REGISTERED No. D-(D)-72 The Gazette of India EXTRAORDINARY
PART II—Section 1 PUBLISHED BY AUTHORITY No. 3] NEW DELHI, THURSDAY, JANUARY 12, 1984/PAUSA 22, 1905 Separate paging is given to this Part in order that it may be filed as a separate compilation MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department) New Delhi, the 12th January, 1984/Pausa 22, 1905 (Saka) The following Act of Parliament received the assent of the President on the 12th January, 1984, and is hereby published for general information:— THE BANKING LAWS (AMENDMENT) ACT, 1983 No. 1 OF 1984 [12th January, 1984] An Act further to amend the Bankers' Books Evidence Act, 1891, the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, the State Bank of India (Subsidiary Banks) Act, 1959, the Deposit Insurance and Credit Guarantee Corporation Act, 1961, the Banking Companies (Acquisition and transfer of Undertakings) Act, 1970, the Regional Rural Banks Act, 1976 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
BE it enacted by Parliament in the Thirty-fourth Year of the Republic of India as follows:—
CHAPTER I PRELIMINARY
1. (2) This Act may be called the Banking Laws (Amendment) Act,
1983.
(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act, and any reference in any provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
0) Short title and commencement.
2 THE GAZETTE OF INDIA EXTRAORDINARY [PAHT H— AMENDMENTS TO THE BANKERS' BOOKS EVIDENCE ACT, 1891
2. In the Bankers' Books Evidence Act, 1891,—
(a) in section 2,—
(i) for clause (4), the following clause shall be substituted, namely:—- '(4) "legal proceeding'1 means,—
(i) any proceeding or inquiry in which evidence is or may be given;
{ii) an arbitration; and
(iii) any investigation or inquiry under the Code of Criminal Procedure, 1973, or under any other law for the time being in lorce for the collection of evidence, conducted by a police officer or by any other person (not being a magistrate) authorised in this behalf by a magistrate or by any law Xor the time being in force;';
(ii) in clause (S), for the words "such certificate being dated and subscribed by the principal accountant or manager of the bank with his name and official title", the following shall be substituted, namely: — "and where the copy was obtained by a mechanical or other process which iu itself ensured the accuracy of the copy, a iurtiier ccralicate to that effect, but where the book from wmch such copy was prepared has been destroyed in the usual course oi the bank's business after the date on whico die ropy had been so prepared, a further certilicate to thai, uilect, each such certificate being dated and subscribed by the principal accountant or manager of the bank wiih his name and official title";
(b) after section 7, the following section shall be inserted, namely: — 2 of 1&74.
Amendment of Art 16 of 18W.
'8. In the application of sections 5, 6 and 7 to any investigation or inquiry referred to in sub-clause (ui) of clause (4) of section 2, the order of a court or a Judge referred to in the said sections shall be construed as referring to an order made by an officer of a rank not lower than the rank of a Superintendent of Police as may be specified in this behalf by the appropriate Government.
Explanation.—In this section, "appropriate Government" means the Government by which the police officer or any other person conducting the investigation or inquiry is employed'.
Order of court to be construed to be order made by specified officer.
CHAPTER III AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934
3. In section 17 of the Reserve Bank of India Act, 1934 (hereafter in this Chapter referred to as the Reserve Bank Act), in clause (4B), In the proviso, for the words "three crores of rupees", the words "fifteen crores of rupees" shall be substituted.
2 of 1934.Amendment of section
17.
SEC. 1] THE GAZETTE Or INDIA EXTRAORDINARY
4. In section 3u u i ^ Act, in vib clause (a) of clause
(z) of sub-section (6), IV tl i \ oi 1 "notified", the word "approved" shall bo substituted.
Amendment of section 33,
5. In section 40 of the R& rive Sink Act in the Explanation, for the words and figures "Forr^gn ^xc c<n™e ReguWfron Act, 1947", the words and figures "Foreign E"c "iye regulation Act, 1973" shall be substituted.
Amendment of section
40.
7 oi 1947.
48 oi 1973.
6. In section 42 of the Reserve Bank Act,—
(a) in the Explavct'nn T sub-section (1),—
(i) in clause ff7) „ for the words "of a week", the words "of a fortnight" shall be substituted;
(ii) for claiis° (b), the following clause shall be substituted, namely: — '(b) "fortnight" shall mean the period from Saturday to the secorti following Friday, both days inclusive;';
(in) in clause (c),— Amendment of section
42.
(A) in sub-clause (m), after the words "fatate Government", the wo nc"s and figures "or from the National Cooperative Development Corporation established under the National Co-operative Development Corporation Act, 1962" shall be inserted:
26 of 1902.
(B) after sub-clause ('«), the following sub-clause shall be inserted, namely: — "(v) In the case of a Regional Rural Bank, also any loan taVeti by such bank from its Sponsor Bank;";
(iv) in clause (d), after sub-clause (til), the following subclause shall be inserted, namely: — "(ma) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980;";
(v) in clsuse (>\ ^fter sub-clause (in), the following subclause shall be inserted namely — 40 of 1980.
" (Ilia) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Art 1980;";
40 of 1980.
(b) to sub-sort-nn (1A), the following proviso shall be added, namely: — "Provided thit the Bank may, by a separate notification In the Gazpttp r>t Tn'-Ii-, •"i^ifv different dates in respect of a bank subsequently, inHucWl n̂ fhp Second Schedule".;
(c) after s-ub-sertir^ (1B) the following sub-section shall be inserted, namely: — "(1C) Thp FinV TIPV f c the purposes of this section, specify from time +-1 tirne with reference to any transaction or class of trar-nHin^ +̂ n+ "iich transaction or transactions shall be regarded ns linbili'v in Tnd â of 3 scheduled bank, and if any 4 THE GAZETTE OF INDIA EXTRAORDINARY [PAST H— question arises as to whether any transaction or class of transactions shall be regarded, for the purposes of this section, as liability in India of a scheduled bank, the decision of the Bank thereon shall be final.";
(d) m sub-section (2),—
(i) for the words "at the close of business on each Friday, and every such return shall be sent not later than five days after the date to which it relates", the words "at the close of business on each alternate Friday, and every such return shall be sent not later than seven days after the date to which it relates" shall be substituted;
(ii) in the second proviso, after the words "Provided further that where", the words "such alternate" shall be Inserted;
(iU) for the third proviso, the following proviso shall bo substituted, namely: — "Provided also that where the Bank Is satisfied that the furnishing of a fortnightly return under this sub-section Is impracticable in the case of any scheduled bank by reason of the geographical position of the bank and its branches, the Bank may allow such bank—
(i) to furnish a provisional return for the fortnight within the period aforesaid to be followed by a final return not later than twenty daya after the date to which It relates, or
(ii) to furnish in lieu of a fortnightly return a monthly return to be sent not later than twenty days after the end of the month to which It relates giving the details specified in this sub-section in respect of such bank at the close of business for the month.";
(e) after sub-section (2), the following sub-section shall be Inserted, namely:— "(2A) Where the last Friday of a month is not an alternate Friday for the purpose of sub-section (2), every scheduled bank shall send to the Bank, a special return giving the details specified In sub-section (2) as at the close of business on such last Friday or where such last Friday is a public holiday under the Negotiable Instruments Act, 1881 as at the close of business on the preceding working day and such return shall be sent not later than seven days after the date to which it relates.";
(f) in sub-sections (3) and (3A), for the word "week" wherever It occurs, the word "fortnight" shall be substituted.
26ofI8fll.
7. In section 43 of the Reserve Bank Act, for the word "week", the word "fortnight" shall be substituted.
Amendment Of section
43.
8. In section 45H of the Reserve Bank Act, for the words and figures "a banking institution notified under section 51 of that Act", the words, brackets, letters and figures "a corresponding new bank as defined in clause (da) of section 5 of that Act or a subsidiary bank as denned In the State Bank of India (Subsidiary Banks) Act, 1959" shall be substituted. 38 of 1909.
Amendment of section
45H.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 5
9. In section 451 of the K^urve Bank Act,—
(i) for clause (bb), the following clause shall be substituted, namely: — Amendment of section
451.
' (bb) "deposit" includes and shall be deemed always to have included any receipt of money by way of deposit or loan or in any other form, but does not include,—
(i) amounts raised by way of share capital;
(ii) amounts contributed as capital by partners of a firm;
(in) amounts received from a scheduled bank or a cooperative bank or any other banking company as denned In clause (c) of section 5 of the Banking Regulation Act, 1940;10 of 1949.
(iv) any amount received from,—
(a) the Development Bank,
(b) a State Financial Corporation,
(c) any financial Institution specified in or under section 6A of the Industrial Development Bank of India Act, 1964, or18 of 1964.
(d) any other institution that may be specified by the Bank in this behalf;
(v) amounts received in the ordinary course of business, by way of—
(a) security deposit,
(b) dealership deposit,
(e) earnest money, or
(d) advance against orders for goods, properties of services;
(in) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in any State; and
(vii) any amount received by way of subscriptions in respect of a chit.
Explanation I.—"Chit" has the meaning assigned to it in clause (b) of section 2 of the Chit Funds Act, 1982.
Explanation IT.—Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;';
40 ot 1982.
6 THE GAZETTE OF INDIA EXTRAORDINARY [PART 11—
(n) in clause (d), the word:-, ", of which the capital subscribed by its partners exceeds one lakh of rupees" shall be omitted;
(in) in clause (e), for the words ", co-operative society or firm", the words "or co-operative society" shall be substituted.
10. After Chapter IIIB of the Reserve Bank Act, the following Chapter shall be inserted, namely: — Insertion of new Chapter after Chapter IIIB.
"CHAPTER IIIC PROHIBITION OP ACCEPTANCE OF DEPOSITS BY LTNINCOBPORATED BODIES
45R. The words and expressions used in this Chapter and defined in Chapter IIIB shall have the meanings respectively assigned to them therein.
Interpretation.
45S. (1) No person, being an individual or a firm or an unincorporated association of individuals shall, at any time, have deposits from more than the number of depositors specified against each, In the table below: — Deposits not to be accepted in certain cases.
TABLE
(i) («)
(in) Individual Firm Unincorporated association of individuals Not more than twenty-five depositors excluding depositors who are relatives of the individual.
Not more than twenty-five depositors per partner and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the partners.
Not more than twenty-five depositors per individual and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the individuals constituting the association.
(2) Where at the commencement of section 10 of the Banking Laws (Amendment) Act, 1983, the deposits held by any such person are not in accordance with sub-section (1), he shall, before the expiry of a period of two years from the date of such commencement, repay such of the deposits as are necessary for bringing the number of depositors within the relative limits specified in that sub-section.
Eocplanation.—For the purposes of this section,—
(a) a person shall be deemed to be a relative of another if, and only if,—
(i) they are members of a Hindu undivided family; or SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY J
(ii) they are husband and wife; or
(in) the one is related to the other in the manner indicated in the List of relatives below: — List of Relatives
1. Father. 2. Mother (including step-mother). 3. Son (including stepson). 4. Son's wife. 5. Daughter (including step-daughter). 6. Father's father. 7. Father's mother. 8. Mother's mother. 9. Mother's father.
10. Son's son. 11. Son's son's wife. 12. Son's daughter. 13. Son's daughter's husband. 14. Daughter's husband. 15. Daughter's son. 16. Daughter's son's wife. 17. Daughter's daughter. 18. Daughter's daughter's husband.
19. Brother (including step-brother). 20. Brother's wife. 21. Sister (including step-sister) . 22. Sister's husband;
(b) a person in whose favour a credit balance is outstanding for a period not exceeding six months in any account relating to mutual dealings in the ordinary course of trade or business shall not, on account of such balance alone, be deemed to be a depositor.
45T. (1) Any court having jurisdiction to issue a search warrant undor the Code of Criminal Procedure, 1973 may, on an application by an officer of the Bank or of the State Government authorised in this behalf stating his belief that certain documents relating to acceptance of deposits in contravention of the provisions of section 45S arc secreted in any place within the local limits of the jurisdiction of Huch court, issue a warrant to search for such documents.
Power to issue search warrants.
2 of 1974.
(2) A warrant issued under sub-section (1) shall be executed in the same manner and shall have the same effect as a search warrant issued under the Code of Criminal Procedure, 1973.".a of 1974.
11. In section 58B of the Reserve Bank Act, after sub-section (5), the following sub-sections shall be inserted, namely: — " (5A) If any person contravenes any provision of section 45S, he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of deposit received by such person in contravention of that section, or two thousand rupees, whichever is more, or with both:
Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgment of the court, the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees.
Amendment of section 58B, (5E) Notwithstanding anything contained in section 29 of the • Code of Criminal Procedure, 1973, it shall be lawful for a Metropolitan Magistrate or a Judicial Magistrate of the first class to impose a sentence of fine in excess of tho limit specified in that section on any person convicted under sub-section (5A).".
2 of 1B74.
8 THE GAZETTE OF INDIA EXTRAORDINARY [PABT It—
12. In section 58E of the Reserve Bank Act, to sub-fiection (1), the following proviso shall be added, namely: — Amandm«ntof section
58E.
"Provided that in respect of any offence punishable under subsection (5A) of section 58B, a complaint in writing may also be made by an officer of the State Government, generally or specially authorised in writing in this behalf by that Government.".
CHAPTER IV AMENDMENTS TO THE BANKING REGULATION ACT, 1949
13. In section 5 of the Banking Regulation Act, 1949 (hereafter In this i0 of 1949.
Chapter referred to as the Banking Regulation Act),— Amendment of station I.
(a) for clause (a), the following clause shall be substituted, namely: — ' (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.
(it) such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trusts Act, 1882, as may be prescribed;*; 2 of 1882.
(b) after clause (d), the following clause shall be inserted, namely: — '(da) "corresponding new bank" meana a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980:';
5 of 1970.
40 of 1980.
(c) after clause (Jff), the following clauses shall be inserted, namely: — '(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.
(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.
(d) for clause (I), the following clause shall be substituted, namely: — '(I) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934;'; 2 of 1984.
SKC, 1] THE GAZETTE OF INDIA EXTRAORDINARY <
(c) clause (nb) and clause (nc) shall be re-lettered as clause
(nd) and clause (ne), respectively, and before clause (nd) as so re-lettured, the following clauses shall be inserted, namely: — ' (nb) "Sponsor Bank" has the meaning assigned to it in th« Regional Ruril Banks Act, 1976;31 of 1978,
(nc) "State Bank of India" means the State Bank of India constituted under section 3 of the State Bank of India Act, 1955;'.?3 of 1953.
14. In section 7 of the Banking Regulation Act, in sub-section (J), after the words "shall use as part of its name", the words "or in connection with its business" shall be inserted.
Amendment ol secki.tn
7.
15. In section 8 of the Banking Regulation Act, lor the proviso, the following proviso shall be substituted, namely:-—• Amendment *f section It.
"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.".
16. In section 10A of the Banking Regulation Act, after sub-section (2), the following sub-section shall be inserted, namely:—- Amend, tnent of section
10A.
" (2A) Notwithstanding anything to the contrary contained in the Companies Act, 1956, or in any other law for the time being in force,— (0 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 omc? as such chairman, or wholetime director, as the case may be, under the provisions of this Act shall also cease to be n director of the banking company and shall also not be eligible to bc 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.".
It 1*56
17. Tn section 10B of the Banking Regulation Act,—
(a) in sub-section ( / ) , for the words "shall have a chairman of its Board of directors", ihe words "shall have one of its directors as chairman of its Board of dirortors" shall be substituted;
(b) in sub-senrion (5), the words "but shall continue in office until his successor assumes office'' shall be omitted;
(c) after sub-section (5"), the following sub-section shall be inserted, namely:—• "(5A) A chairman of the Board of directors whose term of office has come to an end, either by reason of hi« resignation or by reason of expiry of the period of his office, shall, subject to 'he approval of the "Reserve Bank, continue in office until hie successor resumes office,", Amandmeit of s«ctio»
101.
io THE GAZETTE OF INDIA EXTBAORDINARY [PABT II— 18, Alter .section 10B of the Banking Regulation Act, the following section shall be inserted, namely:— Insertion of new section ]OBB.
"10BB. ( i ) Where the office of the chairman 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 10B to be so appointed, to be the chairman of the bankirjg company and where the person so appointed is not a director of such banking company, he shall, so long as he holds the office of the chairman, bt' deemed to be a director of the banking company.
Power of Reserve Bank to appoint chairman of a banking company.
(2) The chairman so appointed by the Reserve Bank shall be in the whole-time employment ot the banking company and shall hold office tor such period not exceeding three years, as the Reserve Bank may specify, but shall, subject to other provisions of this Act, b c eligible for reappointment,
(3) The chairman 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 10B shall, as far as may be, apply to the chairman appointed by the Reserve Bank under sub-section (1) as they apply to a chairman appointed by the banking company.".
19. For section IOC of the Banking Regulation Act, the following section shall be substituted, namely:— Substitution of new section for section IOC.
"IOC. A chairman of a banking company (by whomsoever appointed) and a director of a banking company (appointed by the Reserve Bank under section 10A) shall not be required to hold qualification shares in the banking company.".
Chair, man and certain directors not to be required t© hold qualification shares
20. In section 10D of the Banking Regulation Act, after the words, figures and lexers "in pursuance of section 10A or section 10B" the words, figures and letters* "or section 10BB" shall be inserted, Amendmtnt of section i OP S"C. 1] THE GAZETTE OF INDIA EXTRAORDINABY 11
21. For section 18 of the Banking Regulation Act, the following section shall be substituted, namely:— Substitution of new section for section
18.
'18. ( i) Every banking company, not being a scheduled bank, shall maintain in India by way ot cash reserve with itself or by way of balance in a current account with the Reserve Bank or by way of net balance in current accounts or in one or more of the aforesaid ways, a sum equivalent to at least three per cent, of the total of its demand and time liabilities in India an on the last Friday of the second preceding fortnight 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, at the close of business on the preceding working day.
Cash reserve.
2«of l f l l .
Explanation.—In this section, and in section 24,—
(a) "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;
(ii) any advance taken Irom the Reserve Bank or from the Development Bank of irom the Exim Bank or from the National Bank by thc banking company;
(iii) in the case of a Regional Rural Bank, also any loan taken by such bank irom its Sponsor Bank;
(b) "fortnight" shall mean the period from Saturday to thc 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 subsidiaiy 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 ol computation of liabilities, the aggregate of the liabilities of a banking company to thc 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 thc Central Government in this behalf, shall be reduce by the aggregate of thc liabilities of all such banks institutions to the banking company;
(e) the expression "co-operative bank1' shall have the meaning assigned to it in clause (<xi) of section 56.
i a THE GAZETTE OF INDIA EXTHAOflDLNARY [PA«T II—
(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.'.
22, In section 19 ol the Banking Regulation Act, for sub-seclion ( I ) , the I'oilnwini sub-section shall be substituted, namely:— Amend meat Ol section
19.
"(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 airy business which, under clauses (a) to {(>) 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 \he purposes of section 8, a banking company shall not be deemed, by reason ot its forming or having a subsidiary company, to be engaged indirectly in the business carried on by such subsidiary company.".
23. In section 20 ot the Banking Regulation Act, in sub-section ( I ) , in clause (b), in sub-clause (tii), after the words "of which11, the words 'k, or the subsidiary or the holding company of which" shall be inserted.
Amendment of section
20.
24. After section 21 of the Banking Regulation Act, the following section shall be inserted, namely:— Insertion of new section
21A.
"21 A. Notwithstanding anything contained in the Usurious Loans Act, 1^18, or any otner law relating to indebtedness in force in any State, a transaction between a banking company and its deb'.or shall be reopened by any Court on the ground that the rate of interest charged by the banking company in lespcct of such transaction is excessive."
10 of 1*11.RatM of interest charged by bankinp companies not to be subject to •scrutiny by court*.
titaC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 13
26. In section 22 of the Banking Regulation Act,— Am«dmont of sectiom 22.
(i) in sub-section (3) ,—
(a) in Hie opening portion, the words "all or any of" skall be omitted;
(b) for clause (c), the following clauses »hall fct subitituUd, namely:— "(c) that the gene aj 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 structurt and earning prospects;
(e) that the public interest will be served by th» grant of a licence to the company to carry on banking business in India;
(/) 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 ot 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.";
(/«) after sub-section (3), the following sub-section shall be inserted, namely:— "(3.4) 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) aref 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.1';
(Hi) in sub-section (4), in clause (Hi), after the word, brackets and figure "sub-section (3)", the words, brackets, figure and letter "and sub-section (3A)" shall be inserted.
*4 THE GAZETTE OF INDIA EXTRAORDINARY [PAI« 1J_
26. In section 24 of the Banking Regulation Act,Amendment of tectioji
24. (a) in sub-section (1), for the words "time and demand liabilities'', the words "demand and time liabilities" shall be substituted;
(b) in sub-section (.2A),—
(i) in clause (a), f,or the words and figures "shall maintain in India in cash, 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 25 per cent, of the total of its demand and time liabilities in India", the following shall be substituted, namely: — "shall maintain in India,— (A) in cash, or (B) in gold valued at a price not exceeding the current market price or in unencumbered approved securities valued at a price determined in accordance with such one or more of, or combination of, the following methods of valuation, namely, valuation with reference to cost price, market price, book value or face value, as may be specified by the Reserve Bank from time to time, an amount which shall not, at the close of; business on any day, bo less than twenty-five per cent, or such other percentage not exceeding forty per cent, as the Reserve Bank may, from time to time, by notification in the Official Gazette, specify, of the total of its demand and time liabilities in India, as on the last Friday of the second preceding fortnight";
(ij) for clause (b)f the following clause shall be substituted namely:— L'{b) in computing the amount for the purpose of clause
(a) —
(i) the deposit required under sub-section (2) of section 11 to be made with the Reserve Bank by a banking company incorporated outside India;
(«) any cash or balances maintained in India by a banking company other than a scheduled bank with itself or with the Reserve Bank or by way of net balance in current account in excess of the aggregate of the cash or balance or net balance required to be maintained under section 18;
SK. 1] THE GAZETTE OF INDIA EXTRAORDINARY 15 (Hi) any balances maintained by a scheduled bank with the Reserve Bank in excess of the balance required to be maintained by it under section 42 of the Reserve Bank of India Act, 1934;2 of 1934.
(iv) the net balance in current accounts maintained in India by a scheduled bank;
(v) any balances maintained by a Regional Rural Bank in call or fixed deposit with its Sponsor Bank, shall be deemed to be cash maintained in India.";
(Hi) the following Explanation shall be inserted at the end, namely:— "Explanation.—-For the purpose of clause (a) of this sub-section, the market price of an approved security shall be the price as on the date of the issue of the notification or as on any earner or later date as may be notified from time to time by the Reserve Bank in respect of any class or classes of securities.";
(c) in sub-section (2B), the words and figures "established under section 3 of the Regional Rural Banks Act, 1976". shall be omitted;
21 of 1»76.
(tl) for sub-section (3), the following sub-sections shall be substituted, namely— '(3) For the purpose of ensuring compliance with the provisions of this section, every banking company shall, not later tham twenty days after the end of the month to which it relates, furnish to the Reserve Bank in the prescribed form and manner a monthly return showing particulars of its assets maintained in accordance with this section, and its demand and time liabilities in India at the close of business on each alternate Friday during the month, or if any such Friday is a public holiday, at the close of business on the preceding working day:
Provided that every Regional Rural Bank shall also furnish a copy of the said return to the National Bank.
(4) (a) If on any alternate Friday or, if such Friday is a public holiday, on the preceding working day, the amount maintained by a banking company at the close of business on that day falls below the minimum prescribed by or under clause (a) of sub-section (2A), such banking company shall be liable to pay to the Reserve Bank in respect ot that day's default, penal interest for that day at the rate of three pur cent, per annum above the bank rate on the amount by which the amount actually maintained falls shott of the prescribed minimum Or that day; and 16 THE GAZETTE OF WJDIA EX'lfiAOKDINARY [PAHT 11— (.b) if the default ucuit' again on, the next succeeding alternate Friday, or, if such ) rklny ii, a public holiday, on the preceding working day, and continues on sua-eedmp, alternate Fridays or preceding working days, as the case may be, the rate of penal interest shall be increased to a rate of five per cent, per annum above the bank rate* on each Buch shortfall in respect of that alternate Friday and each succeeding alternate Friday or preceding working day, if su- h 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 rcquiie a banking company to furnish to it a return in the form and manner specified by It showing particulars of its assets maintained in accoidancc with this section and its el'maad and time liabilities in Tndia, as ,n the close of business on each day of a month; and
(6) without prejudice to ihe provisions of sub-section (4) , on the failure of a banking company to maintain as on any day, the amount so required to be maintaintd by or under clause (a) of sub-section (2A) the Reserve Bank may, in respect of such default, require the banking company to pay penal interest for that day aa 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 subsection (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, (h) of sub-section
(4) penal interest at the increased rate of flvc per cent, above the bank rate has become pavablP by a banking company, if thereafter the amount required to be maintained on the nexf succeeding alternate Fridav, or if such Friday is a public holidav.
the next preceding working day, is still below the prescribed minimum, every director, manager or secretary of the bankina company, who is knowingly and wilfully a partv to the defau'f.
shall be punishable with fine which mav extend to five hundrcl rupees and with a further fine which mav extend <n five hundred rupees for each subsequent alternate- Fridnv or the nrecedin?
worW&E dny> as thr ease may be, or) which 'hr default pontinn?".
SEC. 1J THE GAZETTE OF INDIA EXTRAORDINARY i7
(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 clause (a) of sub-section (2A), 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.
27. In section 29 of the Banking Regulation Act, after sub-section
(3), the following sub-section shall be inserted, namely: — Amendment of section
29.
"{3A) Notwithstanding anything to the contrary contained in sub-section (3) of section 210 of the Companies Act, 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.".
1 of 1958.
28. In section 34A of the Banking Regulation Act, for sub-section (3), the following sub-section shall be substituted, namely: — Amendment of section
34A."(3) For the purposes of this section "banking company" includes the Reserve Bank, the Development Bank, the Exim Bank, the National Bank the State Bank of India, a corresponding new bank, a regional rural bank and a subsidiary bank,'.
29. In section 35 of the Banking Regulation Act,—
(i) after sub-section (1), the following sub-section shall be inserted and shall be deemed to have always been so inserted, namely: — Amendment of section
35.
"(1A) (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 (2), 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.";
(ii) in sub-section (2), after the words, brackets and figure "any officer making an inspection under sub-section (1)", the words, brackets, figure and letter "or a scrutiny under sub-section (JA)" shall be inserted;
(Hi) in sub-section (3), after the words, brackets and figure "inspection under sub-section (2)", the words, brackets, figure and letter "or a scrutiny under sub-section (1A)" shall be inserted;
(lv) in sub-section (4), after the words "on any inspection", the words "or scrutiny" shall be inserted.
tB THE GAZETTE OF INDIA EXTRAORDINARY [PART II-
30. In section 35B of the Banking Regulation Act,—
(i) in sub-section (1), in clause (a), after the words "any provision relating to", the words "the maximum permissible number of directors or" shall be inserted;
Amendment of s?ction
35B.
(n) in sub-section (2), for the words and figures "provisions of sections 310", the words and figures "provisions of sections 269, 310" shall be substituted;
(in) after sub-section (2), the following sub-section shall be inserted, namely: — " (2 A) Nothing contained in section 198 of the Companies Act, 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.".
1 of 1956.
31. In section 36AB of the Banking Regulation Act, in sub-section
(1), the proviso shall be omitted.
Amendment of section
36AB.
,'!2 In section 36AD of the Banking Regulation Act, for sub-section (.?), the following sub-section shall be substituted, namely: — Amendment oi section
36AD. ' (3) For the purposes of this section "banking company" includes the Reserve Bank, the Development Bank, the Exim Bank, the National Bank, the State Bank of India, a corresponding new bank, a regional rural bank and a subsidiary bank.'.
33. In section 42 of the Banking Regulation Act,—
(i) for the words and figures "sections 460, 464 and 465", the word and figures "section 460" shall be substituted; and Amendment of section
42.
(h) the words "or with the appointment of a committee of inspection" shall be omitted- ?A, In section 45 of the Banking Regulation Act,—
(a) in sub-section (5), in clause (i),— Amendment of section
45. (i) in the first proviso, for the words "as are applicable", in the two places where they occur, the words "as are, at the time ot such payment or grant, applicable'1 shall be substituted;
(n) in the second proviso, for the words "the doubt or difference shall be referred", the words "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 cla-use," shall be substituted;
(b) in sub-section (8), the following shall be inserted at the end, namely: — "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";
SEC. 1J THE GAZETTE OF INDIA EXTRAORDINARY itj (c> in sub-section (9), for the words "On and from such date as may be specified by the Central Government in this behalf", the words "On and from the date of the coming into operation of, or as the case may be, the date specified in this behalf in, the scheme" shall be substituted;
(d) in sub-section (25), for the words and figures "any other banking institution notified by the Central Government under section 51", the words "a .subsidiary bank or a corresponding new bank" shall be substituted;
(c) the following Explanation shall i>e inserted at the end, namely: — "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.'1.
35. In sections 45A and 45J of the Banking Regulation Act, tor the words and figures "Code of Criminal Procedure, 1898", wherever they occur, the words and figures "Code of Criminal Procedure, 1973" shall be substituted and in sub-section (5) of the said section 45J, the words "and all such trials shall be without the aid of a jury" shall be omitted.
Amendment of section - 45A an:
45J.
5 of 1898.
2 of 1974.
36. In section 45S of the Banking Regulation Act, for the words "Chief Presidency Magistrate or the District Magistrate", wherever they occur, the words "Chief Metropolitan Magistrate or the Chief Judicial Magistrate" shall be substituted.
Amendment of section
45S.
37. After section 45X of the Banking Regulation Act, the following Part shall be inserted, namelv: — Insertion of new Part IT1B.'PART IIIB PROVISIONS RELATING TO CERTAIN OPERATIONS OF BANKING COMPANIES
45Y. The Central Government may, after consultation with the Reserve Bank and by notification in the Official Gazette, make rules specifying the periods for which—
(a) a banking company shall preserve its books, accounts and oth«r documents; and
(b) a banking company shall preserve and keep with itself different instruments paid by it.
45Z. (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 45Y, the banking company shall not return the instrument except after making and keeping in its possession a irug 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 untomer 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.
Power of Central Government to make;
rules for the preservation of records.
Return of paid instruments to customers.
20 THE GAZETTE OF INDIA EXTRAORDINARY [PART ll—
45ZA. (i) 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.
Nomination for payment of depositors' money.
(2) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such deposit, where a nomination made in the prescribed manner purports to confer on any person the right to receive the amount of deposit from the banking company, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
(3) Wher^ 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 in whom anv navment is made under this section.
45ZB. 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 ttliat nothing containe in this sub-section shall affect 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.
Notice of claims of other persons regarding deposits not receivable.
45ZC. (I) 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 Nomination for return of articles kept in safe custody with banking oompany.
SEC. 1] THE GAZETTE 6 F INDIA EXTRAORDINARY it sub-section (2), prepare, in such manner as may be directed by the Reserve Bank from time to time, an inventory of the said articles which shall be signed by such nominee or person and shall deliver a copy of the inventory so prepared to such nominee or person.
(4) Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of such article, where a nomination made in the prescribed manner purports to confer on any person the right to receive the article from the banking company, the nominee shall, on the death of the person leaving the article in safe custody, become entitled to the return of the article to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner:
Provided that nothing contained in this section shall affect the right or claim which any person may have against the person to whom, the article is returned in pursuance of this sub-section.
45ZD. 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.
Notice oi claims of other persons regarding articles not receivable.
45ZE. (1) Where an individual is the sole hirer of a locker from a banking company, whether such locker is located in the safe deposit vault of such banking company or elsewhere, such individual may nominate one person to whom, in the event of the death of such individual, the banking company may give access to the locker, and liberty to remove the contents of the locker.
Release of contents of safety lockers.
(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 anyf 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 conientf; of the locker which shall be signed by such nominee or jointly by such nominee and survivors and shall deliver 22 THE GAZETTE OF INDIA EXTRAORDINARY [FART II— 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 subsection (2) or sub-section (2)( as the case may be.
45ZF. No notice of the claim) of any person, othej 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 if.
Notice of claims of other persona regarding safetylockers not receivable.
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.'.
38. In section 4R of the Banking Regulation Act,—
(i) in sub-section (2), for the words "an officer making an inspection under that section", the words "an officer making an inspection or scrutiny under that section" sjhall be substituted;
(ii) for sub-section (4), the following sub-section shall be substituted, namely: — Amendment of section
46.
" (4) If any other provision of this Act is contravened or if any default is made in— (0 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 two thousand rupees, and whe^e a contravention or default is a continuing one, with a further fine which may extend to one hundred rupees for every day, during which the contravention or default continues.".
39. In section 47 of the Banking Regulation Act3 for the words "no court inferior to that of a Presidency Magistrate or a Magistrate of the first class", the words "no court other than that of a Metropolitan Magistrate or n Judicial Magistrate of the first class or any court superior thereto" shall be substituted.
Amendment of section
47.
SEC, 1] THE GAZETTE OF INDIA EXTRAOKDINARY 23
40. Section 51 of the Banking Regulation Act shall be re-numbered as sub-section (1) of that section, and—
(a) m sub-section (1) as so re-numbered— Amend, rnent of section
51.
(i) lor the figures, words, brackets and letters "19 to 21, 23 to 2&, 29 [excluding sub-section (3)], 31, 34, 35, 35A, 36 [excluding clause (d) of sub-section (I)] , 46 to 48", the figures, words, letters and brackets "19 to 21A, 23 to 28, 29 [excluding subsection (3)~\, 31, 34, 3(5, 35A, 36 [excluding clause (d) of subsection (J)], 45Y to45ZF, 46 to 48" shall be substituted;
(ii) for the words, figures and brackets or any corresponding new ibank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, or a Regfiona^ jRujal Bank established under section 3 of the Regional Rural Banks Act, 1976 or any corresponding new bank constituted under sect:on 3 of the Banking Companies (Acquisition and Transfer of. Undertakings) Act, 1980, or any other banking institution notified by the Central Government in this behalf", the words "or any corresponding new bank or a Regional Rural Bank or any subsidiary bank" shall be substituted:
5 of 1970 21 o 1976.
40 of ]9t3O, (Hi) in the proviso,— (A) in clause (a), ffor the words "general manager", the words "managing director" shall be substituted;
(B) for clauses (b) and (c), the following clauses shall be substituted, namely: — " (b) nothing contained in sub-clause (in) of clause
(b) of sub-section (I1) of section 20 shall apply to any bank referred to jn sub-section (1), insofar as the said slub-clause (id) oil clause (b) precludes that bank from entering into any commitment for granting any loan or advance to or on behalf of a company (not being a Government company) in which not less than forty per cent, of the paid-up capital is held (whether singly or taken together) by the Central Government or the Reserve Bank or a corporation owned by that bank; and
(c) nothing contained in section 46 or in seption 47A 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
(n) 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 bank3 (not being the bank of which he is an officer) or of a banking company.";
24 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) after sub-section (1) as so re-numbered, the following yubsection shall be inserted, namely: — "(2) References to a banking company in any rule or direction relating to any provision of this Act referred to in subsection (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.".
41. In section 52 of the Banking Regulation Act,—
(a) sub-section (3) shall be omitted;
(b) after sub-section (4), the following sub-section shall be inserted, namelv:—• Amendment of section
52.
"(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 Housles agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, â the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity at anything previously done under that rule.".
42. In section 56 of the Banking Regulation Act,—
(i) for sub-clause (ii) of clause (c), the following sub-clause shall be substituted, namely: — Amendment of section
50.
"(if) clauses (#), (h) and (rib) shall be omitted;";
(it) for clause (f), the following clause shall be substituted, namely: — '(f) for section 7, the following section shall be substituted, namely: — "7. (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.
Use of words "bank", "banker" or "banking".
(2) Nothing in this section shall apply to—
(a) a primary credit society, or
(b) a co-ope.ratjive society formed for the protection of the mutual interest of co-operative banks or co-operative land mortgage banks, or
(c) any co-operative society, not being a primary credit society, formed by the employees of—
(i) a banking company or the State Bank of India or a corresponding new bank or a subsidiary bank of such banking company. State Bank of India or a corresponding new bank, or SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 25
(ii) a co-ope) ative bank or a primary credit society or a co-operative land mortgage bank, insofar as the word "bank", "banker" or "banking" appears os part of the n=iRin of the employer bank, or as the case miy be, of the bank, whose subsidiary the employer bank is." ';
(Hi) after clause (f), the following clauses shall be inserted, namely: — '(fi) in section 8, for the proviso, the following proviso shall be substituted, namely: — "Provided th^t this section shall not apply—
(a) to any such business r>s iforesa'd which was in the course of being transacted on the commencement of clause (Hi) of section &c>. of tho Banking Laws (Amendment) Act, 1983. so, however, that the said business shall be completed before thp pyvry nf one •"ear from such commencement; or
(b) to s^v b:"T» !3 PS ;" specified <n pursuar^e of clause (o1* of <3"1"> c<^<on (i) -f cp^tion 6;";
( f / i ) i n s e c t i o n 9 , f + ^ < - > - ^ c n n . i - - I H T - ^ ' T * h e f o l l o w i n « • p r o - v i s o s s h a l l h e a u h s l i t ' i ' r ^ 1 n ^ m e l ^ : — • "Provided further that in th° C~SP of 1 primary credit society which b^comes a orinicuy •• i-orterative bank after the commencement of o^urp (riA, < f section 42 of the Banking Laws (Amendment) Act, 5033 the npriod of E"ven years shall commence f> nm t^a dvr it ro b'-^ornes a primary cooperative bank:
Provided ?!so tb^t the " " " f v e "Rnnk *my in any particular pase, extend th° if^res^ -i period n[ reven years bv such period a« it iniy rons^der ^^ce^^ary where it is satisfied that such extend"1 would he 'n th'1 -ritF'>"Pc''"<3 nf the depositors of the ro-opeT+ive b^rk " '•
(iv) in clause (a) f • +he V u - ^ nnd lotfc" "10"B IOC", the fieures and le+fpr- '"im ]QT).T3 1 0 ^ " ^ I 1 ! he ^ihsM+v+ed-
(u) for clause {7), f^e fillov^."1^ -*^n^ choii b° substituted namely: — '(7) for section IS t^p fiV^v/inp se^inn «hin ^» cmbstitutpr!
namely: — "18 (11 V~p"-T co-pt>a Tt;»"^ b"n1r *̂ "+ 'winf ° State co~ operative b^nk foi-- thp ti*T>p ' e'n" •nrlndp^ in tho P'^cond Schedule to thp Reserve H r̂>k o* ipd a Art 1934 (hereinafter referred +n v a "scl-^in1 1 o + ^ Cn o-orr^t^/" B^nk") shall maintain in Tnd'p bv w w of e^sh rpserve with itself or by wav of b^-mrp in a mi^rp-p-f- "Q^nvnt w4th thp •Re<:;pT"srm Cash reserve.
2 of 1834.
26 THE GAZETTE OF INDIA EXTRAORDINARY [PART II - Bank or the State co-operative bank of the State concerned or by way of net balance in current accounts, or, in the case of a primary co-operative bank, with the central co-operative bank of the district concerned, or in one or more of the aforesaid ways, a sum equivalent to at least three per cent, of the total of its demand and time liabilities in India, as on the last Friday of the second preceding fortnight 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 Tndia on buch Fridays or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881 at the close of business on the preceding working day. 26 of 1881.
Explanation,—In this section and in section 24—
(a) "liabilities in India" shall not include—
(i) the paid-up capital or the reserves or any credit balance in the profit and loss account of the co-operative bank;
(ii) any advance taken from a State Government, the Reserve Bank, the Development Bank, the Exim Bank, the National Bank or from the National Co-operative Development Corporation established under section 3 of the National Cooperative Development Corporation Act, 1962 by the co-operative bank;
26 of 1962.
(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 cooperative bank, also an advance taken by it from the State 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 State cooperative 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
(m) in the case of any co-operative bank, the amount of any advance or other credit arrangement drawn and availed of against approved securities;
(b) "fortnight" shall mean the period from Saturday to the second following Friday, both days inclusive;
(c) "net balance in current accounts" shall, in relation to a co-operative bank, mean the excess, if any, of the aggregate of the credit balances in current account maintained by that co-operative bank with the State Bank of India or a subsidiary bank or a corres- SEC. 1] THE GAZETTE Oi' INDIA EXTRAORDINARY 127 ponding new bank, 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 m this behalf shall be reduced by the aggregate of the liabilities of all such banks and institutions to the co-operative bank;
(e) any cash with a co-operative bank or any balance held by a co-operative bank with another bank, shall not, to the extent such cash or such balances represents the balance in, or investment of, Agricultural Credit Stabilisation Fund of such co-operative bank, be1 deemed to be cash maintained in India.
(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."';
(vi) for clause (w), the following clause shall be substituted namely: — '(TO) in section 20A, in sub-section (-*),—
(i) the words and figures ''Notwithstanding anything to the contrary contained in section 293 of the Companies Act 1956," shall be omitted;
1 of 1956.
(ii) in clause (0), for the words "any of its directors" the words "any of its past or present directors" shall bo substituted;';
(vii) in clause (o) relating to the modification of section 22,— (A) in sub-clause (i), for sub-section (2) of section 22 aforesaid as substituted by that sub-clause, the following sub-section shall be substituted, namely: — "(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, shall before the expivy 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 cm banking business shall, before th e expiry of three months from its so coming into existence, every primary credit society which becomes a primary co-operative bank after such commencement shall before the expiry of three months 23 of 1965.
a8 THE GAZETTE 01'' lJMbiA EX1HAORDINARY [PAKT II— from the date on which it so becomes a primary co-operative bank and every cj-oper^ve society other than a primary credit society Si»-"J] before commencing banking business in India, apply in writing to the- Reserve Bank for a licence under this section:
Provided thU nothing in clause (b) of sub-section (/) sha]l be deemed to prohibit—
(i) a co-operative society carrying on business as a co-oper'itive bank ?'_ the commencement of the Banking Laws (Application to Co-operati\7e Societies) Act, 1965;
or 23 of 19S5.
(ii) a co-cfp'-'v.'-.L'v;? b'ir>k whJcli has come into existence as :i result of the division of any other co-operative society carrying on bus:net;s 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 L:>\vs (Application to Co-operative Societies) Act, IBfifj or .;t any time thereafter; or 23 of 19*5.
(Hi) a prLnary credit society wh'ch becomes a primnry co-operative bank after such commencement, from carrying on banking business until it is granted a licence ui pursuance of this section or is, by a notice in writing, notified by the Reserve Bank that the licence cannot be granted to it.";
(B) for sub-clause (ii), the following sub-clauses shall be substituted, namely: — "(ii) sub-section (3 A) shall be omitted;
(Hi) in sub-section (4), in clause (Hi), the words' brackets, figure and letter "and sub-section (3A)" shall be omitted;";
(viii) in clause (p), for sub-c!ause (ii), the following sub-clause shall be substituted, namely: — ' (ii) after sub-section (4), the following sub-section shall be inserted, namely: — "(4A) Any co-opeiative bank other than a primary cooperative 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."';
(ix) for clause (q), the following clause shall be substituted, namely: — '(q) in section 24,—
(i) in sub-section (1), the words "After the expiry of two years from the commencement of this Act," shall be omitted;
&EC. 1] TttE GAZETTE OF INDIA EXTRAORDINARY 29
(ii) for sub-sections (2) and (2A), the following subsections shall be substituted, namely: — " (2) In computing the amount for the purposes of sub-section (i),— ya) any balances maintained in India by a cooperative bank in current account with the Reserve Bank or by way of net balance in current accounts, and in the case of a scheduled State co-operative bank, also the balance required under section 42 of the Reserve Bank of India Act, 1934, to be so maintained;
3 of 1034.
(t>) any balances maintained by a central cooperative bank with the State co-operative bank of the State concerned, and
(c) any balances maintained by a primary cooperative bank with central co-operative bank of the district concerned or with the State co-operative bank of the State concerned, shall be deemed to be cash maintained in Tndla.
(2A) (a) Notwithstanding anything contained in sub-sect.on (/) or in sub-section (2), after the expiry of two years from the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965, or of such fuither period not exceeding one year as the Reserve Bank, having regard to the interests of the cooperative bank concerned, may think fit in any particular case to allow,— 23 of 1965.
0) a scheduled State 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. and2 of 1934.
(ii) every other cooperative bank, in addition to the cash reserve which it is required to maintain under section 18, shall maintain in India, in cash, or in gold valued at a price not exceeding the current market price or in unencumbered approved securities valued at a price determined in accordance with such one or more of, or combination of, the following methods of valuation, namely, valuation with reference to cost price, market price, book value or face value, as may be specified by the Reserve Bank from time to time, an amount which shall not, at the close of business on any day, be less than twentyfive per cent, or such other percentage not exceeding forty per cent, as the Reserve Bank may, from time to time, by notification in the Official Gazette, specify, of the total of its demand and lime liabilities In India, as on thr last Friday of the second preceding fortnight.
3" THE GAZETTE OF INDIA EXTRAORDINARY [.PART II—
(b) In computing the amount for the purpose of clause (a), the following shall be deemed to be cash maintained in India, namely: —
(i) any balance maintained by a scheduled State co-operative bank with the Reserve Bank in excess of the balance required to be maintained by it under section 42 of the Reserve Bank of India Act, 1934; 2 of 1934.
(ii) any cash or balances maintained in India by a co-operative bank, other than a scheduled State co-operative bank, with itself or with the State cooperative bank of the State concerned, or in current account with the Reserve Bank or by way of net balance in current accounts and, in the case of a primary co-operative bank, also any balances maintained with the central co-operative bank of the district concerned, in excess of the aggregate of the cash or balances required to be maintained under section 18;
(iii) any net balance in current accounts.
Explanation.—-For the purposes of this sub-section—
(a) approved securities, or a portion thereof, representing investment of monies of Agricultural Credit Stabilisation Fund of a co-operative bank shall not be deemed to be unencumbered approved securities;
(b) in case a co-operative bank has taken an advance against any balance maintained with the State co-operative bank of the State concerned or with the central co-operative bank of the district concerned, such balance to th e extent to which it has been drawn against or availed of shall not be deemed to be cash maintained In India;
(c) for the purpose of clause (a), the market price of an approved security shall be the price as on the date of the issue of the notification or as on any earlier or later date, as may be notified from time to time by the Reserve Bank in respect of any class or classes of securities;";
(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.";
(iv) in sub-section (6), in clause (a), for the words "fourteen days", the words "thirty days" shall be substituted;';
SEC, 1] THE GAZETTE OF INDIA EXTRAORDINARY 31
(x) after clause (q), the following clause shall be inserted, namely: — 1 (qq) after section -4, the following section shall be inserted, namely: — "24A. Without prejudice to the provisions of section 53, the Reserve Bank may, by notification in the Official Gazette, declare that, for sucii period and subject to such conditions as may he specified in such notification the whole or any part of the provisions of section 18 or section 24, as may be specified therein, shal1 net npply to any co-operative bank or class of co-operative bank;;, with reference to all or any of th e offices of such co-nperative bank or banks, or with reference to the whole or any part of the assets and liabilities of such co-operative bank or banks." ';
Power to exempt.
(xi) in clau.:e (w) relating to the modification of section 35,- -
(a) in sub-claufe (?), for item (b), the following item shal1 be substituted, namely: — '(b) the following pioviso shall bp inserted at the end, namely: — "Provided that the Reserve Bany may, if it considers it necessary or expedient so to do, cause an inspec tion to be made of a primary co-operative bank undei this sub-section by one or more officers of a State cooperative bank in the State in which such primary cooperative bank is registered-" ';
(b) sub-clauses (Hi) and (iv) shall be re-numbered as subclauses (iv) and (v) respectively ?nd before sub-clause (iv) as so re-numbered, the following sub-clause shall be inserted namely: — ' (Hi) after sub-section (4), the following sub-section shall be inserted, namely: — "(4A) Without prejudice to the provisions of subsection (4), the Re-serve Bank may, if it considers it necessary nr expedient so to do supply a copy of the report on any inspection or scrutiny to the State cooperative hunk and the Registrar of co-operative societies of the State in which the bank which has been inspected or whose affairs have been scrutinised is registered." ';
(xii) for clause (z), the following clause shall be substituted namely: — '(z) in section 36, in sub-section (1),—
(a) clause (b) shall bo 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 co-operative credit on sound oo THE GAZETTE OP INDIA EXTRAORDINARY [PART II— lines it is necessary so to do, by an order in writing and on such terms and conditions as may be specified therein,— (/) depute one or more of its officers to watch the proceedings at any meeting of the Board oi directors of the co-operative bank or of any other body constituted by it and require the co-operative 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 co-operative 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 co-operative bank or its offices or branches are being conducted and make a report thereon;" ';
(xiii) in clause (za) relating to the modification of section 36A, in sub-clause (ii), in sub-section (3) as inserted by that sub-clause, for the words, brackets, letters and figure "in clause (ccc) of section 5", the words, brackets, letters and figure "In clause (ccv) of section 5" shall be substituted;
(xiv) after clause (za), the following clause shall be inserted, namely: — "(zaa) in section 30AD, sub-section (3) shall be omitted;";
(xv) for clause (zc), the following clause shall be substituted, namely: — '(zc) in section 46,—
(i) in sub-section (4), the word "or" occurring at the end of clause (i) and clause (ii) shall be omitted;
(it) in clause (a) of the Explanation, after the words "includes a", the words "co-operative society" shall be inserted;'.
CHAPTER V AMENDMENTS TO THE STATE BANK OF INDIA ACT, 1955
43. In Chapter VT, after section 35 of the State Bank of India Act, 1955 23 of 1955.
(hereafter in this Chapter referred to as the State Bank Act), the following section shall be inserted, namely: — Insertion of new section 35A:
"35A. (J) Where any arrangement entered into by the State Bank with a company provides for the appointment by the State Bank of one or more directors of such companyj such provisions and any appointment of directors made In pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1956; or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the company, and any provision regarding share qualification, age limit, number of directorships, removal from 1 of 19fl8.
Arrangement with the State Bank OQ appoint.
ment of directors to prevail SEC. 1] THE GAZETTE OF INDIA EXTRAOEDINARY 33 olliije ul directors and such like conditions contained in any such law or instrument dloresaid, snail nui, apply LO any dnecior appointed by the State Bank in pursuance 01 the arrangement aa aioresaid,
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the State Bank and may be removed or substituted by any person by order in writing of the State Bank;
(b) 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 discharge of his duties as a director or anything in relation thereto;
(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement.".
44. In section 40 01 the State Bank Act,—
(i) in sub-section (2), for the words "auditors' report on the working of the State Bank", the words "auditors' report and a report by the Central Board on the working and activities of the State Bank" shall be substituted;
Amendment of section
40.
(ii) after sub-section (3), the following sub-section shall be inserted, namely: — "(4) The Central Government shall cause the auditors' report and the report by the Central Board on the working and activities of the State Bank to be laid, as soon as may be after they are received, 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.".
45, In section 42 of the State Bank Act, in sub-section (2), after the word "working", the words "and activities" shall be inserted.
Amendment nf section 42.
46. In section 43 of the State Bank Act, in sub-section (2), for the words "as may be", the words "as may, by general or special order, be" shall be substituted.
Amendment Of section 43.
47. In section 49 of the State Bank Act, after sub-section (2), the following sub-section shall be inserted, namely: - Amendment ol section 49.
"(3) 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 34 THE GAZETTE OF INDIA EXTRAORDINARY [PABT II— may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.".
48. In section 50 of the State Bank Act, after sub-section (3), the following sub-section shall be inserted, namely: — Amendment of section 50.
"(4) Every regulation shall, as soon as may be after it is made under this Act by the Central Board, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid 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 regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.".
CHAPTER VI AMENDMENTS TO THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 19̂ 9
49. After section 36 of the State Bank of India, (Subsidiary Banks) Act, 1959 (hereafter in this Chapter referred to as the Subsidiary Banks Act), the following section shall be inserted, namely: — 38 of 1959.
Insertion.
of new section 36A "3tfA. (2) A subsidiary bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India, where it nas a branch, for—
(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India;
and Subsidiarybank to act as arent of the Reserve Bank.
(b) undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it.
(Z) The terms and conditions on which any such agency business shall be carried on by the subsidiary bank on behalf of the Reserve Bank shall be such as may be agreed upon.
(3) If, no agreement can be reached on any matter referred to in. sub-section (2) or if a dispute arises between a subsidiary bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final.
(4) A subsidiary bank may transact any business or perform any functions entrusted to it under sub-section (1), by Itself or through any agent approved by the Reserve Bank-".
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 35 50- After section 38 of the Subsidiary Banks Act, the following section shall be inserted, namely: — Insertion of new section
38A.
"38A. (1) Where any arrangement entered into by a subsidiary bank with a company provides for the appointment by the subsidiary bank of one or more directors of such company, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1956, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the company, and any provision regarding share qualification, age limit, number of directorships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the subsidiary bank in pursuance of the arrangement as aforesaid.
Arrangement with subsidiary banks on appointment of directors to prevail.
1 of 1956
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the subsidiary bank and may be removed or substituted by any person by order in writing of the subsidiary bank;
(b) 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 discharge of his duties as a director or anything in relation thereto;
(c) not be liable to retirement by rotation and shall not bo taken into account for computing the number of directors liable to such retirement.".
51. Tn section 43 of the Subsidiary Banks Act.—
(i) in sub-section (/),—
(a) in the opening portion, for the words "and the Reserve Bank", the words ", the Reserve Bank and the Central Govern ment"' shall be substituted;
Amendment c* section
43.
(b) in clause (a), after the words "on the working", the words "and activities" shall b e inserted;
(ii) after sub-section (2), the following sub-section shall be inserted, namely; — "(3) The Central Government shall cause the auditor's report and the report by the Board of directors on the working and activitier of the subsidiary bank to be laid, as soon as may be after they nre m-eived, before each House of Parliament.
36 THE GAZETTE OF INDIA EXTRAORDINABY [PART II— 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.".
52. In section 44 of th e Subsidiary Banks Act,—
(o) in sub-section (7), in the proviso, for the words "the State Bank, or to the Reserve Bank", the words "the State Bank, the Reserve Bank or the Central Government" shall be substituted;
Amendment of section
44.
(b) in suo-sectJon (2), after the word "working", the words "and actities' shall be inserted.
5't, In section 53 of the Subsidiary Banks Act, after sub-section (2), the following sub-section shall be inserted, namely: — Amendment of lection 53.
"(3) Where the State Bank nominates any of its officers as director of a subsidiary hnnl-r, puch director shall not incur any obligation or liability by reason only of his being a director or for anvthing donP or omittpd to he done in pood faith in the discharge of his duties as diredor or anything in relation thereto.".
54. Tn sertinn R2 of the Subsidiary Banks Act, for sub-section (3), the following sub-section shall bo substituted, nnrne^y:—Amendment of section
62. "(3) Every rule made under this section shall be laid, as soon ns may be after *t is made, before each House of Parliament, while It is in session, for n total period of thirty davs, which may be comnri^pd in one session or in two or more successive sessions, and if, Vofnrp the C^V'TV of the1 option immediately fd'ow^'ntr thp session or the successive sessions aforesaid, both Houses agree in making any modification 'n thp rife or both Houses ngree that the rule should Trot he made, the ru""e chili thereafter have effect onlv in such modified form or be of no effect, as the rase may be; so. however, that any such modification or annulment shall be without nre-indice, to the validity of anything previously done under that rule,".
55. Tn section 63 of the Subsidiary Banks Act, after sub-section (3), the following sub-section ah-ill be inserted, namely: —Amendment of section
63.
under this Act by the State B^nk, be forwarded to the Central Gov- "(4) Everv regulation shall, OR soon as mav be after it is made prnment and that flnvernmpnt shall cause fl enny of the same to be laid befnre each Hoiise of Pnrli'jment, while it is ^n session, for a total period of thirty dnvs, which may be comprised in one session or in Iwn or m^re successive sessions, and if, before the expiry of the session imm'-dintpiv f^llnwiut* the spss'on or the successive SP^'or.s pfnrosfiid, both Ho'is^s P^ree in makin? rmv raodificai'nn in the regulation or both. Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or bp nf no effect, as the case rmv be; so, however, thr-t any such modification or annulment shall be without prejudice to thp validity of anything previously done under that regulation"- SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 37
CHAPTER VII AMENDMENTS TO THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961
56. In section 2 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (hereafter in this Chapter referred to as the Deposit Insurance Corporation Act),— Amendment of section 2.
47 of 1961.
(a) in olavr.e (b), for the words and figures " , ^ subsidiary bank and any other banking institution notified under section 51 of the Banking Regulation Act, 1949", the words "and a subsidiary bank" shall be substituted;
10ofl&49.
(b) for clause (ep), the following clause shall be substituted, namely: — '(ee) "corresponding new bank" means a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or, as the case may be, under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980;';
6 of 1970.
40 of 1980.
(c) in clause (i),-~
(i) after the words "banking company", at the first place where they occur, the words "or a corresponding new bank" shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 1971;
(ii) for sub-clause (i), the following sub-clauses shall be substituted nnd shall be deemed to have been substituted with effect from the 19th day of July, 1969, namely: — "(i) a banking company referred to In clause (a) or clause (o) of sub-section (1) of section 13, or
(ia) a corresponding new bank to which the provisions of clause (a) of sub-section (1) of section 13 apply, or";
(d) in clause (k), the words and figures ", and includes any banking institution notified under section 51 of the said Act after such commencement" shall be omitted.
57. In section 4 of the Deposit Insurance Corporation Act, in subsection (1), for the words "fifteen crores of rupees", the words "fifty crores of rupees" shall be substituted.
Amendment of flection 4.
58. In section 6 of the Deposit Insurance Corporation Act,—
(a) for sub-section (2), the following sub-section shall be substituted, namely: — Amendment of section 6.
"(2) (i) A director nominated under clause (b) or clause (c) of sub-section (1) shall hold office during the pleasure of the authority nominating him; snd 38 THE GAZETTE OF INDIA EXTRAORDINARY [PART II— («) A director nominated under clause (d) or clause (c) of sub-section (1), shall hold office for such period not exceeding four years as may be specified by the Central Government and thereafter until his successor assumes office.";
(b) in sub-section (3), in the opening portion, after the word, brackets and letter "clause (d)", the words, brackets and letter "or clause (e)" shall be inserted;
(c) after sub-section (4), the following sub-section shall be inserted, namely: — "(5) If a director nominated under clause (e) of sub-section
(a) becomes subject to any of the disqualifications mentioned in clauses (a) to (d) of sub-section (3); or
(b) la absent without leave of the Board for more than three consecutive meetings thereof, his seat shall thereupon become vacant.".
59. In section 11 of the Deposit Insurance Corporation Act, the words and figures ", or, as the case may be, after it.is notified under section 51 of the said Act" shall be omitted.
Amendment of section 11,
60. In section 13 of the Deposit Insurance Corporation Act, in subsections (2) and (3), the brackets and letter "(b)," shall be omitted.
Amendment of eection 13.
61. In section 13A of the Deposit Insurance Corporation Act, in clause
(b) of sub-section (2), after sub-clause ("), the following sub-clause shall be inserted, namely: — Amendment of êctioYi 13 A.
" (Hi) every co-operative bank which has come into existence after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968, as a result of the division of any other co-operntiv?
society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business, at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965, or at any time thereafter, within three months of its having made an application for a licence under the said section:".
56 of 1968.
23 of 1969.
62. In section 16 of the Deposit Insurance Corporation Act, in subsection (1), in the proviso, for the words and figures "of section 13", the words, brackets and figures "of sub-section (7) of section 13" shall be substituted and shall be deemed to have been substituted with effect from the 19th day of July, 1969.
Amendment of section 16.
63. In section 32 of the Deposit Insurance Corporation Act, in subsection (2), for the words "for not less than thirty days hefore each House of Parliament as soon as may be after each such report is received by the Central Government", the words "as soon as may be after they are received before each House of Parlrament, while it is in session, for a total period of thirty days which may he comprised in one session or in two or more successive sessions" shall be substituted.
Amendment of section 32.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINAKY 39
64. In section 50 of the Deposit Insurance Corporation Act, after subsection (3), the following sub-section shall be inserted, namely:— Amendment of section 50.
(4) iiivery regulation shall, as soon as may be after it is made under this Act by the Board, be forwarded to -the Central Government and that Government shall cause a copy of the same to be laid belore 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 tne session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation."
CHAPTER VIII AMENDMENTS TO THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970.
65. In section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (hereafter in this Chapter referred to as the Bank Nationalisation Act),— Amendment of section 3.
f of 1970.
(i) in sub-section (5), for the words "one or more forms of business", the words "one or more of the other forms of business" shall be substituted;
(ii) after sub-section (6), the following sub-section shall be inserted, namely: — " (7) (i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch, for—
(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India;
and
(b) undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it.
(ii) The terms and conditions on which any such agency business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon, (Hi) If no agreement can be reached on any matter referred to in clause (ii), or if a dispute arises between the corresponding new bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final.
(iv) The corresponding new bank may transact any business or perform any functions entrusted to it under clause (i), by itself or through any agent approved by the Reserve Bank.".
An THE GAZETTE OF INDIA EXTRAORDINARY [PART II— 6<i. In section 9 of the Bank Nationalisation Act,—
(i) sub-section (5) shall be re-numbered as sub-section (6) and before sub-section (6) as so re-numbered, the following sub-section and Explanation shall be inserted, namely: — Amendment of section 9.
'(5) On and from the date of coming Into operation of a scheme made under this section with respect to any of the matters referred to in clause (c) of sub-Section (2) or any matters incidental, consequential and supplemental thereto,—
(a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and employees of each of them and on any other persons having any right or liability In relation to any of them including the trustees or other persons, managing or In any other manner connected with, any provident fund or other fund maintained by any of them;
(b) the properties and assets of the corresponding new bank, or as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vested in, and the liabilities of the corresponding new bank, or, as the case may be, of the banking institution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of, the corporation or corporations brought into existence by reconstitution of the banking institution or the corresponding new bank, as the case may be.
Explanation,—In this section, "banking institution" means a banking company and includes tho State Bank of Indita or a subsiiary bank.'.
(U) in sub-section (6) as so re-numbered, for the words "which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following", the words "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" shall be substituted.
67. In section 10 of the Bank Nationalisation Act,— 0) after sub-section (4), the following Explanations shall be inserted, namely: — Amendment of section L0.
"Explanation L—For the purposes of this Act—
(a) the balance-sheet shall not be treated as not disclosing a true and fair view of the affairs of the corresponding new bank, and
(b) the profit and loss account shall not be treated as not showing a true balance of profit or loss for the period covered by such account, merely by reason of the fact that the balance-sheet or, as the case may be, the profit and loss account does not disclose any SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 41 matters which are by the provisions of the Banking Regulation Act, 1949, read with the relevant provisions of this Act or any other Act, not required to be disclosed.
10 of mo.
Explanation 11.—J? or the purposes of this Act the accounts of the corresponding new bank shall not be deemed as having not been properly drawn up on the ground merely that they do not disclose certain matters if-- (0 those matters are such as the corresponding new bank is, by virtue of any provision contained in the Banking Regulation Act, 1949, read with the relevant provisions of this Act, or any other Act, not required to disclose; and 10 of 1949.
(ii) the provisions referred to m clause, (i) are specified in the balance-sheet and profit and loss account of the corresponding new bank or in the auditor's report.";
(ii) after sub-section (7), the following sub-section shall be inserted, namely :^- " (7A) Every corresponding new bank shall furnish to the Central Government the annual balance-sheet, the profit and loss account, and the auditor's report and a report by its Board of directors on the working and activities of 'the bank during the period covered by the accounts.";
(in) ip. s>ub-ŝ a!tion (8), for the words "for not less than thirty days before each House of Parliament as soon as may be after each such report is received by the Central Government", the words "'as soon as may be after they are received 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" shall be substituted;
(iv) after sub-section (8), the following sub-section shall be inserted, namely: — "(9) Without prejudice to the foregoing provisions, the Central Government may, at any time, appoint such number of auditors as it thinks fit to examine and report on the accounts of a corresponding new bank and the auditors so appointed shall have all the rights, privileges and authority In relation to the audit of the accounts of the corresponding new bank which an auditor appointed by the corresponding new bank has under this section.".
68. After section 16 of the Bank Nationalisation Act, the following section shall be inserted, namely: — Insertion of new Motion
16A.
"16A. (1) Where any arrangement entered into by a corresponding new bank with a company provides for the appointment by the corresponding new bank of one or more directors of such company, such provision and any appointment of directors made In pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1969, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the Company, and Arrange, meat with correspondhrg hew bank «Q appointment of directors to prevail.
loHPM.
4a THE GAZETTE OF INDIA EXTRAORDINARY [PAHT II— any provision regarding share qualification, age limit, number of directorships, removal from office of directors and such like conditions contained in any such law or Instrument aforesaid, shall not apply to any director appointed by the corresponding new bank in pursuance of the arrangement as aforesaid,
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the corresponding new bank and may be removed or substituted by any person by order in writing of the corresponding new bank;
(b) not incur any obligation or liability by reason only of hia being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto;
(c) not be liable to retirement by rotation and shall not b« taken into account for computing the number of directors liable to such retirement.".
69. In section 19 of the Bank Nationalisation Act, after sub-section
(3), the following sub-section shall be inserted, namely: — Amendment of Section 19.
"(4) Every regulation shall, as soon, as may be after it is made under this Act by the Board of directors of a corresponding new bank, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid 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 regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.".
CHAPTER IX AMENDMENTS TO THE REGIONAL RURAL BANKS ACT, 1976
70. Section 30'of the Regional Rural Banks Act, 1976 shall be renumbered as sub-section (1) thereof, and after sub-section (1) as so renumbered, the following sub-section shall be inserted, namely: — 21 of 1976 Amendment °t nection 3Q.
" (2) Every regulation shall, as soon as may be after it is made under this Act by the Board of directors, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total p2riod 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 regulation or both Houses agree that the regulation should not be made, the regulation 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 *>he validity of anything previously done under that regulation.".
SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 43
CHAPTER X AMENDMENTS TO THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980
71. In section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 [hereafter in this Chapter referred to as the Benk (Second) Nationalisation Act],— Amendment of (action 3 40 ol 1 WO.
(i) in sub-section (5), for the words "one or more forms of business", the words "one or more of the other forms of business" shall be substituted;
(ii) after sub-section (6), the following sub-section shall be inserted, namely: —
(7) (i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch, for—
(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India; and
(b) undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it.
(ii) The terms and conditions on which any such agency business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon (Hi) If no agreement can be reached on any matter referred to in clause (ii), or If a dispute arises between the corresponding new bank and the Reserve Bank as to the interpretation of any.
agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final.
(iv) The corresponding new bank may transact any business or, perform any functions entrusted to It under clause (i), by itself or through any agent approved by the Reserve Bank.".
72. In section 9 of the Bank (Second) Nationalisation Act, subsection (5) shall be re-numbered as sub-section (6) and before subjection (6) as so re-numbered, the following sub-section and Explanation shall be inserted, namely: — Amendment of section ft '(5) On and from the date of coming into operation of a scheme made under this section with respect to any of the matters referred to in clause (c) of sub-section (2) or any matters incidental, consequential and supplemental thereto,—
(a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and employees of each of them and on any other persons having any right or liability in relation to any of them including th» trustees or other persons, managing or in any other manner connected with, any provident fund or other fund maintained by any of them;
44 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) the properties and assets of the corresponding new bank or, as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vested in, and the liabilities of the corresponding new bank or, as the case may be, of the banking institution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of, the corporation or corporations brought into existence by reconstitution of the banking institution or the corresponding new bank, as the case may be.
Explanation.—In this section, "banking institution" means a banking company and includes the State Bank of India or a subsidiary bank.'.
73. In section 10 of the Bank (Second) Nationalisation Act,—
(i) after sub-section (i), the following Explanations shall be inserted, namely: — Amendment of section :o .
"Explanation I.—For the purposes of this Act,-r-
(a) the balance-sheet shall not be treated as not disclosing a true and fan- view of the affairs of the corresponding new bank, and
(b) the profit and loss account shall not be treated as not showing a true balance of profit or loss for the period covered by such account, merely by reason of the fact that the balance-sheet or, as the case may be, the profit and loss account, does not disclose any matters which are by the provisions of the Banking Regulation Act, 1949, read with the relevant provisions of this Act or any other Act, not required to be disclosed. 10 of 1MB.
Explanation II.—-For the purposes of this Act, the accounts of the corresponding new bank shall not be deemed os having < not been properly drawn up on the ground merely that they do not disclose certain matters if— ({) those matters are such as the corresponding new bank is, by virtue of any provision contained in the Banking Regulation Act, 1940, read with the relevant provisions of this Act, or any other Act, not required, to disclose; and 10 at 1940.
(it) the provisions referred to in. clause (i) are specified in the balance-sheet and profit and loss account of the corresponding new bank or in the auditor's report.";
(U) after sub-section (7), the following sub-section shall be inserted, namely: — • " (7A) Every corresponding new bank shall furnish to the Central Government the annual balance-sir jet, the profit and loss account, and the auditor's report and a report by Its Board of directors on the working and activities of the TDank during the period covered by the accounts.";
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 45
(m) in sub-section (A1), for JJ I words "foj not less than thirty days before each House of PailiLnur.t is soon as may be after each such report is received by uie Central Government", the words k'as soon as may be after they are received be core each House of Parliament, while it is in session, for a total p r riod of thirty days which may be comprised in one session or in two or more successive sessions" shall be substituted;
(iv) after sub-section (8), the following sub-section, shall be inserted, namely: — " (9) Without prejudice to the foregoing provisions, the Central Government may, at any time, appoint such number of auditors as it thinks fit to examine and report on the accounts of a corresponding new bark and the auditors so appointed shall have all the lights, jur* leges, and avthorit;, in relation to the audit of the accounts of the correspoiiding new bank which'an auditor appointed by the corresponding new bank has under this section/'
74. After section 16 of the Bank (Second) Nationalisation Act, the following section shall bo incited, namely: — Insertion of new section 16A "16A. (1) Where any arrangement entered into by a corresponding new bank with a company provides for the appointment by the corresponding new bank of one or more directors of such company, such provision, and any appointment of directors made in pursuance thereof shall be valid and effocthe notwithstanding anything to the contrary contained in the Companies Act, 1956 or in any other law for the time being in force < r in the memorandumj articles of association or any other instrument relating to the company, and any provision regarding share qualification, age limit, number of directorships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the corresponding new bank in pursuance of the arrangement as aforesaid.
Airangement with corresponding new bank on " appointment of directors to picvail.
1 »f J156
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the corresponding new bank and may be removed or substituted by any person byorder in writing of the corresponding new bank;
(b) 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 discharge of his duties as a director or anything in relation thereto;
(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable 'to such retirement.".
75. In section 19 of the Bank (Second) Nationalisation Act, after subsection (3), the following sub-section ^holi be inserted namely: — Amendment of saction 1*.
"(4) Every regulation shall, as soon as may be after it is made under this Act by the Board of directors of a corresponding new
4.6 THE GA2BTTE OF INDIA EXTRAORDINAUY LPART II—SIC. 1] bank, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parl iament , whi le it is in session, for a total period of thi r ty 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 t he session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree tha t the regulation should not be made, the regulat ion shall thereafter have effect only i,i such modified form or be of no effect, as the case may be; so, howt ver, tha t any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.".
R. V. S. PERI SASTRI, Secy,, to the Govt, of India.
PRINTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA fRESS, MINTO ROAD, NfcW DELHI AND PUBLISHEP BY THE CONTROLLER OF PUBLICATIONS, DELHI, 1984