gazette, make for the purpose of
giving full effect to the scheme:
Provided that no such modification or exemption shall be made so as to have effect for a
period of more than seven years from the date of the acquisition of such business.
(13) Nothing in this section shall be deemed to prevent the amalgamation with a banking
institution by a single scheme of several banking companies in respect of each of which
an order of moratorium has been made under this section.
(14) The provisions of this section and of any scheme made under it shall have effect
notwithstanding anything to the contrary contained in any other provisions of this Act or in
any other law or any agreement, award or other instrument for the time being in force.
(15) In this section, "banking institution" means any banking company and includes the
State Bank of India [***] [or a corresponding new bank].
[ Explanation. - References in this section to the terms and conditions of service as
applicable to an employee shall not be construed as extending to the rank and status of
such employee.]]
 [Part III-A

Special Provisions For Speedy Disposal of Winding Up Proceedings

45A. Part III-A to override other laws. - The provisions of this Part and the rules made
thereunder shall have effect notwithstanding anything inconsistent therewith contained in
the [Companies Act, 1956 (1 of 1956)], or the Code of Civil Procedure, 1908 (5 of 1908),
or the [Code of Criminal Procedure, 1973 (2 of 1974)] or any other law for the time being
in force or any instrument having effect by virtue of any such law; but the provisions of any
such law or instrument insofar as the same are not varied by, or inconsistent with, the
provisions of this Part or rules made thereunder shall apply to all proceedings under this
Part.
45B. Power of High Court to decide all claims in respect of banking companies. -
The High Court shall, save as otherwise expressly provided in section 45-C, have
exclusive jurisdiction to entertain and decide any claim made by or against a banking
company which is being wound up (including claims by or against any of its branches in
India) or any application made under [section 391 of the Companies Act, 1956 (1 of
1956)] by or in respect of a banking company or any question of priorities or any other
question whatsoever, whether of law or fact, which may relate to or arise in the course of
the winding up of a banking company, whether such claim or question has arisen or arises
or such application has been made or is made before or after the date of the order for the
winding up of the banking company or before or after the commencement of the Banking
Companies (Amendment) Act, 1953 (52 of 1953).
45C. Transfer of pending proceedings. - (1) Where a winding up order is made or has
been made in respect of a banking company, no suit or other legal proceeding, whether
civil or criminal, in respect of which the High Court has jurisdiction under this Act and which
is pending in any other Court immediately before the commencement of the Banking
Companies (Amendment) Act, 1953 (52 of 1953), or the date of the order for the winding
up of the banking company, whichever is later, shall be proceeded with except in the
manner hereinafter provided.
(2) The official liquidator shall, within three months from the date of the winding up order
or the commencement of the Banking Companies (Amendment) Act, 1953 (52 of 1953),
whichever is later, or such further time as the High Court may allow, submit to the High
Court a report containing a list of all such pending proceedings together with particulars
thereof.
(3) On receipt of a report under sub-section (2), the High Court may, if it so thinks fit, give
the parties concerned an opportunity to show cause why the proceedings should not be
transferred to itself and after making an inquiry in such manner as may be provided by
rules made under section 45-U, it shall make such order as it deems fit transferring to itself
all or such of the pending proceedings as may be specified in the order and such
proceedings shall thereafter be disposed of by the High Court.
(4) If any proceeding pending in a Court is not so transferred to the High Court under sub-
section (3), such proceeding shall be continued in the Court in which the proceeding was
pending.
(5) Nothing in this section shall apply to any proceeding pending in appeal before the
Supreme Court or a High Court.
45D. Settlement of list of debtors. - (1) Notwithstanding anything to the contrary
contained in any law for the time being in force, the High Court may settle in the manner
hereinafter provided a list of debtors of a banking company which is being wound up.
(2) Subject to any rules that may be made under section 52, the official liquidator shall,
within six months from the date of the winding up order or the commencement of the
Banking Companies (Amendment) Act, 1953 (52 of 1953), whichever is later, from time to
time, file to the High Court lists of debtors containing such particulars as are specified in
the Fourth Schedule:
Provided that such lists may, with the leave of the High Court, be filed after the expiry of
the said period of six months.
(3) On receipt of any list under sub-section (2), the High Court shall, wherever necessary,
cause notices to be issued on all persons affected and after making an inquiry in such
manner as may be provided by rules made under section 45-U, it shall make an order
settling the list of debtors:
Provided that nothing in this section shall debar the High Court from settling any such list
in part as against such of the persons whose debts have been settled without settling the
debts of all the persons placed on the list.
(4) At the time of the settlement of any such list, the High Court shall pass an order for the
payment of the amount due by each debtor and make such further orders as may be
necessary in respect of the relief claimed, including reliefs against any guarantor or in
respect of the realisation of any security.
(5) Every such order shall, subject to the provisions for appeal, be final and binding for all
purposes as between the banking company on the one hand and the person against whom
the order is passed and all persons claiming through or under him on the other hand, and
shall be deemed to be a decree in a suit.
(6) In respect of every such order, the High Court shall issue a certificate specifying clearly
the reliefs granted and the names and descriptions of the parties against whom such
reliefs have been granted, the amount of costs awarded and by whom, and out of what
funds and in what proportions, such costs are to be paid; and every such certificate shall
be deemed to be a certified copy of the decree for all purposes including execution.
(7) At the time of settling the list of debtors or at any other time prior or subsequent thereto,
the High Court shall have power to pass any order in respect of a debtor on the application
of the official liquidator for the realisation, management, protection, preservation or sale
of any property given as security to the banking company and to give such powers to the
official liquidator to carry out the aforesaid directions as the High Court thinks fit.
(8) The High Court shall have power to sanction a compromise in respect of any debt and
to order the payment of any debt by instalments.
(9) In any case in which any such list in settled ex parte as against any person, such
person may, within thirty days from the date of the order settling the list, apply to the High
Court for an order to vary such list, so far as it concerns him, and if the High Court is
satisfied that he was prevented by any sufficient cause from appearing on the date fixed
for the settlement of such list and that he has a good defence to the claim of the banking
company on merits, the High Court may vary the list and pass such orders in relation
thereto as it thinks fit:
Provided that the High Court may, if it so thinks fit, entertain the application after the expiry
of the said period of thirty days.
(10) Nothing in this section shall-
(a) apply to a debt which has been secured by a mortgage of immovable property, if a
third party has any interest in such immovable property; or
(b) prejudice the rights of the official liquidator to recover any debt due to a banking
company under any other law for the time being in force.
45E. Special provisions to make calls on contributories. - Notwithstanding that the list
of the contributories has not been settled under [section 467 of the Companies Act, 1956
(1 of 1956)], the High Court may, if it appears to it necessary or expedient so to do, at any
time after making a winding up order, make a call on and order payment thereof by any
contributory under sub-section (1) of [section 470 of the Companies Act, 1956 (1 of 1956)],
if such contributory has been placed on the list of contributories by the official liquidator
and has not appeared to dispute his liability.
45F. Documents of banking company to be evidence. - (1) Entries in the books of
account or other documents of a banking company which is being wound up shall be
admitted in evidence in all [legal proceedings]; and all such entries may be proved either
by the production of the books of account or other documents of the banking company
containing such entries or by the production of a copy of the entries, certified by the official
liquidator under his signature and stating that it is a true copy of the original entries and
that such original entries are contained in the books of account or other documents of the
banking company in his possession.
(2) Notwithstanding anything to the contrary contained in the Indian Evidence Act, 1872
(1 of 1872), all such entries in the books of account or other documents of a banking
company shall, as against the directors, [officers and other employees] of the banking
company in respect of which the winding up order has been made [* * *], be prima
facie evidence of the truth of all matters purporting to be therein recorded.
45G. Public examination of directors and auditors. - (1) Where an order has been
made for the winding up of a banking company, the official liquidator shall submit a report
whether in his opinion any loss has been caused to the banking company since its
formation by any act or omission (whether or not a fraud has been committed by such act
or omission) of any person in the promotion or formation of the banking company or of
any director or auditor of the banking company.
(2) If, on consideration of the report submitted under sub-section (1), the High Court is of
opinion that any person who has taken part in the promotion or formation of the banking
company or has been a director or an auditor of the banking company should be publicly
examined, it shall hold a public sitting on a date to be appointed for that purpose and direct
that such person, director or auditor shall attend thereat and shall be publicly examined
as to the promotion or formation or the conduct of the business of the banking company,
or as to his conduct and dealings, insofar as they relate to the affairs of the banking
company:
Provided that no such person shall be publicly examined unless he has been given an
opportunity to show cause why he should not be so examined.
(3) The official liquidator shall take part in the examination and for that purpose may, if
specially authorised by the High Court in that behalf, employ such legal assistance as may
be sanctioned by the High Court.
(4) Any creditor or contributory may also take part in the examination either personally or
by any person entitled to appear before the High Court.
(5) The High Court may put such questions to the person examined as it thinks fit.
(6) The person examined shall be examined on oath and shall answer all such questions
as the High Court may put or allow to be put to him.
(7) A person ordered to be examined under this section may, at his own cost, employ any
person entitled to appear before the High Court who shall be at liberty to put to him such
questions as the High Court may deem just for the purpose of enabling him to explain or
qualify any answer given by him:
Provided that if he is, in the opinion of the High Court, exculpated from any charges made
or suggested against him, the High Court may allow him such costs in its discretion as it
may deem fit.
(8) Notes of the examination shall be taken down in writing, and shall be read over to or
by, and signed by, the person examined and may thereafter be used in evidence against
him in any proceeding, civil or criminal, and shall be open to the inspection of any creditor
or contributory at all reasonable times.
(9) Where on such examination, the High Court is of opinion (whether a fraud has been
committed or not)-
 (a) that a person, who has been a director of the banking company, is not fit to be a
director of a company, or
(b) that a person, who has been an auditor of the banking company or a partner of a
firm acting as such auditor, is not fit to act as an auditor of a company or to be a
partner of a firm acting as such auditor, the High Court may make an order that that
person shall not, without the leave of the High Court, be a director of, or in any way,
whether directly or indirectly, be concerned or take part in the management of a
company or, as the case may be, act as an auditor of, or be a partner of firm acting
as auditors of, any company for such period not exceeding five years as may be
specified in the order.
45H. Special provisions for assessing damages against delinquent directors, etc. -
(1) Where an application is made to the High Court under [section 543 of the Companies
Act, 1956 (1 of 1956)], against any promoter, director, manager, liquidator or officer of a
banking company for repayment or restoration of any money or property and the applicant
makes out a prima facie case against such person, the High Court shall make an order
against such person to repay and restore the money or property unless he proves that he
is not liable to make the repayment or restoration either wholly or in part:
Provided that where such an order is made jointly against two or more such persons, they
shall be jointly and severally liable to make the repayment or restoration of the money or
property.
(2) Where an application is made to the High Court under [section 543 of the Companies
Act, 1956 (1 of 1956)], and the High Court has reason to believe that a property belongs
to any promoter, director, manager, liquidator or officer of the banking company, whether
the property stands in the name of such person or any other person as an ostensible
owner, then the High Court may, at any time, whether before or after making an order
under sub-section (1), direct the attachment of such property, or such portion thereof, as
it thinks fit and the property so attached shall remain subject to attachment unless the
ostensible owner can prove to the satisfaction of the High Court that he is the real owner
and the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to attachment
of property shall, as far as may be, apply to such attachment.
45I. Duty of directors and officers of banking company to assist in the realisation
of property. - Every director or other officer of a banking company which is being wound
up shall give such assistance to the official liquidator as he may reasonably require in
connection with the realisation and distribution of the property of the banking company.
45J. Special provisions for punishing offences in relation to banking companies
being wound up. - (1) The High Court may, if it thinks fit, take cognizance of and try in a
summary way any offence alleged to have been committed by any person who has taken
part in the promotion or formation of the banking company which is being wound up or by
any director, manager or officer thereof:
Provided that the offence is one punishable under this Act or under the [Companies Act,
1956 (1 of 1956).]
(2) When trying any such offence as aforesaid, the High Court may also try any other
offence not referred to in sub-section (1) which is an offence with which the accused may,
under the [Code of Criminal Procedure, 1973 (2 of 1974)], be charged at the same trial.
(3) In any case tried summarily under sub-section (1), the High Court-
(a) need not summon any witness, if it is satisfied that the evidence of such witness
will not be material;
 (b) shall not be bound to adjourn a trial for any purpose unless such adjournment is,
in the opinion of the High Court, necessary in the interests of justice;
(c) shall, before passing any sentence, record judgment embodying the substance of
the evidence and also the particulars specified in section 263 of the Code of
Criminal Procedure, 1973 (2 of 1974), so far as that section may be applicable;
and nothing contained in sub-section (2) of section 262 of the [Code of Criminal
Procedure, 1973 (2 of 1974)], shall apply to any such trial.
(4) All offences in relation to winding up alleged to have been committed by any person
specified in sub-section (1) which are punishable under this Act or under the [Companies
Act, 1956 (1 of 1956)], and which are not tried in a summary way under sub-section (1)
shall, notwithstanding anything to the contrary contained in that Act or the [Code of
Criminal Procedure, 1973 (2 of 1974)], or in any other law for the time being in force, be
taken cognizance of and tried by a Judge of the High Court other than the Judge for the
time being dealing with the proceedings for the winding up of the banking company.
(5) Notwithstanding anything to the contrary contained in the [Code of Criminal Procedure,
1973 (2 of 1974)], the High Court may take cognizance of any offence under this section,
without the accused being committed to it for trial [* * *].
45K. Power of High Court to enforce schemes of arrangements, etc. - [ Repealed by
the Banking Companies (Amendment) Act , 1959 (33 of 1959), section 31 (w.e.f . 1-10-
1959).]
45L. Public examination of directors and auditors, etc., in respect of a banking
company under schemes of arrangement. - (1) Where an application for sanction a
compromise or arrangement in respect of a banking company is made under [section 391
of the Companies Act, 1956 (1 of 1956)], or where such sanction has been given and the
High Court is of opinion, whether on a report of the Reserve Bank or otherwise, that any
person who has taken part in the promotion or formation of the banking company or has
been a director or auditor of the banking company should be publicly examined, it may
direct such examination of such person and the provisions of section 45-G shall, as far as
may be, apply to the banking company as they apply to a banking company which is being
wound up.
(2) Where a compromise or arrangement is sanctioned under [section 391 of the
Companies Act, 1956 (1 of 1956)], in respect of a banking company, the provisions
of [section 543 of the said Act] and of section 45-H of this Act shall, as far as may be,
apply to the banking company as they apply to a banking company which is being wound
up as if the order sanctioning the compromise or arrangement were an order for the
winding up of the banking company.
[(3) Where [a scheme of reconstruction or amalgamation of a banking company] has been
sanctioned by the Central Government under section 45 and the Central Government is
of opinion that any person who has taken part in the promotion or formation of the banking
company or has been a director or auditor of the banking company should be publicly
examined, that Government may apply to the High Court for the examination of such
person and if on such examination the High Court finds (whether a fraud has been
committed or not) that that person is not fit to be a director of a company or to act as an
auditor of a company or to be a partner of a firm acting as such auditors, the Central
Government shall make an order that that person shall not, without the leave of the Central
Government, be a director of, or in any way, whether directly or indirectly, be concerned
or take part in the management of any company or, as the case may be, act as an auditor
of, or be a partner of a firm acting as auditors of, any company for such period not
exceeding five years as may be specified in the order.
(4) Where [a scheme of reconstruction or amalgamation of a banking company] has been
sanctioned by the Central Government under section 45, the provisions of section 543 of
the Companies Act, 1956 (1 of 1956), and of section 45-H of this Act shall, as far as may
be, apply to the banking company as they apply to a banking company which is being
wound up as if the order sanctioning the scheme of reconstruction or amalgamation, as
the case may be, were an order for the winding up of the banking company; and any
reference in the said section 543 to the application of the official liquidator shall be
construed as a reference to the application of the Central Government.]
45M. Special provisions for banking companies working under schemes of
arrangement at the commencement of the Amendment Act. - Where any compromise
or arrangement sanctioned in respect of a banking company under [section 391 of the
Companies Act, 1956 (1 of 1956)], is being worked at the commencement of the Banking
Companies (Amendment) Act, 1953 (52 of 1953), the High Court may, if it so thinks fit, on
the application of such banking company,-
(a) excuse any delay in carrying out any of the provisions of the compromise or
arrangement; or
(b) allow the banking company to settle the list of its debtors in accordance with the
provisions of section 45-D and in such a case, the provisions of the said section
shall, as far as may be, apply to the banking company as they apply to a banking
company which is being wound up as if the order sanctioning the compromise or
arrangement were an order for the winding up of the banking company.
45N. Appeals. - (1) An appeal shall lie from any order or decision of the High Court in a
civil proceeding under this Act when the amount or value of the subject-matter of the claim
exceeds five thousand rupees.
(2) The High Court may by rules provide for an appeal against any order made under
section 45-J and the conditions subject to which any such appeal would lie.
(3) Subject to the provisions of sub-section (1) and sub-section (2) and notwithstanding
anything contained in any other law for the time being in force, every order or decision of
the High Court shall be final and binding for all purposes as between the banking company
on the one hand, and all persons who are parties thereto and all persons claiming through
or under them or any of them, on the other hand.
45O. Special period of limitation. - (1) Notwithstanding anything to the contrary
contained in the [Indian Limitation Act, 1908 (9 of 1908)] or in any other law for the time
being in force, in computing the period of limitation prescribed for a suit or application by
a banking company which is being wound up, the period commencing from the date of the
presentation of the petition for the winding up of the banking company shall be excluded.
(2) Notwithstanding anything to the contrary contained in the Indian Limitation Act, 1908
(9 of 1908) or [section 543 of the Companies Act, 1956 (1 of 1956)] or in any other law for
the time being in force, there shall be no period of limitation for the recovery of arrears of
calls from any director of a banking company which is being wound up or for the
enforcement by the banking company against any of its directors of any claim based on a
contract, express or implied; and in respect of all other claims by the banking company
against its directors, the period of limitation shall be twelve years from the date of the
accrual of such claims [or five years from the date of the first appointment of the liquidator,
whichever is longer].
(3) The provisions of this section, insofar as they relate to banking companies being wound
up, shall also apply to a banking company in respect of which a petition for the winding up
has been presented before the commencement of the Banking Companies (Amendment)
Act, 1953 (52 of 1953).
45P. Reserve Bank to tender advice in winding up proceedings. - Where in any
proceeding for the winding up of a banking company in which any person other than the
Reserve Bank has been appointed as the official liquidator and the High Court has directed
the official liquidator to obtain the advice of the Reserve Bank on any matter (which it is
hereby empowered to do), it shall be lawful for the Reserve Bank to examine the record
of any such proceeding and tender such advice on the matter as it may think fit.
45Q. Power to inspect. - (1) The Reserve Bank shall, on being directed so to do by the
Central Government or by the High Court, cause an inspection to be made by one or more
of its officers of a banking company which is being wound up and its books of accounts .
(2) On such inspection, the Reserve Bank shall submit its report to the Central
Government and the High Court.
(3) If the Central Government, on consideration of the report of the Reserve Bank, is of
opinion that there has been a substantial irregularity in the winding up proceedings, it may
bring such irregularity to the notice of the High Court for such action as the High Court
may think fit.
(4) On receipt of the report of the Reserve Bank under sub-section (2) or on any irregularity
being brought to its notice by the Central Government under sub-section (3), the High
Court may, if it deems fit, after giving notice to and hearing the Central Government in
regard to the report, give such directions as it may consider necessary.
45R. Power to call for returns and information. - The Reserve Bank may, at any time
by a notice in writing, require the liquidator of a banking company to furnish it, within such
time as may be specified in the notice or such further time as the Reserve Bank may allow,
any statement or information relating to or connected with the winding up of the banking
company; and it shall be the duty of every liquidator to comply with such requirements.
Explanation. - For the purposes of this section and section 45-Q, a banking company
working under a compromise or arrangement but prohibited from receiving fresh deposits,
shall, as far as may be, deemed to be banking company which is being wound up.
45S. Chief Presidency Magistrate and District Magistrate to assist official liquidator
in taking charge of property of banking company being wound up. - (1) For the
purpose of enabling the official liquidator or the special officer appointed under sub-section
(3) of section 37 to take into his custody or under his control, all property, effects and
actionable claims to which a banking company [* * *] is or appears to be entitled, the official
liquidator or the special officer, as the case may be, may request in writing the [Chief
Metropolitan Magistrate or the Chief Judicial Magistrate], within whose jurisdiction any
property, books of account or other documents of such banking company may be situate
or be found, to take possession thereof, and the [Chief Metropolitan Magistrate or the
Chief Judicial Magistrate], as the case may be, shall, on such request being made to him,-
[(a) take possession of such property, books of accounts or other documents, and
(b) forward them to the official liquidator or the special officer.]
[(2) Where any such property and effects are in the possession of the [Chief Metropolitan
Magistrate or the Chief Judicial Magistrate], as the case may be, such Magistrate shall,
on request in writing being made to him by the official liquidator or the special officer
referred to in sub-section (1), sell such property and effects and forward the net proceeds
of the sale to the official liquidator or the special officer:
Provided that such sale shall, as far as practicable, be effected by public auction.
(3) For the purpose of securing compliance with the provisions of sub-section (1),
the [Chief Metropolitan Magistrate or the Chief Judicial Magistrate] may take or cause to
be taken such steps and use or cause to be used such force as may, in his opinion, be
necessary.
(4) No act of the [Chief Metropolitan Magistrate or the Chief Judicial Magistrate] done in
pursuance of this section shall be called in question in any Court or before any authority.]
45T. Enforcement of orders and decisions of High Court. - (1) All orders made in any
civil proceeding by a High Court may be enforced in the same manner in which decrees
of such Court made in any suit pending therein may be enforced.
(2) Notwithstanding anything to the contrary contained in the Code of Civil Procedure,
1908 (5 of 1908), a liquidator may apply for the execution of a decree by a Court, other
than the one which made it on production of a certificate granted under sub-section (6) of
section 45-D and on his certifying to such other Court in writing the amount remaining due
or relief remaining unenforced under the decree.
(3) Without prejudice to the provisions of sub-section (1) or sub-section (2), any amount
found due to the banking company by an order or decision of the High Court, may, with
the leave of the High Court, be recovered [by the liquidator in the same manner as an
arrear of land revenue and for the purpose of such recovery the liquidator may forward to
the Collector within whose jurisdiction the property of the person against whom any order
or decision of the High Court has been made is situate, a certificate under his signature
specifying the amount so due and the person by whom it is payable.]
[(4) On receipt of a certificate under sub-section (3), the Collector shall proceed to recover
from such person the amount specified therein as if it were an arrear of land revenue:
Provided that without prejudice to any other powers of the Collector, he shall, for the
purposes of recovering the said amount, have all the powers which, under the Code of
Civil Procedure, 1908 (5 of 1908), a Civil Court has for the purpose of the recovery of an
amount due under a decree.]
45U. Power of High Court to make rules. - The High Court may make rules consistent
with this Act and the rules made under section 52 prescribing-
(a) the manner in which inquiries and proceedings under Part III or Part III-A may be
held;
(b) the offences which may be tried summarily;
(c) the authority to which, and the conditions subject to which , appeals may be
preferred and the manner in which such appeals may be filed and heard;
(d) any other matter for which provision has to be made for enabling the High Court to
effectively exercise its functions under this Act.
45V. References to directors, etc., shall be construed as including references to
past directors, etc. - .For the removal of doubts it is hereby declared that any reference
in this Part to a director, manager, liquidator, officer or auditor of a banking company shall
be construed as including a reference to any past or present director, manager, liquidator,
officer or auditor of the banking company.
45W. Part II not to apply to banking companies being wound up. - Nothing contained
in Part II shall apply to a banking company which is being wound up.
45X. Validation of certain proceedings. - Notwithstanding anything contained in section
45-B or any other provision of this Part or in section 11 of the Banking Companies
(Amendment) Act, 1950 (20 of 1950), no proceeding held, judgment delivered or decree
or order made before the commencement of the Banking Companies (Amendment) Act,
1953 (52 of 1953), by any Court other than the High Court in respect of any matter over
which the High Court has jurisdiction under this Act shall be invalid or be deemed ever to
have been invalid merely by reason of the fact that such proceeding, judgment, decree or
order was held, delivered or made by a Court other than the High Court.]
[Part III-B

Provisions Relating To Certain Operations Of Banking Companies

45Y. Power of Central Government to make rules for the preservation of records. -
The Central Government may, after consultation with the Reserve Bank and by notification
in the Official Gazette, make rules specifying the periods for which-
(a) a banking company shall preserve its books, accounts and other documents; and
(b) a banking company shall preserve and keep with itself different instruments paid
by it.
45Z. Return of paid instruments to customers. - (1) Where a banking company is
required by its customer to return to him a paid instrument before the expiry of the period
specified by rules made under section 45-Y, the banking company shall not return the
instrument except after making and keeping in its possession a true copy of all relevant
parts of such instrument, such copy being made by a mechanical or other process which
in itself ensures the accuracy of the copy.
(2) The banking company shall be entitled to recover from the customer the cost of making
such copies of the instrument.
Explanation. - In this section "customer" includes a Government department and a
corporation incorporated by or under any law.
45ZA. Nomination for payment of depositors' money. - (1) Where a deposit is held by
a banking company to the credit of one or more persons, the depositor or, as the case
may be, all the depositors together, may nominate, in the prescribed manner, one person
to whom in the event of the death of the sole depositor or the death of all the depositors,
the amount of deposit may be returned by the banking company.
(2) Notwithstanding anything contained in any other law for the time being in force or in
any disposition, whether testamentary or otherwise, in respect of such deposit, where a
nomination made in the prescribed manner purports to confer on any person the right to
receive the amount of deposit from the banking company, the nominee shall, on the death
of the sole depositor or, as the case may be, on the death of all the depositors, become
entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in
relation to such deposit to the exclusion of all other persons, unless the nomination is
varied or cancelled in the prescribed manner.
(3) Where the nominee is a minor, it shall be lawful for the depositor making the nomination
to appoint in the prescribed manner any person to receive the amount of deposit in the
event of his death during the minority of the nominee.
(4) Payment by a banking company in accordance with the provisions of this section shall
constitute a full discharge to the banking company of its liability in respect of the deposit:
Provided that nothing contained in this sub-section shall affect the right or claim which any
person may have against the person to whom any payment is made under this section.
45ZB. Notice of claims of other persons regarding deposits not receivable. - No
notice of the claim of any person, other than the person or persons in whose name a
deposit is held by a banking company, shall be receivable by the banking company, nor
shall the banking company be bound by any such notice even though expressly given to
it:
Provided that where any decree, order, certificate or other authority from a Court of
competent jurisdiction relating to such deposit is produced before a banking company, the
banking company shall take due note of such decree, order, certificate or other authority.
45ZC. Nomination for return of articles kept in safe custody with banking
company. - (1) Where any person leaves any article in safe custody with a banking
company, such person may nominate, in the prescribed manner, one person to whom, in
the event of the death of the person leaving the article in safe custody, such article may
be returned by the banking company.
(2) Where the nominee is a minor, it shall be lawful for the person making the nomination
to appoint in the prescribed manner any person to receive the article deposited in the
event of his death during the minority of the nominee.
(3) The banking company shall, before returning any articles under this section to the
nominee or the person appointed under sub-section (2), prepare, in such manner as may
be directed by the Reserve Bank from time to time, an inventory of the said articles which
shall be signed by such nominee or person and shall deliver a copy of the inventory so
prepared to such nominee or person.
(4) Notwithstanding anything contained in any other law for the time being in force or in
any disposition, whether testamentary or otherwise, in respect of such article, where a
nomination made in the prescribed manner purports to confer on any person the right to
receive the article from the banking company, the nominee shall, on the death of the
person leaving the article in safe custody, become entitled to the return of the article to
the exclusion of all other persons, unless the nomination is varied or cancelled in the
prescribed manner:
Provided that nothing contained in this section shall affect the right or claim which any
person may have against the person to whom the article is returned in pursuance of this
sub-section.
45ZD. Notice of claims of other persons regarding articles not receivable. - No notice
of the claim of any person, other than the person or persons in whose name any article is
held by a banking company in safe custody, shall be receivable by the banking company,
nor shall the banking company be bound by any such notice even though expressly given
to it:
Provided that where any decree, order, certificate or other authority from a Court of
competent jurisdiction relating to such article is produced before a banking company, the
banking company shall take due note of such decree, order, certificate or other authority.
45ZE. Release of contents of safety lockers. - (1) Where an individual is the sole hirer
of a locker from a banking company, whether such locker is located in the safe deposit
vault of such banking company or elsewhere, such individual may nominate one person
to whom, in the event of the death of such individual, the banking company may give
access to the locker and liberty to remove the contents of the locker.
(2) Where any such locker is hired from a banking company by two or more individuals
jointly and under the contract of hire, the locker is to be operated under the joint signatures
of two or more of such hirers, such hirers may nominate one or more persons to whom, in
the event of the death of such joint hirer or hirers, the banking may give, jointly with the
surviving joint hirer or joint hirers, as the case may be, access to the locker and liberty to
remove the contents of such locker.
(3) Every nomination under sub-section (1) or sub-section (2) shall be made in the
prescribed manner.
(4) The banking company shall, before permitting the removal of the contents of any locker
by any nominee or jointly by any nominee and survivors as aforesaid, prepare, in such
manner as may be directed by the Reserve Bank from time to time, an inventory of the
contents of the locker which shall be signed by such nominee or jointly by such nominee
and survivors and shall deliver a copy of the inventory so prepared to such nominee or
nominee and survivors.
(5) On the removal of the contents of any locker by any nominee or jointly by any nominee
and survivors as aforesaid, the liability of the banking company in relation to the contents
of the locker shall stand discharged.
(6) No suit, prosecution or other legal proceeding shall lie against a banking company for
any damage caused or likely to be caused, for allowing access to any locker, and liberty
to remove the contents of such locker, in pursuance of the provisions of sub-section (1) or
sub-section (2), as the case may be.
45ZF. Notice of claims of other persons regarding safety lockers not receivable. -
No notice of the claim of any person, other than hirer or hirers of a locker, shall be
receivable by a banking company nor shall the banking company be bound by any such
notice even though expressly given to it:
Provided that where any decree, order, certificate or other authority from a Court of
competent jurisdiction relating to the locker or its contents is produced before the banking
company, the banking company shall take due not of such decree, order, certificate or
other authority.]
Part IV

Miscellaneous
46. Penalties. - (1) Whoever in any return, balance-sheet or other document [or in any
information required or furnished] by or under or for the purposes of any provision of this
Act, wilfully makes a statement which is false in any material particular, knowing it to be
false, or wilfully omits to make a material statement, shall be punishable with imprisonment
for a term which may extend to three years [or with fine, which may extend to one crore
rupees or with both].
(2) If any person fails to produce any book, account or other document or to furnish any
statement or information which under sub-section (2) of section 35 it is his duty to produce
or furnish, or to answer any question relating to the business of a banking company which
he is asked by [an officer making an inspection or scrutiny under that section], he shall be
punishable with a fine which may extend to [twenty lakh rupees] in respect of each
offence, and if he persists in such refusal, to a further fine which may extend to [fifty
thousand rupees] for every day during which the offence continues.
(3) If any deposits are received by a banking company in contravention of an order under
clause (a) of sub-section (4) of section 35, every director or other officer of the banking
company, unless he proves that the contravention took place without his knowledge or
that he exercised all due diligence to prevent it shall be deemed to be guilty of such
contravention and shall be punishable with a fine which may extend to twice the amount
of the deposits so received.
[(4) If any other provision of this Act is contravened or if any default is made in-
(i) complying with any requirement of this Act or of any order, rule or direction made
or condition imposed thereunder, or
(ii) carrying out the terms of, or the obligations under, a scheme sanctioned under sub-
section (7) of section 45, by any person, such person shall be punishable with fine
which may extend to [one crore rupees] [or twice the amount involved in such
contravention or default where such amount is quantifiable, whichever is more, and
where a contravention or default is a continuing one, with a further fine which may
extend to] [one lakh rupees] for every day, during which the contravention or default
continues.]
(5) Where a contravention or default has been committed by a company, every person
who, at the time the contravention or default was committed, was in charge of, and was
responsible to, the company, for the conduct of the business of the company, as well as
the company, shall be deemed to be guilty of the contravention or default and shall be
liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to
any punishment provided in this Act if he proves that the contravention or default was
committed without his knowledge or that he exercised all due diligence to prevent the
contravention or default.
(6) Notwithstanding anything contained in sub-section (5), where a contravention or
default has been committed by a company, and it is proved that the same was committed
with the consent or connivance of, or is attributable to any gross negligence on the part
of, any director, manager, secretary or other officer of the company, such director,
manager, secretary or other officer shall also be deemed to be guilty of that contravention
or default and shall be liable to be proceeded against and punished accordingly.
Explanation. - For the purposes of this section,-
(a) "company" means any body corporate and includes a firm or other association of
individuals; and
(b) "director", in relation to a firm, means a partner in the firm.
[46A. Chairman, director, etc., to be public servants for the purposes of Chapter IX
of the Indian Penal Code. - [Every chairman who is appointed on a whole-time basis,
managing director, director, auditor], liquidator, manager and any other employee of a
banking company shall be deemed to be a public servant for the purposes of Chapter IX
of the Indian Penal Code (45 of 1860).]
47. Cognizance of offences. - No Court shall take cognizance of any offence punishable
under [sub-section (5) of section 36-AA or] section 46 except upon complaint in writing
made by an officer of [the Reserve Bank or, as the case may be, the National
Bank] generally or specially authorised in writing in this behalf by [the Reserve Bank or,
as the case may be, the National Bank] and [no Court other than that of a Metropolitan
Magistrate or a Judicial Magistrate of the First Class or any Court superior thereto] shall
try any such offence.
[47-A. Power of Reserve Bank to impose penalty. - (1) Notwithstanding anything
contained in section 46, if a contravention or default of the nature referred to in [sub-
section (2) or sub-section (3) or sub-section (4)] of section 46, as the case may be, is
made by a banking company, then, the Reserve Bank may impose on such banking
company-
[(a) where the contravention or default is of the nature referred to in sub-section (2) of
section 46, a penalty not exceeding twenty lakh rupees in respect of each offence
and if the contravention or default persists, a further penalty not exceeding fifty
thousand rupees for everyday, after the first day, during which the contravention or
default continues;
(b) where the contravention is of the nature referred to in sub-section (3) of section 46,
a penalty not exceeding twice the amount of the deposits in respect of which such
contravention was made;
(c) where the contravention or default is of the nature referred to in sub-section (4) of
section 46, a penalty not exceeding one crore rupees or twice the amount involved
in such contravention or default where such amount is quantifiable, whichever is
more, and where such contravention or default is a continuing one, a further penalty
which may extend to one lakh rupees for everyday, after the first day, during which
the contravention or default continues.]
[(2) For the purpose of adjudging the penalty under sub-section (1), the Reserve Bank
shall serve notice on the banking company requiring it to show cause why the amount
specified in the notice should not be imposed and a reasonable opportunity of being heard
shall also be given to such banking company.]
[* * *]
(4) No complaint shall be filed against any banking company in any Court of law in respect
of any contravention or default in respect of which any penalty has been imposed by the
Reserve Bank under this section.
(5) Any penalty imposed by the Reserve Bank under this section shall be payable within
a period of fourteen days from the date on which notice issued by the Reserve Bank
demanding payment of the sum is served on the banking company and in the event of
failure of the banking company to pay the sum within such period, may be levied on a
direction made by the principal Civil Court having jurisdiction in the area where the
registered office of the banking company is situated; or, in the case of a banking company
incorporated outside India, where its principal place of business in India is situated:
Provided that no such direction shall be made except on an application made to the Court
by the Reserve Bank or any officer authorised by that Bank in this behalf.
(6) The Court which makes a direction under sub-section (5) shall issue a certificate
specifying the sum payable by the banking company and every such certificate shall be
enforceable in the same manner as if it were a decree made by the Court in a civil suit.
(7) Where any complaint has been filed against any banking company in any Court in
respect of the contravention or default of the nature referred to in sub-section (3) or, as
the case may be, sub-section (4) of section 46, then, no proceedings for the imposition of
any penalty on the banking company shall be taken under this section.]
48. Application of fines. - A Court imposing any fine under this Act may direct that the
whole or any part thereof shall be applied in or towards payment of the costs of the
proceedings, or in or towards the rewarding of the person on whose information the fine
is recovered.
49. Special provisions for private banking companies. - The exemptions, whether
express or implied, in favour of a private company in [sections 90, 165, 182, 204 and 255,
clauses (a) and (b) of sub-section (1) of section 293 and sections 300, 388-A and 416 of
the Companies Act, 1956 (1 of 1956)], shall not operate in favour of a private company
which is a banking company.
[49A. Restriction on acceptance of deposits withdrawable by cheque. - No person
other than a banking company, the Reserve Bank, the State Bank of India or any
other [banking institution, firm or other person notified by the Central Government in this
behalf on the recommendation of the Reserve Bank] shall accept from the public deposits
of money withdrawable by cheque:
Provided that nothing contained in this section shall apply to any savings bank scheme
run by the Government.
49B. Change of name by a banking company. - Notwithstanding anything contained in
section 21 of the Companies Act, 1956 (1 of 1956), the Central Government shall not
signify its approval to the change of name of any banking company unless the Reserve
Bank certifies in writing that it has no objection to such change.
49C. Alteration of memorandum of a banking company. - Notwithstanding anything
contained in the Companies Act, 1956 (1 of 1956), no application for the confirmation of
the alteration of the memorandum of a banking company shall be maintainable unless the
Reserve Bank certifies that there is no objection to such alteration.]
50. Certain claims for compensation barred. - No person shall have any right, whether
in contract or otherwise, to any compensation for any loss incurred by reason of the
operation of any of the provisions [contained in sections 10, 12-A, 16, 35-A, 35-B, [36, 43-
A and 45] or by reason of the compliance by a banking company with any order or direction
given to it under this Act].
[51. Application of certain provisions to the State Bank of India and other notified
banks. - [(1)] Without prejudice to the provisions of the State Bank of India Act, 1955 (23
of 1955) or any other enactment, the provisions of sections 10, 13 to 15, 17, [19 to 21-A,
23 to 28, 29 ]excluding sub-section (3), [29A,] [sub-sections (1-B), (1-C) and (2) of
sections 30, 31,] 34, 35, 35-A, [35AA, 35AB] 36 excluding clause (d) of sub-section (1),
45-Y to 45-ZF, 46 to 48, 50, 52 and 53 shall also apply, so far as may be, to and in relation
to the State Bank of India [or any corresponding new bank or a Regional Rural Bank or
any subsidiary bank] as they apply to and in relation to banking companies:
[Provided that-
(a) nothing contained in clause (c) of sub-section (1) of section 10 shall apply to the
chairman of the State Bank of India or to a [managing director] of any subsidiary
bank insofar as the said clause precludes him from being a director of, or holding
an office in, any institution approved by the Reserve Bank:
[(b) nothing contained in sub-clause (iii) of clause (b) of sub-section (1) of section 20
shall apply to any bank referred to in sub-section (1), insofar as the said sub-clause
(iii) of clause (b) precludes that bank from entering into any commitment for granting
any loan or advance to or on behalf of a company (not being a Government
company) in which not less than forty per cent. of the paid-up capital is held
(whether singly or taken together) by the Central Government or the Reserve Bank
or a corporation owned by that bank; and
(c) nothing contained in section 46 or in section 47-A shall apply to,-
(i) an officer of the Central Government or the Reserve Bank, nominated or
appointed as director of the State Bank of India or any corresponding new
bank or a Regional Rural Bank or any subsidiary bank or a banking company;
or
(ii) an officer of the State Bank of India or a corresponding new bank or a
Regional Rural Bank or a subsidiary bank nominated or appointed as director
of any of the said banks (not being the bank of which he is an officer) or of a
banking company.]
[* * *]
[(2) References to a banking company in any rule or direction relating to any provision of
this Act referred to in sub-section (1) shall, except where such rule or direction provides
otherwise, be construed as referring also to the State Bank of India, a corresponding new
bank, a Regional Rural Bank and a subsidiary bank.]
[51A. Powers of Reserve Bank not to apply to International Financial Services
Centre. - Notwithstanding anything contained in any other law for the time being in force,
the powers exercisable by the Reserve Bank under this Act, -
(a) shall not extend to an International Financial Services Centre set up under sub-
section (1) of section 18 of the Special Economic Zones Act, 2005 (28 of 2005);
(b) shall be exercisable by the International Financial Services Centres Authority
established under sub-section (1) of section 4 of the International Financial Services
Centres Authority Act, 2019,
in so far as regulation of financial products, financial services and financial institutions that
are permitted in the International Financial Services Centres are concerned.]
52. Power of Central Government to make rules. - (1) The Central Government may,
after consultation with the Reserve Bank, make [rules] to provide for all matters for which
provision is necessary or expedient for the purpose of giving effect to the provisions of this
Act and all such rules shall be published in the Official Gazette.
(2) In particular, and without prejudice to the generality of the forgoing power, such rules
may provide for the details to be included in the returns required by this Act and the
manner in which such returns shall be submitted [and the form in which the official
liquidator may file lists of debtors to the Court having jurisdiction under Part III or Part IIIA
and the particulars which such lists may contain and any other matter which has to be, or
may be, prescribed].
[* * *]
[(4) The Central Government may by rules made under this section annul, alter or add to,
all or any of the provisions of the Fourth Schedule.]
[(5) Every rule made by the Central Government under this Act shall be laid, as soon as
may be, after it is made, before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in the rule
or both Houses agree that the rule should not be made, the rule shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so, however, that
any such modification or annulment shall be without prejudice to the validity of anything
previously done under that rule.]
53. Power to exempt in certain cases. - [(1)] The Central Government may, on the
recommendation of the Reserve Bank, declare, by notification in the Official Gazette, that
any or all of the provisions of this Act shall not apply to any [banking company or institution
or to any class of banking companies [* * *].]
[(2)[A copy of every notification proposed to be issued under sub-section (1) relating to
any banking company or institution or any class of banking companies or any branch of a
banking company or an institution, as the case may be, functioning or located in any
Special Economic Zone established under the Special Economic Zones Act, 2005 (28 of
2005) shall be laid in draft before each House of Parliament], while it is in session, for a
total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in disapproving the
issue of the notification or both Houses agree in making any modification in the notification,
the notification shall not be issued or, as the case may be, shall be issued only in such
modified form as may be agreed upon by both the Houses.]
54. Protection of action taken under Act. - (1) No suit or other legal proceeding shall
be lie against the Central Government, the Reserve Bank or any officer for anything which
is in good faith done or intended to be done in pursuance of this Act.
(2) Save as otherwise expressly provided by or under this Act, no suit or other legal
proceeding shall lie against the Central Government, the Reserve Bank or any officer for
any damage caused or likely to be caused by anything in good faith done or intended to
be done in pursuance of this Act.
55. Amendment of Act 2 of 1934. - The Reserve Bank of India Act, 1934 (2 of 1934)
shall be amended in the manner specified in the fourth column of the First Schedule, and
the amendments to section 18 thereof as specified in the said Schedule shall be deemed
to have had effect on and from the 20th day of September, 1947.
[55A. Power to remove difficulties. - If any difficulty arises in giving effect to the
provisions of this Act, the Central Government may, by order, as occasion requires, do
anything (not inconsistent with the provisions of this Act) which appears to it to be
necessary for the purpose of removing the difficulty:
Provided that no such power shall be exercised after the expiry of a period of three years
from the commencement of section 20 of the Banking Laws (Amendment) Act, 1968 (58
of 1968).]
[Part V

Application Of The Act To Co-Operative Banks

56. Act to apply to co-operative societies subject to modifications. - [Notwithstanding
anything contained in any other law for the time being in force, the provisions of this
Act] shall apply to, or in relation to, co-operative societies as they apply to, or in relation
to, banking companies subject to the following modifications, namely: -
(a) throughout this Act, unless the context otherwise requires, -
(i) references to a "banking company" or "the company" or "such company" shall
be construed as references to a co-operative bank;
(ii) references to "commencement of this Act" shall be construed as references
to commencement of the Banking Laws (Application to Co-operative
Societies) Act, 1965 (23 of 1965);
[(iii) references to "memorandum of association" or "articles of association" shall
be construed as references to bye-laws;
(iv) references to the provisions of the Companies Act, 1956, except in Part III
and Part IIIA, shall be construed as references to the corresponding
provisions, if any, of the law under which a co-operative bank is registered;
(v) references to "Registrar" or "Registrar of Companies" shall be construed as
references to "Central Registrar" or "Registrar of Co-operative Societies", as
the case may be, under the law under which a co-operative bank is registered;]
(b) in section 2, the words and figures "the Companies Act, 1956 (1 of 1956), and"
shall be omitted;
(c) in section 5,-
[(i) after clause (cc), the following clauses shall be inserted, namely:-
(cci) "Co-operative bank" means a state co-operative bank, a central co-operative
bank and a primary co-operative bank;
(ccii) "co-operative credit society" means a co-operative society, the primary object of
which is to provide financial accommodation to its members and includes a co-
operative land mortgage bank;
[(ccii-a) "co-operative society" means a society registered or deemed to have been
registered under any Central Act for the time being in force relating to the multi-
State co-operative societies, or any other Central or State law relating to co-
operative societies for the time being in force;]
(cciii) "director", in relation to a co-operative society, includes a member of any
committee or body for the time being vested with the management of the affairs of
that society;
[(cciii-a) "multi-State co-operative bank" means a multi-State co-operative society
which is a primary co-operative bank;
 (cciii-b) "multi-State co-operative society" means a multi-State co-operative society
registered as such under any Central Act for the time being in force relating to the
multi-State co-operative societies but does not include a national co-operative
society and a federal co-operative;]
(cciv) "primary agricultural credit society" means a co-operative society,-
(i) the primary object or principal business of which is to provide financial
accommodation to its members for agricultural purposes or for purposes
connected with agricultural activities (including the marketing of crops); and
(ii) the bye-laws of which do not permit admission of any other co-operative
society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a
member by reason of such co-operative bank subscribing to the share capital of such co-
operative society out of funds provided by the State Government for the purpose;
(ccv) "primary co-operative bank" means a co-operative society, other than a primary
agricultural credit society,-
(i) the primary object or principal business of which is the transaction of banking
business;
(ii) the paid-up share capital and reserves of which are not less than one lakh of
rupees; and
(iii) the bye-laws of which do not permit admission of any other co-operative
society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a
member by reason of such co-operative bank subscribing to the share capital of such co-
operative society out of funds provided by the State Government for the purpose;
(ccvi) "primary credit society" means a co-operative society, other than a primary
agricultural credit society,-
(i) the primary object or principal business of which is the transaction of banking
business;
(ii) the paid-up share capital and reserves of which are less than one lakh of
rupees; and
(iii) the bye-laws of which do not permit admission of any other co-operative
society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a
member by reason of such co-operative bank subscribing to the share capital of such co-
operative society out of funds provided by the State Government for the purpose.
Explanation .-If any dispute arises as to the primary object or principal business of any
co-operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof
by the Reserve Bank shall be final;
(ccvii) "central co-operative bank", [* * *], "primary rural credit society" and "State co-
operative bank" shall have the meanings respectively assigned to them in the
National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);]
[(ii) clauses (ff), (h) and (nb) shall be omitted].
[***]
(e) in section 6, in sub-section (1), -
 [***]
(ii) in clause (d), after the word "company", the words "co-operative society," shall
be inserted;
[***]
[(f) for section 7, the following section shall be substituted, namely:-
"7. Use of words "bank", "banker" or "banking".-(1) No co-operative society other
than a co-operative bank shall use as part of its name or in connection with its
business any of the words "bank", "banker" or "banking", and no co-operative
society shall carry on the business of banking in India unless it uses as part of its
name at least one of such words.
(2) Nothing in this section apply to-
(a) a primary credit society, or
(b) a co-operative society formed for the protection of the mutual interest of co-
operative banks [***], or
(c) any co-operative society, not being a primary credit society, formed by the
employees of-
(i) a banking company or the State Bank of India or a corresponding new bank
or a subsidiary bank of such banking company, State Bank of India or a
corresponding new bank, or
(ii) a co-operative bank or a primary credit society [***], insofar as the word
"bank", "banker" or "banking" appears as part of the name of the employer
bank, or as the case may be, of the bank whose subsidiary the employer bank
is".];
[***]
(h) for section 11, the following section shall be substituted, namely:-
"11. Requirement as to minimum paid-up capital and reserves.-(1)
Notwithstanding any law relating to co-operative societies for the time being in force,
no co-operative bank shall commence or carry on the business of banking in India
unless the aggregate value of its paid-up capital and reserves is not less than one
lakh of rupees:
Provided that nothing in this sub-section shall apply to-
(a) any such bank which is carrying on such business at the commencement of the
Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), for a
period of three years from such commencement; or
(b) to a primary credit society which becomes a primary co-operative bank after such
commencement, for a period of two years from the date it so becomes a primary
co-operative bank or for such further period not exceeding one year, the Reserve
Bank, having regard to the interests of the depositors of the primary co-operative
bank, may think fit in any particular case to allow.
(2) For the purposes of this section, "value" means the real or exchangeable value and
not the nominal value which may be shown in the books of the co-operative bank
concerned.
(3) If any dispute arises in computing the aggregate value of the paid-up capital and
reserves of any co-operative bank, a determination thereof by the Reserve Bank shall be
final for the purposes of this section.";
[(i) for section 12, the following section shall be substituted, namely: -
12. (1) A co-operative bank may, with the prior approval of the Reserve Bank, issue,
by way of public issue or private placement, -
(i) equity shares or preference shares or special shares, on face value or at
premium; and
(ii) unsecured debentures or bonds or other like securities with initial or original
maturity of not less than ten years,
to any member of such co-operative bank or any other person residing within its area of
operation, subject to such conditions and ceiling, limit or restriction on its issue or
subscription or transfer, as may be specified by the Reserve Bank in this behalf.
(2) Save as otherwise provided in this Act, -
(i) no person shall be entitled to demand payment towards surrender of shares
issued to him by a co-operative bank; and
(ii) a co-operative bank shall not withdraw or reduce its share capital, except to
the extent and subject to such conditions as the Reserve Bank may specify in
this behalf.]
[(j) for section 18, the following section shall be substituted, namely:-
"18. Cash reserve.-(1) Every co-operative bank, not being a [a co-operative bank] for
the time being included in the Second Schedule to the Reserve Bank of India Act,
1934 (2 of 1934) [(hereinafter referred to as a "scheduled co-operative bank")], shall
maintain in India by way of cash reserve with itself or by way of balance in a current
account with the Reserve Bank or the State co-operative bank of the State
concerned or by way of net balance in current accounts, or, in the case of a primary
co-operative bank, with the central co-operative bank of the district concerned, or
in one or more of the aforesaid ways, a sum equivalent to [such per cent.] of the
total of its demand and time liabilities in India, as on the last Friday of the second
preceding fortnight [as the Reserve Bank may specifY, by notification in the Official
Gazette, from time to time having regard to the needs for securing the monetary
stability in the country] and shall submit to the Reserve Bank before the fifteenth
day of every month a return showing the amount so held on alternate Fridays during
a month with particulars of its demand and time liabilities in India on such Fridays
or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881
(26 of 1881), at the close of business on the preceding working day.
Explanation. - In this section and in section 24-
(a) "liabilities in India" shall not include-
(i) the paid-up capital or the reserves or any credit balance in the profit and loss
account of the co-operative bank;
 (ii) any advance taken from a State Government, the Reserve Bank, [***] the
Exim Bank, [the Reconstruction Bank,] [the National Housing Bank,] the
National Bank, [the Small Industries Bank] or from the National Co-operative
Development Corporation established under section 3 of the National Co-
operative Development Corporation Act, 1962 (26 of 1962) by the co-
operative bank;
(iii) in the case of a State or central co-operative bank, also any deposit of money
with it representing the reserve fund or any part thereof maintained with it by
any other co-operative society within its area of operation, and in the case of
a central co-operative bank, also an advance taken by it from the [Co-
operative Bank] of the State concerned;
(iv) in the case of a primary co-operative bank, also any advance taken by it from
the [Co-operative Bank] of the State concerned or the Central co-operative
bank of the district concerned;
(v) in the case of any co-operative bank, which has granted an advance against
any balance maintained with it, such balance to the extent of the amount
outstanding in respect of such advance; and
(vi) in the case of any co-operative bank, the amount of any advance or other
credit arrangement drawn and availed of against approved securities;
(b) "fortnight" shall mean the period from Saturday to the second following Friday, both
days inclusive;
(c) "net balance in current accounts" shall, in relation to a co-operative bank, mean
the excess, if any, of the aggregate of the credit balances in current account
maintained by that co-operative bank with the State Bank of India or a subsidiary
bank or [a corresponding new bank or IDBI Bank Ltd.], over the aggregate of the
credit balances in current accounts held by the said banks with such co-operative
bank;
(d) for the purpose of computation of liabilities, the aggregate of the liabilities of a co-
operative bank to the State Bank of India, a subsidiary bank, a corresponding new
bank, a Regional Rural Bank, a banking company or any other financial institution
notified by the Central Government in this behalf shall be reduced by the aggregate
of the liabilities of all such banks and institutions to the co-operative bank;
(e) any cash with a co-operative bank or any balance held by a co-operative bank with
another bank, shall not, to the extent such cash or such balances represents the
balance in, or investment of, Agricultural Credit Stabilisation Fund of such co-
operative bank, be deemed to be cash maintained in India.
[(1A) If the balance held by co-operative bank referred to in sub-clause (CCI) of clause (c)
of section 56 of the Banking Regulation Act, 1949, at the close of business on any day is
below the minimum specified under sub-section (1), such co-operative bank shall, without
prejudice to the provisions of any other law for the time being in force, be liable to pay to
the Reserve Bank, in respect of that day, penal interest at a rate of three per cent. above
the bank rate on the amount by which such balance falls short of the specified minimum,
and if the shortfall continues further, the penal interest so charged shall be increased to a
rate of five per cent. above the bank rate in respect of each subsequent day during which
the default continues.
(IB) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied,
on an application in writing by the defaulting co-operative bank, that such defaulting co-
operative bank had sufficient cause for its failure to comply with the provisions of sub-
section (1), it may not demand the payment of the penal interest.
(lC) The Reserve Bank may, for such period and subject to such conditions as may be
specified, grant to any co-operative bank such exemptions from the provisions of this
section as it thinks fit with reference to all or any of its officers or with reference to the
whole or any part of its assets and liabilities.];
(2) The Reserve Bank may, for the purposes of this section and section 24, specify from
time to time, with reference to any transaction or class of transactions, that such
transaction or transactions shall be regarded as liability in India of a co-operative bank,
and, if any question arises as to whether any transaction or class of transactions shall be
regarded for the purposes of this section and section 24, as liability in India of a co-
operative bank, the decision of the Reserve Bank thereon, shall be final";]
(k) for section 19, the following section shall be substituted, namely:-
"19. Restriction on holding shares in other co-operative societies.-No co-
operative bank shall hold shares in any other co-operative society except to such
extent and subject to such conditions as the Reserve Bank may specify in that
behalf:
Provided that nothing contained in this section shall apply to-
(i) shares acquired through funds provided by the State Government for that purpose;
(ii) in the case of a central co-operative bank, the holding of shares in the State co-
operative bank to which it is affiliated;
(iii) in the case of a primary co-operative bank, the holding of shares in the central co-
operative bank to which it is affiliated or in the State co-operative bank of the State
in which it is registered:
Provided further that where any shares are held by a co-operative bank in contravention
of this section at the commencement of the Banking Laws (Application to Co-operative
Societies) Act, 1965 (23 of 1965), the co-operative bank shall without delay report the
matter to the Reserve Bank and shall, notwithstanding anything contained in this section,
be entitled to hold the shares for such period and on such conditions as the Reserve Bank
may specify";
[***]
[(m) in section 20-A, in sub-section (1),-
(i) the words and figures "Notwithstanding anything to the contrary contained in
section 293 of the Companies Act, 1956 (1 of 1956)," shall be omitted;
(ii) in clause (a), for the words "any of its directors", the words "any of its past or
present directors" shall be substituted;]
[***]
(o) in section 22, -
(i) for sub-sections (1) and (2), the following sub-sections shall be substituted, namely:-
"(1) Save as hereinafter provided, no co-operative society shall carry on banking
business in India unless-
(a) [***]
 (b) it is a co-operative bank and holds a licence issued in that behalf by the Reserve
Bank, subject to such conditions, if any, as the Reserve Bank may deem fit to
impose:
Provided that nothing in this sub-section shall apply to a co-operative society, not being a
primary credit society or a co-operative bank carrying on banking business at the
commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965
(23 of 1965), for a period of one year from such commencement.
[Provided further that nothing in this sub-section shall apply to a primary credit society
carrying on banking business on or before the commencement of the Banking Laws
(Amendment) Act, 2012, for a period of one year or for such further period not exceeding
three years, as the Reserve Bank may, after recording the reasons in writing for so doing,
extend.];
[(2) Every co-operative society carrying on business as a co-operative bank at the
commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965
(23 of 1965) shall before the expiry of three months from the commencement, every co-
operative bank which comes into existence as a result of the division of any other co-
operative society carrying on business as a co-operative bank, or the amalgamation of
two or more co-operative societies carrying on banking business shall, before the expiry
of three months from its so coming into existence, [every primary credit society which had
become a primary co-operative bank On or before the commencement of the Banking
Laws (Amendment) Act, 2012, shall before the expiry of three months from the date on
which it had become a primary co-operative bank] and every co-operative
society [***] shall before commencing banking business in India, apply in writing to the
Reserve Bank for a licence under this section:
Provided that nothing in clause (b) of sub-section (1) shall be deemed to prohibit-
(i) a co-operative society carrying on business as a co-operative bank at the
commencement of the Banking Laws (Application to Co-operative Societies) Act,
1965 (23 of 1965); or
(ii) a co-operative bank which has come into existence as a result of the division of
any other co-operative society carrying on business as a co-operative bank, or the
amalgamation of two or more co-operative societies carrying on banking business
at the commencement of the Banking Laws (Application to Co-operative Societies)
Act, 1965 (23 of 1965) or at any time thereafter;
(iii) [***]
(ii) [sub-section (3-A) shall be omitted;
(iii) in sub-section (4), in clause (iii), the words, brackets, figures and letter "and sub-
section (3-A)" shall be omitted;]
[22-A. Validation of licences granted by Reserve Bank to multi-State co-operative
societies. - Notwithstanding anything contained in any law or, judgment delivered or
decree or order of any Court made,-
(a) no licence, granted to a multi-State co-operative society by the Reserve Bank
under section 22, which was subsisting on the date of commencement of the
Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004, shall
be invalid or be deemed ever to have been invalid merely by the reason of such
judgment, decree or order;
 (b) every licence, granted to a multi-State co-operative society by the Reserve Bank
under section 22, which was subsisting on the date of commencement of the
Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004, shall
be valid and be deemed always to have been validly granted in accordance with
law;
(c) a multi-State co-operative society whose application for grant of licence for carrying
on banking business was pending with the Reserve Bank on the date of
commencement of the Banking Regulation (Amendment) and Miscellaneous
Provisions Act, 2004 shall be eligible to carry on banking business until it is granted
a licence in pursuance of section 22 or is, by a notice in writing notified by the
Reserve Bank that the licence cannot be granted to it;]
[***]
[ (q) in section 24, -
(i) in sub-section (1), the words "After the expiry of two years from the commencement of
this Act", shall be omitted;
[***]
(iii) in sub-section (3), for the proviso, the following proviso shall be substituted, namely:-
"Provided that every co-operative bank, other than a primary co-operative bank, shall
also furnish within the said period, a copy of the said return to the National Bank.";
[***]].
[(qq) after section 24, the following section shall be inserted, namely:-
"24-A. Power to exempt .-Without prejudice to the provisions of section 53, the
Reserve Bank may, by notification in the Official Gazette, declare that, for such
period and subject to such conditions as may be specified in such notification the
whole or any part of the provisions of section 18 or section 24, as may be specified
therein, shall not apply to any co-operative bank or class of co-operative banks, with
reference to all or any of the offices of such co-operative bank or banks, or with
reference to the whole or any part of the assets and liabilities of such co-operative
bank or banks".];
[***]
[(ri) in the second proviso to section 26, for the expression "regional rural bank", the
expression "co-operative bank, other than a primary co-operative bank" shall be
substituted;
[***]
(rii) in section 27, for sub-section (3), the following sub-section shall be substituted,
namely:-
"(3) Every co-operative bank, other than a primary co-operative bank, shall submit a
copy of the return which it submits to the Reserve Bank, under sub-section (1) also
to the National Bank and the powers exercisable by the Reserve Bank under sub-
section (2) may also be exercised by the National Bank in relation to co-operative
banks, other than primary co-operative banks.";
(s) for [section 29], the following section shall be substituted, namely:-
 "29. Accounts and balance-sheet .-(1) At the expiration of each year ending with the
30th days of June, [or at the expiration of a period of twelve months ending with
such date as the Central Government may, by notification in the Official Gazette,
specify in this behalf,] every co-operative bank, in respect of all business transacted
by it, shall prepare with reference to that year [or the period] a balance-sheet and
profit and loss account as on the last working day of the year [or the period] in the
Forms set out in the Third Schedule as near thereto as circumstances admit:
(2) The balance-sheet and profit and loss account shall be signed by the manager or
the principal officer of the bank and where there are more than three directors of
the bank, by at least three of those directors, or where there are not more than three
directors, by all the directors.
(3) The Central Government, after giving not less than three months' notice of its
intention so to do by a notification in the Official Gazette, may, from time to time by
a like notification, amend the Forms set out in the Third Schedule:]
[Provided that with a view to facilitating the transition from one period of accounting to
another period of accounting under this sub-section, the Central Government may, by
order published in the Official Gazette, make such provisions as it considers necessary or
expedient for the preparation of, or for other matters relating to, the balance-sheet or profit
and loss account in respect of the concerned year or period, as the case may be.;]
[***]
[(t) in section 31, -
[***]
(ii) for the second proviso, the following proviso shall be substituted, namely:-
"Provided further that a co-operative bank, other than a primary co-operative bank,
shall furnish such returns also to the National Bank.";]
[***]
[(zaa) after section 36-AA of the principal Act, the following sections shall be inserted,
namely:-
"36-AAA. Supersession of Board of directors of a [co-operative bank]. - (1) Where the
Reserve Bank is satisfied that in the public interest or for preventing the affairs of
a [co-operative bank] being conducted in a manner detrimental to the interest of the
depositors or of the [co-operative bank] or for securing the proper management of
the [co-operative bank], it is necessary so to do, the Reserve Bank may, for reasons
to be recorded in writing, by order, supersede the Board of directors of such [co-
operative bank] for a period not exceeding five years as may be specified in the
order, which may be extended from time to time, so, however, that total period shall
not exceed five years.
[Provided that in the case of a co-operative bank registered with the Registrar of Co-
operative Societies of a State, the Reserve Bank shall issue such order in consultation
with the concerned State Government seeking its comments, if any, within such period as
the Reserve Bank may specify.]
 (2) The Reserve Bank may, on supersession of the Board of directors of the [co-
operative bank] under sub-section (1) appoint an Administrator for such period as it
may determine.
(3) The Reserve Bank may issue such directions to the Administrator as it may deem
appropriate and the Administrator shall be bound to follow such directions.
(4) Upon making the order of supersession of the Board of directors of a [co-operative
bank],-
(a) the chairman, managing director and other directors as from the date of
supersession of the Board shall vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of the
Multi-State Co-operative Societies Act, 2002 (39 of 2002) or this Act or any other
law for the time being in force, be exercised and discharged by or on behalf of the
Board of directors of such a [co-operative bank] or by a resolution passed in general
meeting of such co-operative bank, shall, until the Board of directors of such co-
operative bank is reconstituted, be exercised and discharged by the Administrator
appointed by the Reserve Bank under sub-section (2):
Provided that the power exercised by the Administrator shall be valid notwithstanding that
such power is exercisable by a resolution passed in the general meeting of such [co-
operative bank].
(5)(a) The Reserve Bank may constitute a committee of three or more persons who
have experience in law, finance, banking, administration or accountancy to assist
the Administrator in discharge of his duties.
(b) The committee shall meet at such times and places and observe such rules of
procedure as may be specified by the Reserve Bank.
(6) The salary and allowances to the Administrator and the members of the committee
constituted by the Reserve Bank shall be such as may be specified by the Reserve
Bank and be payable by the concerned [co-operative bank].
(7) On and before expiration of period of supersession of the Board of directors as
specified in the order issued under sub-section (1), the Administrator of the [co-
operative bank] shall call the general meeting of the society to elect new directors.
(8) Notwithstanding anything contained in any other law or in any contract, or bye-laws
of a [co-operative bank], no person shall be entitled to claim any compensation for
the loss or termination of his office.
(9) The Administrator appointed under sub-section (2) shall vacate office immediately
after the Board of directors of the multi-State co-operative society has been
constituted.
[(10) The provisions of section 36ACA shall not apply to a co-operative bank.]
[***]
AW ▼
 36-AAC. Reimbursement to the Deposit Insurance Corporation by liquidator or
transferee bank. - Where a multi-State co-operative bank, being an insured bank
within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act,
1961 (47 of 1961), is wound up and the Deposit Insurance Corporation has become
liable to the depositors' of the insured bank under sub-section (1) or sub-section (2)
of section 16 of that Act, the Deposit Insurance Corporation shall be reimbursed by
the liquidator or such other person in the circumstances, to the extent and in the
manner provided in section 21 of that Act.";
(zab) in section 36-AD, sub-section (3) shall be omitted;"]
[(zb) Part IIC shall be omitted;]
[(zc) in section 46,-
[***]
(ii) in clause (a) of the Explanation , after the words "includes a", the words "co-
operative society" shall be inserted;]
[***]
(ze) section 49 shall be omitted;
[***]
[(zg) in section 49B, references to "Central Government" shall be construed as references
to "Central Registrar" or "Registrar of Co-operative Societies", as the case may be, under
the law under which a co-operative bank is registered;]
[***]
(zi) section 51 shall be omitted;
[(zj) after section 53, the following section shall be inserted, namely: -
53A. Powers to exempt co-operative banks in certain cases. - Notwithstanding
anything contained in any other provisions of this Act, the Reserve Bank may, from
time to time, on being satisfied that it is necessary so to do, declare, by notification
in the Official Gazette, that the provisions of item (iii) of clause (b) of sub-section (1)
and sub-section (2), of section 10, clause (a) of sub-section (2) of section 10A, sub-
section (1A) of section 10B and clause (b) of sub-section (1) of section 35B of this
Act shall not apply to a co-operative bank or class of co-operative banks, either
generally or for such period as may be specified therein, subject to such conditions,
limitations or restrictions as it may think fit to impose.]
[(zji) in section 54, after the expression "Reserve Bank", wherever it occurs, the
expression, "or the National Bank" shall be inserted;]
(zk) for section 55 and the First Schedule, the following section shall be substituted,
namely:-
"55. Act 18 of 1891 and Act 46 of 1949 to apply in relation to a co-operative
banks.-(1) The Bankers Books Evidence Act, 1891 shall apply in relation to a
co-operative bank as it applies in relation to a bank as defined in section 2 of
that Act.
(2) The Banking Companies (Legal Practitioners' Clients' Accounts) Act, 1949
shall apply in relation to a co-operative bank as it applies in relation to a
banking company as defined in section 2 of that Act.";
(zl) for the Third Schedule and the Fourth Schedule, the following Schedule shall be
substituted, namely:-]
"THE THIRD SCHEDULE
 [See Section 29]
FORM A

FORM OF BALANCE-SHEET

CAPITAL AND LIABILITIES PROPERTY AND ASSETS

R R
s. s.
P. P.
R R
s. s.
P. P.
1. CAPITAL: 1. CASH
(i) Authorised capital In hand and with Reserve Bank
…Shares of Rs ....... each [the National Bank], State Bank of India,
...Shares of Rs........ each State Co-operative Bank and Central Co-
………………………. operative Bank
(ii) Subscribed capital
2. BALANCES WITH OTHER BANKS
..Shares of Rs......... each
(i) Current deposits
..Shares of Rs......... each
(ii) Savings bank deposits
……………………….
(iii) Fixed deposits
(iii) Amount called up
On… shares at Rs ..... each less 3. MONEY AT CALL AND SHORT NOTICE
calls unpaid 4. INVESTMENTS
On… shares at Rs… each less calls (i) In Central and State Government
unpaid Of (iii) above held by securities (at book value)
(a) Individuals…………… Face value Rs………………..
(b) Co-operative institutions. Market value Rs……………...
(c) State Government…… (ii) Other trustee securities…….
2. RESERVE FUND AND OTHER (iii) Shares in co-operative institutions other
RESERVES : than in item (5)
(i) Statutory Reserve……. below………………………..
(ii) Agricultural (Credit Stabilization (iv) Other investments (to be
Fund). Specified)………………
(iii) Building Fund………. 5. INVESTMENTS OUT OF
(iv) Dividend Equalization Fund THE PRINCIPAL SUBSIDIARY STATE PA
.................................. RTNERSHIP FUND :
(v) Special Bad Debts In shares of :
Reserve……………………… (i) Central Co-operative Banks
(vi) Bad and Doubtful Debts (ii) Primary agricultural credit societies
Reserve……………….. (iii) Other societies
(vii) Investment and Depreciation 6. ADVANCES:
Reserve……………
(i) Short-term loans, cash credits,
(viii) Other funds and reserves (to be overdrafts and bills
specified)……… discounted……………………..
3. PRINCIPAL/SUBSIDIARY STATE Of which secured against:
PARTNERSHIP FUND ACCOUNT: (a) Government and other approved
For share capital of : securities
(i) Central Co-operative Banks (b) Other tangible securities @
(ii) Primary agricultural credit Of the advances, amount due from
societies ……………… individuals
(iii) Other Of the advances, amount overdue
societies………………………………….
4. DEPOSITS AND OTHER Considered bad any doubtful of recovery
ACCOUNTS: (ii) Medium-term loans
(i) Fixed deposits* Of which secured against :
(a) Individuals* (a) Government and other approved
(b) Central Co-operative Banks securities
(c) Other societies (b) Other tangible securities @
(ii) Savings bank deposits Of the advances, amount due from
(a) Individuals* individuals…………..
(b) Central Co-operative Banks Of the advances, amount overdue:
(c) Other societies Considered bad and doubtful of recovery
(iii) Current deposits (iii) Long-term loans
(a) Individuals* Of which secured against:
(b) Central Co-operative Banks (a) Government and other approved
(c) Other societies securities……….
(iv) Money at call and short notice (b) Other tangible securities @
Of the advances, amount due from
5. BORROWINGS: individuals………..
(i) From the Reserve Bank Of the advances, amount overdue
of India [the National Bank], Considered bad and doubtful of
State/Central co-operative bank: recovery
(a) Short-term loans, cash credits 7. INTEREST RECEIVABLE
and over-drafts
Of which overdue
Of which secured against :
Considered bad and doubtful of recovery
(a) Government and other
approved securities 8. BILLS RECEIVABLE BEING BILLS FOR
(b) Other tangible securities @ COLLECTION As per contra
(c) Medium-term loans 9. BRANCH ADJUSTMENTS
Of which secured against: 10. PREMISES LESS DEPRECIATION
(a) Government and other 11. FURNITURE AND FIXTURES LESS
approved securities DEPRECIATION
(b) Other tangible securities @ 12. OTHER ASSETS (TO BE SPECIFIED)
(c) Long-term loans 13. NON-BANKING ASSETS ACQUIRED IN
Of which secured against: SATISFACTION OF CLAIMS (STATING
(a) Government and other MODE VALUATION)
approved securities 14. PROFIT AND LOSS
(b) Other tangible securities @
(ii) From the State Bank of India
(a) Short-term loans, cash credits
and over drafts
Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(c) Medium-term loans
Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(c) Long-term loans
Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(ii) From the State Government
(c) Shorts-term loans
 Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(c) Medium-term loans
Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(c) Long-term loans
Of which secured against:
(a) Government and other
approved securities
(b) Other tangible securities @
(iv) Loans from other sources
(source and security to be
specified rule)
6. BILLS FOR COLLECTION BEING
BILLS RECEIVABLE As per contra
7. BRANCH ADJUSTMENTS
8. OVERDUE INTEREST RESERVE
9. INTEREST PAYABLE
10. OTHER LIABILITIES
(i) Bills payable
(ii) Unclaimed dividends
(iii) Suspense
(iv) Sundries

11. PROFIT AND LOSS

Profit as per last balance sheet
Less appropriations
Add profit for the year brought from
the Profit and Loss
Accounts………………………………
……………
CONTINGENT LIABILITIES
(i) Outstanding liabilities for
guarantees issued……….
(ii)
Others……………………………………
……..
TOTAL TOTAL
NOTES
* "Fixed deposits" will include reserve fund, deposits of societies, employees provident
fund deposit, staff security deposits, recurring deposits, cash certificates, etc.
** Under the item "individuals" deposits from institutions other than co-operative bank and
societies may be included.
***"Borrowings" and "Advances". - Short-terms loan will be for periods up to 15 months,
medium-terms loans from 15 months to 5 years and long-terms loans over 5 years.
@ "Other tangible security" will include borrowing against gold and gold ornaments,
repledge of goods, mortgage of land, etc.
General Instructions. - The corresponding figures (to the nearest rupee if so desired) for
the year immediately preceding the year to which the balance-sheet relates should be
shown in separate columns.
 FORM B

FORM OF PROFIT AND LOSS ACCOUNT

Profit and Loss account for the year ended..........

EXPENDITURE INCOME
Rs Rs
. .
P. P.
Rs Rs
. .
P. P.
1. Interest on deposits, borrowing, 1. Interest and
etc.................................. discount............................................
2. Salaries and allowances and provident fund ..
.................... 2. Commissions exchange and
3. Directors and local committee members' fees brokerage .....................
and 3. Subsidies and
allowances........................................................ donations..........................................
............ ..
4. Rent, taxes, insurance, lighting, 4. Income from non-banking assets
etc.............................. and profit from sale of or dealing
5. Law with such
charges............................................................. assets........................................
6. Postage, telegrams and telephone 5. Other
charges.................... receipts.............................................
7. Auditor's .........
fees................................................................ 6. Loss (if
8. Depreciation on and repairs in any)...................................................
property............................ ......
9. Stationery, printing and advertisement,
etc......................
10. Loss from sale of or dealing with non-banking
assets......
11. Other
expenditure........................................................
12. Balance of
profit..........................................................
TOTAL TOTAL
General Instructions. - The corresponding figures (to the nearest rupee, if so desired) for
the year immediately preceding the year to which the profit and loss account relates should
be shown in separate columns.".
THE FIRST SCHEDULE
(See section 55)

AMENDMENTS

Year No Short title Amendment

1 2 3 4
1934 2 The Reserve Bank (1) In Section 17 to Cl. (15-A), the
of India Act, 1934. following shall be added, namely:-
"and under the Banking Companies Act, 1949
(4 of 1949)".
(2) (a) Section 18 shall be re-numbered as sub-
section (1) of that section and in sub-section
(1), as so re-numbered-
(i) in Clause (3), after the words "of that
section", the following words shall be added,
namely :-
"or when the loan or advance, is made to a
banking company as defined in the Banking
Companies Act, 1949, against such other
form of security as the bank may consider
sufficient",
(ii) for the words "under this section"
wherever they occur, the words "under this
sub-section" shall be substituted:
(b) after sub-section (1), as so renumbered
the following, sub-section shall be inserted,
namely:-
"(2) Where a banking company to which a
loan or advance has been made under the
provisions of Cl. (3) of sub section (1) is
wound up, and sums due to the bank in
respect of such loan or advance shall,
subject only to the claims, if any, of any
other banking company in respect of any
prior loan or advance made by such banking
company against any security, be a first
charge on the assets of the banking
company".
(3) In Section 42, for sub-section (6), the
following sub-section shall be substituted
namely:-
"(6) The bank shall, save as hereinafter
provided, by notification in the Gazette of
India,-
(a) direct the inclusion in the Second
Schedule of any bank not already so
included which carries on the business of
banking in any Province of India and which-
(i) has a paid-up capital and reserve of
aggregate value of not less than five lakhs
of rupees, and
(ii) satisfies the bank that its affairs are not
being conducted in a manner detrimental to
the interest of its depositors; and
(iii) is a company as defined in Cl. (2) of
Section 2 of the Indian Companies Act,
1913 (7 of 1913) or a corporation or a
company incorporated by or under any law
in force in any place outside the Provinces
of India;
(b) direct the exclusion from that Schedule
of any scheduled bank-
 (i) the aggregate value of whose paid-up
capital and reserves becomes at any time
less than five lakhs of rupees, or
(ii) which is, in the opinion of the bank after
making an inspection under Section 35 of
the Banking Companies Act, 1949,
conducting its affairs to the detriment of the
interests of its depositors, or
(iii) which goes into liquidation or otherwise
ceases to carry on banking business:
Provided that the bank may, on application
of the scheduled bank concerned and
subject to such conditions, if any, as it may
impose, defer the making of a direction
under sub-clause (i) or sub-clause (ii) of Cl.
(b) for such period as the bank considers
reasonable to give the scheduled bank an
opportunity of increasing the aggregate
value of its paid-up capital and reserves to
not less than five lakhs of rupees or, as the
case may be, of removing the defects in the
conduct of its affairs ;
(c) alter the description in that Schedule
whenever any scheduled bank changes its
name.
Explanation.-In this sub-section the
expression 'value' means the real or
exchangeable value and not the nominal
value which may be shown in the books of
the bank concerned; and if any dispute
arises in computing the aggregate value of
the paid-up capital and reserves of a bank,
a determination thereof by the bank shall be
final for the purposes of this sub-section."

THE SECOND SCHEDULE

 [Repealed by the Repealing and Amending Act, 1957 (36 of 1957), section 52 and
Schedule I.]
THE THIRD SCHEDULE
(See section 29)
[FORM A]

FORM OF BALANCE-SHEET

Balance Sheet of..........................(here enter name of the Banking Company)

Balance Sheet as on 31st March.................(Year)
(000's omitted)
Capital and Liabilities Schedule As on 31- As on 31-
3....(Current 3....(Previous
Year) Year)
Capital 1
Reserves and Surplus 2
Deposits 3
Borrowings 4
Other liabilities and provisions 5
Total
ASSETS 6
Cash and balances with 7
Reserve Bank of India
Balances with banks and 8
money at call and short notice
Investments 9
Advances 10
Fixed-Assets 11
Other Assets 6
Total
Contingent liabilities Bill for 12
collection
SCHEDULE 1
Capital
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. For Nationalised Banks 1
Capital (Fully owned by Central 2
Government)
II. For Banks incorporated outside India 3
Capital
(i) The amount brought in by banks by 4
way of start-up-capital (as prescribed
by RBI should be shown under this
head).
(ii) Amount of deposit kept with the 5
RBI under Section 11 (2) of the
Banking Regulation Act, 1949.
Total
 Authorised Capital (Shares of Rs. 6
each)
Issued capital (Shares of Rs. each) 7
Subscribed Capital (Shares of Rs. 8
each)
Called-up Capital (Shares of Rs. each) 9
Less: Calls unpaid 10
Add: Forfeited share 11
SCHEDULE 2
Reserves and Surplus
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Statutory Reserves.
Opening Balance
Additions during the year
Deductions during the year
II. Capital Reserves
Opening Balance
Additions during the Year
Deductions during the year
III. Shares Premium
Opening Balance
Additions during the year
Deductions during the year
IV. Revenue and other Reserves
Opening Balance
Additions during the year
Deductions during the year
V. Balance in Profit and Loss Account
Total : (I, II, III, IV and V)
SCHEDULE 3
Deposits
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
A. I. Demand Deposits
(i) From banks
(ii) From others
II. Savings Banks Deposits
III. Term Deposits
(i) From banks
(ii) From others
Total: (I, II, III)
B. (i) Deposits of branches in India ...........
(ii) Deposits of branches outside India ......
Total
SCHEDULE 4
 Borrowings
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Borrowing in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
II. Borrowings outside India
Total (I and II)
Secured borrowings included in I and II above-
Rs.
SCHEDULE 5
Other liabilities and provisions
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Bill payable
II. Inter-office adjustment (net)
Ill. Interest accrued
IV. Others (including provisions)
Total :
SCHEDULE 6
Cash and Balances with Reserve Bank of India
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Cash in hand (including foreign currency notes)
II. Balance with Reserve Bank of India
(i) in Current Account
(ii) in Other Accounts
Total (I and II)
SCHEDULE 7
Balance with banks and money at call and short notice
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. In India
(i) Balances with banks
(a) in Current Accounts
(b) In Other Deposit Accounts
(ii) Money at call and short notice
(a) With banks
(b) With other institutions
Total (I and II)
II. Outside India
(i) in Current Accounts
(ii) in other Deposit Accounts
 (iii) Money at call and short notice
Total : (I, II & III)

GRAND TOTAL : (I and II)

SCHEDULE 8
Investments
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and Bonds
(v) Subsidiaries and/or joint ventures
(vi) Others (to be specified)
Total :
II. Investments outside India in
(i) Government securities (including local
authorities)
(ii) Subsidiaries and/or joint ventures abroad
(iii) Other investments (to be specified)
Total :

GRAND TOTAL : (I and II)

SCHEDULE 9
Advances
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
A. (i) Bills purchased and discounted
(ii) Cash credits, overdrafts and loans
repayable on demand
(iii) Term loans
Total :
B. (i) Secured by tangible assets
(ii) Covered by Bank/Government Guarantees
(iii) Unsecured
Total :
C. I. Advances in India
(i) Priority Sector
(ii) Public Sector
(iii) Banks
(iv) Others
Total :
II. Advances outside India
(i) Due from banks
 (ii) Due from others
(a) Bills purchased and discounted
(b) Syndicate loans
(c) Others
Total :

GRAND TOTAL: (C. I & C. II)

SCHEDULE 10
Fixed assets
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Premises
At cost as on 31st March of the preceding
year.
Additions during the year
Deductions during the year
Depreciation to date
II. Other Fixed Assets (including furniture and
fixtures)
At cost as on 31st March of the preceding year
Additions during the year
Deductions during the year
Depreciation to date
TOTAL: (I and II)
SCHEDULE 11
Other assets
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Inter-office adjustments (net)
II. Interest accrued
III. Tax paid in advance/tax deducted at source
IV. Stationery and stamps
V. Non-banking assets acquired in satisfaction of
claims
VI. Others*
TOTAL:
*In case there is any unadjusted balance of loss the same may be shown under this item
with appropriate foot-note.
SCHEDULE 12
Contingent labilities
As on 31- As on 31-
3....(Current Year) 3....(Previous
Year)
I. Claims against the bank not acknowledged as
debts
II. Liabilities for partly paid investments
III. Liability on account of outstanding forward
exchange contracts
IV. Guarantee given on behalf of constituents
(a) In India
(b) Outside India
V. Acceptances, endorsements and other
obligations
VI. Other items for which the bank is contingently
liable
TOTAL:
FORM B
(000's omitted)

FORM OF PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST
MARCH........(YEAR)

Schedule Year ended on Year ended

No. 31-3....(Current on 31-
Year) 3....(Previous
Year)
I. INCOME
Interest earned 13
Other income 14
TOTAL:
II. EXPENDITURE
Interest expended 15
Operating expenses 16
Provisions and
contingencies
TOTAL:
III. PROFIT/LOSS
Net Profit/Loss (-) for the
year
Profit/ Loss (-) brought
forward
TOTAL:
IV. APPROPRIATIONS
Transfer to statutory
reserves
Transfer to other reserves
Transfer to
Government/proposed
dividend/Balance carried
over to balance sheet.
TOTAL:
SCHEDULE 13
Interest earned
Year ended on 31- Year ended on
3....(Current Year) 31-3....(Previous
Year)
I. Interest/discount on advance/bills
 II. Income on investments
III. Interest on balances with Reserve
Bank of India and other inter-bank funds
IV. Others
TOTAL:
SCHEDULE 14
Other income
Year ended on 31- Year ended on
3....(Current Year) 31-3....(Previous
Year)
I. Commission, exchange and brokerage
II. Profit on sale of investments Less:
Loss on sale of investments
III. Profit on re-valuation of investments
Less: Loss on re-valuation of
investments
IV. Profit on sale of land, buildings and
other assets
Less: Loss on sale of land, buildings
and other assets
V. Profit on exchange transactions Less
:Loss on exchange transactions
VI. Income earned by way of dividends,
etc. from subsidiaries/ companies
and/or joint ventures abroad/in India
VII. Miscellaneous Income
TOTAL:
Note: Under items II to V loss figures may be shown in brackets.
SCHEDULE 15
Interest expended
Year ended on 31- Year ended on
3....(Current Year) 31-3....(Previous
Year)
I. Interest on deposits
II. Interest on Reserve Bank of
India/Inter-back borrowings
III. Others
TOTAL:
SCHEDULE 16
Operating expenses
Year ended on 31- Year ended on
3....(Current Year) 31-3....(Previous
Year)
I. Payments to and provisions for
employees
II. Rent, taxes and lighting
III. Printing and stationery
IV. Advertisement and publicity
V. Depreciation on bank's property
VI. Director's fees, allowances and
expenses
 VII. Auditors' fees and expenses
(including branch auditors)
VIII. Law Charges
IX. Postages, Telegrams, Telephones,
etc.
X. Repairs and maintenance
XI. Insurance
XII. Other expenditure

TOTAL:
[THE FOURTH SCHEDULE
[See section 45-D (2)]

LIST OF DEBTORS

1. The Official Liquidator shall from time to time submit lists of debtors to the High Court,
each list being verified by an affidavit.
2. Every such list shall contain the following particulars:-
(a) Names and addresses of the debtors;
(b) Amount of debt due to the banking company by each debtor;
(c) Rate of interest, if any, and the date up to which such interest has been calculated
in the case of each debtor;
(d) Description of papers, writing and documents, if any, relating to each debtor;
(e) Relief or reliefs claimed against each debtors.
3. (a) In every such list, the Official Liquidator shall distinguish between the debts for which
the banking company holds any security other than a personal security and the debts for
which no security or only a personal security is given.
(b) In the case o1 secured debts, particulars of the securities claimed by the banking
company, and whenever possible their estimated value, and the names and
addresses of person or persons, if any, having an interest in the securities or the
right of redemption therein.
(c) In case the debt is guaranteed by any person or persons, the name and address
of the guarantor or guarantors with particulars as to the extent to which the debts is
guaranteed and description of documents, papers or writings in support of such
guarantee.
4. If the debtor is adjudged insolvent either before or after he has been included in any
such list, but before such list is settled, the name and address of the assignee or the
receiver of his estate, as the case may be, should be stated in, or added to, the list.
5. If the original debtor dies either before or after he has been included in any such list,
but before such list is settled, there shall be substituted in his place the names and
addresses of his legal representatives as far as the Official Liquidator is able to ascertain.]
[THE FIFTH SCHEDULE
[See section 36-AG]

PRINCIPLES OF COMPENSATION
1. The compensation to be given under section 36-AG shall be an amount equal to the
value of the assets of the acquired bank as on the day immediately before the appointed
day, computed in accordance with the provisions of Part I of this Schedule less the total
amount of liabilities thereof computed in accordance with the provisions of Part II of this
Schedule.
Part I - Assets
For the purposes of this Part "assets" means the total of the following:-
(a) the amount of cash in hand and with the Reserve Bank and the State Bank of India
(including foreign currency notes which shall be converted at the market rate of
exchange);
(b) the amount of balances with any bank, whether on deposit or current account, and
money at call and short notice, balances held outside India being converted at any
market rate of exchange:
Provided that any balances which are not realisable in full shall be deemed to be debts
and valued accordingly:-
(c) the market value, as on the day immediately before the appointed day, of any
securities, shares, debentures, bonds and other investments, held by the bank
concerned.
Explanation. - For the purposes of this clause,-
(i) securities of the Central and State Government [other than the securities
specified in sub-clauses (ii) and (iii) of this Explanation] maturing for
redemption, within five years from the appointed day shall be valued at the
face value or the market value, whichever is higher;
(ii) securities of the Central Government, such as Post Office Certificates and
Treasury Savings Deposit Certificates and any other securities or certificates
issued or to be issued under the Small Savings Scheme of the Central
Government, shall be valued at their face value or the encashable value or
the market value, as on the day immediately before the appointed day,
whichever is higher;
(iii) where the market value of any Government security such as the zamindari
abolition bonds or other similar security in respect of which the principal is
payable in instalments, is not ascertainable or is, for any reason, not
considered as reflecting the face value thereof or as otherwise appropriate,
the security shall be valued at such an amount as is considered reasonable
having regard to the instalments of principal and interest remaining to be paid,
the period during which such instalments are payable, the yield of any security,
issued by the Government to which the security pertains and having the same
or approximately the same maturity, and other relevant factors;
(iv) where the market value of any security, share, debenture, bond or other
investment is not considered reasonable by reason of its having been affected
by abnormal factors, the investment may be valued on the basis of its average
market value over any reasonable period;
(v) where the market value of any security, share, debenture, bond or other
investment is not ascertainable, only such value, if any, shall be taken into
account as is considered reasonable having regard to the financial position of
the issuing concern, the dividend paid by it during the preceding five years
and other relevant factors;
 (d) the amount of advances (including loans, cash credits, overdrafts, bill purchased
and discounted), and other debts, whether secured or unsecured, to the extent to
which they are reasonably considered recoverable, having regard to the value of
the security, if any, the operations on the account, the reported worth and
respectability of the borrower, the prospects of realisation and other relevant
considerations;
(e) the value of any land or buildings;
(f) the total amount of the premia paid, in respect of all leasehold properties, reduced
in the case of each such premium by an amount which bears to such premium the
same proportion as the expired term. of the lease in respect of which such premium
shall have been paid bears to the total term of the lease;
(g) the written down value as per books, or the realisable value, as may be considered
reasonable, of all furniture, fixtures, and fittings;
(h) the market or realisable value, as may be appropriate, of other assets appearing
on the books of the bank, no value being allowed for capitalised expenses, such as
share selling commission, organisational expenses and brokerage, losses incurred
and similar other items.
Part II-Liabilities
For the purposes of this Part "liabilities" means the total amount of all outside liabilities
existing on-the appointed day, and all contingent liabilities which the Central Government
or the transferee bank may reasonably be expected to be required to meet out of its own
resources on or after the appointed day and where the acquired bank is a banking
company incorporated outside India, includes the liabilities of the offices and branches in
India of the acquired bank to its offices and branches outside India.
2. If the acquired bank is not incorporated in India, the assets or, as the case may be, the
liabilities of the bank shall be, for the purposes of Part I and Part II, and subject to the
other provisions therein, the assets and liabilities of the offices of the bank situated. in
India.

COMPENSATION PAYABLE TO SHAREHOLDERS

3. Every shareholder of the acquired bank to whom the compensation is payable, shall be
given such amount as compensation, as bears to the total compensation, calculated in
accordance with the provisions of paragraph 1, the same proportion as the amount of
paid-up capital of the shares held by the shareholder bears to the total paid-up capital of
the acquired bank.

CERTAIN DIVIDENDS NOT TO BE TAKEN INTO ACCOUNT

4. No separate compensation shall be payable for any profits or any dividend in respect
of any period immediately preceding the appointed day, for which, in the ordinary course,
profit would have been transferred or dividend declared after the appointed day.]
Bare Acts Live
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