[Notwithstanding anything contained in any other law for the time being in force, the provisions of this Act], shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely:—
(a) throughout this Act, unless the context otherwise requires,—
Economic Zones Act, 2005 (28 of 2005)” omitted by Act 17 of 2007, s. 3 (w.e.f. 23-1-2007). draft before each House of Parliament” (w.e.f. 23-1-2007).
(i) references to a “banking company” or “the company” or “such company” shall be construed as references to a co-operative bank;
(ii) references to “commencement of this Act” shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965);
[(iii) references to “memorandum of association” or “articles of association” shall be construed as references to bye-laws;
(iv) references to the provisions of the Companies Act, 1956 (1 of 1956), except in Part III and Part IIIA, shall be construed as references to the corresponding provisions, if any, of the law under which a co-operative bank is registered;
(v) references to “Registrar” or “Registrar of Companies” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;]
(b) in section 2, the words and figures “the Companies Act, 1956 (1 of 1956), and” shall be omitted;
(c) in section 5,— [(i) after clause (cc), the following clauses shall be inserted namely:—
(cci) “co-operative bank” means a state co-operative bank, a central co-operative bank and a primary co-operative bank;
(ccii) “co-operative credit society” means a co-operative society, the primary object of which is to provide financial accommodation to its members and includes a co-operative land mortgage bank; [(cciia) “co-operative society” means a society registered or deemed to have been registered under any Central Act for the time being in force relating to the multi-State co-operative societies, or any other Central or State law relating to co-operative societies for the time being in force;]
(cciii) “director”, in relation to a co-operative society, includes a member of any committee or body for the time being vested with the management of the affairs of that society; [(cciiia) “multi-State co-operative bank” means a multi-State co-operative society which is a primary co-operative bank;
(cciiib) “multi-State co-operative society” means a multi-State co-operative society registered as such under any Central Act for the time being in force relating to the multi- State co-operative societies but does not include a national co-operative society and a federal co-operative;]
(cciv) “primary agricultural credit society” means a co-operative society,—
(1) the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops); and
(2) the bye-laws of which do not permit admission of any other co-operative society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose;
(ccv) “primary co-operative bank” means a co-operative society, other than a primary agricultural credit society,—
(1) the primary object or principal business of which is the transaction of banking business;
(2) the paid-up share capital and reserves of which are not less than one lakh of rupees; and
(3) the bye-laws of which do not permit admission of any other co-operative society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose;
(ccvi) “primary credit society” means a co-operative society, other than a primary agricultural credit society,—
(1) the primary object or principal business of which is the transaction of banking business;
(2) the paid-up share capital and reserves of which are less than one lakh of rupees; and
(3) the bye-laws of which do not permit admission of any other co-operative society as a member:
Provided that this sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose.
Explanation.—If any dispute arises as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final;
(ccvii) “central co-operative bank”, 1*** “primary rural credit society” and “state co-operative bank” shall have the meanings respectively assigned to them in the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);] [(ii) clause (nb) shall be omitted;] * * * * * *
(e) in section 6, in sub-section (1),— * * * * * *
(ii) in clause (d), after the word “company”, the words “co-operative society,” shall be inserted;
* * * * * [(f) for section 7, the following section shall be substituted, namely:— “7. Use of words “bank”, “banker” or “banking”.—(1) No co-operative society other than a co-operative bank shall use as part of its name or in connection with its business any of the words “bank”, “banker” or “banking”, and no co-operative society shall carry on the business of banking in India unless it uses as part of its name at least one of such words.
(2) Nothing in this section shall apply to—
(a) a primary credit society, or
(b) a co-operative society formed for the protection of the mutual interest of co- operative banks or 3***, or
(c) any co-operative society, not being a primary credit society, formed by the employees of—
(i) a banking company or the State Bank of India or a corresponding new bank or a subsidiary bank of such banking company, State Bank of India or a corresponding new bank, or
(ii) a co-operative bank or a primary credit society or a 3***, in so far as the word “bank”, “banker” or “banking” appears as part of the name of the employer bank, or as the case may be, of the bank, whose subsidiary the employer bank is.”]; * * * * * *
(h) for section 11, the following section shall be substituted, namely:— ‘11. Requirement as to minimum paid-up capital and reserves.—(1) Notwithstanding any law relating to co-operative societies for the time being in force, no co-operative bank shall commence or carry on the business of banking in India unless the aggregate value of its paid-up capital and reserves is not less than one lakh of rupees:
Provided that nothing in this sub-section shall apply to—
(a) any such bank which is carrying on such business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), for a period of three years from such commencement; or
(b) to a primary credit society which becomes a primary co-operative bank after such commencement, for a period of two years from the date it so becomes a primary co-operative bank or for such further period not exceeding one year as the Reserve Bank, having regard to the interests of the depositors of the primary co-operative bank, may think fit in any particular case to allow.
(2) For the purposes of this section, “value” means the real of exchangeable value and not the nominal value which may be shown in the books of the co-operative bank concerned.
(3) If any dispute arises in computing the aggregate value of the paid-up capital and reserves of any such co-operative bank, a determination thereof by the Reserve Bank shall be final for the purposes of this section.’;
[(i) for section 12, the following section shall be substituted, namely:— “12. Issue and regulation of paid-up share capital and securities by co-operative banks.—
(1) A co-operative bank may, with the prior approval of the Reserve Bank, issue, by way of public issue or private placement,—
(i) equity shares or preference shares or special shares, on face value or at premium; and
(ii) unsecured debentures or bonds or other like securities with initial or original maturity of not less than ten years, to any member of such co-operative bank or any other person residing within its area of operation, subject to such conditions and ceiling, limit or restriction on its issue or subscription or transfer, as may be specified by the Reserve Bank in this behalf.
(2) Save as otherwise provided in this Act,—
(i) no person shall be entitled to demand payment towards surrender of shares issued to him by a co-operative bank; and
(ii) a co-operative bank shall not withdraw or reduce its share capital, except to the extent and subject to such conditions as the Reserve Bank may specify in this behalf.”;] [(j) for section 18, the following section shall be substituted:— “18. Cash reserve.—(1) Every co-operative bank, not being 2[a co-operative bank] for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 [(hereinafter referred to as a “scheduled co-operative Bank”)], shall maintain in India by way of cash reserve with itself or by way of balance in a current account with the Reserve Bank or the State Co-operative Bank of the State concerned or by way of net balance in current accounts, or, in the case of a primary co-operative bank, with the central co-operative bank of the district concerned, or in one or more of the aforesaid ways, a sum equivalent to 4[such per cent.] of the total of its demand and time liabilities in India, as on the 5[last day] of the second preceding fortnight 6[as the Reserve Bank may specify, by notification in the official Gazette, from time to time having regard to the needs for securing the monetary stability in the country] and shall submit to the Reserve Bank before the fifteenth day of every month a return showing the amount so held on 7[the last day of the fortnight] during a month with particulars of its demand and time liabilities in India on 8[the last day of the fortnight or if the last day of any such fortnight] is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at the close of business on the preceding working day.
Explanation.—In this section and in section 24—
(a) “liabilities in India” shall not include—
(i) the paid-up capital or the reserves or any credit balance in the profit and loss account of the co-operative bank;
(ii) any advance taken from a State Government, the Reserve Bank, 9*** the Exim Bank, 1[the Reconstruction Bank], 1[the National Housing Bank]], the National Bank 1[,
the Small Industries Bank,] or from the National Co-operative Development Corporation established under section 3 of the National Co-operative Development Corporation Act, 1962 (26 of 1962) by the co-operative bank;
(iii) in the case of a State or Central co-operative bank, also any deposit of money with it representing the reserve fund or any part thereof maintained with it by any other co-operative society within its area of operation, and in the case of a central co-operative bank, also an advance taken by it from the 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 [co-operative bank] of the State concerned or the central co-operative bank of the district concerned;
(v) in the case of any co-operative bank, which has granted an advance against any balance maintained with it, such balance to the extent of the amount outstanding in respect of such advance; and
(vi) in the case of any co-operative bank, the amount of any advance or other credit arrangement drawn and availed of against approved securities;
[(b) “fortnight” shall mean the period from the first day to the fifteenth day of each calendar month or sixteenth day to the last day of each calendar month, 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 3[a corresponding new bank or IDBI Bank Ltd.], over the aggregate of the credit balances in current accounts held by the said banks with such co-operative bank;
(d) for the purpose of computation of liabilities, the aggregate of the liabilities of a co-operative bank to the State Bank of India, a subsidiary bank, a corresponding new bank, a Regional Rural Bank, a banking company or any other financial institution notified by the Central Government in this behalf shall be reduced by the aggregate of the liabilities of all such banks and institutions to the co-operative bank;
(e) any cash with a co-operative bank or any balance held by a co-operative bank with another bank, shall not, to the extend such cash or such balances represents the balance in, or investment of, Agricultural Credit Stabilisation Fund of such co-operative bank, be deemed to be cash maintained in India.
[(1A) If the balance held by co-operative bank referred to in sub-clause (cci) of clause (c) of section 56 of the Banking Regulation Act, 1949 (10 of 1949), at the close of business on any day is below the minimum specified under sub-section (1), such co-operative bank shall, without prejudice to the provisions of any other law for the time being in force, be liable to pay to the Reserve Bank, in respect of that day, penal interest at a rate of three per cent. above the bank rate on the amount by which such balance falls short of the specified minimum, and if the shortfall continues further, the penal interest so charged shall be increased to a rate of five per cent. above the bank rate in respect of each subsequent day during which the default continues.
(1B) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an application in writing by the defaulting co-operative bank, that such defaulting co-operative bank had sufficient cause for its failure to comply with the provisions of sub-section (1), it may not demand the payment of the penal interest.
(1C) The Reserve Bank may, for such period and subject to such conditions as may be specified, grant to any co-operative bank such exemptions from the provisions of this section as it thinks fit with reference to all or any of its officers or with reference to the whole or any part of its assets and liabilities.]
(2) The Reserve Bank may, for the purposes of this section and section 24, specify from time to time, with reference to any transaction or class of transactions, that such transaction or transactions shall be regarded as liability in India of a co-operative bank, and, if any question arises as to whether any transaction or class of transactions shall be regarded for the purposes of this section and section 24, as liability in India of a co-operative bank, the decision of the Reserve Bank thereon, shall be final.”;]
(k) for section 19, the following section shall be substituted, namely:— “19. Restriction on holding shares in other co-operative societies.—No co-operative bank shall hold shares in any other co-operative society except to such extent and subject to such conditions as the Reserve Bank may specify in that behalf:
Provided that nothing contained in this section shall apply to—
(i) shares acquired through funds provided by the State Government for that purpose;
(ii) in the case of a Central co-operative bank, the holding of shares in the State co-operative bank to which it is affiliated;
(iii) in the case of a primary co-operative bank, the holding of shares in the Central co-operative bank to which it is affiliated or in the State co-operative bank of the State in which it is registered:
Provided further that where any shares are held by a co-operative bank in contravention of this section at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965) the co-operative bank shall without delay report the matter to the Reserve Bank and shall, notwithstanding anything contained in this section, be entitled to hold the shares for such period and on such conditions as the Reserve Bank may specify.”; * * * * * [(m) in section 20A, in sub-section (1),—
(i) the words and figures “Notwithstanding anything to the contrary contained in section 293 of the Companies Act, 1956 (1 of 1956),” shall be omitted;
(ii) in clause (a), for the words “any of its directors” the words “any of its past or present directors” shall be substituted;] * * * * *
(o) in section 22,—
(i) for sub-sections (1) and (2), the following sub-sections shall be substituted, namely:— “(1) Save as hereinafter provided, no co-operative society shall carry on banking business in India unless— * * * * *
(b) it is a co-operative bank and holds a licence issued in that behalf by the Reserve Bank, subject to such conditions, if any, as the Reserve Bank may deem fit to impose:
Provided that nothing in this sub-section shall apply to a co-operative society, not being a primary credit society or a co-operative bank carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), for a period of one year from such commencement:
[Provided further that nothing in this sub-section shall apply to a primary credit society carrying on banking business on or before the commencement of the Banking Laws (Amendment) Act, 2012 (4 of 2013), for a period of one year or for such further period not exceeding three years, as the Reserve Bank may, after recording the reasons in writing for so doing, extend.]
[(2) Every co-operative society carrying on business as a co-operative bank at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), shall before the expiry of three months from such commencement, every co-operative bank which comes into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business shall, before the expiry of three months from its so coming into existence, 3[every primary credit society which had become a primary co-operative bank on or before the commencement of the Banking Laws (Amendment) Act, 2012 (4 of 2013), shall before the expiry of three months from the date on which it had become a primary co-operative bank] and every co-operative society 4*** shall before commencing banking business in India, apply in writing to the Reserve Bank for a licence under this section:
Provided that nothing in clause (b) of sub-section (1) shall be deemed to prohibit—
(i) a co-operative society carrying on business as a co-operative bank at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965); or
(ii) a co-operative bank which has come into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965) or at any time 5[thereafter]; * * * * * from carrying on banking business until it is granted a licence in pursuance of this section or is, by a notice in writing, notified by the Reserve Bank that the licence cannot be granted to it.”;] [(ii) sub-section (3A) shall be omitted;
commencement shall before the expiry of three months from the date on which it so becomes a primary co-operative bank” (w.e.f. 18-1-2013).
(iii) in sub-section (4), in clause (iii), the words, brackets, figure and letter “and sub-section (3A)” shall be omitted;]
[22A. Validation of licences granted by Reserve Bank to multi-State co-operative societies.
Notwithstanding anything contained in any law or, judgment delivered or decree or order of any court made,—
(a) no licence, granted to a multi-State co-operative society by the Reserve Bank under section 22, which was subsisting on the date of commencement of the Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (24 of 2004), shall be invalid or be deemed ever to have been invalid merely by the reason of such judgment, decree or order;
(b) every licence, granted to a multi-State co-operative society by the Reserve Bank under section 22, which was subsisting on the date of commencement of the Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (24 of 2004), shall be valid and be deemed always to have been validly granted in accordance with law;
(c) a multi-State co-operative society whose application for grant of licence for carrying on banking business was pending with the Reserve Bank on the date of commencement of the Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004 (24 of 2004) shall be eligible to carry on banking business until it is granted a licence in pursuance of section 22 or is, by a notice in writing notified by the Reserve Bank that the licence cannot be granted to it;] * * * * * [(q) in section 24,— * * * * * * * * * *
(iii) in sub-section (3), for the proviso, the following proviso shall be substituted, namely:— “Provided that every co-operative bank, other than a primary co-operative bank, shall also furnish within the said period, a copy of the said return to the National Bank.”; * * * * * * [(qq) after section 24, the following section shall be inserted, namely:— “24A. Power to exempt.—Without prejudice to the provisions of section 53, the Reserve Bank may, by notification in the Official Gazette, declare that, for such period and subject to such conditions as may be specified in such notification the whole or any part of the provisions of section 18 or section 24, as may be specified therein, shall not apply to any co-operative bank or class of co-operative banks, with reference to all or any of the offices of such co-operative bank or banks, or with reference to the whole or any part of the assets and liabilities of such co-operative bank or banks]; * * * * * [(ri) in the second proviso to section 26, for the expression “regional rural Bank” the expression “co-operative bank, other than a primary cooperative bank” shall be substituted; * * * * *
(rii) in section 27, for sub-section (3), the following sub-section shall be substituted, namely:— “(3) Every co-operative bank, other than a primary co-operative bank, shall submit a copy of the return which it submits to the Reserve Bank, under sub-section (1) also to the National Bank and the powers exercisable by the Reserve Bank under sub-section (2) may also be exercised by the National Bank in relation to co-operative banks, other than primary co-operative banks.”;
(s) for 1[section 29], the following section shall be substituted, namely:— “29. Accounts and balance-sheet.—(1) At the expiration of each year ending with the 30th day of June 2[or at the expiration of a period of twelve months ending with such date as the Central Government may, by notification in the Official Gazette, specify in this behalf,] every co-operative bank, in respect of all business transacted by it, shall prepare with reference to that year 1[or the period] a balance-sheet and profit and loss account as on the last working day of the year 1[or the period] in the Forms set out in the Third Schedule or as near thereto as circumstances admit.
(2) The balance-sheet and profit and loss account shall be signed by the manager or the principal officer of the bank and where there are more than three directors of the bank, by at least three of those directors, or where there are not more than three directors, by all the directors.
(3) The Central Government, after giving not less than three months’ notice of its intention so to do by a notification in the Official Gazette, may from time to time by a like notification amend the Forms set out in the Third Schedule:]
[Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this sub-section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the preparation of, or for other matters relating to, the balance-sheet or profit and loss account in respect of the concerned year or period, as the case may be.] * * * * * [(t) in section 31,— * * * * *
(ii) for the second proviso, the following proviso shall be substituted, namely:— “Provided further that a co-operative bank, other than a primary co-operative bank shall furnish such returns also to the National Bank.”;] * * * * * * * * * * * *
(w) in section 35,—
(i) in sub-section (1),—
(a) for the words and figures “section 235 of the Companies Act, 1956 (1 of 1956)”, the words “any law relating to co-operative societies for the time being in force” shall be substituted;
[(b) the following proviso shall be inserted at the end, namely:—
“Provided that the Reserve Bank may, if it considers it necessary or expedient so to do, cause an inspection to be made of a primary co-operative bank under this sub- section by one or more officers of a State co-operative bank in the State in which such primary co-operative bank is registered.”];
(ii) in sub-section (4), clause (b) shall be omitted;
[(iii) after sub-section (4), the following sub-section shall be inserted, namely:— “(4A) Without prejudice to the provisions of sub-section (4), the Reserve Bank may, if it considers it necessary or expedient so to do supply a copy of the report on any inspection or scrutiny to the State co-operative bank 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.”];
[(iv)] in sub-section (6), for the expressions “regional rural banks” and “regional rural bank”, wherever they occur, the expressions “co-operative banks other than primary co- operative banks” and “co-operative bank other than a primary co-operative bank” shall, respectively be substituted;] [(v)] the Explanation shall be omitted; * * * * * * * * * * * * * * * * * * * * * * * * [(zaa) after section 36AA of the principal Act, the following sections shall be inserted, namely:— “36AAA.—Supersession of Board of directors of a 6[co-operative bank].—(1) Where the Reserve Bank is satisfied that in the public interest or for preventing the affairs of a 6[co- operative bank] being conducted in a manner detrimental to the interest of the depositors or of the 6[co-operative bank] or for securing the proper management of the 6[co-operative bank], it is necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order, supersede the Board of directors of such 6[co-operative bank] for a period not exceeding five years as may be specified in the order, which may be extended from time to time, so, however, that total period shall not exceed five years;
[Provided that in the case of a co-operative bank registered with the Registrar of Co-operative Societies of a State, the Reserve Bank shall issue such order in consultation with the concerned State Government seeking its comments, if any, within such period as the Reserve Bank may specify.]
(2) The Reserve Bank may, on supersession of the Board of directors of the 6[co-operative bank] under sub-section (1) appoint an Administrator for such period as it may determine.
(3) The Reserve Bank may issue such directions to the Administrator as it may deem appropriate and the Administrator shall be bound to follow such directions.
(4) Upon making the order of supersession of the Board of directors of a 6[co-operative bank],—
(a) the chairman, managing director and other directors as from the date of supersession of the Board shall vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) or this Act or any other law for the time being in force, be exercised and discharged by or on behalf of the Board of directors of such a 1[co-operative bank] or by a resolution passed in general meeting of such co-operative bank, shall, until the Board of directors of such co-operative bank is reconstituted, be exercised and discharged by the Administrator appointed by the Reserve Bank under sub-section (2):
Provided that the power exercised by the Administrator shall be valid notwithstanding that such power is exercisable by a resolution passed in the general meeting of such multi-State co-operative bank.
(5) (a) The Reserve Bank may constitute a committee of three or more persons who have experience in law, finance, banking, administration or accountancy to assist the Administrator in discharge of his duties.
(b) The committee shall meet at such times and places and observe such rules of procedure as may be specified by the Reserve Bank.
(6) The salary and allowances to the Administrator and the members of the committee constituted by the Reserve Bank shall be such as may be specified by the Reserve Bank and be payable by the concerned 1[co-operative bank].
(7) On and before expiration of period of supersession of the Board of directors as specified in the order issued under sub-section (1), the Administrator of the 1[co-operative bank] shall call the general meeting of the society to elect new directors.
(8) Notwithstanding anything contained in any other law or in any contract, or bye-laws of a 1[co-operative bank], no person shall be entitled to claim any compensation for the loss or termination of his office.
(9) The Administrator appointed under sub-section (2) shall vacate office immediately after the Board of directors of the multi-State co-operative society has been constituted.
[(10) The provisions of section 36ACA shall not apply to a co-operative bank.] * * * * *
36AAC. Reimbursement to Deposit Insurance Corporation by liquidator or transferee bank.
Where a multi-State co-operative bank, being an insured bank within the meaning of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), is wound up and the Deposit Insurance Corporation has become liable to the depositors of the insured bank under sub-section (1) or sub-section (2) of section 16 of that Act, the Deposit Insurance Corporation shall be reimbursed by the liquidator or such other person in the circumstances, to the extent and in the manner provided in section 21 of that Act.”;
(zab) In section 36AD, sub-section (3) shall be omitted;
[(zb) Part IIC shall be omitted;]
[(zc) in section 46,— * * * * *
(ii) in clause (a) of the Explanation, after the words “includes a”, the words “co-operative society” shall be inserted;] * * * * * *
(ze) section 49 shall be omitted; * * * * * * [(zg) in section 49B, references to “Central Government” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;] * * * * * *
(zi) section 51 shall be omitted;
[(zj) after section 53, the following section shall be inserted, namely:—
“53A. Powers to exempt co-operative banks in certain cases.—Notwithstanding anything contained in any other provisions of this Act, the Reserve Bank may, from time to time, on being satisfied that it is necessary so to do, declare, by notification in the Official Gazette, that the provisions of item (iii) of clause (b) of sub-section (1) and sub-section (2), of section 10, clause (a) of sub-section (2) of section 10A, sub-section
(1A) of section 10B and clause (b) of sub-section (1) of section 35B of this Act shall not apply to a co-operative bank or class of co-operative banks, either generally or for such period as may be specified therein, subject to such conditions, limitations or restrictions as it may think fit to impose.”,] [(zji) in section 54, after the expression “Reserve Bank”, wherever it occurs, the expression “or the National Bank” shall be inserted;]
(zk) for section 55 and the First Schedule, the following section shall be substituted, namely:—
“55. Act 18 of 1891 and Act 46 of 1949 to apply in relation to co-operative banks.—(1) The Bankers’ Books Evidence Act, 1891(18 of 1891) shall apply in relation to a co-operative bank as it applies in relation to a bank as defined in section 2 of that Act.
(2) The Banking Companies (Legal Practitioners’ Clients’ Accounts) Act, 1949 (46 of 1949) (shall apply in relation to a co-operative bank as it applies in relation to a banking company as defined in section 2 of that Act.”;
(zl) for the Third Schedule and the Fourth Schedule, the following Schedule shall be substituted, namely:— “THE THIRD SCHEDULE (see section 29) FORM A FORM OF BALANCE-SHEET CAPITAL AND LIABILITIES PROPERTY AND ASSETS Rs. P. Rs. P Rs. .P. Rs. P. 1. CAPITAL: 1. CASH:
(i) Authorised Capital In hand with Reserve Bank [National Bank] State Bank of ……Shares of Rs…….each …….Shares of Rs. …Each India, State Co-operative Bank and Central Co-operative Bank….
(ii) Subscribed Capital 2. BALANCES WITH OTHER ................Shares of Rs.........................each BANKS: ....................Shares of Rs.........................each ....................................................................... (i) Current deposits……
(iii) Amount called up (ii) Savings bank deposits …. On.......Shares at Rs.................each (iii) Fixed deposits……….. less called unpaid 3. MONEY AT CALL AND SHORT NOTICE On.........Shares at Rs.................each less called unpaid of ………… 4. INVESTMENTS:
(i) In Central and State
(iii) above, held by Government securities (at book
(a) Individuals ............... value)………………………..
(b) Co-operative institutions ............... Face value Rs. ...............
(c) State Government............... Market value Rs. ............... 2. RESERVE FUND AND OTHER (ii) Other Trustee securities……. RESERVES: (iii) Shares in co-operative
(i) Statutory Reserve………… institutions other than in item (5)
(ii) Agricultural (Credit Stabilization Fund)…… below....................
(iii) Building Fund……………………. (iv) Other investments (to be specified) ....................
(iv) Dividend Equalization Fund………….. 5. INVESTMENT OUT OF
(v) Special Bad Debts Reserve…………… THE PRINCIPAL
(vi) Bad and Doubtful Debts Reserve…………. /SUBSIDIARY STATE
(vii) Investment Depreciation Reserve……… PARTNERSHIP FUNDS:
(viii) Other Funds and Reserves (to be specified) In shares of: 3. PRINCIPAL/SUBSIDIARY STATE (i) Central co-operative banks…... PARTNERSHIP FUND ACCOUNT: (ii) Primary agricultural credit For share capital of: societies…………………… …
(i) Central co-operative banks
(iii) Other societies……………..
(ii) Primary agricultural credit societies........... 6. ADVANCES† :.
(iii) Other societies..............................
(i) Short-term loans, cash credits, 4. DEPOSITS AND OTHER ACCOUNTS: overdrafts and bills
(i) Fixed deposits*………………………… discounted……….
(a) Individuals**……………………. Of which secured against:
(b) Central co-operative banks………… (a) Government and other
(c) Other societies…………………. approved securities………..
(ii) Savings Bank Deposits……………… (b) Other tangible securities@
(a) Individuals**…………………….. of the advances, amount due from individuals…………………..
(b) Central co-operative banks…………… Of the advances, amount overdue
(c) Other societies............. Considered bad and doubtful of recovery.
(ii) Medium-term loans Of which secured against:
capital and liabilities property and assets
(iii) Current deposits……….. (a) Government and other approved
(a) Individuals**……………………….. securities
(b) Central co-operative banks………….. (b) Other tangible securities@
(c) Other societies……………………… Of the advances, amount due
(iv) Money at call and short notice…………. from individuals †.................... 5. BORROWINGS†: Of the advances, amount Rs. P. Rs. P
(i) From the Reserve Bank of India Rs. P. Rs. P overdue:...................................... [the National Bank]/State/Central Considered bad and doubtful of co-operative bank: recovery....................................
(a) Short-term loans, cash credits and (iii) long-term loans overdrafts……….. Of which secured against: Of which secured against: (a) government and other approved (A) Government and other approved securities………………… securities. (b) other tangible securities@ (B) Other tangible securities@................... Of the advances, amount due from
(b) Medium-term loans of which secured individuals..................... against: Of the advances, amount overdue: (A) Government and other approved Considered bad and doubtful of securities. recovery……………… (B) Other tangible securities@....................... 7. INTEREST RECEIVABLE:
(c) Long-term loans Of which overdue Of which secured against: Considered bad and doubtful of (A) Government and other approved recovery securities 8. BILLS RECEIVABLE BEING (B) Other tangible securities@........................ BILLS FOR COLLECTION AS
(ii) From the State Bank of India per contra………………….
(a) Short-term loans, cash credits and 9. BRANCH ADJUSTMENTS…... overdrafts……………………. 10. PREMISES LESS Of which secured against: DEPRECIATION……... (A) Government and other approved 111. FURNITURE AND FIXTURES securities. LESS DEPRECIATION. (B) Other tangible securities@.................... 12. OTHER ASSETS (to be
(b) Medium-term loans Of which secured specified)……………………. against 13. NON-BANKING ASSETS (A) Government and other approved ACQUIRED IN securities SATISFACTION OF CLAIMS (B) Other tangible securities@ (stating mode of valuation)…….
(c) Long-term loans Of which secured 14. PROFIT AND LOSS ………… against: (A) Government and other approved securities. (B) Other tangible securities@....................
capital and liabilities property and assets
Rs. P. Rs. P Rs. P. Rs. P
(iii) From the State Government
(a) Short-term loans Of which secured against (A) Government and other approved securities. (B) Other tangible securities@................
(b) Medium-term loans Of which secured against: (A) Government and other approved securities….. (B) Other tangible securities@............
(c) Long-term loans Of which secured against: (A) Government and other approved securities. (B) Other tangible securities@...............
(iv) Loan from other sources (source and security to be specified) 6.BILLS FOR COLLECTION BEING BILLS RECEIVABLE As per contra ………………… 7. BRANCH ADJUSTMENTS…………….. 8. OVERDUE INTEREST RESERVE……. 9. INTEREST PAYABLE ……………. 10.
other liabilities
(i) Bills payable………….
(ii) Unclaimed dividends………….
(iii) Suspense. . . . . ..
(iv) Sundries . . . . . .. 11. PROFIT AND LOSS Profit as per last balance-sheet Less appropriations Add profit for the year brought from the Profit and Loss Account Total . . . . . . . .
contingent liabilities
(i) Outstanding liabilities for guarantees issued………………….. Total . . . . . . .
(ii) Others ………….. . Total. . . . . ..
NOTES *“Fixed deposits” will include reserve fund deposits of societies, employees provident fund deposits, staff security deposits, recurring deposits, cash certificates, etc. ** Under the item “individuals” deposits from institutions other than cooperative banks and societies may be included. † “Borrowings” and “Advances”.—Short-term loans will be for periods up to 15 months, medium-term loans from 15 months to 5 years and long-term loans over 5 years. @ “other tangible security” will include borrowings against gold and gold ornaments, repledge of goods, mortgage of land, etc. General Instructions.— The corresponding figures (to the nearest rupees, if so desired) for the year immediately preceding the year to which the balance-sheet relates should be shown in separate columns.
FORM B FORM OF PROFIT AND LOSS ACCOUNT Profit and loss account for the year ended
EXPENDITURE INCOME Rs. P. Rs. P. Rs. P. Rs. P. 1. Interest on deposits, borrowings, etc. . . . 1. Interest and discount. . . . 2. Salaries and allowances and provident fund. 2. Commission, exchange and . . . . . . . . . brokerage . . . . . . . . . 3. Directors and local committee members’ 3. Subsidies and donations. . . fees and allowances. 4. Income from non-banking 4. Rent, taxes, insurance, lighting, etc. . . assets and profit from sale of or dealing with such assets. . 5. Law charges. . . . . . . 5. Other receipts. . . . . . . 6. Postage, telegrams and telephone Charges……. 6. Loss (if any). . . . . . . . 7. Auditor’s fees . . . . . . . 8. Depreciation on and repairs in property 9. Stationery, printing and advertisement, etc……….. 10. Loss from sale of or dealing with non-banking assets. . . . . . . 11. Other expenditure . . . . . . 12. Balance of profit . . . . . . Total . . . . . . . Total. . . . . . . .
General Instructions.—The corresponding figures (to the nearest rupee, if so desired) for the year immediately preceding the year to which the profit and loss account relates should be shown in separate columns.”.
(See section 55) AMENDMENTS Year No. Short title Amendments 1 2 3 4 1934 2 The Reserve (1) In section 17, to clause (15A), the following shall be added, namely :— Bank of India Act, “and under the Banking Companies Act, 1949 (4 of 1949)”. 1934.
(2) (a) Section 18 shall be renumbered as sub-section (1) of that section and in sub-section (1), as so renumbered,—
(i) in clause (3) after the words “of that section”, the following words shall be added, namely:— “or when the loan or advance, is made to banking company as defined in the Banking Companies Act, 1949 (4 of 1949), against such other form of security as the Bank may consider sufficient”;
(ii) for the words “under this section” wherever the occur, the words “under this sub-section” shall be substituted;
(b) after sub-section (1) as so renumbered, the following sub-section shall be inserted, namely:— “(2) Where a banking company to which a loan or advance has been made under the provisions of clause (3) of sub-section (1) is wound up, any sums due to the Bank in respect of such loan or advance, shall subject only to the claims, if any, of any other banking company in respect of any prior loan or advance made by such banking company against any security, be a first charge on the assets of the banking company.”
(3) In section 42, for sub-section (6), the following sub-section shall be substituted, namely:— “(6) The bank shall, save as hereinafter provided, by notification in the Gazette of India,—
(a) direct the inclusion in the Second Schedule of any bank not already so included which carries on the business of banking in any Province of India and which—
(i) has a paid-up capital and reserves of an aggregate value of not less than five lakhs of rupees, and
(ii) satisfies the Bank that its affairs are not being conducted in a manner detrimental to the interests of its depositors; and
(iii) is a company as defined in clause (2) of section 2 of the Indian Companies Act, 1913 (7 of 1913) or a corporation or a company incorporated by or under any law in force in any place outside the Provinces of India;
(b) direct the exclusion from that Schedule of any scheduled bank—
(i) the aggregate value of whose paid-up capital and reserves becomes at any time less than five lakhs of rupees, or
(ii) which is, in the opinion of the Bank after making an inspection under section 35 of the Banking Companies Act, 1949, conducting its affairs to the detriment of the interests of its depositors, or
(iii) which goes into liquidation or otherwise ceases to carry on banking business:
Year No. Short title Amendments 1 2 3 4
Provided that the Bank may, on application of the scheduled bank concerned and subject to such conditions, if any, as it may impose, defer the making of a direction under sub-clause (i) or sub-clauses (ii) of clause (b) for such period as the bank considers reasonable to give the scheduled bank and opportunity of increasing the aggregate value of its paid-up capital and reserves to not less than five lakhs of rupees or, as the case may be, of removing the defects in the conduct of its affairs;
(c) alter the description is that Schedule whenever any scheduled bank changes its name.
Explanation.—In this sub-section, the expression ‘value’ means the real or exchangeable value and not the nominal value which may be shown in the books of the 163 bank concerned; and if any dispute arises in computing the aggregate value of the paid up capital and reserves of a bank, a determination thereof by the Bank shall be final for the purposes of this sub-section.
THE SECOND SCHEDULE.—[Repeals] Rep. by the Repealing and Amending Act, 1957 (36 of 1957), s. 52 and I Sch. (w.e.f. 17-9-1957).
THE THIRD SCHEDULE (See section 29) [FORM A FORM OF BALANCE SHEET
Balance Sheet of ____________________(here enter name of the Banking Company) Balance Sheet as on 31st March _________________________(Year) (000's omitted) Capital and Liabilities Schedule As on 31-3— As on 31-3— (current year) (previous year) Capital 1 Reserves and surplus 2 Deposits 3 Borrowings 4 Other liabilities and provisions 5 ___________ ___________ TOTAL:
ASSETS Cash and Balances with Reserve Bank of 6 India Balances with Banks and money at call and short notice Investments Advances Fixed Assets Other Assets TOTAL: Contingent liabilities 12 Bill for collection
SCHEDULE I—CAPITAL
As on 31-3— As on 31-3— (current year) (previous year) I. FOR NATIOINALISED BANKS Capital (Fully owned by Central Government) _________
II. FOR BANKS INCORPORATED OUTSIDE INDIA Capital
(i) (The amount brought in by banks by way of Start-up capital as prescribed by RBI should be shown under this head)
(ii) Amount of deposit kept with the RBI under Section 11(2) of the Banking Regulation Act, 1949. TOTAL: III. FOR OTHER BANKS Authorised Capital (Shares of Rs. each) Issued Capital (Shares of Rs. each) Subscribed Capital (Shares of Rs. each) Called-up Capital (Shares of Rs. each) Less : Calls unpaid Add : Forfeited shares SCHEDULE 2—RESERVES AND SURPLUS
As on 31-3— As on 31-3— (current year) (previous year) I. Statutory Reserves Opening Balance Additions during the year Deductions during the year II. Capital Reserves Opening Balance Additions during the year Deductions during the year III. Share premium Opening Balance Additions during the year Deductions during the year IV. Revenue and other Reserves Opening Balance
Additions during the year Deductions during the year V. Balance of Profit and Loss Account ____________ ____________ TOTAL : (I, II, III, IV and V) ____________ ____________
SCHEDULE 3—DEPOSITS As on 31-3— As on 31-3— (current year) (previous year) A. I. Demand Deposits
(i) From banks
(ii) From others II. Savings Bank Deposits III. Term Deposits
(i) From banks
(ii) From others ____________ ____________ TOTAL : (I, II, III) ____________ B. (i) Deposits of branches in India
(ii) Deposits of branches outside India ________ ____________ TOTAL SCHEDULE 4—BORROWINGS
As on 31-3— As on 31-3— (current year) (previous year) I. Borrowing in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies II. Borrowings outside India ____________ ____________ TOTAL : (I and II) ___________ ____________ Secured borrowings included in I and II above—Rs. SCHEDULE 5 —OTHER LIABILITIES AND PROVISIONS As on 31-3— As on31-3— (current year) (previous year) I. Bills payable
II. Inter-office adjustments (net)
III. Interests accrued IV. Others (Including provisions) ____________ ____________ TOTAL : ____________ ____________ SCHEDULE 6—CASH AND BALANCES WITH RESERVE BANK OF INDIA As on 31-3— As on 31-3— (current year) (previous year) I. Cash in hand (Including foreign currency notes) II. Balance with Reserve Bank of India
(i) in Current Account
(ii) in other Accounts ____________ ____________ TOAL : (I and II) ____________ ____________
SCHEDULE 7—BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE As on 31-3— As on 31-3— (current year) (previous year) I. In India
(i) Balances with banks
(a) In Current Accounts
(b) In Other Deposit Accounts
(ii) Money at call and short notice
(a) With banks
(b) With other institutions ____________ ____________ TOTAL : (I and II) ____________ ____________ II. Outside India
(i) in Current Accounts
(ii) in Other Deposit Accounts
(iii) Money at call and short notice ____________ ____________ TOTAL : (I, II and III) ____________ ____________ ____________ ____________ GRAND TOTAL : (I and II) ____________ ____________ SCHEDULE 8—INVESTMENTS As on 31-3— As on 31-3— (current year) (previous year) I. Investments in India in
(i) Government Securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and Bonds
(v) Subsidiaries and/or joint ventures
(vi) Others (to be specified) ____________ ____________ TOTAL :
II. Investments outside India in
(i) Government securities (Including local authorities)
(ii) Subsidiaries and/or joint ventures abroad
(iii) Other investments (to be specified) ____________ Total : ____________ GRAND TOTAL : (I and II) ____________ ____________
SCHEDULE 9—ADVANCES As on 31-3__ As on 31-3__ current year) (previous year) A. (i) Bills purchased and discounted
(ii) Cash credits, overdrafts and loans repayable on demand
(iii) Term loans ____________ ____________ TOTAL : ____________ ____________ B. (i) Secured by tangible assets
(ii) Covered by Bank/Government Guarantees
(iii) Unsecured TOTAL : ____________ ____________ ____________ ____________
C. I. Advances in India
(i) Priority sectors
(ii) Public sector
(iii) Banks
(iv) Others ____________ ____________ TOTAL : II. Advances Outside India
(i) Due from banks
(ii) Due from others
(a) Bills purchased and discounted
(b) Syndicated loans
(c) Others ____________ ____________ TOTAL : ________ ___________ ____________ ____________ GRAND TOTAL : (C.I. & C.II) ____________ ____________
SCHEDULE 10—FIXED ASSETS As on 31-3— As on 31-3— (current year) (previous year) I. Premises At cost as on 31st March of the preceding year Additions during the year Deductions during the year Depreciation to date II. Other Fixed Assets (including furniture and fixtures) At cost as on 31st March of the preceding year Additions during the year Deductions during the year Depreciation to date TOTAL : (I and II) ____________ ____________ ____________ ____________ SCHEDULE 11—OTHER ASSETS As on 31-3— As on 31-3— (current year) (previous year) I. Inter-office adjustment (net)
II. Interest accrued III. Tax paid in advance/tax deducted at source IV. Stationery and stamps V. Non-banking assets acquired in satisfaction of claims VI. Others* ____________ ____________ TOTAL : ____________ ____________ *In case there is any unadjusted balance of loss the same may be shown under this item with appropriate foot-note. SCHEDULE 12—CONTINGENT AVAIBILITIES As on 31-3__ As on 31-3__ (current year) (previous year) I. Claims against the bank not acknowledged as debts II. Liability for partly paid investments III. Liability on account of outstanding forward exchange contracts IV. Guarantees given on behalf of constituents
(a) In India
(b) Outside India V. Acceptances, endorsements and other obligations VI. Other items for which the bank is contingently Liable ____________ ____________ TOTAL : ____________ ____________
FORM B (000’s omitted) FORM OR PROFIT AND LOSS ACCOUT FOR THE YEAR ENDED ON 31ST MARCH (YEAR)
Schedule No. Year ended 31-3— Year ended 31-3— (current year) (previous year)
I. INCOME 13 Interest earned 14 Other Income TOTAL :
II. EXPENDITURE 15 Interest expended 16
Operating expenses Provisions and contingencies TOTAL : III. PROFIT/LOSS Net Profit/Loss (-) for the year Profit/Loss (-) brought forward TOTAL : IV. APPROPRIATIONS Transfer to statutory reserves Transfer to other reserves Transfer to Government/proposed dividend Balance carried over to balance sheet TOTAL :
SCHEDULE 13—INTEREST EARNED Year ended on Year ended on 31-3__ 31-3__ (current year) (previous year)
I. Interest/discount on advance/bills II. Income on investments III. Interest on balances with Reserve Bank of India and other inter-bank funds IV. Others ______________ ______________ TOTAL : ______________ ______________
SCHEDULE 14—OTHER INCOME Year ended on Year ended on 31-3— 31-3— (current year) (previous year) I. Commission, exchange and brokerage II. Profit on sale of investments Less : Loss on sale of investments III. Profit on revaluation of investments Less : Loss on revaluation of investments IV. Profit on sale of land, buildings and other assets
Less : Loss on sale of land, buildings and other assets V. Profit on exchange transactions Less : Loss on exchange transactions VI. Income earned by way of dividends etc. from subsidiaries/companies and/or joint ventures abroad/in India VII. Miscellaneous Income ______________ ______________ TOTAL : ______________ ______________
NOTE : Under items II to V loss figures may be shown in brackets.
SCHEDULE 15—INTEREST EXPENDED Year ended on Year ended on 31-3__ 31-3__ (current year) (previous year)
I. Interest on deposits II. Interest on Reserve Bank of India/ inter-back borrowings III. Others
TOTAL : ______________ ______________ ______________ ______________ SCHEDULE 16—OPERATING EXPENSES Year ended on Year ended on 31-3......... 31-3................. (current year) (previous year) I. Payments to and provisions for employees II. Rent, taxes and lighting III. Printing and stationery IV. Advertisement and publicity V. Depreciation on bank’s property VI. Director’s fees, allowances and expenses VII. Auditors’ fees and expenses (Including branch auditors) VIII. Law Charges IX. Postages, Telegrams, Telephones, etc. X. Repairs and maintenance XI. Insurance XII. Other expenditure ____________ ____________
TOTAL : ______________ __________
[THE FOURTH SCHEDULE [See section 45D(2)] LIST OF DEBTORS 1. The official liquidator shall from time to time submit list of debtors to the High Court, each list being verified by an affidavit. 2. Every such list shall contain the following particulars:—
(a) names and addresses of the debtors;
(b) amount of debt due to the banking company by each debtor;
(c) rate of interest, if any, and the date up to which such interest has been calculated in the case of each debtor;
(d) description of papers, writings, and documents, if any, relating to each debt;
(e) relief or reliefs claimed against each debtor. 3. (a) In every such list, the official liquidator shall distinguish between the debts for which the banking company holds and security other than a personal security and the debts for which no security or only a personal security is given;
(b) In the case of secured debts, particulars of the securities claimed by the banking company, and whenever possible their estimated value, and the names and addresses of person or persons, if any, having an interest in the securities or the right of redemption therein;
(c) In case the debt is guaranteed by any person or persons, the name and address of the guarantor or guarantors with particulars as to the extent to which the debt is guaranteed and description of documents, papers or writings in support of such guarantee. 4. If the debtor is adjudged insolvent either before or after he has been included in any such list, but before such list is settled, the name and address of the assignee or the receiver of his estate, as the case may be, should be stated in, or added to, the list. 5. If the original debtor dies either before or after he has been included in any such list, but before such list is settled, there shall be substituted in his place the names and addresses of his legal representatives as far as the official liquidator is able to ascertain.]
1 Ins. by Act 52 of 1953, s. 12 (w.e.f. 30-12-1953).
[THE FIFTH SCHEDULE (See section 36AG) PRINCIPLES OF COMPENSATION 1. The compensation to be given under section 36AG shall be an amount equal to the value of the assets of the acquired bank as on the day immediately before the appointed day, computed in accordance with the provisions of Part I of this Schedule less the total amount of liabilities thereof computed in accordance with the provisions of Part II of this Schedule. Part I.—Assets For the purposes of this Part “assets” means the total of the following:—
(a) the amount of cash in hand and with the Reserve Bank and the State Bank of India (including foreign currency notes which shall be converted at the market rate of exchange);
(b) the amount of balances with any bank, whether on deposit or current account, and money at call and short notice, balance held outside India being converted at the market rate of exchange:
Provided that any balance which are not realisable in full shall be deemed to be debts and valued accordingly:—
(c) the market value, as on the day immediately before the appointed day, of any securities, shares, debentures, bonds and other investments, held by the bank concerned.
Explanation.—For the purposes of this clause,—
(i) securities of the Central and State Governments [other than the securities specified in sub-clauses (ii) and (iii) of this Explanation] maturing for redemption within five years from the appointed day shall be valued at the face value or the market value, whichever is higher;
(ii) securities of the Central Government, such as Post Office Certificates and Treasury Savings Deposit Certificates and any other securities or certificates issued or to be issued under the Small Savings Scheme of the Central Government, shall be valued at their face value or the encashable value of the market value, as on the day immediately before the appointed day, whichever is higher;
(iii) where the market value of any Government security such as the zamindari abolition bonds or other similar security in respect of which the principal is payable in instalment, is not ascertainable or is, for any reason, not considered as reflecting the fair value thereof or as otherwise appropriate, the security shall be valued at such an amount as is considered reasonable having regard to the instalments of principal and interest remaining to be paid, the period during which such instalments are payable the yield of any security, issued by the Government to which the security pertains and having the same or approximately the same maturity, and other relevant factors;
(iv) where the market value of any security, share, debenture, bond or other investment is not considered reasonable by reason of its having been affected by abnormal factors, the investment may be valued on the basis of its average market value over any reasonable period;
(v) where the market value of any security, share, debenture, bond or other investment is not ascertainable, only such value, if any, shall be taken into account as is considered reasonable having regard to the financial position of the issuing concern, the dividend paid by it during the preceding five years and other relevant factors;
(d) the amount of advances (including loans, cash, credits, overdrafts, bills purchased and discounted), and other debts, whether secured or unsecured, to the extent to which they are reasonably considered recoverable, having regard to the value of the security, if any, the operations
on the account, the reported worth and respectability of the borrower, the prospects of realisation and other relevant considerations;
(e) the value of any land or buildings;
(f) the total amount of premia paid, in respect of all leasehold properties, reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid bears to the total term of the lease;
(g) the written down value as per books, or the realisable value, as may be considered reasonable, of all furniture, fixture and fittings;
(h) the market or realisable value, as may be a appropriate, of the other assets appearing on the books of the bank, no value being allowed for capitalised expenses, such as share selling commission, organisational expenses and brokerage, losses incurred and similar other items. Part II.—Liabilities For the purpose of the Part “liabilities” means the total amount of all outside liabilities existing on the appointed day, and all contingent liabilities which the Central Government or the transferee bank may reasonably be expected to be required to meet out of its own resources on or after the appointed day and where the acquired bank is a banking company incorporated outside India, includes the liabilities of the offices and branches in India of the acquired bank to its offices and branches outside India. 2. If the acquired bank is not incorporated in India, the assets or, as the case may be, the liabilities of the bank shall be, for the purposes of Part I and Part II, and subject to the other provisions therein, the assets and liabilities of the offices of the bank situated in India. COMPENSATION PAYABLE TO SHAREHOLDERS 3. Every shareholder of the acquired bank to whom the compensation is payable, shall be given such amount as compensation as bears to the total compensation, calculated in accordance with the provisions of paragraph 1, the same proportion as the amount of paid-up capital of the shares held by the shareholder bears to the total-up capital of the acquired bank. CERTAIN DIVIDENDS NOT TO BE TAKEN INTO ACCOUNT 4. No separate compensation shall be payable for any profits or any dividends in respect of any period immediately preceding the appointed day, for which, in the ordinary course, profits would have been transferred or dividend declared after the appointed day.]
STATEMENT OF OBJECTS AND REASONS The provisions of law relating to banking companies at present form a subsidiary portion of the general law applicable to companies and are contained in Part XA of the Indian Companies Act, 1913. These provisions, which were first introduced in 1936, and which have undergone two subsequent modifications, have proved inadequate and difficult to administer. Moreover while the primary objective of Companies Law is to safeguard the interests of the stock-holder, that of banking legislation should be the protection of the interests of the depositor. It has therefore been felt for some time that separate legislation was necessary for the regulation of banking in India. This need has become the more insistent on account of the considerable development that has taken place in recent years in banking, especially the rapid growth of banking resources and of the number of banks and branches. Regard must also be had to the fact that the banking system is likely in the post-war period to be more vulnerable by reason of the great expansion. both quantitatively and relatively, that has taken place in demand deposits, as compared with time deposits, during the war years. The enactment of a separate comprehensive measure has in consequence now become imperative. 2. With this object in view, a Bill to amend the law relating to Banking Companies was introduced in the Legislative Assembly in November, 1944, and was subsequently circulated for eliciting public opinion through the Provincial Governments. In the ensuing Budget Session of the Assembly the Bill was referred to a Select Committee which was due to meet in October, 1945, but it lapsed before its consideration by the Committee. A fresh Bill with certain modification which suggested themselves on consideration of the opinions and criticisms received on the 1944 Bill was introduced in the Legislative Assembly in March, 1946 and was referred to a Select Committee in April 1946. The report of the Select Committee was presented to the Assembly on the 17th February, 1947. As it was the original intention of the Government that the Bill should be taken up for disposal by the Constituent Assembly (Legislative) in the form in which it emerged from the Select Committee and that the changes necessitated in the Bill as a result of the passing of the Indian Independence Act, 1947, and other developments should be moved in the House as separate amendments, a motion for the continuation of that Bill was adopted on the 17th November, 1947. In view however of a fairly large number of amendments, Government considered that the passage of the measure would be facilitated if the Bill as reported upon by the Select Committee were withdrawn and a fresh Bill incorporating all the amendments were introduced and referred to a Select Committee. The Bill was accordingly withdrawn on the 30th January, 1948. The present Bill is the result of long and detailed consideration by expert Committees, the Reserve Bank, the public including the representatives of banks, the Government and the Legislature. The main features of the Bill are as follows:--
(i) a comprehensive definition of banking so as to bring within the scope of the legislation all institutions which receive deposits, repayable on demand or otherwise, for lending or investment;
(ii) prohibiting non-banking companies from accepting deposits repayable on demand:
(iii) prohibition of trading with a view to eliminating non-banking risk:
(iv) prescription of minimum capital standards;
(v) limiting the payment of dividends;
(vi) inclusion in the scope of the legislation of banks incorporated or registered outside the Provinces of India;
(vii) introduction of a comprehensive system of licensing of banks and their branches;
(viii) prescription of a special form of balance-sheet and conferring of powers on the Reserve Bank to call for periodical returns
(ix) inspection of the books and accounts of a bank by Reserve Bank;
(x) empowering the Central Government to take action against banks conducting their affairs in a manner detrimental to the interest of the depositors;
(xi) provision for bringing the Reserve Bank of India into closer to with banking companies;
(xii) provision of an expeditious procedure for liquidation;
(xiii) bringing the Imperial Bank of India within the purview of some of the provisions of the Bill;
(xiv) widening the powers of the Reserve Bank of India so as to enable it to come to the aid of banking companies in times of emergency;
(xv) provision for the extension of the Act to acceding States. Brief explanatory notes on the several clauses are given in the annexed notes on clauses.
NEW DELHI; R. K. SHANMUKHAM CHETTY. The 12th March, 1948.