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The
Banking Regulation Act, 19491
(Banking Regulation Act, 1949)

[Act 10 of 1949 as amended up to Act 17 of 2021 and Noti. No. S.O. 942(E), dated
28-2-2024 and updated as of 30th April 2024]
[10th March, 1949]

CONTENTS

PART I

PRELIMINARY

1. Short title, extent and commencement

2. Application of other laws not barred

3. Act not to apply to certain cooperative societies

4. Power to suspend operation of Act

5. Interpretation

5-A. Act to override memorandum, articles, etc

PART II

BUSINESS OF BANKING COMPANIES

6. Forms of business in which banking companies may engage

7. Use of words “bank”, “banker”, “banking” or “banking company”

8. Prohibition of trading

9. Disposal of non-banking assets

10. Prohibition of employment of managing agents and restrictions on

certain forms of employment

10-A. Board of directors to include persons with professional or other

experience

10-B. Banking company to be managed by whole-time chairman

10-BB. Power of Reserve Bank to appoint chairman of a banking company

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10-C. Chairman and certain directors not to be required to hold

qualification shares

10-D. Provisions of Sections 10-A and 10-B to override all other laws,
contracts, etc

11. Requirement as to minimum paid-up capital and reserves

12. Regulation of paid-up capital, subscribed capital and authorised capital

and voting rights of shareholders

12-A. Election of new directors

12-B. Regulation of acquisition of shares or voting rights

13. Restriction on commission, brokerage, discount, etc., on sale of shares

14. Prohibition of charge on unpaid capital

14-A. Prohibition of floating charge on assets

15. Restrictions as to payment of dividend

16. Prohibition of common directors

17. Reserve Fund

18. Cash reserve

19. Restriction on nature of subsidiary companies

20. Restrictions on loans and advances

20-A. Restrictions on power to remit debts

21. Power of Reserve Bank to control advances by banking companies

21-A. Rates of interest charged by banking companies not to be subject to

scrutiny by courts

22. Licensing of banking companies

23. Restrictions on opening of new, and transfer of existing, places of

business

24. Maintenance of a percentage of assets

25. Assets in India

26. Return of unclaimed deposits

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26-A. Establishment of Depositor Education and Awareness Fund

27. Monthly returns and power to call for other returns and information

28. Power to publish information

29. Accounts and balance sheet

29-A. Power in respect of associate enterprises

30. Audit

31. Submission of returns

32. Copies of balance-sheets and accounts to be sent to registrar

33. Display of audited balance-sheets by companies incorporated outside

India

34. Accounting provisions of this Act not retrospective

34-A. Production of documents of confidential nature

35. Inspection

35-A. Power of the Reserve Bank to give directions

35-AA. Power of Central Government to authorise Reserve Bank for issuing

directions to banking companies to initiate insolvency resolution process

35-AB. Power of Reserve Bank to issue directions in respect of stressed

assets

35-B. Amendments of provisions relating to appointments of managing

directors, etc., to be subject to previous approval of the Reserve Bank

36. Further powers and functions of Reserve Bank

36-A. Certain provisions of the Act not to apply to certain banking

companies

PART II-A

CONTROL OVER MANAGEMENT

36-AA. Power of Reserve Bank to remove managerial and other persons

from office

36-AB. Power of Reserve Bank to appoint additional directors

36-AC. Part II-A to override other laws

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PART II-AB

SUPERSESSION OF BOARD OF DIRECTORS OF BANKING COMPANY

36-ACA. Supersession of Board of Directors in certain cases

PART II-B

PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES

36-AD. Punishments for certain activities in relation to banking companies

PART II-C

ACQUISITION OF THE UNDERTAKINGS OF BANKING COMPANIES IN CERTAIN

CASES

36-AE. Power of Central Government to acquire undertakings of banking

companies in certain cases

36-AF. Power of the Central Government to make scheme

36-AG. Compensation to be given to shareholders of the acquired bank

36-AH. Constitution of the Tribunal

36-AI. Tribunal to have powers of a civil court

36-AJ. Procedure of the Tribunal

PART III

SUSPENSION OF BUSINESS AND WINDING UP OF BANKING COMPANIES

36-B. High Court defined

37. Suspension of business

38. Winding up by High Court

38-A. Court liquidator

39. Reserve Bank to be official liquidator

39-A. Application of Companies Act to liquidators

40. Stay of proceedings

41. Preliminary report by official liquidator

41-A. Notice to preferential claimants and secured and unsecured creditors

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42. Power to dispense with meetings of creditors, etc

43. Booked depositors' credits to be deemed proved

43-A. Preferential payments to depositors

44. Powers of High Court in voluntary winding up

44-A. Procedure for amalgamation of banking companies

44-B. Restriction on compromise or arrangement between banking

company and creditors

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

PART III-A

SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS

45-A. Part III-A to over-ride other laws

45-B. Power of High Court to decide all claims in respect of banking

companies

45-C. Transfer of pending proceedings

45-D. Settlement of list of debtors

45-E. Special provisions to make calls on contributories

45-F. Documents of banking company to be evidence

45-G. Public examination of directors and auditors

45-H. Special provisions for assessing damages against delinquent

directors, etc

45-I. Duty of directors and officers of banking company to assist in the

realisation of property

45-J. Special provisions for punishing offences in relation to banking

companies being wound up

45-K. Power of High Court to enforce schemes of arrangements, etc

[Omitted]

45-L. Public examination of directors and auditors, etc., in respect of a

banking company under schemes of arrangement
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45-M. Special provisions for banking companies working under schemes of

arrangement at the commencement of the Amendment Act

45-N. Appeals

45-O. Special period of limitation

45-P. Reserve Bank to tender advice in winding up proceedings

45-Q. Power to inspect

45-R. Power to call for returns and information

45-S. Chief Presidency Magistrate and District Magistrate to assist official

liquidator in taking charge of property of banking company being wound up

45-T. Enforcement of orders and decisions of High Court

45-U. Power of High Court to make rules

45-V. References to directors, etc., shall be construed as including

references to past directors, etc

45-W. Part II not to apply to banking companies being wound up

45-X. Validation of certain proceedings

PART III-B

PROVISIONS RELATING TO CERTAIN OPERATIONS OF BANKING COMPANIES

45-Y. Power of Central Government to make rules for the preservation of

records

45-Z. Return of paid instruments to customers

45-ZA. Nomination for payment of depositors' money

45-ZB. Notice of claims of other persons regarding deposits not receivable

45-ZC. Nomination for return of articles kept in safe custody with banking
company

45-ZD. Notice of claims of other persons regarding articles not receivable

45-ZE. Release of contents of safety lockers

45-ZF. Notice of claims of other persons regarding safety lockers not

receivable
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PART IV

MISCELLANEOUS

46. Penalties

46-A. Chairman, director, etc., to be public servants for the purposes of

Chapter IX of the Indian Penal Code

47. Cognizance of offences

47-A. Power of Reserve Bank to impose penalty

48. Application of fines

49. Special provisions for private banking companies

49-A. Restriction on acceptance of deposits withdrawable by cheque

49-B. Change of name by a banking company

49-C. Alteration of memorandum of a banking company

50. Certain claims for compensation barred

51. Application of certain provisions to the State Bank of India and other
notified banks

51-A. Powers of Reserve Bank not to apply to International Financial

Services Centre

52. Power of Central Government to make rules

53. Power to exempt in certain cases

54. Protection of action taken under Act

55. Amendment of Act 2 of 1934

55-A. Power to remove difficulties

PART V

APPLICATION OF THE ACT TO CO-OPERATIVE BANKS

56. Act to apply to co-operative societies subject to modifications

THE FIRST SCHEDULE

THE SECOND SCHEDULE

THE THIRD SCHEDULE

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THE FOURTH SCHEDULE

THE FIFTH SCHEDULE

———

Banking Regulation Act, 1949

[Act 10 of 1949 as amended up to Act 17 of 2021 and [10th March,
Noti. No. S.O. 942(E), dated 28-2-2024] 1949]
2
An Act to consolidate and amend the law relating to banking [* * *]
Whereas it is expedient to consolidate and amend the law relating to banking
3
[* * *];
It is hereby enacted as follows:
Statement of Objects and Reasons.—“The provisions of law relating to
banking companies at present form a subsidiary portion of the general law
applicable to companies and are contained in Part XA of the Indian Companies
Act, 1913. These provisions, which were first introduced in 1936, and which
have undergone two subsequent modifications, have proved inadequate and
difficult to administer. Moreover while the primary objective of Companies Law is
to safeguard the interests of the stock-holder, that of banking legislation should
be the protection of the interests of the depositor. It has therefore been felt for
some time that separate legislation was necessary for the regulation of banking
in India. This need has become the more insistent on account of the
considerable development that has taken place in recent years in banking,
especially the rapid growth of banking resources and of the number of banks and
branches. Regard must also be had to the fact that the banking system is likely
in the post-war period to be more vulnerable by reason of the great expansion,
both quantitatively and relatively, that has taken place in demand deposits, as
compared with time deposits, during the war years. The enactment of a separate
comprehensive measure has in consequence now become imperative.
2. With this object in view, a Bill to amend the law relating to Banking
Companies was introduced in the Legislative Assembly in November, 1944, and
was subsequently circulated for eliciting public opinion through the Provincial
Governments. In the ensuing Budget Session of the Assembly the Bill was
referred to a Select Committee which was due to meet in October, 1945, but it
lapsed before its consideration by the Committee. A fresh Bill with certain
modifications which suggested themselves on consideration of the opinions and
criticisms received on the 1944 Bill was introduced in the Legislative Assembly
in March 1946 and was referred to a Select Committee in April 1946. The report
of the Select Committee was presented to the Assembly on the 17th February,
1947. As it was the original intention of the Government that the Bill should be
taken up for disposal by the Constituent Assembly (Legislative) in the form in
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which it emerged from the Select Committee and that the changes necessitated
in the Bill as a result of the passing of the Indian Independence Act, 1947, and
other developments should be moved in the House as separate amendments, a
motion for the continuation of that Bill was adopted on the 17th November,
1947. In view however of a fairly large number of amendments, Government
considered that the passage of the measure would be facilitated if the Bill as
reported upon by the Select Committee were withdrawn and a fresh Bill
incorporating all the amendments were introduced and referred to a Select
Committee. The Bill was accordingly withdrawn on the 30th January, 1948. The
present Bill is the result of long and detailed consideration, by expert
Committees, the Reserve Bank, the public including the representatives of
banks, the Government and the Legislature. The main features of the Bill are as
follows—
(i) A comprehensive definition of ‘banking’ so as to bring within the scope of
the legislation all institutions which receive deposits, repayable on demand
or otherwise, for lending or investment:
(ii) Prohibiting non-banking companies from accepting deposits repayable on
demand;
(iii) Prohibition of trading with a view to eliminating non-banking risks;
(iv) Prescription of minimum capital standards;
(v) Limiting the payment of dividends;
(vi) Inclusion in the scope of the legislation of banks incorporated or
registered outside the Provinces of India;
(vii) Introduction of a comprehensive system of licensing of banks and their
branches;
(viii) Prescription of a special form of balance sheet and conferring of powers
on the Reserve Bank to call for periodical returns;
(ix) Inspection of the books and accounts of a bank by the Reserve Bank;
(x) Empowering the Central Government to take action against banks
conducting their affairs in a manner detrimental to the interests of the
depositors;
(xi) Provision for bringing the Reserve Bank of India into closer touch with
banking companies;
(xii) Provision of an expeditious procedure for liquidation;
(xiii) Bringing the Imperial Bank of India, within the purview of some of the
provisions of the Bill;
(xiv) Widening the powers of the Reserve Bank of India so as to enable it to
come to the aid of banking companies in times of emergency;
(xv) Provision for the extension of the Act to acceding States.
Brief explanatory notes on the several clauses are given in the annexed notes
on clauses.”
Statement of Objects and Reasons of Amendment Act 20 of 1950.—The
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Banking Companies (Amendment) Ordinance, 1949, was promulgated on 19-9-

1949. This Act now incorporates the provisions contained therein in the Banking
Companies Act, 1949 as a permanent basis. In addition, this Act also amends
the said Act for the following purposes—
(a) to incorporate special provisions for facilitating quick amalgamations
between banking companies;
(b) to empower the Reserve Bank to control opening of branches by Indian
banks in foreign countries;
(c) to provide a meaning of the terms “assets in India” for the purpose of
Section 25.
Statement of Objects and Reasons of Amendment Act 52 of 1953.—The
Banking Companies Act, 1949 (X of 1949), was passed to ensure proper
administration of the banking companies in India. The liquidation of banks,
however, continued to be governed by the provisions of the Indian Companies
Act, 1913.
Experience of the liquidation of a large number of banks that failed during the
post-war and post-partition period disclosed that the procedure for the
liquidation of joint stock companies was totally inadequate for the liquidation of
banking companies in a manner satisfactory to the depositors. A bank has a far
larger number of debtors than a joint stock company of a comparable size, and
the necessity to pursue legal proceedings against each debtor, quite frequently
in different courts, involves considerable expenditure and immense delay. In
order to remove such difficulties, the Banking Companies Act was amended in
1950.
The law thus amended, however, did not go far enough and complaints
continued to be received about the distress of the depositors. A committee was,
therefore, appointed in July, 1950, to examine the difficulties and defects in the
existing liquidation procedure and to recommend changes in law, procedure and
machinery, in order to facilitate the speedy disposal of proceedings in
liquidation. The Committee submitted its report in December, 1952 and the
report disclosed that 321 banks were under liquidation under the various courts
dating from 1926, with outside liabilities of about Rs 30 crores and that the
procedure for winding up of banking companies is cumbersome, prolonged and
expensive. The Committee has recommended certain administrative as well as
legislative measure for simplifying the procedure and expediting the
proceedings. The Reserve Bank, the State Governments and the various High
Courts were consulted on the recommendations of the Committee and the
present Bill is based on the recommendations of the Committee and the
suggestions of the authorities consulted.
2. The recommendations of the Committee requiring administrative action are
being implemented. It was the intention of the Government to give effect to the
recommendations requiring legislation simultaneously, but on account of the pre
-occupation of Parliament with other urgent legislative measures during the last
session, it was not found possible to have the Bill enacted during that session.
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Meanwhile, certain data recently collected about 82 banks in liquidation in West

Bengal showed that while the expenses of liquidation amounted to Rs 39-81
lakhs, the moneys returned to the depositors totalled to only Rs 17.64 lakhs of
which Rs 15.61 lakhs were paid by one single bank. The publication of the
Committee's report has evoked hopes in the minds of a large number of
distressed depositors that implementation would soon follow and numerous
requests were being received urging immediate action. It was also not possible
to implement some of the administrative measures without an amendment of
the Act. As the circumstances required immediate action, an Ordinance was
promulgated on the 24th October, 1953. The Banking Companies (Amendment)
Ordinance, 1953 (4 of 1953).
3. The present Bill seeks to replace the Ordinance by an Act of Parliament and
the notes on clauses appended to the Bill explain the provisions thereof.
Statement of Objects and Reasons of Amendment Act 95 of 1956.—
Experience has shown that the existing provisions in the Banking Companies
Act, 1949, are not adequate to prevent certain undesirable tendencies in the
administration of banking companies which might affect the soundness of the
companies or not be in the public interest or in the interests of the depositors.
The present Bill, therefore, seeks to amend the Act so as to tighten up control
over banking companies in the following directions:
(i) to check the payment of excessive remuneration to bank employees on a
consideration of all relevant factors;
(ii) to make the existing restrictions on exercise of voting rights in the hands
of individual shareholders applicable to banks which are now exempt from
such restrictions, namely, those established before the 15th January, 1937
and to empower the Reserve Bank to direct the election of fresh directors
on the basis of the restricted voting rights;
(iii) to prohibit appointment as director of one who is director of other
companies which together can exercise voting rights in excess of 20 per
cent of voting rights in a banking company;
(iv) to enable the Reserve Bank to obtain statements and information over a
wider range than hitherto for the performance of the functions under the
Act;
(v) to enable the Reserve Bank to give directions to banking companies in
relation to matters of policy or administration affecting the public interest,
and to make failure to observe such directions liable to specified penalties;
(vi) to render appointments of managing directors, managers or the chief
executive officers by whatever name called of banking companies and the
terms of their appointments subject to the prior approval of the Reserve
Bank;
(vii) to enable the Reserve Bank to depute an observer or observers for
purpose of observing and reporting on the conduct of affairs of a banking
company;
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(viii) to include the chairman, director, auditor, liquidator and other

employees of banking companies within the definition of “public servants”
for the purpose of Chapter IX of the Indian Penal Code and the Prevention
of Corruption Act, 1947, so that action can be taken in cases where illegal
gratifications are taken by them.
2. Opportunity has also been taken in this Bill to clarify—
(a) that the payment of bonus to bank employees does not amount to
employment on the basis of a commission or a share of profits which is
prohibited under clause (b) of sub-section (1) of Section 10 of the Banking
Companies Act; and
(b) that restrictions imposed by clause (c) of sub-section (1) of Section 10 of
the Banking Companies Act on persons appointed to manage banking
companies are not applicable to directors other than managing directors.
3. The Bill also provides for references contained in the Banking Companies
Act to the Indian Companies Act, 1913, being substituted by references to the
relevant sections of the Companies Act, 1956.
Statement of Objects and Reasons of Amendment Act 33 of 1959.—The
Banking Companies Act, 1949, came into force on the 16th March, 1949, and
although it was amended in December, 1956, with a view to extending the
powers of supervision and control exercisable by the Reserve Bank, the question
of further amending the Act, in order to remove minor omissions or ambiguities
in the meaning of certain sections was left over for consideration at a later stage.
It is now proposed, in the light of the experience gained in regard to the
administration of the Act, to introduce some amendments, mostly of a non-
controversial nature, in order to facilitate the application and enforcement of the
Act. Opportunity has also been taken to clarify the position regarding the
application of the Act to banking companies which have been prohibited from
accepting fresh deposits and are in consequence not functioning normally.
Statement of Objects and Reasons of Amendment Act 23 of 1960.—The
interpretation of the provisions of the Banking Companies Act, 1949, relating to
certain special reserves maintained by banks has not been quite clear and the
question of clarifying the intention has been under consideration for some time.
2. As credit institutions dealing primarily with depositors' monies, banks have
to make certain special provisions against emergencies or unforeseen
contingencies as a matter of financial prudence. The legal position in the United
Kingdom and certain other countries is that banks have been specifically
exempted by law from disclosing information relating to these provisions. In
India the form of the balance sheet and the profit and loss account prescribed
for banks by the Banking Companies Act ensures that such provisions need not
be disclosed. But a doubt has been felt whether notwithstanding this, any
Tribunal or other authority could compel banking companies to disclose
information relating to these reserves and provisions. As such reserves and
provisions are for emergencies and unforeseen contingencies, it is not in the
public interest or in the interests of the banking system of the country to
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disclose these particulars. It is accordingly proposed to insert a new section in

the Banking Companies Act to make it clear that information, which according to
the law is not required to be published in the balance sheet or profit and loss
accounts of a banking company, need not be disclosed to the various authorities
under the Industrial Disputes Act. Although the secrecy of the special or inner
reserves is thus proposed to be maintained, the various authorities constituted
under the Industrial Disputes Act are being specifically empowered to call for
reports from the Reserve Bank of India, as an expert authority, regarding the
amount of such reserves which may be taken into account for the purposes of
the proceedings under that Act.
Statement of Objects and Reasons of Amendment Act 37 of 1960.—The
procedure now prescribed under the Banking Companies Act, 1949, read with
the Companies Act, 1956, for the liquidation of banking companies is somewhat
elaborate, and in the absence of any provisions in the law indicating the time-
schedule according to which certain payments may be made to the depositors, a
great deal of hardship is caused to such depositors, who have to wait for
considerably long periods for realising the sums due to them. It is proposed, in
order to facilitate the expeditious payment of certain minimum amounts in such
cases, that the procedure relating to the liquidation of banking companies
should be suitably modified.
2. Section 43-A of the Banking Companies Act now provides for the payment
of a sum of Rs 100 in the case of each savings bank depositor as a preferential
claim from out of the assets which are available for distribution among the
creditors of a banking company generally. In view of the rise in prices since the
relevant provision was first incorporated in the Act, it is considered desirable
that this minimum payment should be increased to Rs 250. It is also proposed
that after this payment has been made, the depositors other than those with
savings bank accounts should be paid an amount equal to fifty per cent of their
deposits or Rs 250 whichever may be less, as a further preferential payment.
3. The opportunity provided by these amendments has also been utilised to
simplify the provisions of the law relating to the grant of moratorium in respect
of banking companies which may be experiencing difficulties and to facilitate the
formulation and implementation of schemes of reconstruction or amalgamation
in respect of such companies.
Statement of Objects and Reasons of Amendment Act 7 of 1961.—The
Banking Companies Act, 1949, was amended in 1960 in order to facilitate the
grant of expeditious relief in the case of banking companies which may be taken
into liquidation and the reconstruction or amalgamation of other banking
companies, wherever this may be considered necessary or desirable.
The question of transferring the assets and liabilities of certain banking
companies to other institutions, which may be in a better position to serve the
interests of the depositors, has since been under consideration, but certain
practical difficulties have been encountered in bringing into force or
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implementing the schemes which have been formulated for this purpose. In
order to eliminate these difficulties and to clarify the legal position beyond any
doubt, the Banking Companies (Amendment) Ordinance was issued early in
February, 1961, substantially amplifying the provisions of Section 45 of the
Banking Companies Act.
The present Bill is intended to replace the Ordinance.
Statement of Objects and Reasons of Amendment Act 36 of 1962.—The
provisions in the Banking Companies Act relating to the minimum paid-up
capital and reserves of the commercial banks and the amounts which such banks
are required to maintain in the form of cash or bank balances or in the form of
liquid assets which can be readily utilised for meeting any current obligations
are somewhat out of date. In view of the changes which have taken place since
March, 1949, when the provisions relating to the minimum paid-up capital were
brought into force, and the very great increase in the deposits and working
funds of the commercial banking system in recent years, it is considered
desirable that the paid-up capital and reserves, the cash and bank balances, and
the overall liquid assets of the commercial banks should be increased. The Bill
seeks to amend the relevant provisions of the Act in a suitable manner for these
purposes and is intended to strengthen the financial position of the commercial
banks generally and to increase the protection which is available to the
depositors.
The opportunity provided by the amendment of the Act for these purposes
has also been utilised to make a few clarificatory changes in some of the other
provisions of the Act.
The scope and object of the amendments proposed are explained in detail in
the notes on the various clauses of the Bill.
Statement of Objects and Reasons of Amendment Act 30 of 2017.—
Stressed assets in the banking system, or non-performing assets have reached
unacceptably high levels and hence, urgent measures are required for their
speedy resolution to improve the financial health of banking companies for
proper economic growth of the country. Therefore, it was considered necessary
to make provisions in the Banking Regulation Act, 1949, for authorising the
Reserve Bank of India to issue directions to any banking company or banking
companies to effectively use the provisions of the Insolvency and Bankruptcy
Code, 2016, for timely resolution of stressed assets.
2. It was accordingly decided to make amendments to the Banking
Regulation Act, 1949. Since Parliament was not in session and immediate action
was required to be taken, the Banking Regulation (Amendment) Ordinance,
2017, was promulgated by the President on the 4th May, 2017.
3. The Banking Regulation (Amendment) Bill, 2017, which seeks to replace
the Banking Regulation (Amendment) Ordinance, 2017, provides for the
following, namely—
(a) to confer power upon the Central Government for authorising the Reserve
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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;
(b) to confer power upon the Reserve Bank to issue directions to banking
companies for resolution of stressed assets and also allow the Reserve
Bank to specify one or more authorities or committees to advise banking
companies on resolution of stressed assets; and
(c) to amend Section 51 of the Act so as to make therein the reference of
proposed new Sections 35-AA and 35-AB.
4. The Bill seeks to replace the said Ordinance.
Statement of Objects and Reasons of Amendment Act 39 of 2020.—The
Banking Regulation Act, 1949 was enacted to consolidate and amend the law
relating to banking. Section 3 of the said Act provides that the Act shall not
apply to certain co-operative societies, except in the manner and to the extent
specified therein. Section 45 empowers the Reserve Bank of India for suspension
of business by a banking company and to prepare a scheme of reconstruction or
amalgamation during the order of moratorium. Part V thereof provides for the
application of the Banking Regulation Act, 1949 to co-operative banks, subject
to certain modifications specified in Section 56.
2. Certain amendments were considered necessary in the said Act to provide
for better management and proper regulation of co-operative banks and to
ensure that the affairs of the co-operative banks are conducted in a manner that
protects the interests of the depositors, by increasing professionalism, enabling
access to capital, improving governance and ensuring sound banking through
the Reserve Bank of India. Accordingly, the Banking Regulation (Amendment)
Bill, 2020 was introduced in Lok Sabha on the 3rd March, 2020, but the same
could not be passed.
3. Further amendments were proposed to be made in Section 45 of the Act to
enable the Reserve Bank of India to make a scheme to protect the interests of
the public, the banking system, depositors or to secure the banking company's
proper management, without first making an order of moratorium so as to avoid
disruptions in the financial system.
4. As the economic situation arising from the COVID-19 pandemic had
increased the stress in both co-operative banks and banking companies, there
was an immediate need for legislation in this regard. As Parliament was not in
session, the Banking Regulation (Amendment) Ordinance, 2020 was
promulgated by the President of India on the 26th day of June, 2020 under
clause (1) of Article 123 of the Constitution.
5. The Banking Regulation (Amendment) Bill, 2020 which seeks to replace
the Banking Regulation (Amendment) Ordinance, 2020 (Ord. 12 of 2020)
provides for the following, namely:—
(i) substitution of Section 3 to provide that the Act shall not apply to—
(a) a primary agricultural credit society; or
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(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;
(ii) amendment of Section 45 to address the potential disruptions in the
financial system by providing for the Reserve Bank of India to prepare a
scheme for the reconstruction or amalgamation of the banking company
without the necessity of first making an order of moratorium;
(iii) amendment of Section 56 to provide that notwithstanding anything
contained in any other law for the time being in force, the provisions of the
Act shall apply to co-operative societies, subject to the modifications
specified therein.
6. The Bill seeks to replace the aforesaid Ordinance.
Part I
PRELIMINARY
1. Short title, extent and commencement.—(1) This Act may be called the
Banking 4[Regulation] Act, 1949.
5
[(2) It extends to the whole of India 6[* * *].]
(3) It shall come into force on such date7 as the Central Government may, by
notification in the Official Gazette, appoint in this behalf.
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
8
[Companies Act, 1956], and any other law for the time being in force.
► Interpretation/Construction. — Expression “any other law” in Section 2 includes
Section 45 and its sub-sections, Indian Bank v. K. Usha, (1998) 2 SCC 663.
► Section 71 of Gujarat Co-operative Societies Act, 1961.—Section 71 of the Gujarat
Act is not in derogation of any other law but is in addition to it, so where a Central co-
operative bank seeking to invest money stating that there was inconsistency between the
State and Central Act, it was not bound by the restrictions imposed by the State enactment,
Mehsana Distt. Central Coop. Bank Ltd. v. State of Gujarat, (2004) 2 SCC 463.
► RBI guidelines expanding scope of “banking business”.—Scope of “banking
business” is not limited to core banking of accepting deposits and lending. The 1949 Act
leaves ample scope for banking companies to undertake such additional businesses as are
not violative of prohibitive and restrictive statutory provisions like those contained in Sections
8 and 9. RBI can formulate policy enabling banking companies to engage in such additional
activities, and in the process it can define what constitutes “banking business”, ICICI Bank
Ltd. v. APS Star Industries Ltd., (2010) 10 SCC 1.
9
[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—
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(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
10
table of [Parliament] as soon as may be after it is issued.
11
5. Interpretation.— [In this Act], unless there is anything repugnant in the
subject or context,—
12
[(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
13
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;
14
[(ca) “banking policy” means any policy which is specified from time to
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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;]
15
[(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;]
16
[(d) “company” means any company as defined in Section 3 of the
Companies Act, 1956; and includes a foreign company within the
meaning of Section 591 of that Act;]
17
[(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);]
(e) [* * *]18
(f) “demand liabilities” means liabilities which must be met on demand,
and “times liabilities” means liabilities which are not demand liabilities;
19
[(ff) “Deposit Insurance Corporation” means the Deposit Insurance
Corporation established under Section 3 of the Deposit Insurance
Corporation Act, 1961;]
20 21
[(ffa) [* * *]
(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);]
22
[(ffc) “Reconstruction Bank” means the Industrial Reconstruction Bank of
India established under Section 3 of the Industrial Reconstruction Bank
of India Act, 1984;]
23
[(ffd) “National Housing Bank” means the National Housing Bank
established under Section 3 of the National Housing Bank Act, 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;
24
[(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
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such company,
(iii) where the managing agent is a firm, any partner of such firm;]
25
[(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:]
26
[Provided that the managing director shall exercise his powers subject
to the superintendence, control and direction of the Board of directors;]
27
[(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 (61 of 1981);]
28
[(hb) “National Bank for Financing Infrastructure and Development”
means the Institution established under Section 3 of the National Bank
for Financing Infrastructure and Development Act, 2021;
(hc) “other development financial institution” means a development
financial institution licensed under Section 29 of the National Bank for
Financing Infrastructure and Development Act, 2021;]
29
(i) [* * *]
(j) “prescribed” means prescribed by rules made under this Act;
30
[(ja) “regional rural bank” means a regional rural bank established under
Section 3 of the Regional Rural Banks Act, 1976 (21 of 1976);]
31
(k) [* * *]
32
[(l) “Reserve Bank” means the Reserve Bank of India constituted under
Section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);]
33
(m) [* * *]
(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;
34
[(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;]
35
[(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
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Official Gazette, specify in this behalf, having regard to the trends in

industrial development and other relevant factors;]
36
[(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);]
37
[(nd)] “subsidiary bank” has the meaning assigned to it in the State
Bank of India (Subsidiary Banks) Act, 1959;
38
[(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;]
39
[(o) all other words and expressions used herein but not defined and
defined in the Companies Act, 1956, shall have the meanings
respectively assigned to them in that Act.]
40
[* * *]
► “Banking company”.—Effect of Section 56(a) on definition of “banking company” in
Section 5(c), is that cooperative banks became integral part of definition of “banking
company”, Pandurang Ganpati Chaugule v. Vishwasrao Patill Murgud Sahakari Bank Ltd.,
(2020) 9 SCC 215.
► ‘Banking company’ — Essential ingredient.—In order that a bank may be a
banking company, it is in the first place necessary that it must be a “company”. The State
Bank of Travancore, is not a “company” property so called. It is a subsidiary bank which falls
within the definition of Section 2(k) of the State Bank of India (Subsidiary Banks) Act, 1959,
State Bank of Travancore v. Mohd. M. Khan, (1981) 4 SCC 82.
41
[5-A. 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; and
(b) any provision contained in the memorandum, articles, agreement or
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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, scripts 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, scripts or other forms of securities on behalf of constituents or
others, the negotiating of loans and advances; the receiving of all kinds
of bonds, scripts or valuables on deposits 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,
42
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 and 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
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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 of 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).
► Purchase and sale of securities.—Purchase and sale of securities is a part of
banking transactions, Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1 : (2009) 3 SCC (Cri)
646.
► Cooperative bank.—Section 6 recognises distinction between business of banking
and entity that performs banking functions. Sections 6(1) and (2) enable such entity to
perform certain additional business functions. Cooperative bank falling within definition of
Section 5(c), performs banking activity and in addition it may engage in any of the
businesses as enumerated in Section 6, Pandurang Ganpati Chaugule v. Vishwasrao Patill
Murgud Sahakari Bank Ltd., (2020) 9 SCC 215.
43
[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 44[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
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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 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.]
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:
45
[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 purpose of this section, “goods” means every kind of
moveable 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 interests of the depositors of the
banking company.
46
[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
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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:
47
[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—
48
[(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:
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
49
(iii) [whose term of office as a person managing the company is] for a
period exceeding five years at any one time:
50
[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, whichever is later:]
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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 a 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.
51 52
[ [* * *]
53
(4) [* * *]
54
(5) [* * *]
(6) Any decision or order of the Reserve Bank made under this section shall
be final for all purposes].
► Profit Sharing.—The profit bonus is a share in the profit of the company; it is a
labour's share of contribution which it has made in the earning of the profits, Central Bank of
India v. Workmen, 1959 SCC OnLine SC 1 : AIR 1960 SC 12 : (1960) 1 SCR 200.
► Effect of amendment.—Section 10 [as amended by Banking Companies
(Amendment) Act, 1956 (95 of 1956)] does not have retrospective effect. Expression “shall
employ a person” includes ‘shall have in employment’, Central Bank of India v. Workmen,
1959 SCC OnLine SC 1 : AIR 1960 SC 12 : (1960) 1 SCR 200.
55
[10-A. 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, 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.
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(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, 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.
56
[(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 wholetime 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.]
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(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 such
banking company and with a view to complying with the provisions 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.
10-B. Banking company to be managed by whole-time chairman.—57[(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, 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
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superintendence, control and direction of the Board of directors.

(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.]
58
(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.
(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.
59
(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 60[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 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.
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61
(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
62
addressed to the company, resign his office [* * *].
63
[(5-A) 64[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 65
[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
66
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 67[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
68
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 69
[chairman of the Board of the directors who is appointed on a whole-time basis
70
or the managing director] of such banking company and any person elected or
[appointed as chairman 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
71
may, if in its opinion it is necessary in the public interest so to do, permit [the
chairman of the Board of the directors who is appointed on a whole-time basis or
the managing director] to undertake such part-time honorary work as is not
72
likely to interfere with his duties as [such chairman or managing director].
73
(9) Notwithstanding anything contained in this section, where a person
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[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
74
carrying out the [duties of chairman or managing director] for a total period
not exceeding four months.
75
[10-BB. Power of Reserve Bank to appoint 76[chairman of the Board of
directors appointed on a whole-time basis or a managing director] of a banking
77
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 78[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
79
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.
80
(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.
81
(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
82
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 83[chairman of the Board
of directors appointed on a whole-time basis or a managing director] appointed
by the banking company.]
84
[10-C. Chairman and certain directors not to be required to hold
85
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.]
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86
[10-D. Provisions of Sections 10-A and 10-B to override all other laws,
87
contracts, etc.—Any appointment or removal of a [director, chairman of the
Board of directors who is appointed on a whole-time basis or managing director]
in pursuance of Section 10-A or Section 10-B 88[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)
89
Notwithstanding anything contained in [Section 149 of the Companies Act,
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
90
allow, carry on business [in India], and no other banking company shall, after
the commencement of this Act, commence or carry on business 91[unless it
complies with such of the requirements of this section as are applicable to it].
92
[(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) 93[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 94[* * *] 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.]
95
[(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
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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:
96
[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 place 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 97[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.
98
(4) Any amount deposited and kept deposited with the Reserve Bank under
99
[* * *] sub-section (2) by any banking company incorporated [outside India]
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shall, in the event of the company ceasing for any reason to carry on banking
100
business [in India], be an asset of the company on which the claims of all the
101
creditors of the company [in India] shall be a first charge.
102
[(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.
103
[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;
104
[(ii) that, notwithstanding anything contained in the Companies Act,
1956 (1 of 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 (1 of 1956);]
105
[* * *]
(2) No person holding shares in a banking company shall, in respect of any
shares held by him, exercise voting rights 106[on poll] 107[in excess of 108[ten
per cent]] of the total voting rights of all the shareholders of the banking
company.
109
[Provided that the Reserve Bank may increase, in a phased manner, such
ceiling on voting rights from ten per cent to twenty-six per cent.]
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(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 shares 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.]
110
[12-A. Election of new directors.—(1) 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
right 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.]
111
[12-B. 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,—
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(a) “associate enterprise” means a company, whether incorporated or not,

which,—
(i) is a holding company or a subsidiary company of the applicant;
(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) exercise, 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 (1 of 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
co-operate 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
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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 (1) 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 112[Sections 76 and 79 of
the Companies Act, 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
113
aggregate two and one-half per cent, of the [price at which the said shares
are issued].
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114
[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.
115
[14-A. 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.]
116
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.
117
[(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.]
118
[16. Prohibition of common directors.—119[(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
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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 right 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.]
120
[(3) Nothing in sub-section (1) shall apply to, or in relation to, any director
appointed by the Reserve Bank.]
121
[17. Reserve Fund.—(1) Every banking company incorporated in India shall
122
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.
123
[(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 reserve 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.
► Statutory reserve fund.—Banks do not require prior approval of RBI for making an
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appropriation, though there is a statutory obligation on banks to report any appropriation to

RBI within the specified period, Salim Akbarali Nanji v. Union of India, (2006) 5 SCC 302.
124
[18. Cash reserve.—(1) Every banking company, not being a scheduled
125
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
126
equivalent to [such per cent] of the total of its demand and time liabilities in
127
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;
128
(ii) any advance taken from the Reserve Bank [* * *] or from the
129 130
Exim Bank [or from the Reconstruction Bank], [or from the
131
National Housing Bank] or from the National Bank [, or from the
132
Small Industries Bank] [or from the National Bank for Financing
Infrastructure and Development or from the other development
financial institution] 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
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banking company;
(e) the expression “co-operative bank” shall have the meaning assigned to
it in clause (cci) of Section 56.
133
[(1-A) If the balance held by such banking company at the close of
business on any days 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.
(1-B) 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.
(1-C) 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.]]
134
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.]
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(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 therefore 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.
135
[(2-A) Notwithstanding anything contained in sub-section (2), the limits
mentioned therein shall not apply to an International Financial Services Centres
Banking Unit of a Foreign Bank—
(a) for a transaction entered in the ordinary course of business in respect
of a company where the shareholding is held by way of security,
whether as a pledge, mortgage or by any other similar mode; or
(b) if the shareholding or interest acquired or held in the course of
satisfaction of debts due to it, is disposed of at the earliest but not later
than five years:
Provided that the period of five years referred to in clause (b) may be
extended by the International Financial Services Centres Authority, for
reasons to be recorded in writing.
Explanation.— For the purposes of this sub-section and sub-section (1)
of Section 20,—
(i) “International Financial Services Centres Banking Unit” means a
financial institution defined under clause (c) of sub-section (1) of
Section 3 of the International Financial Services Centres Authority
Act, 2019 (50 of 2019);
(ii) “Foreign Bank” shall have the same meaning as assigned to it in
clause (d) of sub-regulation (1) of Regulation 2 of the International
Financial Services Centres Authority (Banking) Regulations, 2020.]
(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.
136
[(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).]
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137
[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
138
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:
139
[Provided that the restrictions mentioned in sub-section (1) shall not apply
to loans and advances made by an International Financial Services Centres
Banking Unit of a Foreign Bank.]
(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.
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(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 the
section;
(b) “director” includes 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.]
140
[20-A. Restrictions on power to remit debts.—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 141[or in the interests of depositors] 142[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
143
companies in particular [as to—
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(a) the purposes for which advance 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].
144
[(3) Every banking company shall be bound to comply with any directions
given to it under this section.]
► Nature and effect of RBI Circulars.—Nature of Reserve Bank of India circulars
issued under Sections 21 and 35 is statutory, Canara Bank v. P.R.N. Upadhyaya, (1998) 6
SCC 526.
The circular laying down instructions relating to rediscounting of bills of exchange, are
referable to Section 21, and therefore binding on bank officials of a nationalised bank,
Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1 : (2009) 3 SCC (Cri) 646.
Circular marked ‘confidential’ containing directions issued by RBI to banking companies
would not bind third parties, BOI Finance Ltd. v. Custodian, (1997) 10 SCC 488.
► Distinction between commercial loans and agricultural loans.—In case of
commercial loans, interest with quarterly rest is permissible, but in case of agricultural
loans/advances interest can be fixed with annual rests coinciding with the time when the
farmer can repay and if thereafter the farmer fails to pay the interest it would be open to
compound the interest on the crop loan and instalments upon the term loan becoming
overdue, Corporation Bank v. D.S. Gowda, (1994) 5 SCC 213.
► Binding effect of guidelines issued by RBI.—RBI is empowered to control advances
under Section 21 and to issue directions in the interest of banking policy under Section 35-
A. For attaining this purpose, held, RBI is entitled to issue guidelines from time to time, such
as OSS. Such guidelines, further held, are bound to be followed by banks under Section 21
(3), Sardar Associates v. Punjab & Sind Bank, (2009) 8 SCC 257 : (2009) 3 SCC (Civ)
350.
145
[21-A. 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
reopened by any Court on the ground that the rate of interest charged by the
banking company in respect of such transaction is excessive.]
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► Constitutional validity.—Section 21-A is not unconstitutional and was validly

enacted. Entry 45 of List I of the Seventh Schedule of the Constitution of India clearly
empowers Parliament to legislate with regard to banking, State Bank of India v. Yasangi
Venkateswara Rao, (1999) 2 SCC 375. See also Jayant Verma v. Union of India, (2018) 4
SCC 743.
► Applicability.—Insofar as Section 21-A incidentally encroaches upon the field of relief
of agricultural indebtedness, set out in List II Entry 30, it will not operate only in States where
there is a State Debt Relief Act which deals with the subject-matter of relief of agricultural
indebtedness, where the State Debt Relief Act covers debts due to “banks”, as defined in
those Acts. In States where the State Debt Relief Act does not apply to banks at all, or
applies only to certain specified banks, Section 21-A will, in the former situation, apply in
such States, and, in the latter situation, apply only in respect of loans made to agriculturists
where such loans are given by banks other than the banks specified or covered by the State
Debts Relief Act concerned, as the case may be, Jayant Verma v. Union of India, (2018) 4
SCC 743.
Where rate of interest with periodical rest fixed by bank in disregard of the
circulars/directions issued by Reserve Bank under Sections 21/35, Section 21-A is not
attracted and court could reopen the transaction between the bank and the borrower and
grant suitable relief, Corporation Bank v. D.S. Gowda, (1994) 5 SCC 213.
► Non obstante clause.—Non obstante clause in Section 21-A does not override Order
34 Rule 11 CPC, N.M. Veerappa v. Canara Bank, (1998) 2 SCC 317.

22. Licensing of banking companies.—146[(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 147[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
148
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
149
that [* * *] the following conditions are fulfilled namely:—
150
[(a) that the company is or will be in a position to pay its present or
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future depositors in full as their claims accrue;]

151
[(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;]
152
[(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.]
153
[(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.]
154
[(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
155
(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
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it may specify, an opportunity of taking the necessary steps for complying with
or fulfilling such condition.
156
[(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.]
► Scheme of amalgamation.—Scheme of amalgamation with respect to Bank carrying
on business by virtue of Section 22(2) proviso framed under Section 45(7), is valid, Rahuta
Union Coop. Bank Ltd. v. Union of India, (2004) 3 SCC 636.
► Eligibility of Cooperative Societies.—A co-operative society which is not a State co-
operative bank or a central co-operative bank or a primary co-operative bank as defined in
the said Act, is not eligible for licence, Apex Co-operative Bank of Urban Bank of
Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Bank Ltd., (2003) 11 SCC 66.
157
[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
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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.
158
[(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.]
► Liability of RBI.—Relationship of RBI with depositors of banks is not such as to
enable the depositors to claim damages against RBI for its negligence in issuing to a
financially weak bank, a licence to open a new branch, Pramod Malhotra v. Union of India,
(2004) 3 SCC 415.
159
24. Maintenance of a percentage of assets.—(1) [* * *]
160
(2) [* * *]
161
[(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.]
162
(2-B) [* * *]
163
[(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
164
close of business on that day falls below the minimum prescribed by or under
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[* * *] 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 or 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 percent 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
165
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
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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 166[* * *] 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).]
167
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.]
168
[(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:]
169
[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,—
170
[(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;]
171
[(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;]
172
[(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
173
year of all accounts [in India] which have not been operated upon for ten
174
years [* * *]:
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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:
175
[Provided further that every regional rural bank shall also furnish a copy of
the said return to the National Bank.]
176
[26-A. Establishment of Depositor Education and Awareness Fund.—(1)
The Reserve Bank shall establish a Fund to be called the “Depositor Education
and Awareness Fund” (hereafter in this section referred to as the “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
sub-section (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 sub
-section (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 177[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, at the close of business on the preceding
working day.
178
[(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
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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
179
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].]
180
[(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.]
► Information received from banks by RBI.—Information received from banks by RBI
relating to financial health and probity in banking and financial system of the country, such
as details of unpaid loans by industrialists, names of top defaulters, investigation and audit
reports re banks, advisories issued to foreign branches of Indian banks, etc. cannot be
withheld on ground of economic interest of country, commercial confidence and public
interest, RBI v. Jayantilal N. Mistry, (2016) 3 SCC 525 : (2016) 2 SCC (Civ) 382.
181
[28. Power to publish information.—The Reserve Bank or the National
182
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
183
[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
184
this behalf,] every banking company incorporated [in India], in respect of all
185
business transacted by it, and every banking company incorporated [outside
186
India], in respect of all business transacted through its branches [in India],
187
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 [the 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:
188
[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.]
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(2) The balance-sheet and profit and loss account shall be signed—
(a) in the case of a banking company incorporated 189[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
190
(b) in the case of a banking company incorporated [outside India] by
191
the manager or agent of the principal office of the company [in
India].
(3) Notwithstanding that the balance-sheet of a banking company is under
sub-section (1) required to be prepared in a form other than the form 192[set out
in Part I of Schedule VI to the Companies Act, 1956 (1 of 1956)], the
requirements of that Act relating to the balance-sheet and profit and loss
account of a company shall, in so far 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.
193
[(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.]
194
[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 Forms set out in the Third Schedule.
195
[29-A. Power in respect of associate enterprises.—(1) 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 (1 of 1956), the Reserve Bank may, at any time, cause an inspection to be
made of 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
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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.—196[(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.]
197
[(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, reappointing 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 interests of the
banking company or its necessary in the public interest or in the interests of the
198
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.
199
(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,
200
auditors of companies by [Section 227 of the Companies Act, 1956 (1 of
201
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
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202
incorporated [in India], state in his report,—
(a) whether or not the information and explanations 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;
203
(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:
204
[Provided further that a regional rural bank shall furnish returns also to the
National Bank.]
32. Copies of balance-sheets and accounts to be sent to registrar.—205[(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 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-sheets by companies incorporated outside
206
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 207
[in India] a copy of its last audited balance-sheet and profit and loss account
prepared under Section 29, shall keep the copy so displayed until replaced by a
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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.
208
[34-A. Production of documents of confidential nature.—(1) Notwith-
standing 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 of 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 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 services 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.
209
[(3) For the purposes of this section “banking company” includes the
210 211 212
Reserve Bank, [* * *], the Exim Bank, [the Reconstruction Bank], [the
213 214
National Housing Bank], the National Bank [, the Small Industries Bank] [,
the National Bank for Financing Infrastructure and Development or the other
development financial institution,] the State Bank of India, a corresponding new
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bank, a regional rural bank and a subsidiary bank.]]

► Constitutional Validity.—Section 34-A is constitutionally valid. It does not contravene
Article 19(1)(c) and Article 14 of the Constitution, All-India Bank Employees' Assn. v.
National Industrial Tribunal, 1961 SCC OnLine SC 5 : AIR 1962 SC 171 : (1962) 3 SCR
269.
► Right to form association and unions.—Right of Banks to withhold information as to
accounts etc., does not affect the right to form association or unions under Article 19(1)(c)
or Article 14 of the employees, All-India Bank Employees' Assn. v. National Industrial
Tribunal, 1961 SCC OnLine SC 5 : AIR 1962 SC 171 : (1962) 3 SCR 269.
35. Inspection.—(1) Notwithstanding anything to the contrary contained in
215
[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.
216
[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) 217[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.
218
(3) Any person making an inspection under sub-section (1) [or a scrutiny
219
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 220[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—
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(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.
221
[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.]
222
[(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-section (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.]
223
[35-A. Power of the Reserve Bank to give directions.—(1) Where the
Reserve Bank is satisfied that—
224
(a) in the [public interest]; or
225
[(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 condition as it thinks fit, subject to
which the modification or cancellation shall have effect.
► Exercise of power by RBI.—Parameters for satisfaction/application of mind i.e. by
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(i) gathering facts, (ii) sifting relevant material from those which are irrelevant and (iii)
forming an opinion about the cause and connection between relevant material and the
decision proposed to be taken must be complied with, by RBI in passing Circulars. Though
there was application of mind by RBI, held, the RBI Circular dt. 6-4-2018 directing entities
regulated by it (i) not to deal in virtual currencies nor to provide services for facilitating any
person or entity in dealing with or settling virtual currencies, and (ii) to exit the relationship
with such persons or entities, if they were already providing such services to them, was not a
proportionate exercise of power. Hence, struck down, Internet & Mobile Assn. of India v.
Reserve Bank of India, (2020) 10 SCC 274.
226
[35-AA. 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 (31 of 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 (31 of 2016).]
► Validity of RBI Circular dt. 12-2-2018 for Resolution of Stressed Assets.—
Without the authorisation of Central Government to RBI to issue directions to a banking
company/companies for initiating the insolvency resolution process, RBI would have no such
power i.e. after enactment of Section 35-AA, it may do so only within the four corners of
Section 35-AA of 1949 Act. Held, when it comes to issuing directions to initiate the
insolvency resolution process under the Insolvency Code, Section 35-AA power of RBI to
issue directions for initiation of insolvency proceedings is the only source of power. When it
comes to issuing directions in respect of stressed assets, which directions are directions
other than resolving this problem under the Insolvency Code, such power falls within Section
35-A r/w Section 35-AB. Further, the power to be exercised under the authorisation of the
Central Government requires “due deliberation and care” to refer specific defaults. Thus, the
impugned circular, held, is ultra vires Section 35-AA of the Banking Regulation Act, Dharani
Sugars & Chemicals Ltd. v. Union of India, (2019) 5 SCC 480.
227
[35-AB. Power of Reserve Bank to issue directions in respect of stressed
assets.—(1) Without prejudice to the provisions of Section 35-A, 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.]
35-B. 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—
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228
(a) no amendment of any provision relating to [the maximum
229
permissible number of directors or] the [appointment or
reappointment or termination of appointment or remuneration of a
230
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;
231
[(b) no appointment or reappointment 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, reappointment or termination of appointment is made
with the previous approval of the Reserve Bank.]
232
[Explanation.—For the purposes 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 233[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.
234
(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] (in so far as Section 388 makes the 235[provisions of Sections 269,
310] and 311 apply in relation to the manager of a company) of the Companies
236
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)].
237
[(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.]
238
(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 239[appointment or
reappointment] 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
240
done by such person after his [appointment or reappointment] has been
shown to the banking company not to have had effect.]
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36. Further powers and functions of Reserve Bank.—(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 241[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);
242
[(d) 243[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 or more of its officers to watch 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 this 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
244
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
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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.
► Power of RBI.—When RBI prohibits banking companies against entering into any
particular transaction or class of transactions, it is binding. But when it only cautions or gives
advice it may not be binding, BOI Finance Ltd. v. Custodian, (1997) 10 SCC 488.
► Difference between Sections 36(1), 21 and 35-A.—Under Section 36(1), RBI may
caution or prohibit banking companies but RBI has power to issue binding directions under
Sections 21 and 35-A, Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1 : (2009) 3 SCC (Cri)
646.
245
[36-A. 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
Section 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.]
246
[Part II-A
CONTROL OVER MANAGEMENT
36-AA. 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
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247
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.
248
(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, 249[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) 250[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 251[a chairman, director] or chief
executive officer or other officer or employee of a banking company under sub-
252
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,
253
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.
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254
(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;
255
(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.
36-AB. Power of Reserve Bank to appoint additional directors.—(1) If the
Reserve Bank is of 256[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.
257
[* * *]
(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.
36-AC. 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.]
258
[Part II-AB
SUPERSESSION OF BOARD OF DIRECTORS OF BANKING COMPANY
36-ACA. 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
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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 (1 of 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 (1 of 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 law,
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
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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.]
259
[Part II-B
PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES
36-AD. 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.
260
[(3) For the purposes of this section “banking company” includes the
261 262 263
Reserve Bank, [* * *], the Exim Bank, [the Reconstruction Bank], [the
264 265
National Housing Bank], the National Bank [, the Small Industries Bank] [,
the National Bank for Financing Infrastructure and Development or the other
development financial institution,] the State Bank of India, a corresponding new
bank, a regional rural bank and a subsidiary bank.]
266
[Part II-C
ACQUISITION OF THE UNDERTAKINGS OF BANKING COMPANIES IN CERTAIN
CASES
36-AE. 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, in so far as such
directions relate to banking policy, or
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(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 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
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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.
36-AF. 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
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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, and 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 to 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.
36-AG. 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
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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 share-holders 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
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.
36-AH. 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-
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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.
36-AI. 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.
36-AJ. 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
267 268
[ [36-B.] 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 269[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
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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:
270
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 271[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.
272
[(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.]
273
[(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.]
274
[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 disentitled to
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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.]
► Constitutional Validity.—Sections 38(1) and 3(b)(iii) are constitutionally valid,
Section 38(1) and (3)(b)(iii) are not violative of Articles 14, 19, 301 and 302 of the
Constitution, Joseph Kuruvilla Vellukunnel v. Reserve Bank of India, 1962 SCC OnLine SC
3 : AIR 1962 SC 1371 : 1962 Supp (3) SCR 632.
► Arbitrariness/Discretionary Power.—Discretionary power placed in responsible
body RBI subject to administrative control, public opinion and judicial review, upheld, Joseph
Kuruvilla Vellukunnel v. Reserve Bank of India, 1962 SCC OnLine SC 3 : AIR 1962 SC
1371 : 1962 Supp (3) SCR 632.
275
[38-A. 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.
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276
(2) [* * *]
277
(3) [* * *]
(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.]
278 279
[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.]
280
[(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 his 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.]
281
[39-A. 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
282
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 283[High Court] is satisfied that an arrangement
has been made whereby the company can pay its depositors in full as their
claims accrue.
284
[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
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winding up order or where 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.
41-A. 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,
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
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shall himself value the security and such valuation shall be binding on the
creditor.]
42. Power to dispense with meetings of creditors, etc.—Notwithstanding
285
anything to the contrary contained in [Section 460] of the Companies Act,
286
1956 (1 of 1956), the [High Court] may, in the proceedings for winding up a
banking company, dispense with any meetings of creditors or contributories 287
[* * *] if it considers that no object will be secured thereby sufficient to justify
the delay and expense.
288
[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 289[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.
290
[43-A. 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
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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
291
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) of 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
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(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.]
292
[(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.]
293
[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.]
294
[44-A. 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,
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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 to 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.
295
(5) [* * *]
(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
296
business of the amalgamated banking company, subject in all cases to [the
provisions of the scheme as sanctioned].]
297
[(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
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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 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.]
298
[(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
299
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.]
300 301
[ [44-B.] Restriction on compromise or arrangement between banking
302
company and creditors.— [(1) Notwithstanding anything contained in any law
for the time being in force, no 303[High Court] shall sanction a compromise or
arrangement between a banking company and its creditors or any class of them
304
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 305[in writing as not being incapable of being worked and as
not being detrimental to the interests of the depositors of such banking
company].]
306
[(2) Where an application under 307[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 a direction is
given, the Reserve Bank shall make such inquiry and submit its report to the
High Court.]
308
[45. Power of Reserve Bank to apply to Central Government for suspension
of business by a banking company and to prepare scheme of 309[reconstruction]
or amalgamation.—(1) Notwithstanding anything contained in the foregoing
310
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
311
Government for an order of moratorium in respect of [a banking company].
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(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
312
other creditors [or grant any loans or advances or make investments in any
credit instruments].
313 314
[(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
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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
315
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 their 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
316
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
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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
317
[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
318
[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, 319[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
320
banking company immediately before the [reconstruction or
amalgamation];
(k) any other terms and conditions for the reconstruction or amalgamation
of the banking company;
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(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
321
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.
322
[(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 the 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 323[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].
324
(9) [On and from the date of the coming into operation of, or as the case
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may be, the date specified in this behalf in, the scheme] shall be substituted;
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
325 326
includes the State Bank of India [ [* * *] or a corresponding new bank].
327
[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].
► Interpretation/construction.—The phrase “good reason” is of wide amplitude and is
not restricted only to actions mentioned under Section 45(2). Further clarified that “good
reason” is not restricted only to situations when court proceedings are pending against bank
in question or that there is a run on the Bank, Ganesh Bank of Kurundwad Ltd. v. Union of
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India, (2006) 10 SCC 645.

A construction which fructifies welfare measures for the employees should be preferred
to one which stultifies the same, Indian Bank v. K. Usha, (1998) 2 SCC 663.
► Nature of obligation on RBI.—When a moratorium has been imposed suspending
business of a bank, RBI is duty-bound to prepare a scheme of either reconstruction or
amalgamation under Section 45(4) with any other banking institution, Ganesh Bank of
Kurundwad Ltd. v. Union of India, (2006) 10 SCC 645.
► Overriding effect of Section 45.—Before Section 45(14) can apply, there must be a
provision on a given topic either in any of the other clauses of Section 45 or any scheme
framed thereunder and such a provision must be contrary to any other provision on the same
topic as found in any other part of the Act or in any other law or award or instrument for the
time being in force. If the Scheme deals with a topic and if it is comprehensive enough then
it would rule out any contrary provision found elsewhere, Indian Bank v. K. Usha, (1998) 2
SCC 663.
► Transfer of liabilities.—Word “liabilities” means monetary liabilities. For deciding
scope of such liabilities express provisions of the Scheme have to be seen, Indian Bank v. K.
Usha, (1998) 2 SCC 663.
328
[Part III-A
SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS
45-A. Part III-A to over-ride other laws.—The provisions of this Part and the
rules made thereunder shall have effect notwithstanding anything inconsistent
329
therewith contained in the [Companies Act, 1956 (1 of 1956)] or the Code of
Civil Procedure, 1908 (5 of 1908) or the 330[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 in so far 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.
► Jurisdiction of High Court.—Where there is a decree against Bank under Displaced
Persons (Debt Adjustment) Act, 1951 after winding up of the Bank, Jurisdiction of the High
Court is exclusive in matter of execution of the decree and other incidental matters arising
therefrom as not overridden by Displaced Persons (Debt Adjustment) Act, 1951, Ram Narain
v. Simla Banking and Industrial Co. Ltd., 1956 SCC OnLine SC 1 : AIR 1956 SC 614 : 1956
SCR 603.
45-B. 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 331
[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
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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).
► Sections 45-B and 45-G (as amended by Act LII of 1953) —Scope.—Section 45-B
comprehends all sorts of claims which relate to or arise in the course of winding up. Normal
proceedings contemplated by this section are summarily proceedings by way of application,
Dhirendra Chandra Pal v. Associated Bank of Tripura Ltd., 1954 SCC OnLine SC 1 : AIR
1955 SC 213 : (1955) 1 SCR 1098.
45-C. Transfer of pending proceedings.—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.
45-D. Settlement of list of debtors.—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
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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 is 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—
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(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.
45-E. Special provisions to make calls on contributories.—Notwithstanding
332
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 333[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.
45-F. 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 334[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 335[officers and
other employees] of the banking company in respect of which the winding up
336
order has been made [* * *], be prima facie evidence of the truth of all
matters purporting to be therein recorded.
45-G. 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
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conduct and dealings, in so far 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 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.
► Constitutional Validity.—Section 45-G is constitutionally valid. This provision is not
invalid on the ground that it contravenes Article 20(3) of the Constitution because the other
condition that such a person is an accused at that moment is not satisfied. Section 45-G(6)
is not violative of Article 20(3), K. Joseph Augusthi v. M.A. Narayanan, 1964 SCC OnLine
SC 3 : AIR 1964 SC 1552 : (1964) 7 SCR 137.
Public examination of any person of a banking company in an action under Section 545
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of the Companies Act, and Section 45-J has no concern with public examination under
Section 478 of Companies Act, and Section 45-G of the Act. It is not violative of Article 20(3)
of the Constitution of India, Official Liquidator, Popular Bank Ltd. v. K. Madhava Naik, 1964
SCC OnLine SC 4 : AIR 1965 SC 654.
► Section 45-G(2) —Proviso —Scope of.—Proviso envisages a limited inquiry at the
initial stage and not a full-fledged inquiry, K. Joseph Augusthi v. M.A. Narayanan, 1964
SCC OnLine SC 3 : AIR 1964 SC 1552 : (1964) 7 SCR 137.
► Acts or omission.—Acts or omissions, not necessarily to be criminal. They include
commercially unsound or unwise acts and omissions, K. Joseph Augusthi v. M.A.
Narayanan, 1964 SCC OnLine SC 3 : AIR 1964 SC 1552 : (1964) 7 SCR 137.
45-H. Special provisions for assessing damages against delinquent directors,
etc.—(1) Where an application is made to the High Court under 337[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 338[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.
► Jurisdiction of District Court.—Order of High Court under Section 45-H of Banking
Regulation Act, 1949, for restoration of money and property when transferred to District
Court for execution under CPC, Order XXI, Rule 6 is within the jurisdiction of the District
Court, Vastulal v. Pareek Commercial Bank, 1964 SCC OnLine SC 5 : (1965) 35 Comp
Cas 141.
45-I. 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.
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45-J. Special provisions for punishing offences in relation to banking

companies being wound up.—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:
339
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 340[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 341[Code of Criminal Procedure, 1973 (2 of 1974)], so far as
that section may be applicable;
342
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
343
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 344[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 345[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
346
trial [* * *].
347
45-K. Power of High Court to enforce schemes of arrangements, etc.— [* *]
45-L. Public examination of directors and auditors, etc., in respect of a
banking company under schemes of arrangement.—(1) Where an application for
sanctioning a compromise or arrangement in respect of a banking company is
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made under 348[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 349[Section 391
of the Companies Act, 1956 (1 of 1956)] in respect of a banking company, the
350
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.
351 352
[(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 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 353[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.]
45-M. 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
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354
[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.
45-N. 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.
45-O. 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
355
Limitation Act, 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
356
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, in so far 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
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commencement of the Banking Companies (Amendment) Act, 1953 (52 of

1953).
► Applicability.—Applies to suits or applications for which limitation expired before
coming into force of amending Act, 1953. Exclusion of entire period of limitation begins to
run prior to presentation of petition for winding up, Sree Bank Ltd. v. Sarkar Dutt Roy and
Co., 1965 SCC OnLine SC 1 : AIR 1966 SC 1953.
► Retrospective effect.—Sections 45-O(1), 45-O(3) (as amended by Act 52 of 1953) is
retrospective in operation, Sree Bank Ltd. v. Sarkar Dutt Roy and Co., 1965 SCC OnLine
SC 1 : AIR 1966 SC 1953.
45-P. 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.
45-Q. 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 and 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.
45-R. 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, be deemed to be a banking
company which is being wound up.
45-S. Chief Presidency Magistrate and District Magistrate to assist official
liquidator in taking charge of property of banking company being wound up.—
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(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
357
company [* * *] is or appears to be entitled, the official liquidator or the
358
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 359
[Chief Metropolitan Magistrate or the Chief Judicial Magistrate], as the case may
be, shall, on such request being made to him,—
360
[(a) take possession of such property, books of accounts or other
documents, and
(b) forward them to the official liquidator or the special officer].
361
[(2) Where any such property and effects are in the possession of the 362
[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
363
(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 364[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.]
45-T. 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
365
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
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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.]
366
[(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.]
45-U. 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 provisions has to be made for enabling the
High Court to effectively exercise its functions under this Act.
45-V. 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.
45-W. 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.
45-X. 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.]
367
[Part III-B
PROVISIONS RELATING TO CERTAIN OPERATIONS OF BANKING COMPANIES
45-Y. 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
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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.
45-Z. 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.
45-ZA. 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 sale 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 effect the right or
claim which any person may have against the person to whom any payment is
made under this section.
► Interpretation/construction.—Section 45-ZA(2) are pari materia provisions, Ram
Chander Talwar v. Devender Kumar Talwar, (2010) 10 SCC 671.
45-ZB. Notice of claims of other persons regarding deposits not receivable.—
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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.
45-ZC. 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.
45-ZD. 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.
45-ZE. 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
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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 company 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 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.
45-ZF. 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 note of such
decree, order, certificate or other authority.]
Part IV
MISCELLANEOUS
46. Penalties.—(1) Whoever in any return, balance-sheet or other document
368
[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
369
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
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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
370
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
371
which may extend to [twenty lakh rupees] in respect of each offence, and if
372
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.
373
[(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
374 375
[ [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
376
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.
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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.]
377
[46-A. Chairman, director, etc., to be public servants for the purposes of
Chapter IX of the Indian Penal Code.—378[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
379
punishable under [sub-section (5) of Section 36-AA or] Section 46 except
380
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
381
this behalf by the Reserve Bank [or, as the case may be, the National Bank]
382
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.
383
[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 384[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—
385
[(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;]
386
[(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;]
387
[(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 if quantifiable, whichever is more, and where such
contravention or default it 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) 388[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
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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.]
389
(3) [* * *]
(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 390[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.
391
[49-A. 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 392[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
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bank scheme run by the Government.

49-B. 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.
49-C. 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
393
reason of the operation of any of the provisions [contained in Sections 10, 12-
394
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].
395
[51. Application of certain provisions to the State Bank of India and other
notified banks.—396[(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
397 398
10, 13 to 15, 17, [19 to 21-A, 23 to 28, 29 [excluding sub-section (3)],
399
[29-A,] [sub-sections (1-B), (1-C) and (2) of Sections 30,] 31, 34, 35, 35-A,
400
[35-AA, 35-AB] 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 401[or any corresponding new bank or a Regional Rural
Bank or any subsidiary bank] as they apply to and in relation to banking
companies:
402
[Provided that—
(a) nothing contained in clause (c) of sub-section (1) of Section 10 shall
403
apply to the chairman of the State Bank of India or to a [managing
director] of any subsidiary bank in so far as the said clause precludes
him from being a director of, or holding an office in, any institution
approved by the Reserve Bank;
404
[(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
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(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.]
405
[* * *]]
406
[(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.]
407
[51-A. 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 foregoing
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
408
[and the form in which the official liquidator may file lists of debtors to the
Court having jurisdiction under Part III or Part III-A and the particulars which
such lists may contain and any other matter which has to be, or may be,
prescribed].
409
(3) [* * *]
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410
[(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.]
411
[(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 or
anything previously done under that rule.]
412
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
413 414
[banking company or institution or to any class of banking companies [* *
*]] either generally or for such period as may be specified.
415
[(2) 416[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 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
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September, 1947.
417
[55-A. 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).]
418
[Part V
APPLICATION OF THE ACT TO CO-OPERATIVE BANKS
56. Act to apply to co-operative societies subject to modifications.—419
[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);
420
[(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 (1 of
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,—
421
[(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;
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422
[(cciia) “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;
423
[(cciiia) “multi-State co-operative bank” means a multi-State co-
operative society which is a primary co-operative bank;
(cciiib) “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,—
(1) 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
(2) 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,—
(1) the primary object or principal business of which is the
transaction of banking business;
(2) the paid-up share capital and reserves of which are not less
than one lakh of rupees; and
(3) 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
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than a primary agricultural credit society,—

(1) the primary object or principal business of which is the
transaction of banking business;
(2) the paid-up share capital and reserves of which are less than
one lakh of rupees; and
(3) 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’, ‘424[* * *]’, ‘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);”];
425
[(ii) Clauses (ff), (h) and (nb) shall be omitted;]
426
(d) [* * *]
(e) in Section 6, in sub-section (1),—
427
(i) [* * *]
(ii) in clause (d), after the word “company”, the words “co-operative
society,” shall be inserted;
428
(iii) [* * *]
429
[(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 shall apply to—
(a) a primary credit society, or
(b) a co-operative society formed for the protection of the mutual
430
interest of co-operative banks [* * *], or
(c) any co-operative society, not being a primary credit society, formed
by the employees of—
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(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
431
(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.”]
432
(fi) [* * *]
433
(fii) [* * *]
434
(g) [* * *]
(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 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, as 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 such co-operative bank, a determination
thereof by the Reserve Bank shall be final for the purposes of this
section.”;
435
[(i) for Section 12, the following section shall be substituted, namely:—
12. Issue and regulation of paid-up share capital and securities by co-
operative banks.—(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
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(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.]
436
[(j) for Section 18, the following section shall be substituted, namely:—
437
“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) 438[(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
439
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 440[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 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,
441 442 443
[* * *] the Exim Bank, [the Reconstruction Bank] [the
444
National Housing Bank], the National Bank [, the Small
Industries Bank] or from the National Co-operative De-velopment
Corporation established under Section 3 of the National Co-
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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
445
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 446[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 447[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 balance represents the balance in, or investment of,
Agricultural Credit Stabilisation Fund of such co-operative bank, be
deemed to be cash maintained in India.
448
[(1-A) 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 (10 of 1949), at the close of business on any day is below the
minimum specified under sub-section (1), such co-operative bank shall,
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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.
(1-B) 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.
(1-C) 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
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entitled to hold the shares for such period and on such conditions as the
Reserve bank may specify.”;
449
(l) [* * *]
450
[(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;]
451
(n) [* * *]
(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—
452
(a) [* * *]
(b) it is 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.
453
[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 (4 of
2013), 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.]
454
[(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 such 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 coming into existence, 455[every primary credit
society which had become a primary co-operative bank on or before
the commencement of the Banking Laws (Amendment) Act, 2012,
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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
456
[* * *] 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
457
Societies) Act, 1965 (23 of 1965) or at any time [thereafter,]
458
(iii) [* * *]
459
[(ii) sub-section (3-A) shall be omitted;
(iii) in sub-section (4), in clause (iii), the words, brackets, figure and
letter “and sub-section (3-A)” shall be omitted;]
460
[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 (24 of 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 (24 of 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
(24 of 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
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granted to it;]
461
(p) [* * *]
462
[(q) in Section 24,—
463
(i) [* * *]
464
(ii) [* * *]
(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.”;
465
(iv) [* * *]
466
[(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.”];
467
(r) [* * *]
468
[(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;
469
(ria) [* * *]
(rii) in Section 27, for sub-section (3), the following sub-section shall be
substituted, namely:—
“(2) 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 cooperative banks, other
than primary cooperative banks.”];
470
(s) for [Section 29], the following section shall be substituted, namely:
—
“29. Accounts and balance-sheet.—(1) At the expiration of each year
471
ending with the 30th day of June, [or at the expiration of a period of
twelve months ending with such date as the Central Government may,
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by notification in the Official Gazette, specify in this behalf,] every

cooperative bank in respect of all business transacted by it, shall
472
prepare with reference to that year [or the period] a balance-sheet
473
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 or as near thereto
as circumstances admit:
474
[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 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.”
475
(sa) [* * *]
476
[(t) in Section 31,—
477
(i) [* * *]
(ii) for the second proviso, the following proviso shall be substituted,
namely:—
“Provided further that a cooperative bank, other than a primary
cooperative bank shall furnish such returns also to the National
Bank.”];
478
(u) [* * *]
479
(v) [* * *]
(w) in Section 35,—
(i) in sub-section (1),—
(a) for the words and figures “Section 235 of the Companies Act,
1956 (1 of 1956)”, the words “any law relating to cooperative
societies for the time being in force” shall be substituted;
480
[(b) the following proviso shall be inserted at the end, namely:—
“Provided that the Reserve Bank may, if it considers it necessary or
expedient so to do, cause an inspection to be made of a primary
cooperative bank under this sub-section by one or more officers of
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a State co-operative bank in the State in which such primary co-

operative bank is registered.”];
(ii) in sub-section (4), clause (b) shall be omitted;
481
[(iii) after sub-section (4), the following sub-section shall be
inserted, namely:—
“(4-A) Without prejudice to the provisions of sub-section (4), the
Reserve Bank may, if it considers it necessary or expedient so to do
supply a copy of the report on any inspection or scrutiny to the State
cooperative bank and the Registrar of cooperative societies of the
State in which the bank which has been inspected or whose affairs
have been scrutinised is registered.”;]
482 483
[ [(iv)] in sub-section (6), for the expressions “regional rural
banks” and “regional rural bank”, wherever they occur, expressions
“cooperative banks other than primary cooperative banks” and
“cooperative bank other than a primary co-operative bank” shall,
respectively be substituted;]
484
[(v)] the Explanation shall be omitted;
485
(x) [* * *]
486
(y) [* * *]
487
(z) [* * *]
488
(za) [* * *]
489
[(zaa) after Section 36-AA of the principal Act, the following sections
shall be inserted, namely—
490
“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
491
for preventing the affairs of a [Co-operative bank] being conducted in
492
a manner detrimental to the interest of the depositors or of the [Co-
493
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
494
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.
495
[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
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the 496[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
497
[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
498
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
499
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
500
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
501
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
502
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.
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503
[(10) The provisions of Section 36-ACA shall not apply to a co-
operative bank.]
36-AAB. Order of winding up of multi-State co-operative bank to be final
504
in certain cases.— [* * *]
36-AAC. Reimbursement to 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.”
505
[(zab) in Section 36-AD, sub-section (3) shall be omitted;]
506
[(zb) Part II-C shall be omitted;]
507
[(zc) in Section 46,—
508
(i) [* * *]
(ii) in clause (a) of the Explanation, after the words “includes a”, the
words “cooperative society” shall be inserted;].
509
(zd) [* * *]
(ze) Section 49 shall be omitted;
510
(zf) [* * *]
511
[(zg) in Section 49-B, 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;]
512
(zh) [* * *]
(zi) Section 51 shall be omitted;
513
[(zj) after section 53, the following section shall be inserted, namely:—
53-A. 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 10-A,
sub-section (1-A) of Section 10-B and clause (b) of sub-section (1) of
Section 35-B 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.]
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514
[(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
cooperative banks.—(1) The Bankers' Books Evidence Act, 1891 shall
apply in relation to a cooperative 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 cooperative 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
515
shall be substituted, namely :—
THE FIRST SCHEDULE
(See Section 55)
Amendments
Year No. Short title Amendments
1 2 3 4
1934 2 The Reserve Bank of (1) In Section 17, to clause (15-
India Act, 1934. A), the following shall be added,
namely :—
“and under the Banking Companies
Act, 1949”.
(2) (a) Section 18 shall be
renumbered as sub-section (1)
of that section and in sub-
section (1), as so renumbered,
—
(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-
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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 clause
(3) of sub-section (1) is wound up,
any 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
reserves of an 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
interests of its depositors;
and
(iii) is a company as defined
in clause (2) of Section 2
of the Indian Companies
Act, 1913 (7 of 1913) or a
corporation or a company
incorporated by or under
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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
clause (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
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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

[Repeals.]
Rep. by the Repealing and Amending Act, 1957 (36 of 1957), S. 2 and Sch. I
(w.e.f. 17-9-1957)
516 517
[THE THIRD SCHEDULE
(See Section 29)
518
[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)
Capitals and Schedule As on 31- As on 31-3-. . .
Liabilities 3-. . . . . .(Previous
(Current year)
year)
% %
Capital 1
% %
Reserves 2
and Surplus
% %
Deposits 3
% %
Borrowings 4
% %
Other 5
liabilities
and
provisions
TOTAL :
ASSETS
Cash and 6
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balances
with
Reserve
Bank of
India
Balances 7
with banks
and money
at call and
short notice
Investments 8
Advances 9
Fixed Assets 10
Other 11
Assets
TOTAL :
% 12
Contingent
liabilities
Bill for
collection

Schedule 1
CAPITAL
% %
As on 31-3-. As on 31-3-. .
. . . (Current . .(Previous
Year) Year)
%
I. For Nationalised Banks
%
Capital (Fully owned by
Central Government)
%
II. For Banks Incorporated
Outside India
%
Capital
(i) (The amount brought in
by banks by way of start
-up capital as prescribed
by RBI should be shown
under this head)
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(ii) Amount of deposit kept

with the RBI under
Section 11(2) of the
Banking Regulation Act,
1949
TOTAL :
%
III. For Other Banks
Authorised Capital
(Shares of Rs each)
Issued Capital
(Shares of Rs each)
Subscribed Capital
(Shares of Rs each)
Called-up Capital
(Shares of Rs each)
Less : Calls unpaid
Add : Forfeited shares

Schedule 2
RESERVES AND SURPLUS
% %
As on 31-3-. As on 31-3-.
. . . (Current . . .(Previous
Year) 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. Share Premium Opening Balance
Additions during the year Deductions
during the year
% %
IV. Revenue and other Reserves Opening
Balance Additional during the year
Deductions during the year
% Balance in Profit and Loss Account
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V.
TOTAL : (I, II, III, IV and V)

SCHEDULE 3
DEPOSITS
% %
As on 31-3 As on 31-3-.
-. . . . . . .
(Current (Previous
Year) Year)
%
A.I.
Demand
Deposits
%
(i) From
banks
%
(ii) From
others
%
II.
Savings
Bank
Deposits
%
III.
Term
Deposits
%
(i) From
banks
%
(ii) From
others
%
TOTAL : (I, II
and III)
%
B.(i)
Deposits
of
branches
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in India
%
(ii)
Deposits
of
branches
outside
India
TOTAL :

Schedule 4
BORROWINGS
% %
As on 31-3-. As on 31-3-. . . .
. . . (Current (Previous Year)
Year)
% Borrowings in India
I.
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
% Borrowings outside India
II.
TOTAL : (I and II)
Secured borrowings included in I and
II above — Rs

Schedule 5
OTHER LIABILITIES AND PROVISIONS
% %
As on 31-3-. . . . As on 31-
(Current Year) 3-. . . .
(Previous
Year)
% %
I. Bills payable
% %
II. Inter-office adjustments (net)
% %
III. Interests accrued
% Others (including provisions)
IV.
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TOTAL :.

Schedule 6
CASH AND BALANCES WITH RESERVE BANK OF INDIA
% %
As on 31-3-. . . . As on 31-3-
(Current Year) . . . .
(Previous
Year)
% %
I. Cash in hand (including foreign
currency notes)
% Balances with Reserve Bank of India
II.
(i) in Current Account
(ii) in Other Accounts
TOTAL : (I and II)

Schedule 7
BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
% %
As on 31-3-. . . . As on 31-3-
(Current Year) . . . .
(Previous
Year)
% In India
I.
(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 & II)
% Outside India
II.
(i) in Current Accounts
(ii) in Other Deposit Accounts
(iii) Money at call and short notice
TOTAL : (I, II & III)
TOTAL : (I & II)
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Schedule 8
INVESTMENTS
% %
As on 31-3-. . . . As on 31-3-
(Current Year) . . . .
(Previous
Year)
% Investments in India in
I.
(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 :
% Investments outside India in
II.
(i) Government securities including
local authorities)
(ii) Subsidiaries and/or joint
ventures abroad
(iii) Other investments (to be
specified)
TOTAL :
GRAND TOTAL : (I & II)

Schedule 9
ADVANCES
% %
As on 31-3-. . . . As on 31-3-
(Current Year) . . . .
(Previous
Year)
% (i) Bills purchased and discounted
A.
(ii) Cash credits, overdrafts and
loans repayable on demand
(iii) Term loans
TOTAL :
% (i) Secured by tangible assets
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B.
(ii) Covered by Bank/Government
Guarantees
(iii) Unsecured
TOTAL :
% %
C. I. Advances in India
(i) Priority Sectors
(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) Syndicated loans
(c) Others
TOTAL :
GRAND TOTAL : (C.I & C.II)

Schedule 10
FIXED ASSETS
% %
As on 31-3-. . . . As on 31-3
(Current Year) -. . . .
(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
% Other Fixed Assets (including furniture
II. and fixtures)
At cost as on 31st March of the preceding
year
Additions during the year
Deductions during the year
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Depreciation to date
TOTAL :

Schedule 11
OTHER ASSETS
% %
As on 31-3-. . . . As on 31-3
(Current Year) -. . . .
(Previous
Year)
% %
I. Inter-office adjustment (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
% Others
*

VI.
TOTAL :

* In case there is any unadjusted balance of loss the same may be shown
under this item with appropriate footnote.
Schedule 12
CONTINGENT LIABILITIES
% %
As on 31-3-. . . . As on 31-3
(Current Year) -. . . .
(Previous
Year)
% %
I. Claims against the bank not acknowledged
as debts
% %
II. Liability for partly paid investments
% %
III. Liability on account of outstanding forward
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exchange contracts
% Guarantees given on behalf of constituents
IV.
(a) In India
%
(b) Outside India
% %
V. Acceptances, endorsements and other
obligations
% Other items for which the bank is
VI. contingently liable
TOTAL :

Form ‘B’
(000's omitted)
Form of Profit & Loss Account for the year ended 31st March. .....
(Year)
Schedule % %
No. Year ended Year
31-3-. . . . . ended
(Current 31-3-. . .
year) .
(Previous
year)
% Income
I.
Interest earned 13
% %
Other Income 14
TOTAL :
% Expenditure
II.
Interest expended 15
Operating expenses 16
Provisions and contingencies
TOTAL :
% Profit/Loss
III.
Net Profit/Loss (—) for the year
Profit/Loss (—) brought forward
TOTAL :
% Appropriations
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IV.
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 Year ended on
on 31-3-. . . 31-3-. . . . . .
. . . . . (Previous
(Current year)
year)
% %
I. Interest/discount on advances/bills
% %
II. Income on investments
% %
III. Interest on balances with Reserve Bank
of India and other inter-bank funds
% Others
IV.
TOTAL :

Schedule 14
OTHER INCOME
% %
Year ended Year ended
on 31-3-. . . on 31-3-. . . .
. . . . . . . (Previous
(Current year)
year)
% %
I. Commission, exchange and brokerage
% %
II. Profit on sale of investments
%
Less: Loss on sale of investments
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% %
III. Profit on revaluation of investments
%
Less : Loss on revaluation 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 Year ended
on 31-3-. . . on 31-3-. . .
. . . . . . . .
(Current (Previous
year) year)
% %
I. Interest on deposits
% %
II. Interest on Reserve Bank of India/inter-
bank borrowings
% Others
III.
TOTAL :

Schedule 16
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OPERATING EXPENSES
% %
Year ended Year ended
on 31-3-. . . on 31-3-. . . .
. . . . . . . (Previous
(Current year)
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 :

519
[THE FOURTH SCHEDULE520
[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 :—
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(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 interests has
been calculated in the case of each debtor;
(d) description of papers, writings and documents, if any, relating to each
debt;
(e) relief or reliefs claimed against each debtor.
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 of 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 debt 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.]
521
[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
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being converted at the market rate of exchange:

Provided that any balance 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 Governments [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 of 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 fair 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, bills
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;
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(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 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, profits would have been transferred or dividend declared
after the appointed day.]
COOPERATIVE BANKS THIRD AND FOURTH SCHEDULE
Subs. for Third and Fourth Schedule : See Section 56(zl)
FORM A
Form of Balance-sheet
CAPITAL AND LIABILITIES PROPERTY AND ASSETS
Rs. Rs. Rs. Rs.
P. P. P. P.
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1. Capital: 1. Cash:
(i) Authorised Capital In hand and with
………………Shares of Reserve Bank the
Rs……………………each National Bank, State
………………Shares of Bank of India, State co-
Rs……………………each operative bank and
Central co-operative
bank.
……………………………………………………… 2. Balances with other
Banks
(ii) Subscribed Capital (i) Current deposits
………………Shares of ……………
Rs……………………each (ii) Savings bank
………………Shares of deposits ……
Rs……………………each (iii) Fixed deposits
……………
………………………………………………………
(iii) Amount called up 3. Money at call and
short notice:
On ………………….Shares at Rs 4. Investments:
………………….
each less calls unpaid (i) In Central and
On ………………….Shares at Rs State Government
…………………. securities (at book
value)
each less calls unpaid Face Value
……………………………… Rs………………
Of (iii) above, held by
(a) Individuals Market Value Rs
………………………………………… …………
(b) Co-operative institutions (ii) Other Trustee
…………………………… securities …
(c) State (iii) Shares in co-
Government………………………………… operative
institutions other
than
2. Reserve Fund and other Reserves In item (5)
below:
(i) Statutory Reserve (iv) Other
…………………………………… Investments (to be
specified)
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(ii) Agricultural (Credit 5. Investments out of

Stabilization Fund)…………… the
(iii) Building Fund Principal/Subsidiary
……………………………………… State Partnership
Fund:
(iv) Dividend Equalization Fund In shares of:
………………………
(v) Special Bad Debts Reserve (i) Central co-
………………………… operative banks …………
(vi) Bad and Doubtful Debts (ii) Primary
Reserve …………… agricultural credit
societies ………
(vii) Investment Depreciation (iii) Other societies
Reserve ………….. ……………………
(viii) Other Funds and Reserves
(to be specified)
3. Principal/Subsidiary State 6. Advances†:
Partnership Fund Account:
(i) Short-term
loans, cash credits,
overdrafts and bills
discounted
…………………
For share capital of:
(i) Central co-operative banks Of which secured
………………… against:
(ii) Primary agricultural credit (a) Government
societies ……….. and other approved
securities …
(iii) Other societies (b) Other tangible
……………………………… securities @ ………
Of the advances,
amount due from
individuals
4. Deposits and other Accounts: Of the advances,
amount overdue
(i) Fixed deposits* Considered bad and
…………………………….. doubtful of recovery
(a) Individuals** (ii) Medium-term
…………………………… loans…………
(b) Central co-operative banks Of which secured
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…………….. against:
(c) Other societies (a) Government
………………………….. and other approved
securities
(ii) Savings Bank Deposits (b) Other tangible
…………………….. securities @
(a) Individuals** Of the advances,
…………………………… amount due from
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
securities
(c) Other societies (b) Other tangible
………………………….. securities @
(iv) Money at call and short Of the advances,
notice ……………… amount due from
individuals
5. Borrowings†: Of the advances amount
overdue:
(i) From the Reserve Bank of Considered bad and
India the National doubtful of recovery
Bank]/State/Central co-operative
bank:
7. Interest receivable:
(a) Short-term loans, cash credits Of which overdue
and overdrafts ………………………………………
Of which secured against:
Considered bad and
doubtful of recovery
…………………..
(A) Government and other 8. Bills receivable
approved securities being bills for
Collection as per
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contra
(B) Other tangible securities @
(b) Medium term loans
Of which secured against:
9. Branch
adjustments
(A) Government and other 10. Premises less
approved securities depreciation
(B) Other tangible securities @ 11. Furniture and
fixtures less
depreciation
(c) Long-term loans 12. Other assets (to be
specified)
Of which secured against: 13. Non-banking assets
acquired in
satisfaction of
claims (stating
mode of valuation)
(A) Government and other
approved securities
(B) Other tangible securities @ 14. Profit and Loss
(ii) From the State Bank of India
(a) Short-term loans, cash credits
and overdrafts
Of which secured against:
(A) Government and other
approved securities
(B) Other tangible securities @
(b) 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 @
(iii) From the State Government
(a) Short-term loans
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Of which secured against:

(A) Government and other
approved securities
(B) Other tangible securities @
(b) 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)
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 Account
………………………………………………
TOTAL TOTAL
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CONTINGENT LIABILITIES
(i) Outstanding liabilities for
guarantees issued….
(ii) Others ………………………………………..
TOTAL

NOTES
*“Fixed deposits” will include reserve fund deposits of societies, employees
provident fund deposits, staff security deposits, recurring deposits, cash
certificates, etc.
**Under the item “individuals” deposits from institutions other than co-
operative banks and societies may be included.
†“Borrowings” and “Advances”.—Short-term loans will be for periods up to 15
months, medium-term loans from 15 months to 5 years and long-term loans
over 5 years.
@“Other tangible security” will include borrowings 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. Rs. Rs.
P. P. P. P.
1. Interest on deposits, 1. Interest and discount
borrowings, etc. ….. ……………
2. Salaries and allowances 2. Commission, exchange
and provident fund and brokerage ……………
3. Directors' and local 3. Subsidies and donations
committee members' ……………………………..
fees and allowances
………………………
4. Rent, taxes, insurance, 4. Income from non-
lighting, etc. ……… banking assets and
profit from sale of or
dealing with such assets
……………………….
5. Law charges 5. Other receipts
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………………………………… ……………………
6. Postage, telegrams and 6. Loss (if any)
telephone ………………………
charges……………
7. Auditor's fees
…………………………………
8. Depreciation on and
repairs to
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.”.
► Article 300-A.—The fundamental right to property is now taken out of Part III of the
Constitution and property rights are deemed only as legal rights. Now property is no longer a
fundamental right. No writ under Article 32 or Article 226 can henceforth lie in respect of
property as a fundamental right.
► Compensation.—In ordinary parlance the expression ‘compensation’ means anything
given to make things equivalent, a thing given to or to make amends for loss, recompense,
remuneration or pay. It need not necessarily be in terms of money. State of Gujarat v.
Shantilal Mangaldas, (1969) 1 SCC 509.
Adequacy of amount of compensation is not justiciable. State v. Ranganatha Reddy,
(1977) 4 SCC 471.
► Amount.—It is true that the word ‘amount’ is being used in lieu of compensation, but
the word ‘amount’ is not a legal concept. The figurative meaning of amount given by Oxford
English Dictionary viz., the full value, cannot be given because of the deliberate omission of
the word ‘compensation’ and substitution of the word ‘amount’ in lieu thereof in Article 31 of
the Constitution. Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225.
Since the amount is to be paid in lieu of the property taken, it must have a reasonable
relationship with the value of the property taken. Kesavananda Bharati v. State of Kerala,
(1973) 4 SCC 225.
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The principles for fixing or determining the amount must be relevant to the ‘acquisition’ or
‘requisition’ and not to confiscation. The amount has to be determined on the basis of certain
principles. Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225.
Per Shelat and Grover, JJ.—The word ‘amount’ unlike the word “compensation” has no
legal connection. It is a neutral, colourless word. The dictionary meanings do not help in
arriving at its true import as used in a constitutional provision. It can be anything from one
paisa to an astronomical figure in rupees. Its meaning has, therefore, to be ascertained by
turning to the context in which it is used and the words preceding it as well as following it.
Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225.
Per Hedge and Mukherjea, JJ.—The word ‘amount’ is a neutral word. Standing by itself,
it has no norm and is completely colourless. The dictionary meaning of the word appropriate
to the present context is ‘sum total of a figure’. Kesavananda Bharati v. State of Kerala,
(1973) 4 SCC 225.
The word ‘amount’ in Article 31(2) after the 25th Amendment is to be read in the entire
collection of words. In Article 31(2) the use of the word ‘amount’ in conjunction with payment
in cash shows that a sum of money is being spoken of. Amount is a sum meaning, a quantity
or amount of money, or, in other words, amount means a sum of money. Kesavananda
Bharati v. State of Kerala, (1973) 4 SCC 225.
Per Palekar, J.—By substituting ‘compensation’ by ‘amount’ in Article 31(2) all that the
amendment has done is to negative the interpretation put by this Court on the concept of
compensation. Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225.
———
1.
For Statement of Objects and Reasons, see Gazette of India, 1948, Pt. V, pp. 311 and 312; for Report
of Select Committee, see ibid., 1949, Pt. V, pp. 45 to 48. Extended to Dadra and Nagar Haveli by Regn. 6
of 1963, S. 2 and Sch. I (w.e.f. 1-7-1965) and to Goa, Daman and Diu by Regn. 11 of 1963, S. 3 and
Sch. Nothing in this Act (except S. 34-A) shall apply to the Industrial Development Bank of India, vide
Act 18 of 1964, S. 34.

2.
The word “companies” omitted by Act 23 of 1965, S. 10 (w.e.f. 1-3-1966).

3.
The word “companies” omitted by Act 23 of 1965, S. 10 (w.e.f. 1-3-1966).

4.
Subs. for “Companies” by Act 23 of 1965, S. 11 (w.e.f. 1-3-1966).

5.
Subs. by Act 20 of 1950, S. 2.

6.
The words “except the State of Jammu and Kashmir” omitted by Act 62 of 1956, S. 2 and Sch. (w.e.f.
1-11-1996)

7.
16-3-1949 [Vide Noti. No. F. 4(46)-FI/49, dt. 10-3-1949].

8.
Subs. for “Indian Companies Act, 1913 (7 of 1913)” by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-
1957).

9.
Subs. by Act 39 of 2020, S. 2 (w.r.e.f. 26-6-2020). Prior to substitution it read as:
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“3. Act to apply to cooperative societies in certain cases.—Nothing in this Act shall apply to—

(a) a primary agricultural credit society;

(b) a co-operative land mortgage bank; and

(c ) any other co-operative society, except in the manner and to the extent specified in Part V.”

10.
Subs. for “the Dominion Legislature” by the A.O. 1950 (w.e.f. 26-1-1950).

11.
Subs. for “(1) In this Act” by Act 55 of 1963, S. 6 (w.e.f. 1-2-1964).

12.
Subs. by Act 4 of 2013, S. 2 (w.e.f. 18-1-2013). Prior to substitution it read as:

‘(a) “approved securities” means—

(i) securities in which a trustee may invest money under clause (a), clause (b), clause (bb),
clause (c ) or clause (d) of Section 20 of the Indian Trusts Act, 1882 (2 of 1882);

(ii) such of the securities authorised by the Central Government under clause (f) of Section 20 of
the Indian Trusts Act, 1882 (2 of 1882), as may be prescribed;’

13.
Subs. for “in any State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

14.
Ins. by Act 58 of 1968, S. 2 (w.e.f. 1-2-1969).

15.
Ins. by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959).

16.
Subs. by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959).

17.
Ins. by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

18.
Omitted by Act 52 of 1953, S. 2 (w.e.f. 30-12-1953). Prior to omission it read as:
‘(e) “Court” means the Court having jurisdiction under the Indian Companies Act, 1913;’

19.
Ins. by Act 47 of 1961, S. 51 and Sch. II, Pt. II (w.e.f. 1-1-1962).

20.
Ins. by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

21.
Omitted by Act 53 of 2003, S. 12 and Sch. (w.e.f. 2-7-2004). Prior to omission it read as:
“(ffa) ‘Development Bank’ means the Industrial Development Bank of India established under Section
3 of the Industrial Development Bank of India Act, 1964 (18 of 1964);”

22.
Ins. by Act 62 of 1984, S. 71 and Sch. III (w.e.f. 20-3-1985).

23.
Ins. by Act 53 of 1987, S. 56 and Sch. II (w.e.f. 9-7-1988).

24.
Ins. by Act 58 of 1968, S. 2 (w.e.f. 1-2-1969).

25.
Subs. by Act 33 of 1959, S. 2, for cl. (h) (w.e.f. 1-10-1959). Earlier, inserted by Act 58 of 1968, S.2
(w.e.f. 1-2-1969).
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26.
Ins. by Act 58 of 1968, S. 2 (w.e.f. 1-2-1969).

27.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 1-5-1982).

28.
Ins by Act 17 of 2021, S. 48, Sch. III (w.e.f. 19-4-2021).

29.
Omitted by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959). Prior to omission it read as:
‘(i) “private company” has the same meaning as in the Indian Companies Act, 1913;

30.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 1-5-1982).

31.
Omitted by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959). Prior to omission it read as:
(k) “registrar” has the same meaning as in the Indian Companies Act, 1913;

32.
Subs. by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

33.
Omitted by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959). Prior to omission it read as:
(m) “scheduled bank” means a bank for the time being included in the Second Schedule to the
Reserve Bank of India Act, 1934; and’

34.
Ins. by Act 39 of 1989, S. 53 and Sch. II (w.e.f. 7-3-1990).

35.
Ins. by Act 58 of 1968, S. 2 (w.e.f. 1-2-1969).

36.
Ins. by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

37.
Re-numbered by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

38.
Re-numbered by Act 1 of 1984, S. 13 (w.e.f. 15-2-1984).

39.
Ins. by Act 33 of 1959, S. 2 (w.e.f. 1-10-1959).

40.
Sub-section (2) omitted by the A.O. 1950 (w.e.f. 26-1-1950). Prior to omission it read as:
“(2) In the application of this Act to Acceding States all references to the Provinces of India shall
be construed as including references to the Acceding States to which this Act extends.”

41.
Ins. by Act 33 of 1959, S. 3 (w.e.f. 1-10-1959).

42.
Subs. by Act 33 of 1959, S. 4 for “managing agent” (w.e.f. 1-10-1959).

43.
Subs. by Act 55 of 1963, S. 7 (w.e.f. 1-2-1964).

44.
Ins. by Act 1 of 1984, S. 14 (w.e.f. 15-2-1984).

45.
Subs. by Act 1 of 1984, S. 15 (w.e.f. 15-2-1984).

46.
Subs. by Act 95 of 1956, S. 2 (w.e.f. 14-1-1957).
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47.
Subs. by Act 33 of 1959, S. 6 (w.e.f. 1-10-1959).

48.
Subs. by Act 33 of 1959, S. 6 (w.e.f. 1-10-1959).

49.
Subs. by Act 55 of 1963, S. 8 (w.e.f. 1-2-1964).

50.
Subs. by Act 55 of 1963, S. 8 (w.e.f. 1-2-1964).

51.
Subs. by Act 33 of 1959, S. 6 (w.e.f. 1-10-1959).

52.
Sub-sections (3) omitted by Act 55 of 1963, S. 8 (w.e.f. 1-2-1964). Prior to omission it read as:
“(3) Where a person holding the office of a chairman or director or manager or chief executive
officer (by whatever name called) of a banking company is, or has been found by any tribunal or
other authority (other than a criminal court) to have contravened the provision of any law and the
Reserve Bank is satisfied that the contravention is of such a nature that the association of such
person with the banking company is or will be detrimental to the interests of the banking company or
its depositors or otherwise undesirable, the Reserve Bank may make an order that that person shall
cease to hold the office with effect from such date as may be specified therein and thereupon, that
office shall, with effect from the said date, become vacant.

53.
Sub-sections (4) omitted by Act 55 of 1963, S. 8 (w.e.f. 1-2-1964). Prior to omission it read as:
(4) Any order made under sub-section (3) in respect of any person may also provide that he shall
not, without the previous permission of the Reserve Bank in writing, in any way, directly or indirectly,
be concerned with, or take part in the management of, the banking company or any other banking
company for such period not exceeding five years as may be specified in the order.

54.
Sub-sections (5) omitted by Act 55 of 1963, S. 8 (w.e.f. 1-2-1964). Prior to omission it read as:
(5) No order under sub-section (3) shall be made in respect of any person unless he has been given
an opportunity of making a representation to the Reserve Bank against the proposed order:
Provided that it shall not be necessary to give any such opportunity if, in the opinion of the
Reserve Bank, any delay would be detrimental to the interests of the banking company or its
depositors.”

55.
Ins. by Act 58 of 1968, S. 3 (w.e.f. 1-2-1969).

56.
Ins. by Act 1 of 1984, S. 16 (w.e.f. 15-2-1984).

57.
Subs. by Act 20 of 1994, S. 2(a) (w.r.e.f. 31-1-1994).

58.
Subs. by Act 20 of 1994, S. 2(b) (w.r.e.f. 31-1-1994).

59.
Subs. for “Every Chairman of the Board of Directors of a baking company” by Act 20 of 1994, S. 2(c)
(i) (w.r.e.f. 31-1-1994).

60.
Subs. for “chairman” by Act 20 of 1994, S. 2(c)(ii) (w.r.e.f. 31-1-1994).

61.
Subs. for “A chairman of the Board of directors” by Act 20 of 1994, S. 2(d) (w.r.e.f. 31-1-1994).
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62.
Omitted by Act 1 of 1984, S. 17 (w.e.f. 15-2-1984). Prior to omission it read as:
“but shall continue in office until his successor assumes office”

63.
Ins. by Act 1 of 1984, S. 17 (w.e.f. 15-2-1984).

64.
Subs. for “A chairman of the Board of directors” by Act 20 of 1994, S. 2(d) (w.r.e.f. 31-1-1994).

65.
Subs. by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

66.
Subs. by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

67.
Subs. by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

68.
Subs. by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

69.
Subs. by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

70.
Subs. for “appointed as chairman” by Act 20 of 1994, S. 2(e) (w.r.e.f. 31-1-1994).

71.
Subs. by Act 20 of 1994, S. 2(f)(i) (w.r.e.f. 31-1-1994).

72.
Subs. for “such chairman” by Act 20 of 1994, S. 2(f)(ii) (w.r.e.f. 31-1-1994).

73.
Subs. for “appointed as chairman” by Act 20 of 1994, S. 2(g)(i) (w.r.e.f. 31-1-1994).

74.
Subs. for “duties of chairman” by Act 20 of 1994, S. 2(g)(ii) (w.r.e.f. 31-1-1994).

75.
Ins. by Act 1 of 1984, S. 18 (w.e.f. 15-2-1984).

76.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

77.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

78.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

79.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

80.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

81.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

82.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

83.
Subs. for “chairman” by Act 20 of 1994, S. 3 (w.r.e.f. 31-1-1994).

84.
Ins. by Act 1 of 1984, S. 19 (w.e.f. 15-2-1984).

85.
Subs. for “A chairman” by Act 20 of 1994, S. 4 (w.r.e.f. 31-1-1994).

86.
Ins. by Act 58 of 1968, S. 3 (w.e.f. 1-2-1969).
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87.
Subs. for “director or chairman” by Act 20 of 1994, S. 5 (w.r.e.f. 31-1-1994).

88.
Ins. by Act 1 of 1984, S. 20 (w.e.f. 15-2-1984).

89.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 103 of the Indian Companies Act, 1913 (7 of 1913)”

90.
Subs. for “in any State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

91.
Subs. by Act 33 of 1959, S. 7 (w.e.f. 1-10-1959).

92.
Subs. by Act 33 of 1959, S. 7 (w.e.f. 1-10-1959).

93.
Subs. by Act 36 of 1962, S. 2 (w.e.f. 16-9-1962).

94.
The words “calendar” omitted by Act 66 of 1988, S. 7 (w.e.f. 30-12-1988).

95.
Ins. by Act 36 of 1962, S. 2 (w.e.f. 16-9-1962).

96.
Ins. by Act 36 of 1962, S. 2 (w.e.f. 16-9-1962).

97.
Subs. for “in India” by Act 62 of 1956, S. 2 and Sch. (w.e.f. 25-9-1956)

98.
The words “the proviso to” omitted by Act 33 of 1959, S. 7 (w.e.f. 1-10-1959).

99.
Subs. for “elsewhere than in a State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

100.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

101.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

102.
Subs. by Act 33 of 1959, S. 7 (w.e.f. 1-10-1959).

103.
Subs. by Act 95 of 1956, S. 3 (w.e.f. 14-1-1957).

104.
Subs. by Act 4 of 2013, S. 3(A)(i) (w.e.f. 18-1-2013). Prior to substitution it read as:

“(ii) that the capital of the company consists of ordinary shares only or of ordinary shares or equity
shares and such preferential shares as may have been issued prior to the 1st day of July, 1944:”

105.
Omitted by Act 4 of 2013, S. 3(A)(ii) (w.e.f. 18-1-2013). Prior to omission it read as:

“Provided that nothing contained in this sub-section shall apply to any banking company incorporated
before the 15th day of January, 1937.”

106.
Ins. by Act 33 of 1959, S. 8 (w.e.f. 1-10-1959).

107.
Subs. for “in excess of five per cent” by Act 55 of 1963, S. 9 (w.e.f. 1-2-1964).
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108.
Subs. for “one per cent” by Act 20 of 1994, S. 6 (w.r.e.f. 31-1-1994).

109.
Ins. by Act 4 of 2013, S. 3(B) (w.e.f. 18-1-2013).

110.
Ins. by Act 95 of 1956, S. 4 (w.e.f. 14-1-1957).

111.
Ins. by Act 4 of 2013, S. 4 (w.e.f. 18-1-2013).

112.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Sections 105 and 105-A of the Indian Companies Act, 1913 (7 of 1913)”

113.
Subs. for “paid-up value of the said shares” by Act 4 of 2013, S. 5(i) (w.e.f. 18-1-2013).

114.
Ins. by Act 4 of 2013, S. 5(ii) (w.e.f. 18-1-2013).

115.
Ins. by Act 33 of 1959, S. 9 (w.e.f. 1-10-1959).

116.
Section 15 renumbered as sub-section (1) of that section by Act 33 of 1959, S. 10 (w.e.f. 1-10-
1959).

117.
Ins. by Act 33 of 1959, S. 10 (w.e.f. 1-10-1959).

118.
Subs. by Act 95 of 1956, S. 5 (w.e.f. 14-1-1957).

119.
Subs. for sub-section (1) by Act 20 of 1994 (w.r.e.f. 31-1-1994).

120.
Ins. by Act 58 of 1968, S. 4 (w.e.f. 1-2-1969).

121.
Subs. by Act 33 of 1959, S. 11, for Ss. 17 and 18 (w.e.f. 1-10-1959).

122.
Certain words omitted by Act 36 of 1962, S. 3 (w.e.f. 16-9-1962). Prior to omission it read as:
“unless the amount in such fund together with the amount in the share premium account is not less
than its paid-up capital,”

123.
Ins. by Act 36 of 1962, S. 3 (w.e.f. 16-9-1962).

124.
Subs. by Act 1 of 1984, S. 21 (w.e.f. 29-3-1985).

125.
Subs. for “shall maintain in India” by Act 4 of 2013, S. 6(i)(a) (w.e.f. 18-1-2013).

126.
Subs. for “at least three per cent” by Act 4 of 2013, S. 6(i)(b) (w.e.f. 18-1-2013).

127.
Ins. by Act 4 of 2013, S. 6(i)(c ) (w.e.f. 18-1-2013).

128.
The words “or from the Development Bank” omitted by Act 4 of 2013, S. 6(i)(d) (w.e.f. 18-1-2013).

129.
Ins. by Act 62 of 1984, S. 71 and Sch. III (w.e.f. 20-3-1985).

130.
Ins. by Act 53 of 1987, S. 56 and Sch. II (w.e.f. 9-7-1988).
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131.
Ins. by Act 39 of 1989, S. 53 and Sch. II (w.e.f. 7-3-1990).

132.
Ins by Act 17 of 2021, S. 48, Sch. III (w.e.f. 19-4-2021).

133.
Ins. by Act 4 of 2013, S. 6(ii) (w.e.f. 18-1-2013).

134.
Subs. by Act 1 of 1984, S. 22 (w.e.f. 15-2-1984).

135.
Ins. by Noti. No. S.O. 942(E), dt. 28-2-2024.

136.
Ins. by Act 30 of 2005, S. 4 and Sch. (w.e.f. 14-12-2006).

137.
Subs. by Act 58 of 1968, S. 5, for S. 20 (w.e.f. 1-2-1969).

138.
Ins. by Act 1 of 1984, S. 23 (w.e.f. 15-2-1984).

139.
Ins. by Noti. No. S.O. 942(E), dt. 28-2-2024.

140.
Ins. by Act 55 of 1963, S. 12 (w.e.f. 1-2-1964).

141.
Ins. by Act 55 of 1963, S. 13 (w.e.f. 1-2-1974).

142.
Ins. by Act 58 of 1968, S. 6 (w.e.f. 1-2-1969).

143.
Subs. by Act 55 of 1963, S. 13 (w.e.f. 1-2-1964).

144.
Ins. by Act 55 of 1963, S. 13 (w.e.f. 1-2-1964).

145.
Ins. by Act 1 of 1984, S. 24 (w.e.f. 15-2-1984).

146.
Subs. by Act 33 of 1959, S. 13 (w.e.f. 1-10-1969).

147.
Subs. for “in any State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

148.
Subs. for “sub-section (2)” by Act 33 of 1959, S. 13 (w.e.f. 1-10-1959).

149.
The words “all or any of” omitted by Act 1 of 1984, S. 25 (w.e.f. 15-2-1984).

150.
Subs. by Act 33 of 1959, S. 13 (w.e.f. 1-10-1959).

151.
Subs. by Act 33 of 1959, S. 13 (w.e.f. 1-10-1959).

152.
Subs. by Act 1 of 1984, S. 25 (w.e.f. 15-2-1984).

153.
Ins. by Act 1 of 1984, S. 25 (w.e.f. 15-2-1984).

154.
Subs. by Act 33 of 1959, S. 13 (w.e.f. 1-10-1959).

155.
Ins. by Act 1 of 1984, S. 25 (w.e.f. 15-2-1984).
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156.
Subs. by Act 33 of 1959, S. 13 (w.e.f. 1-10-1959).

157.
Subs. by Act 33 of 1959, S. 14 (w.e.f. 1-10-1959).

158.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 1-5-1982).

159.
Omitted by Act 17 of 2007, S. 2(a) (w.e.f. 23-1-2007). Prior to omission they read as:
“(1) After the expiry of two years from the commencement of this Act, every banking company
shall maintain in India in case, gold or unencumbered approved securities, valued at a price not
exceeding the current market price, an amount which shall not at the close of business on any day
be less than 20 per cent of the total of its demand and time liabilities in India.
Explanation.—For the purposes of this section, “unencumbered approved securities” of a banking
company shall include its approved securities lodged with another institution for an advance or any
other credit arrangement to the extent to which such securities have not been drawn against or
availed of.

160.
Omitted by Act 17 of 2007, S. 2(a) (w.e.f. 23-1-2007). Prior to omission they read as:
(2) In computing the amount for the purposes of sub-section (1), the deposit required under sub-
section (2) of Section 11 to be made with the Reserve Bank by a banking company incorporated
outside India and any balances maintained in India by a banking company in current account with the
Reserve Bank or the State bank of India or with any other bank which may be notified in this behalf
by the Central Government, including in the case of a scheduled bank the balance required under
Section 42 of the Reserve Bank of India Act, 1934, to be so maintained, shall be deemed to be cash
maintained in India.”

161.
Subs. by Act 17 of 2007, S. 2(b) (w.e.f. 23-1-2007).

162.
Omitted by Act 17 of 2007, S. 2(c) (w.e.f. 23-1-2007). Prior to omission it read as:
“(2-B) The Reserve Bank may, by notification in the Official Gazette, vary the percentage referred
to in sub-section (2-A) in respect of a Regional Rural Bank.”

163.
Subs. by Act 1 of 1984, S. 26 (w.e.f. 29-3-1985).

164.
The words “clause (a) of” omitted by Act 4 of 2013, S. 7(a) (w.e.f. 18-1-2013).

165.
The words “clause (a) of” omitted by Act 4 of 2013, S. 7(b) (w.e.f. 18-1-2013).

166.
The words “clause (a) of” omitted by Act 4 of 2013, S. 7(c ) (w.e.f. 18-1-2013).

167.
Subs. by Act 33 of 1959, S. 16 (w.e.f. 1-10-1959).

168.
Subs. by Act 33 of 1959, S. 16 (w.e.f. 1-10-1959).

169.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

170.
Subs. by Act 20 of 1950, S. 7 (w.e.f. 18-3-1950).
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171.
Ins. by Act 33 of 1959, S. 16 (w.e.f. 1-10-1959).

172.
Cl. (b) relettered as cl. (c ) by Act 33 of 1959, S. 16 (w.e.f. 1-10-1959).

173.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

174.
Omitted by Act 55 of 1963, S. 14 (w.e.f. 1-2-1964). Prior to omission it read as:
“, giving particulars of the deposits standing to the credit of each such account:”

175.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

176.
Ins. by Act 4 of 2013, S. 8 (w.e.f. 18-1-2013).

177.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

178.
Subs. by Act 95 of 1956, S. 6 (w.e.f. 14-1-1957).

179.
Subs. by Act 33 of 1959, S. 17 (w.e.f. 1-10-1959).

180.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

181.
Subs. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

182.
Subs. by Act 30 of 2005, S. 34 and Sch. (w.e.f. 14-12-2006).

183.
Ins. by Act 66 of 1988, S. 8 (w.e.f. 30-12-1988).

184.
Subs. for “in a State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

185.
Subs. for “outside the State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

186.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

187.
Subs. by Act 66 of 1988, S. 8 (w.e.f. 30-12-1988).

188.
Subs. by Act 66 of 1988, S. 8 (w.e.f. 30-12-1988).

189.
Subs. for “in a State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

190.
Subs. for “outside the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

191.
Subs. for “in a State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

192.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“marked F in the Third Schedule to the Indian Companies Act, 1913 (7 of 1913)”

193.
Ins. by Act 1 of 1984, S. 27 (w.e.f. 15-2-1984).

194.
Subs. by Act 66 of 1988, S. 8 (w.e.f. 30-12-1988).
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195.
Ins. by Act 4 of 2013, S. 9 (w.e.f. 18-1-2013).

196.
Subs. by Act 58 of 1968, S. 8 (w.e.f. 1-2-1969).

197.
Ins. by Act 58 of 1968, S. 8 (w.e.f. 1-2-1969).

198.
Subs. by Act 66 of 1988, S. 9 (w.e.f. 30-12-1988).

199.
Subs. by Act 66 of 1988, S. 9 (w.e.f. 30-12-1988). Prior to substitution it read as:
“the audit of the transaction or class of transactions”

200.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 145 of the Indian Companies Act, 1913 (7 of 1913)”

201.
Ins. by Act 66 of 1988, S. 9 (w.e.f. 30-12-1988).

202.
Subs. for “in a State” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

203.
Subs. for “of profit and loss” by Act 55 of 1963, S. 15 (w.e.f. 1-2-1964).

204.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 1-5-1982).

205.
Subs. by Act 33 of 1959, S. 19 (w.e.f. 1-10-1959).

206.
Subs. for “outside the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

207.
Subs. for “in the States” by Act 20 of 1950, S. 3 (w.e.f. 18-3-1950).

208.
Ins. by Act 23 of 1960, S. 2 (w.e.f. 26-8-1960).

209.
Subs. by Act 1 of 1984, S. 28 (w.e.f. 15-2-1984).

210.
The words “the Development Bank” omitted by Act 53 of 2003, S. 12 and Sch. (w.e.f. 2-7-2004).

211.
Ins. by Act 62 of 1984, S. 71 and Sch. III (w.e.f. 20-3-1985).

212.
Ins. by Act 53 of 1987, S. 56 and Sch. II (w.e.f. 9-7-1988).

213.
Ins. by Act 39 of 1989, S. 53 and Sch. II (w.e.f. 7-3-1990).

214.
Ins by Act 17 of 2021, S. 48, Sch. III (w.e.f. 19-4-2021).

215.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 138 of the Indian Companies Act, 1913 (7 of 1913)” (w.e.f. 14-1-1957).

216.
Ins. by Act 1 of 1984, S. 29 (w.e.f. 15-2-1984).

217.
Ins. by Act 1 of 1984, S. 29 (w.e.f. 15-2-1984).

218.
Ins. by Act 1 of 1984, S. 29 (w.e.f. 15-2-1984).
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219.
Ins. by Act 55 of 1963, S. 17 (w.e.f. 1-2-1964).

220.
Ins. by Act 1 of 1984, S. 29 (w.e.f. 15-2-1984).

221.
Ins. by Act 33 of 1959, S. 20 (w.e.f. 1-10-1959).

222.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

223.
Ins. by Act 95 of 1956, S. 7 (w.e.f. 14-1-1957).

224.
Subs. for “national interest” by Act 7 of 1961, S. 2 (w.e.f. 24-3-1961).

225.
Ins. by Act 58 of 1968, S. 10 (w.e.f. 1-2-1969).

226.
Ins. by Act 30 of 2017, S. 2 (w.r.e.f. 4-5-2017).

227.
Ins. by Act 30 of 2017, S. 2 (w.r.e.f. 4-5-2017).

228.
Ins. by Act 1 of 1984, S. 30 (w.e.f. 15-2-1984).

229.
Subs. by Act 58 of 1968, S. 11 (w.e.f. 1-2-1969). Prior to substitution it read as:
“appointment or re-appointment or remuneration of a”

230.
Subs. by Act 33 of 1959, S. 21 (w.e.f. 1-10-1959). Prior to substitution it read as:
“managing or whole-time director or of a director not liable to retire by rotation”

231.
Subs. by Act 58 of 1968, S. 11, for cl. (b) (w.e.f. 1-2-1969).

232.
Added by Act 33 of 1959, S. 21 (w.e.f. 1-10-1959).

233.
Subs. for “of the manager” by Act 58 of 1968, S. 11 (w.e.f. 1-2-1969).

234.
Subs. for “268, 269, 310, 311 and 388” by Act 36 of 1962, S. 7 (w.e.f. 16-9-1962).

235.
Subs. for “provisions of section 310” by Act 1 of 1984, S. 30 (w.e.f. 15-2-1984).

236.
Subs. by Act 33 of 1959, S. 21 (w.e.f. 1-10-1959).

237.
Ins. by Act 1 of 1984, S. 30 (w.e.f. 15-2-1984).

238.
Subs. for “as a managing or whole-time director” by Act 58 of 1968, S. 11 (w.e.f. 1-2-1969).

239.
Subs. for “appointment” by Act 58 of 1968, S. 11 (w.e.f. 1-2-1969).

240.
Subs. for “appointment” by Act 58 of 1968, S. 11 (w.e.f. 1-2-1969).

241.
Subs. for “45” by Act 33 of 1959, S. 22 (w.e.f. 1-10-1959).
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242.
Subs. by Act 95 of 1956, S. 8 (w.e.f. 14-1-1957).

243.
Subs. by Act 58 of 1968, S. 12 (w.e.f. 1-2-1969).

244.
Omitted by Act 58 of 1968, S. 12 (w.e.f. 1-2-1969). Prior to omission it read as:
“in consequence of the state of affairs disclosed during or by the inspection.”

245.
Ins. by Act 33 of 1959, S. 23 (w.e.f. 1-10-1959).

246.
Ins. by Act 55 of 1963, S. 18 (w.e.f. 1-2-1964).

247.
Subs. for “any director” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

248.
Subs. for “unless the director” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

249.
Subs. by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).
“the director or, as the case may be, chief executive officer”

250.
Subs. for “act as such director” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

251.
Subs. for “a director” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

252.
Subs. for “a director or, as the case may be” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

253.
Subs. by Act 58 of 1968, S. 13 for “the director” (w.e.f. 1-2-1969).

254.
Subs. for “director or chief executive officer” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

255.
Subs. for “director or chief executive officer” by Act 58 of 1968, S. 13 (w.e.f. 1-2-1969).

256.
Subs. for “opinion that” by Act 58 of 1968, S. 14 (w.e.f. 1-2-1969).

257.
Proviso omitted by Act 1 of 1984, S. 31 (w.e.f. 15-2-1984). Prior to omission it read as:
“Provided that the number of additional directors so appointed shall not at any time exceed five or
one-third of the maximum strength fixed for the Board by the articles, whichever is less.”

258.
Ins. by Act 4 of 2013, S. 10 (w.e.f. 18-1-2013).

259.
Ins. by Act 58 of 1968, S. 15 (w.e.f. 1-2-1969).

260.
Subs. by Act 1 of 1984, S. 32 (w.e.f. 15-2-1984).

261.
The words “the Development Bank” omitted by Act 53 of 2003, S. 12 and Sch. (w.e.f. 2-7-2004).

262.
Ins. by Act 62 of 1984, S. 71 and Sch. III (w.e.f. 20-3-1985).

263.
Ins. by Act 53 of 1987, S. 56 and Sch. II (w.e.f. 9-7-1988).

264.
Ins. by Act 39 of 1989, S. 53 and Sch. II (w.e.f. 7-3-1990).
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265.
Ins by Act 17 of 2021, S. 48, Sch. III (w.e.f. 19-4-2021).

266.
Ins. by Act 58 of 1968, S. 15 (w.e.f. 1-2-1969).

267.
Ins. by Act 52 of 1953, S. 3 (w.e.f. 30-12-1953).

268.
S. 36-A renumbered as “36-B” by Act 33 of 1959, S. 24 (w.e.f. 1-10-1959).

269.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

270.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

271.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

272.
Ins. by Act 52 of 1953, S. 5 (w.e.f. 30-12-1953).

273.
Ins. by Act 33 of 1959, S. 25 (w.e.f. 1-10-1959).

274.
Subs. by 33 of 1959, S. 26 (w.e.f. 1-10-1959).

275.
Ins. by Act 52 of 1953, S. 6 (w.e.f. 30-12-1953).

276.
Omitted by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to omission it read as:
“(2) Where there is a court liquidator attached to a High Court and an order is passed by the High
Court for the winding up of any banking company, then, notwithstanding anything contained in
Section 171-A of Section 175 of the Indian Companies Act, 1913 (7 of 1913), the court liquidator
shall become the official liquidator of the banking company.

277.
Omitted by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to omission it read as:
(3) Where there is a court liquidator attached to a High Court and any proceeding for the winding
up of a banking company in which any person other than the Reserve Bank or the court liquidator has
been appointed as official liquidator is pending before the High Court immediately before the
commencement of the Banking Companies (Amendment) Act, 1953 (52 of 1953), or the date on which
the court liquidator is so attached to the High Court whichever is later, then, notwithstanding
anything contained in Section 176 of the Indian Companies Act, 1913 (7 of 1913), the person
appointed as the official liquidator shall on such commencement or, as the case may be, on the
aforesaid date, be deemed to have vacated his office as such and the vacancy so caused shall be
deemed to be filled up by the appointment of the court liquidator as the official liquidator:
Provided that where the High Court, after giving the court liquidator and the Reserve Bank an
opportunity of being heard, is of opinion that the appointment of the court liquidator would be
detrimental to the interests of the depositors of the banking company, it may direct the person
appointed as the official liquidator to continue to act as such.”

278.
S. 39 has successively been amended by Act 52 of 1953, Ss. 4 and 7; Act 23 of 1955, S. 53 and
Sch. IV; Act 79 of 1956, S. 43 and Sch. II; Act 95 of 1956, S. 14 and Sch.; Act 33 of 1959, S. 27 and
Act 37 of 1960, S. 2 (w.e.f. 19-9-1960) to read as above.
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279.
S. 39 was renumbered as sub-section (1) of that section by Act 58 of 1968, S. 16 (w.e.f. 1-2-
1969).

280.
Ins. by 58 of 1968, S. 16 (w.r.e.f. 16-3-1949).

281.
Ins. by Act 33 of 1959, S. 28 (w.e.f. 1-10-1959).

282.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957).
“Section 173 of the Indian Companies Act, 1913 (7 of 1913)” (w.e.f. 14-1-1957).

283.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

284.
Subs. by Act 37 of 1960, S. 3 for S. 41 (w.e.f. 19-9-1960).

285.
Subs. for “sections 460, 464 and 465” by Act 1 of 1984, S. 33 (w.e.f. 15-2-1984).

286.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

287.
Omitted by Act 1 of 1984, S. 33 (w.e.f. 15-2-1984). Prior to omission it read as:
“or with the appointment of a committee of inspection”

288.
Subs. by Act 52 of 1953, S. 8 (w.e.f. 30-12-1953).

289.
Subs. by Act 95 of 1956, S. 14 and Sch. Prior to substitution it read as:
“Section 191 of the Indian Companies Act, 1913 (7 of 1913)” (w.e.f. 14-1-1957).

290.
Subs. by Act 37 of 1960, S. 4 (w.e.f. 19-9-1960).

291.
Subs. for “the foregoing provisions” by Act 47 of 1961, S. 51 and Sch. II, Pt. II (w.e.f. 1-1-1962).

292.
Ins. by Act 47 of 1961, S. 51 and Sch. II, Pt. II (w.e.f. 1-1-1962).

293.
Subs. by Act 33 of 1959, S. 30 (w.e.f. 1-10-1959).

294.
Ins. by Act 20 of 1950, S. 8 (w.e.f. 18-3-1950).

295.
Omitted by Act 55 of 1963, S. 19 (w.e.f. 1-2-1964). Prior to omission it read as:
“(5) Where a scheme of amalgamation is sanctioned by the Reserve Bank under the provisions of
this section, the Reserve Bank shall transmit a copy of the order sanctioning the scheme to the
registrar before whom the banking companies concerned have been registered, and the registrar
shall, on receipt of any such order, strike off the name of the company (hereinafter in this section
referred to as the amalgamated banking company) which by reason of the amalgamation will cease to
function.”

296.
Subs. by Act 55 of 1963, S. 19 (w.e.f. 1-2-1964). Prior to substitution it read as:
“the terms of the order sanctioning the scheme”

297.
Ins. by Act 20 of 1950 (w.e.f. 1-2-1964).
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298.
Ins. by Act 37 of 1960, S. 5 (w.e.f. 19-9-1960).

299.
The words “in national interest” omitted by Act 7 of 1961, S. 3 (w.e.f. 24-3-1961).

300.
Subs. by Act 20 of 1950, S. 9 (w.e.f. 18-3-1950).

301.
S. 45 renumbered as S. 44-B by Act 37 of 1960, S. 6 (w.e.f. 19-9-1960).

302.
S. 45 (now renumbered as 44-B) renumbered as sub-section (1) of that section by Act 52 of 1953,
S. 9 (w.e.f. 30-12-1953).

303.
Subs. for “Court” by Act 52 of 1953, S. 4 (w.e.f. 30-12-1953).

304.
Subs. for “unless the compromise or arrangement” by Act 55 of 1963, S. 20 (w.e.f. 1-2-1964).

305.
Subs. by Act 52 of 1953, S. 9 (w.e.f. 30-12-1953). Prior to substitution it read as:
“as not being detrimental to the interests of the depositors of such company”

306.
Ins. by Act 52 of 1953, S. 9 (w.e.f. 30-12-1953).

307.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 153 of the Indian Companies Act, 1913 (7 of 1913)”.

308.
Ins. by Act 37 of 1960, S. 6 (w.e.f. 19-9-1960).

309.
Subs. for “reconstitution” by Act 39 of 2020, S. 3(i) (w.r.e.f. 26-6-2020).

310.
Subs. for “any agreement” by Act 7 of 1961, S. 4 (w.e.f. 24-3-1961).

311.
Subs. for “the banking company” by Act 7 of 1961, S. 4 (w.e.f. 24-3-1961).

312.
Ins. by Act 39 of 2020, S. 3(ii) (w.r.e.f. 26-6-2020).

313.
Subs. by Act 7 of 1961, S. 4 (w.e.f. 24-3-1961) for sub-sections (4) to (9).

314.
Ins. by Act 39 of 2020, S. 3(iii) (w.r.e.f. 26-6-2020).

315.
Subs. for “date of the order of moratorium” by Act 39 of 2020, S. 3(iv) (w.r.e.f. 26-6-2020).

316.
Subs. for “date of the order of moratorium” by Act 39 of 2020, S. 3(iv) (w.r.e.f. 26-6-2020).

317.
Subs. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

318.
Subs. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

319.
Subs. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

320.
Subs. for “date of the order of moratorium” by Act 39 of 2020, S. 3(iv) (w.r.e.f. 26-6-2020).

321.
Subs. for “amalgamation” by Act 39 of 2020, S. 3(v) (w.r.e.f. 26-6-2020).
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322.
Ins. by Act 55 of 1963, S. 21 (w.e.f. 1-2-1964).

323.
Ins. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

324.
Subs. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

325.
Subs. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

326.
The words “or a subsidiary bank” omitted by Act 39 of 2020, S. 3(vi) (w.r.e.f. 26-6-2020).

327.
Ins. by Act 1 of 1984, S. 34 (w.e.f. 15-2-1984).

328.
Subs. by Act 52 of 1953, S. 10 (w.e.f. 30-12-1953) for the former Part III-A, Earlier, inserted by Act
20 of 1950, S. 10 (w.e.f. 18-3-1950).

329.
Subs. for “Indian Companies Act, 1913 (7 of 1913)” by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-
1957).

330.
Subs. for “Code of Criminal Procedure 1898 (5 of 1898)” by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).

331.
Subs. by Act 95 of 1956 (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 153 of the Indian Companies Act, 1913 (7 of 1913)”

332.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 184 of the Indian Companies Act, 1913 (7 of 1913)”

333.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 187 of the Indian Companies Act, 1913 (7 of 1913)”

334.
Subs. by Act 55 of 1963, S. 22 (w.e.f. 1-2-1964). Prior to substition it read as:
“proceedings by or against the banking company”

335.
Ins. by by Act 55 of 1963 (w.e.f. 1-2-1964).

336.
Omitted by Act 55 of 1963 (w.e.f. 1-2-1964). Prior to omission it read as:
“before the commencement of the Banking Companies (Amendment) Act, 1953,”

337.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 235 of the Indian Companies Act, 1913 (7 of 1913)”

338.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 235 of the Indian Companies Act, 1913 (7 of 1913)”

339.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Indian Companies Act, 1913 (7 of 1913)”.

340.
Subs. by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).
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341.
Subs. by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).

342.
Subs. by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).

343.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Indian Companies Act, 1913 (7 of 1913)”

344.
Subs. by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).

345.
Subs. by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984).

346.
Omitted by Act 1 of 1984, S. 35 (w.e.f. 15-2-1984). Prior to omission it read as:
“and all such trials shall be without the aid of a jury”

347.
Omitted by the Banking Companies (Amendment) Act, 1959 (33 of 1959), S. 31. Prior to omission it
read as:
“45-K. Powers of High Court to enforce schemes of arrangements, etc.—(1) Where a High Court
makes an order under Section 153 of the Indian Companies Act, 1913 (VII of 1913) sanctioning a
compromise or arrangement in respect of a banking company, it shall have power to supervise the
carrying out of the compromise or arrangement and may at the time of making such order or at any
time thereafter give such directions in regard to any matter or make such modifications in the
compromise or arrangement as it may consider necessary for the proper working of the compromise or
arrangement.
(2) If the High Court is satisfied that a compromise or arrangement sanctioned under Section 153 of
the Indian Companies Act, 1913 (7 of 1913) cannot be worked satisfactorily with or without
modifications, it may, either on its own motion or on the application of any person interested in the
affairs of the banking company, make an order winding up the banking company and such an order
shall be deemed to be an order made under Section 162 of the Indian Companies Act, 1913.
(3) The provisions of this section shall, so far as they may, also apply to a banking company in
respect of which an order under Section 153 of the Indian Companies Act, 1913 (7 of 1913)
sanctioning a compromise or arrangement has been made before the commencement of the Banking
Companies (Amendment) Act, 1953 (52 of 1953).”

348.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 153 of the Indian Companies Act, 1913 (7 of 1913)”

349.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 153 of the Indian Companies Act, 1913 (7 of 1913)”

350.
Subs. for “Section 235 of the said Act” by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957).

351.
Ins. by Act 37 of 1960, S. 7 (w.e.f. 19-9-1960).

352.
Subs. by Act 7 of 1961, S. 5 (w.e.f. 24-3-1961).

353.
Subs. by Act 7 of 1961, S. 5 (w.e.f. 24-3-1961).

354.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
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“Section 153 of the Indian Companies Act, 1913 (7 of 1913)”

355.
Subs. by Act 95 of 1956, S. 14 and Sch. (w.e.f. 14-1-1957). Prior to substitution it read as:
“Section 235 of the Indian Companies Act, 1913 (7 of 1913)”

356.
Ins. by Act 33 of 1959, S. 32 (w.e.f. 1-10-1959).

357.
Omitted by Act 55 of 1963, S. 23, (w.e.f. 1-2-1964). Prior to omission it read as:
“, which has been ordered to be wound up,”

358.
Subs. by Act 1 of 1984, S. 36 (w.e.f. 15-2-1984).

359.
Subs. by Act 1 of 1984, S. 36 (w.e.f. 15-2-1984).

360.
Subs. by Act 55 of 1963 (w.e.f. 1-2-1964).

361.
Subs. by Act 55 of 1963, S. 23 (w.e.f. 1-2-1964).

362.
Subs. by Act 1 of 1984, S. 36 (w.e.f. 15-2-1984).

363.
Subs. by Act 1 of 1984, S. 36 (w.e.f. 15-2-1984).

364.
Subs. by Act 1 of 1984, S. 36 (w.e.f. 15-2-1984).

365.
Subs. by S. 24, Act 55 of 1963 (w.e.f. 1-2-1964). Prior to substitution it read as:
“in the same manner as an arrear of land revenue”

366.
Ins. by Act 53 of 1963, (w.e.f. 1-2-1964).

367.
Ins. by Act 1 of 1984, S. 37 (w.e.f. 29-3-1985).

368.
Subs. for “required” by Act 95 of 1956, S. 9 (w.e.f. 14-1-1957).

369.
Subs. for “and shall also be liable to fine” by Act 4 of 2013, S. 11(a) (w.e.f. 18-1-2013).

370.
Subs. by Act 1 of 1984, S. 38 (w.e.f. 15-2-1984).

371.
Subs. for “two thousand rupees” by Act 4 of 2013, S. 11(b)(i) (w.e.f. 18-1-2013).

372.
Subs. for “one hundred rupees” by Act 4 of 2013, S. 11(b)(ii) (w.e.f. 18-1-2013).

373.
Subs. by Act 1 of 1984, S. 38 (w.e.f. 15-2-1984).

374.
Subs. by Act 20 of 1994, S. 8 (w.r.e.f. 31-1-1994).

375.
Subs. for “fifty thousand rupees” by Act 4 of 2013, S. 11(c )(i) (w.e.f. 18-1-2013).

376.
Subs. for “two thousand and five hundred rupees” by Act 4 of 2013, S. 11(c )(ii) (w.e.f. 18-1-2013).

377.
Ins. by Act 95 of 1956, S. 10 (w.e.f. 14-1-1957).
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378.
Subs. for “Every chairman, director, auditor” by Act 20 of 1994, S. 9 (w.r.e.f. 31-1-1994).

379.
Ins. by Act 55 of 1963, S. 26 (w.e.f. 1-2-1964).

380.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

381.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

382.
Subs. by Act 1 of 1984, S. 39 (w.e.f. 15-2-1984).

383.
Ins. by Act 58 of 1968, S. 17 (w.e.f. 1-2-1969).

384.
Subs. for “sub-section (3) or sub-section (4)” by Act 4 of 2013, S. 12(a) (w.e.f. 18-1-2013).

385.
Subs. by Act 4 of 2013, S. 12(b) (w.e.f. 18-1-2013). Prior to substitution it read as:
“(a) 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;”

386.
Subs. by Act 4 of 2013, S. 12(b) (w.e.f. 18-1-2013). Prior to substitution it read as:
“(b) where the contravention or default is of the nature referred to in sub-section (4) of Section
46, a penalty not exceeding five lakh 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 twenty-five thousand rupees for
every day, after the first, during which the contravention or default continues.”

387.
Ins. by Act 4 of 2013, S. 12(b) (w.e.f. 18-1-2013).

388.
Subs. by Act 20 of 1994 (w.r.e.f. 31-1-1994).

389.
Omitted by Act 20 of 1994 (w.r.e.f. 31-1-1994). Prior to omission it read as:
“(3) While holding an inquiry under this section, the Reserve Bank shall have power to summon and
enforce the attendance of any person to give evidence or to produce any document or any other
thing which, in the opinion of the Reserve Bank, may be useful for, or relevant to, the subject-matter
of the inquiry.”

390.
Subs. by Act 55 of 1963, S. 27 (w.e.f. 1-2-1964). Earlier, substituted by Act 33 of 1959 and Act 95
of 1956. Prior to substitution it read as:
“Sections 17, 77, 83-B, 86-H, 91-B and 91-D and sub-section (5) of Section 144 of the Indian
Companies Act, 1913 (7 of 1913)”

391.
Ins. by Act 33 of 1959, S. 35 (w.e.f. 1-10-1959).

392.
Subs. by Act 55 of 1963, S. 28 (w.e.f. 1-2-1964).

393.
Subs. by Act 95 of 1956, S. 12 (w.e.f. 14-1-1957).
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394.
Subs. for “and 36” by Act 37 of 1960, S. 8 (w.e.f. 19-9-1960).

395.
Subs. by Act 79 of 1956, S. 43 and Sch. II, for S. 51 (w.e.f. 22-10-1956).

396.
Renumbered as sub-section (1) by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

397.
Subs. by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

398.
Ins. by Act 4 of 2013, S. 13 (w.e.f. 18-1-2013).

399.
Ins. by Act 66 of 1988, S. 10 (w.e.f. 30-12-1988).

400.
Ins. by Act 30 of 2017, S. 3 (w.r.e.f. 4-5-2017).

401.
Subs. by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

402.
Subs. by Act 38 of 1959, S. 64 and Sch. III, Pt. III, for the proviso (w.e.f. 10-9-1959).

403.
Subs. for “general manager” by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

404.
Subs. by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

405.
Explanation omitted by Act 58 of 1968 (w.e.f. 1-2-1969). Prior to omission it read as:
“Explanation.—The expression “subsidiary bank” in this section shall have the same meaning as in
Section 2 of the State Bank of India (Subsidiary Banks) Act, 1959.”

406.
Ins. by Act 1 of 1984, S. 40 (w.e.f. 15-2-1984).

407.
Ins. by Act 50 of 2019, S. 33 and Sch. II (w.e.f. 1-10-2020).

408.
Ins. by Act 52 of 1953, S. 11 (w.e.f. 30-12-1953).

409.
Omitted by Act 1 of 1984, S. 41 (w.e.f. 15-2-1984). Prior to omission it read as:
“(3) All rules made under this section shall be subject to the condition of previous publication, and
the date to be specified under clause (3) of Section 23 of the General Clauses Act, 1897 (10 of
1897), shall not be less than six months from the date on which the draft of the proposed rules was
published:
Provided that in respect of the first occasion on which rules are made under this section, the
provisions of this sub-section shall not apply.”

410.
Ins. by Act 52 of 1953, S. 11 (w.e.f. 30-12-1953).

411.
Ins. by Act 1 of 1984, S. 41 (w.e.f. 15-2-1984).

412.
Renumbered by Act 28 of 2005, S. 57 and Sch. (w.e.f. 10-2-2006).

413.
Subs. by Act 28 of 2005, S. 57 and Sch. (w.e.f. 10-2-2006).

414.
omitted by Act 17 of 2007, S. 3(i) (w.e.f. 23-1-2007). Prior to omission it read as:
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“or any of their branches functioning or located in any Special Economic Zone established under the
Special Economic Zones Act, 2005 (28 of 2005)”

415.
Ins. by Act 28 of 2005, S. 57 and Sch. (w.e.f. 10-2-2006).

416.
Subs. by Act 17 of 2007, S. 3(ii) (w.e.f. 23-1-2007).

417.
Ins. by Act 58 of 1968, S. 20 (w.e.f. 1-2-1969).

418.
Ins. by Act 23 of 1965, S. 14 (w.e.f. 1-3-1966). The original S. 56 was rep. by Act 36 of 1957, S. 2
and Sch. I.

419.
Subs. by Act 39 of 2020, S. 4(A) (w.e.f. 1-4-2021). Prior to substitution it read as:
“The provisions of this Act, as in force for the time being,”

420.
Ins. by Act 39 of 2020, S. 4(B) (w.e.f. 1-4-2021).

421.
Subs. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 1-5-1982).

422.
Ins. by Act 24 of 2004, S. 2(I)(A) (w.r.e.f. 1-3-1966).

423.
Ins. by Act 24 of 2004, S. 2(I)(B) (w.r.e.f. 1-3-1966).

424.
The words “co-operative society” omitted by Act 24 of 2004, S. 2(I)(C) (w.r.e.f. 1-3-1966).

425.
Subs. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

426.
Omitted by Act 39 of 2020, S. 4(C) (w.e.f. 1-4-2021). Prior to omission it read as:
“(d) for Section 5-A, the following section shall be substituted, namely:—
“5-A. Act to override bye-laws, etc.—(1) The provisions of this Act shall have effect,
notwithstanding anything to the contrary contained in the bye-laws of a co-operative society, or in
any agreement executed by it, or in any resolution passed by it in general meeting, or by its Board of
Directors or other body entrusted with the management of its affairs, whether the same be
registered, executed or passed, as the case may be, before or after the commencement of the
Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965).
(2) Any provision contained in the bye-laws, 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.”

427.
Omitted by Act 39 of 2020, S. 4(D) (w.e.f. 1-4-2021). Prior to omission it read as:
“(i) in clause (b), the words, “but excluding the business of a managing agent or secretary and
treasurer of a company” shall be omitted;”

428.
Omitted by Act 39 of 2020, S. 4(D) (w.e.f. 1-4-2021). Prior to omission it read as:
“(iii) in clause (m), after the word “company”, the words “or co-operative society” shall be
inserted;”

429.
Subs. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).
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430.
The words “or cooperative land mortgage banks” omitted by Act 39 of 2020, S. 4(E)(I) (w.e.f. 1-4-
2021).

431.
The words “or a co-operative land mortgage bank” omitted by Act 39 of 2020, S. 4(E)(II) (w.e.f. 1-
4-2021).

432.
Omitted by Act 39 of 2020, S. 4(F) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(fi) in Section 8, for the proviso, the following proviso shall be substituted, namely:—
“Provided that this section shall not apply—

(a) to any such business as aforesaid which was in the course of being transacted on the
commencement of clause (iii) of Section 42 of the Banking Laws (Amendment) Act, 1983, so,
however, that the said business shall be completed before the expiry of one year from such
commencement; or

(b) to any business as is specified in pursuance of clause (o) of sub-section (1) of Section 6.”;’

433.
Omitted by Act 39 of 2020, S. 4(F) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(fii) in Section 9, for the second proviso, the following provisos shall be substituted, namely:—
“Provided further that in the case of a primary credit society which becomes a primary co-
operative bank after the commencement of clause (iii) of Section 42 of the Banking Laws
(Amendment) Act, 1983, the period of seven years shall commence from the day it so becomes a
primary co-operative bank:
Provided also that the Reserve Bank may, in any particular case, extend the aforesaid period of
seven years by such period as it may consider necessary where it is satisfied that such extension
would be in the interests of the depositors of the co-operative bank.”’

434.
Omitted by Act 39 of 2020, S. 4(F) (w.e.f. 1-4-2021). Prior to omission it read as:
“(g) Sections 10, 10-A, 10-B, 10-BB, 10-C and 10-D shall be omitted;”

435.
Subs. by Act 39 of 2020, S. 4(G) (w.e.f. 1-4-2021). Prior to substitution it read as:
“(i) Sections 12, 12-A, 13 and 15 to 17 shall be omitted;”

436.
Subs. by Act 1 of 1984, S. 42(v) (w.e.f. 29-3-1985).

437.
Subs. for “State Co-operative Bank” by Act 4 of 2013, S. 14(a)(A)(i) (w.e.f. 18-1-2013).

438.
Subs.by Act 4 of 2013, S. 14(a)(A)(ii) (w.e.f. 18-1-2013). Prior to substitution it read as:
‘(hereinafter referred to as a “scheduled State co-operative bank”)’

439.
Subs. for ‘at least three per cent’ by Act 4 of 2013, S. 14(a)(A)(iii) (w.e.f. 18-1-2013).

440.
Ins. by Act 4 of 2013, S. 14(a)(A)(iv) (w.e.f. 18-1-2013).

441.
The words “the Development Bank” omitted by Act 4 of 2013, S. 14(a)(B)(i)(1) (w.e.f. 18-1-2013).

442.
Ins. by Act 62 of 1984, S. 71 and Sch. III (w.e.f. 20-3-1985).

443.
Ins. by Act 53 of 1987, S. 56 and Sch. II (w.e.f. 9-7-1988).
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444.
Ins. by Act 39 of 1989, S. 53 and Sch. II (w.e.f. 7-3-1990).

445.
Subs. for “State co-operative bank” by Act 4 of 2013, S. 14(a)(B)(i)(2) (w.e.f. 18-1-2013).

446.
Subs. for “State co-operative bank” by Act 4 of 2013, S. 14(a)(B)(i)(2) (w.e.f. 18-1-2013).

447.
Subs. for “a corresponding new bank” by Act 4 of 2013, S. 14(a)(B)(ii) (w.e.f. 18-1-2013).

448.
Ins. by Act 4 of 2013, S. 14(a)(C) (w.e.f. 18-1-2013).

449.
Omitted by Act 39 of 2020, S. 4(H) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(l) Section 20 of the principal Act, the following section shall be substituted, namely:—
“20. Restrictions on loans and advances.—(1) No co-operative bank shall—

(a) make any loans or advances on the security of its own shares; or

(b) grant unsecured loans or advances—

(i) to any of its directors; or

(ii) to firms or private companies in which any of its directors is interested as partner or managing
agent or guarantor or to individuals in cases where any of its directors is a guarantor; or

(iii) to any company in which the chairman of the Board of directors of the co-operative bank
(where the appointment of a chairman is for a fixed term) is interested as its managing agent,
or where there is no managing agent, as its chairman or managing director:
Provided that nothing in clause (b) shall apply to the grant of unsecured loans or advances—

(a) made by a co-operative bank—

(i) against bills for supplies or services made or rendered to Government or bills of exchange
arising out of bona fide commercial or trade transactions, or

(ii) in respect whereof trust-receipts are furnished to the co-operative bank;

(b) made by a primary co-operative bank to any of its directors or to any other person within such
limits and on such terms and conditions as may be approved by the Reserve Bank in this behalf.
(2) Every co-operative bank shall, before the close of the month succeeding that to which the
return relates, submit to the Reserve Bank a return in the prescribed form and manner showing all
unsecured loans and advances granted by it to companies in cases [other than those in which the co
-operative bank is prohibited under sub-section (1) to make unsecured loans and advances] in which
any of its directors is interested as director or managing agent or guarantor.
(3) If, on examination of any return submitted under sub-section (2), it appears to the Reserve
Bank that any loans or advances referred to in that sub-section are being granted to the detriment
of the interests of the depositors of the co-operative bank, the Reserve Bank may, by order in
writing, prohibit the co-operative bank from granting any such further loans or advances or impose
such restrictions on the grant thereof as it thinks fit, and may by like order direct the co-operative
bank to secure the re-payment of such loan or advance within such time as may be specified in the
order.”;’
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450.
Subs. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

451.
Omitted by Act 39 of 2020, S. 4(H) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(n) in Section 21, in sub-section (2), in clauses (c ) and (d), for the words “any one company, firm,
association of persons or individual”, the words “any one party” shall be substituted;’

452.
Omitted by Act 4 of 2013, S. 14(b)(A)(i) (w.e.f. 18-1-2013). Prior to omission it read as:
“(a) it is primary credit society, or”

453.
Ins. by Act 4 of 2013, S. 14(b)(A)(ii) (w.e.f. 18-1-2013).

454.
Subs. by Act 1 of 1984, S. 42(vii) (w.e.f. 15-2-1984).

455.
Subs. by Act 4 of 2013, S. 14(b)(B)(i) (w.e.f. 18-1-2013). Prior to substitution it read as:
“every primary credit society which becomes a primary co-operative bank after such
commencement shall before the expiry of three months from the date on which it so becomes a
primary co-operative bank”

456.
The words “other than a primary credit society” omitted by Act 4 of 2013, S. 14(b)(B)(ii) (w.e.f. 18-
1-2013).

457.
Subs. for “thereafter, or” by Act 4 of 2013, S. 14(b)(B)(iii)(a) (w.e.f. 18-1-2013).

458.
Omitted by Act 4 of 2013, S. 14(b)(B)(iii)(b) (w.e.f. 18-1-2013). Prior to omission it read as:
“(iii) a primary credit society which becomes a primary co-operative bank after such
commencement,
from carrying on banking business until it is granted a licence in pursuance of this section or is, by a
notice in writing, notified by the Reserve Bank that the licence cannot be granted to it.”

459.
Subs. by Act 1 of 1984, S. 42(vii) (w.e.f. 15-2-1984).

460.
Ins. by Act 24 of 2004, S. 2(II) (w.r.e.f. 24-9-2004).

461.
Omitted by Act 39 of 2020, S. 4(H) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(p)in Section 23,—

(i) for sub-section (1), the following sub-section shall be substituted, namely:—]

“(1) Without obtaining the prior permission of the Reserve Bank no co-operative bank shall open a
new place of business or change otherwise than within the same city, town or village, the
location of an existing place of business:

Provided that nothing in this sub-section shall apply to—

(a) the opening for a period not exceeding one month of temporary place of business within a
city, town or village or the environs thereof within which the co-operative bank 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;
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(b) the opening or changing the location of branches] by a Central Co-operative Bank within the
area of its operation.”;

(ii) after sub-section (4), the following sub-section shall be inserted, namely:—

“(4-A) Any co-operative bank other than a primary co-operative 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 co-operative bank shall also send an advance copy of the application directly to
the Reserve Bank.’

462.
Subs. by Act 1 of 1984, S. 42(ix) (w.e.f. 29-3-1985).

463.
Omitted by Act 4 of 2013, S. 14(c )(a) (w.e.f. 18-1-2013). Prior to omission it read as:
“(i) in sub-section (1), the words “after the expiry of two years from the commencement of this
Act”, shall be omitted;

464.
Omitted by Act 39 of 2020, S. 4(I) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(ii) for sub-section (2-A), the following sub-section shall be substituted, namely—
“(2-A) A scheduled co-operative 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 co-operative bank, 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 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.”;’

465.
Omitted by Act 39 of 2020, S. 4(I) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(iv) in sub-section (6) in clause (a), for the words “fourteen days”, the words “thirty days” shall be
substituted;’

466.
Ins. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

467.
Omitted by Act 39 of 2020, S. 4(J) (w.e.f. 1-4-2021). Prior to omission it read as:
“(r) Section 25 shall be omitted;”

468.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

469.
Omitted by Act 39 of 2020, S. 4(J) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(ria) in Section 26-A, for the words “banking companies”, the words “co-operative bank” shall be
substituted;’

470.
Subs. for “Sections 29 and 30” by Act 4 of 2013, S. 14(e) (w.e.f. 18-1-2013).

471.
Ins. by Act 54 of 1991, S. 2 (w.e.f. 20-12-1991).
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472.
Ins. by Act 54 of 1991, S. 2 (w.e.f. 20-12-1991).

473.
Ins. by Act 54 of 1991, S. 2 (w.e.f. 20-12-1991).

474.
Ins. by Act 54 of 1991, S. 2 (w.e.f. 20-12-1991).

475.
Omitted by Act 39 of 2020, S. 4(J) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(sa) for Section 30, the following section shall be substituted, namely—
“30. Audit.—(1) Without prejudice to anything contained in any other law for the time being in
force, where the Reserve Bank is satisfied the it is necessary in the public interest or in the interest
of the co-operative bank or its depositors so to do, it may at any time by general or special order
direct that an additional audit of the co-operative bank accounts, for any such transactions 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 appoint a person duly qualified under any law for the time being
in force to be an auditor of companies to conduct such 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 co
-operative bank.
(2) The expenses of, or incidental to, the additional audit specified in the order made by the
Reserve Bank shall be borne by the co-operative bank.
(3) The auditor referred to in sub-section (1) shall have such powers, exercise such 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 also that of the auditors, if
any, appointed by the law establishing, constituting or forming the co-operative bank to the extent
the provisions of the Companies Act, 1956 (1 of 1956) are not inconsistent with the provisions of
such law.
(4) In addition to the matters referred to in the order under sub-section (1) the auditor shall
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 co-operative bank which came to his notice have been
within the powers of the co-operative bank;

(c ) whether or not the returns received from branch offices of the co-operative bank have been
found adequate for the purpose of his audit;

(d) whether the profit and loss accounts, shows a true balance or 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 Reserve Bank and the
shareholders of the co-operative bank.’

476.
Subs. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

477.
Omitted by Act 39 of 2020, S. 4(K) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(i) for the words “within three months” and “of three months”, the words “within six months” and
“of six months” shall, respectively, be substituted;’
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478.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
“(u) Sections 32 to 34 shall be omitted;”

479.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
“(v) in Section 34-A, sub-section (3) shall be omitted;”

480.
Subs. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

481.
Ins. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

482.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

483.
Renumbered by Act 1 of 1984, S. 42(xi)(b) (w.e.f. 15-2-1984).

484.
Renumbered by Act 1 of 1984, S. 42(xi)(b) (w.e.f. 15-2-1984).

485.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(x) in Section 35-A, in sub-section (1), in clause (c ) for the words “any banking company”, the
words “the banking business of any cooperative bank” shall be substituted;’

486.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
“(y) Section 35-B shall be omitted;”

487.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(z) in Section 36, in sub-section (1),—

(a) clause (b) shall be omitted;

(b) for clause (d), the following clause shall be substituted, namely:—

“(d) at any time if it is satisfied that for the reorganisation or expansion of cooperative credit on
sound lines it is necessary so to do, by an order in writing and on such terms and conditions as
may be specified therein,—

(i) depute one or more of its officers to watch the proceedings at any meeting of the Board of
directors of the co-operative bank or of any other body constituted by it and require the
cooperative bank to give an opportunity to the officer so deputed to be heard at such
meetings and to offer such advice on such matters as the officer may consider necessary or
proper for the reorganisation and expansion of cooperative credit on sound lines, and also
require such officer to send a report of such proceedings to the Reserve Bank;

(ii) appoint one or more of its officers to observe the manner in which the affairs of the
cooperative bank or its offices or branches are being conducted and make a report
thereon;”];’

488.
Omitted by Act 39 of 2020, S. 4(L) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(za) in Section 36-A,—

(i) for sub-section (1), the following sub-section shall be substituted namely:—
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“(1) The provisions of Section 11, Section 18 and Section 24 shall not apply to a cooperative bank
which has been refused a licence under Section 22 or whose licence has been cancelled under
that section or which is or has been prohibited or precluded from accepting deposits by virtue of
any order made under this Act or of any alteration made in its bye-laws.”;

(ii) after sub-section (2), the following sub-section shall be inserted, namely:—

“(3) Subject to the provisions of sub-sections (1) and (2), a cooperative society carrying on business
as a primary cooperative bank at the commencement of the Banking Laws (Application to
Cooperative Societies) Act, 1965, or a cooperative society which becomes a primary cooperative
bank after such commencement shall, notwithstanding that it does not at any time thereafter
satisfy the requirements of the definition of primary cooperative bank in clause (ccv) of Section
5, continue to be a primary cooperative bank within the meaning of this Act, and may, with the
approval of the Reserve Bank and subject to such terms and conditions as the Reserve Bank may
specify in that behalf, continue to carry on the business of banking.”;’

489.
Subs. by Act 24 of 2004, S. 2(III) (w.r.e.f. 24-9-2004).

490.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

491.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

492.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

493.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

494.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

495.
Ins. by Act 39 of 2020, S. 4(M)(a)(ii) (w.e.f. 1-4-2021).

496.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

497.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

498.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

499.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

500.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

501.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

502.
Subs. for “multi-State co-operative bank” by Act 39 of 2020, S. 4(M)(a)(i) (w.e.f. 1-4-2021).

503.
Ins. by Act 39 of 2020, S. 4(M)(a)(iii) (w.e.f. 1-4-2021).

504.
Omitted by Act 39 of 2020, S. 4(M)(b) (w.e.f. 1-4-2021). Prior to omission it read as:
“36-AAB. Order of winding up of multi-State co-operative bank to be final in certain cases.—Where
a multi-State co-operative bank, being an eligible co-operative bank, has been registered under
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Section 13-A of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), as
an insured bank, and subsequently—

(a) in pursuance of a scheme prepared with the previous approval of the Reserve Bank under Section
18 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002), an order sanctioning a
scheme of compromise and arrangement or reorganisation or reconstruction has been made; or

(b) on requisition by the Reserve Bank, an order for winding up of the multi-State co-operative bank
has been made under Section 87 of the Multi-State Co-operative Societies Act, 2002 (39 of
2002); or

(c ) an order for the supersession of the Board and the appointment of an Administrator therefor has
been made under Section 36-AAA,
such order for sanctioning the scheme of compromise and arrangement or reorganisation or
reconstruction under clause (a) or the winding up of the multi-State co-operative bank under clause
(b) or an order for the supersession of the Board and the appointment of an Administrator under
clause (c ) shall not be liable to be called in question in any manner.”

505.
Ins. by Act 24 of 2004, S. 2(iii) (w.r.e.f. 24-9-2004).

506.
Subs. by Act 39 of 2020, S. 4(N) (w.e.f. 1-4-2021). Prior to substitution it read as:
“(zb) Part II-A except Sections 36-AAA, 36-AAB and 36-AAC, Part II-C, Part III, except sub-
sections (1), (2) and (3) of Section 45, and Part III-A except Section 45-W shall be omitted;”

507.
Subs. by Act 1 of 1984, S. 42 (w.e.f. 15-2-1984).

508.
Omitted by Act 39 of 2020, S. 4(O) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(i) in sub-section (4), the word “or” occurring at the end of clause (i) and clause (ii) shall be
omitted;’

509.
Omitted by Act 39 of 2020, S. 4(P) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(zd) in Section 47, the words, brackets, figures and letters “sub-section (5) of Section 36-AA or”
shall be omitted;’

510.
Omitted by Act 39 of 2020, S. 4(P) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(zf) in Section 49-A, for the proviso, the following proviso shall be substituted, namely:—
“Provided that nothing contained in this section shall apply to—

(a) a primary credit society,

(b) any other cooperative society accepting such deposits at the commencement of the Banking
Laws (Application to Cooperative Societies) Act, 1965, for a period of one year from the date of
such commencement; and

(c ) any savings bank scheme run by the Government.”;’

511.
Subs. by Act 39 of 2020, S. 4(Q) (w.e.f. 1-4-2021). Prior to substitution it read as:
“(zg) Sections 49-B and 49-C shall be omitted;”
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512.
Omitted by Act 39 of 2020, S. 4(R) (w.e.f. 1-4-2021). Prior to omission it read as:
‘(zh) in Section 50, the figures and letters “10, 12-A, 16,”, “35-B,” and “43-A” shall be omitted;’

513.
Subs. by Act 39 of 2020, S. 4(S) (w.e.f. 1-4-2021). Prior to substitution it read as:
‘(zj) in Section 52,—

(i) in sub-section (2), the words, figures and letter “and the form in which the official liquidator may
file lists of debtors to the Court having jurisdiction under Part III or Part III-A and the particulars
which such lists may contain” shall be omitted;

(ii) sub-section (4) shall be omitted;’

514.
Ins. by Act 61 of 1981, S. 61 & Sch. II (w.e.f. 12-7-1982).

515.
Ed.: See “Cooperative Banks Third and Fourth Schedule”, after Fifth Schedule.

516.
Substitued by S.O. 28(E), dated 18-1-1991 (w.e.f. 18-4-1991).

517.
Ed.: For modified Third Schedule as applicable to cooperative Banks see ‘Cooperative Banks Third &
Fourth Schedule’ after Fifth Schedule, below.

518.
Substitued by S.O. 240(E), dated 26-3-1992.

519.
Ins. by Act, 52 of 1953, S. 12 (w.e.f. 30-12-1953).

520.
Ed.: For modified Fourth Schedule as applicable to cooperative Banks see ‘Cooperative Banks Third &
Fourth Schedule’ after Fifth Schedule, below.

521.
Ins. by Act, 58 of 1968, S. 22 (w.e.f. 1-2-1969).

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