THE BANKING REGULATION ACT, 1949

__________
ARRANGEMENT OF SECTIONS
____________
PART I
PRELIMINARY
SECTIONS
1. Short title, extent and commencement.
2. Application of other laws not barred.
3. Act not to apply to certain co-operative societies.
4. Power to suspend operation of Act.
5. Interpretation.
5A. Act to override memorandum, articles, etc.
PART II
BUSINESS OF BANKING COMPANIES
6. Form of business in which banking companies may engage.
7. Use of words bank , banker , banking or banking company .
8. Prohibition of trading.
9. Disposal of non-banking assets.
10. Prohibition of employment of managing agents and restrictions on certain forms of
employment.
10A. Board of directors to include persons with professional or other experience.
10B. Banking company to be managed by whole time chairman.
10BB. Power of Reserve Bank to appoint chairman of the Board of directors appointed on a
whole-time basis or a managing director of a banking company.
10C. Chairman and certain directors not to be required to hold qualification shares.
10D. Provisions of sections 10A and 10B to override all other laws, contracts, etc.
11. Requirement as to minimum paid-up capital and reserves.
12. Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of
shareholders.
12A. Election of new directors.
12B. Regulation of acquisition of shares or voting rights.
13. Restriction on commission, brokerage, discount, etc., on sale of shares.
14. Prohibition of charge on unpaid capital.
14A. Prohibition of floating charge on assets.
15. Restrictions as to payment of dividend.
16. Prohibition of common directors.
17. Reserve Fund.

1
SECTIONS
18. Cash reserve.
19. Restriction on nature of subsidiary companies.
20. Restrictions on loans and advances.
20A. Restrictions on power to remit debts.
21. Power of Reserve Bank to control advances by banking companies.
21A. Rates of interest charged by banking companies not to be subject to scrutiny by courts.
22. Licensing of banking companies.
23. Restrictions on opening of new, and transfer of existing, places of business.
24. Maintenance of a percentage of assets.
25. Assets in India.
26. Return of unclaimed deposits.
26A. Establishment of Depositor Education and Awareness Fund.
27. Monthly returns and power to call for other returns and information.
28. Power to publish information.
29. Accounts and balance-sheet.
29A. Power in respect of associate enterprises.
30. Audit.
31. Submission of returns.
32. Copies of balance-sheets and accounts to be sent to registrar.
33. Display of audited balance-sheet by companies incorporated outside India.
34. Accounting provision of this Act not retrospective.
34A. Production of documents of confidential nature.
35. Inspection.
35A. Power of the Reserve Bank to give directions.
35B. Amendments of provisions relating to appointments of managing directors, etc., to be subject
to previous approval of the Reserve Bank.
36. Further powers and functions of Reserve Bank.
36A. Certain provisions of the Act not to apply to certain banking companies.
PART IIA
CONTROL OVER MANAGEMENT
36AA. Power of Reserve Bank to remove managerial and other persons from office.
36AB. Power of Reserve Bank to appoint additional directors.
36AC. Part IIA to override other laws.

2
 PART IIAB
SUPERSESSION OF BOARD OF DIRECTORS OF BANKING COMPANY
SECTIONS
36ACA. Supersession of Board of Directors in certain cases.
PART IIB
PROHIBITION OF CERTAIN ACTIVITIES IN RELATION TO BANKING COMPANIES
36AD. Punishments for certain activities in relation to banking companies.
PART IIC
ACQUISITION OF THE UNDERTAKINGS OF BANKING COMPANIES IN CERTAIN CASES
36AE. Power of Central Government to acquire undertakings of banking companies in certain
cases.
36AF. Power of the Central Government to make scheme.
36AG. Compensation to be given to shareholders of the acquired bank.
36AH. Constitution of the Tribunal.
36AI. Tribunal to have powers of a civil court.
36AJ. Procedure of the Tribunal.
PART III
SUSPENSION OF BUSINESS AND WINDING UP OF BANKING COMPANIES
36B. High Court defined.
37. Suspension of business.
38. Winding up by High Court.
38A. Court liquidator.
39. Reserve Bank to be official liquidator.
39A. Application of Companies Act to liquidators.
40. Stay of proceedings.
41. Preliminary report by official liquidator.
41A. Notice to preferential claimants and secured and unsecured creditors.
42. Power to dispense with meetings of creditors, etc.
43. Booked depositors' credits to be deemed proved.
43A. Preferential payments to depositors.
44. Powers of High Court in voluntary winding up.
44A. Procedure for amalgamation of banking companies.
44B. Restriction on compromise or arrangement between banking company and creditors.
45. Power of Reserve Bank to apply to Central Government for suspension of business by a
banking company and to prepare scheme of reconstitution or amalgamation.

3
 10D. Provisions of sections 10A, 10B and 10BB to override all other laws, contracts,
etc. Any appointment or removal of a 1[director, chairman of the Board of directors who is appointed
on a whole-time basis or managing director] in pursuance of section 10A or section 10B 2[or section
10BB] shall have effect and any such person shall not be entitled to claim any compensation for the loss
or termination of office, notwithstanding anything contained in any law or in any contract,
memorandum or articles of association.]
11. Requirement as to minimum paid-up capital and reserves. (1) Notwithstanding anything
contained in 3[section 149 of the Companies Act, 1956 (1 of 1956)], no banking company in existence
on the commencement of this Act, shall, after the expiry of three years from such commencement or of
such further period not exceeding one year as the Reserve Bank, having regard to the interests of the
depositors of the company, may think fit in any particular case to allow, carry on business 4[in India],
and no other banking company shall after the commencement of this Act, commence or carry on
business 4[in India], 5[unless it complies with such of the requirements of this section as are applicable
to it].
6
[(2) In the case of a banking company incorporated outside India
(a) the aggregate value of its paid-up capital and reserves shall not be less than fifteen lakhs of
rupees and if it has a place or places of business in the city of Bombay or Calcutta or both, twenty
lakhs of rupees; and
(b) 7[the banking company shall deposit and keep deposited with the Reserve Bank either in
cash or in the form of unencumbered approved securities, or partly in cash and partly in the form of
such securities
(i) an amount which shall not be less than the minimum required by clause (a); and
(ii) as soon as may be after the expiration of each 8*** year, an amount calculated at twenty
per cent. of its profit for that year in respect of all business transacted through its branches in
India, as disclosed in the profit and loss account prepared with reference to that year under
section 29:]
Provided that any such banking company may at any time replace
(i) any securities so deposited by cash or by any other unencumbered approved securities, or
partly by cash and partly by other such securities, so however, that the total amount deposited is not
affected;
(ii) any cash so deposited by unencumbered approved securities of an equal value.]
9
[(2A) Notwithstanding anything contained in sub-section (2), the Central Government may, on the
recommendation of the Reserve Bank, and having regard to the adequacy of the amounts already
deposited and kept deposited by a banking company under sub-section (2), in relation to its deposit
liabilities in India, declare by order in writing that the provisions of sub-clause (ii) of clause (b) of
sub-section (2) shall not apply to such banking company for such period as may be specified in the
order.]

-1-1994).
2. Ins. by Act 1 of 1984, s. 20 (w.e.f. 15-2-1984).
. 14-1-1957).
-3-1950).
5. Subs. by Act 33 of 1959, s. 7, for certain words (w.e.f. 1-10- 1959).
6. Subs. by s. 7, ibid., for sub-section (2) (w.e.f. 1-10-1959).
7. Subs. by Act 36 of 1962, s. 2, for certain words (w.e.f. 16-9-1962).
-12-1988).
9. Ins. by Act 36 of 1962, s. 2 (w.e.f. 16-9-1962).

18
 (3) In the case of any banking company to which the provisions of sub-section (2) do not apply, the
aggregate value of its paid-up capital and reserves shall not be less than
(i) if it has places of business in more than one State, five lakhs of rupees, and if any such place
or places of business is or are situated in the city of Bombay or Calcutta or both, ten lakhs of
rupees;
(ii) if it has all its places of business in one State none of which is situated in the city of
Bombay or Calcutta, one lakh of rupees in respect of its principal place of business, plus ten
thousand rupees in respect of each of its other places of business situated in the same district in
which it has its principal place of business, plus twenty-five thousand rupees in respect of each
place of business situated elsewhere in the State otherwise than in the same district:
Provided that no banking company to which this clause applies shall be required to have paid-
up capital and reserves exceeding an aggregated value of five lakhs of rupees:
Provided further that no banking company to which this clause applies and which has only one
place of business shall be required to have paid-up capital and reserves exceeding an aggregate
value of fifty thousand rupees:
1
[Provided further that in the case of every banking company to which this clause applies and
which commences banking business for the first time after the commencement of the Banking
Companies (Amendment) Act, 1962 (36 of 1962), the value of its paid-up capital shall not be less
than five lakhs of rupees;]
(iii) if it has all its places of business in one State, one or more of which is or are situated in the
city of Bombay or Calcutta, five lakhs of rupees, plus twenty-five thousand rupees in respect of
each place of business situated outside the city of Bombay or Calcutta, as the case may be:
Provided that no banking company to which this clause applies shall be required to have
paid-up capital and reserves exceeding an aggregate value of ten lakhs of rupees.
Explanation. For the purposes of this sub-section, a place of business situated 2[in a State] other
than that in which the principal place of business of the banking company is situated shall, if it is not
more than twenty-five miles distant from such principal place of business, be deemed to be situated
within the same State as such principal place of business.
(4) Any amount deposited and kept deposited with the Reserve Bank under 3*** sub-section (2) by
any banking company incorporated 4[outside India] shall, in the event of the company ceasing for any
reason to carry on banking business 5[in India], be an asset of the company on which the claims of all
the creditors of the company 5[in India] shall be a first charge.
6
[(5) For the purposes of this section,
(a) place of business means any office, sub-office, sub- pay office and any place of business
at which deposits are received, cheques cashed or moneys lent;
(b) value means the real or exchangeable value, and not the nominal value which may be
shown in the books of the banking company concerned.]
(6) If any dispute arises in computing the aggregate value of the paid-up capital and reserves of any
banking company, a determination thereof by the Reserve Bank shall be final for the purposes of this
section.

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

2. Subs. by Act 62 of 1956, s. - 11-1956).
-10-1959).
-3-1950).
5. Subs. by s. 3, ibid. -3-1950).
6. Subs. by Act 33 of 1959, s. 7, for sub-section (5) (w.e.f. 1-10- 1959).

19
 company as companies in which he wishes to continue to hold the office of a director and resign his
office as a director in the other companies.]
1
[(3) Nothing in sub-section (1) shall apply to, or in relation to, any director appointed by the
Reserve Bank.]
2
[17. Reserve Fund. (1) Every banking company incorporated in India shall create a reserve fund
and 3*** shall, out of the balance of profit of each year as disclosed in the profit and loss account
prepared under section 29 and before any dividend is declared, transfer to the reserve fund a sum
equivalent to not less than twenty per cent. of such profit.
4
[(1A) Notwithstanding anything contained in sub-section (1), the Central Government may, on the
recommendation of the Reserve Bank and having regard to the adequacy of the paid-up capital and
reserves of a banking company in relation to its deposit liabilities, declare by order in writing that the
provisions of sub-section (1) shall not apply to the banking company for such period as may be
specified in the order:
Provided that no such order shall be made unless, at the time it is made, the amount in the reserve
fund under sub-section (1), together with the amount in the share premium account is not less than the
paid-up capital of the banking company.]
(2) Where a banking company appropriates any sum or sums from the reserve fund or the share
premium account, it shall, within twenty-one days from the date of such appropriation, report the fact to
the Reserve Bank, explaining the circumstances relating to such appropriation:
Provided that the Reserve Bank may, in any particular case, extend the said period of twenty-one
days by such period as it thinks fit or condone any delay in the making of such report.
5
[18. Cash reserve. (1) Every banking company, not being a scheduled bank, 6[shall maintain in
India on a daily basis] by way of cash reserve with itself or by way of balance in a current account with
the Reserve Bank, or by way of net balance in current accounts or in one or more of the aforesaid ways,
a sum equivalent to 7[such per cent.] of the total of its demand and time liabilities in India as on the last
Friday of the second preceding fortnight 8[as the Reserve Bank may specify, by notification in the
Official Gazette, from time to time, having regard to the needs of securing the monetary stability in the
country] and shall submit to the Reserve Bank before the twentieth day of every month a return
showing the amount so held on alternate Fridays during a month with particulars of its demand and time
liabilities in India on such Fridays or if any such Friday is a public holiday under the Negotiable
Instruments Act, 1881 (26 of 1881), at the close of business on the preceding working day.
Explanation. In this section, and in section 24,
(a) liabilities in India shall not include
(i) the paid-up capital or the reserves or any credit balance in the profit and loss account of
the banking company;
(ii) any advance taken from the Reserve Bank 9*** or from the Exim Bank 10[or from the
Reconstruction Bank 11[or from the National Housing Bank]] or from the National Bank 12[, or
from the small Industries Bank ,13[or from the National Bank for Financing Infrastructure and
Development or from the other development financial institution]] by the banking company;

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

2. Subs. by Act 33 of 1959, s. 11, for ss. 17 and 18 (w.e.f. 1-10-1959).
3. Certain words omitted by Act 36 of 1962, s. 3 (w.e.f. 16-9-1962).
4. Ins. by s. 3, ibid. (w.e.f. 16-9-1962).
5. Subs. by Act 1 of 1984, s. 21, for section 18 (w.e.f. 29-3-1985).
-1-2013).
7. Subs. by s. 6, ibid -1-2013).
8. Ins. by s. 6, ibid. (w.e.f. 18-1-2013).
ibid. (w.e.f. 18-1-2013).
10. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985).
11. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).
12. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).
13. Ins. by Act 17 of 2021, s. 48 and the third Schedule (w.e.f. 19-4-2021).

24
 (iii) in the case of a Regional Rural Bank, also any loan taken by such bank from its
Sponsor Bank;
(b) fortnight shall mean the period from Saturday to the second following Friday, both days
inclusive;
(c) net balance in current accounts shall, in relation to a banking company, mean the excess,
if any, of the aggregate of the credit balances in current account maintained by that banking
company with the State Bank of India or a subsidiary bank or a corresponding new bank over the
aggregate of the credit balances in current account held by the said banks with such banking
company;
(d) for the purposes of computation of liabilities, the aggregate of the liabilities of a banking
company to the State Bank of India, a subsidiary bank, a corresponding new bank, a regional rural
bank, another banking company, a co-operative bank or any other financial institution notified by
the Central Government in this behalf, shall be reduce by the aggregate of the liabilities of all such
banks institutions to the banking company;
(e) the expression co-operative bank shall have the meaning assigned to it in clause (cci) of
section 56.
1
[(1A) If the balance held by such banking company at the close of business on any day is
below the minimum specified under sub-section (1), such banking company shall, without prejudice
to the provisions of any other law for the time being in force, be liable to pay to the Reserve Bank,
in respect of that day, penal interest at a rate of three per cent. above the bank rate on the amount by
which such balance falls short of the specified minimum, and if the shortfall continues further, the
penal interest so charged shall be increased to a rate of five per cent. above the bank rate in respect
of each subsequent day during which the default continues.
(1B) Notwithstanding anything contained in this section, if the Reserve Bank, is satisfied, on an
application in writing by the defaulting banking company, that such defaulting banking company
had sufficient cause for its failure to company 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 banking company such exemptions from the provisions of this section as it
thinks fit with reference to all or any of its offices or with reference to the whole or any part of its
assets and liabilities.]
(2) The Reserve Bank may, for the purposes of this section and section 24, specify from time to
time, with reference to any transaction or class of transactions, that such transaction or transactions
shall be regarded as liability in India of a banking company and, if any question arises as to whether
any transaction or class of transactions shall be regarded for the purposes of this section and section
24 as liability in India of a banking company, the decision of the Reserve Bank thereon shall be
final.]
19. Restriction on nature of subsidiary companies. 2[(1) A banking company shall not form
any subsidiary company except a subsidiary company formed for one or more of the following
purposes, namely:
(a) the undertaking of any business which, under clauses (a) to (o) of sub-section (1) of section
6, is permissible for a banking company to undertake, or

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

2. Subs. by Act 1 of 1984, s. 22, for sub-section (1) (w.e.f. 15-2-1984).

25
 (7) When under the provisions of clause (b) of sub-section (4), penal interest at the increased rate of
five per cent. above the bank rate has become payable by a banking company, if thereafter the amount
required to be maintained on the next succeeding alternate Friday, or if such Friday is a public holiday,
the next preceding working day, is still below the prescribed minimum, every director, manager or
secretary of the banking company, who is knowingly and wilfully a party to the default, shall be
punishable with fine which may extend to five hundred rupees and with a further fine which may
extend to five hundred rupees for each subsequent alternate Friday or the preceding working day, as the
case may be, on which the default continues.
(8) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an
application in writing by the defaulting banking company, that the banking company had sufficient
cause for its failure to comply with the provisions of 1*** 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).]
25. Assets in India. 2[(1) The assets in India of every banking company at the close of business
on the last Friday of every quarter or, if that Friday is a public holiday under the Negotiable Instruments
Act, 1881 (26 of 1881), at the close of the business on the preceding working day, shall not be less than
seventy-five per cent. of its demand and time liabilities in India.
(2) Every banking company shall, within one month from the end of every quarter, submit to the
Reserve Bank a return in the prescribed form and manner of the assets and liabilities referred to in
sub-section (1) as at the close of business on the last Friday of the previous quarter, or, if that Friday is
a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at the close of business on
the preceding working day:]
3
[Provided that every regional rural bank shall also furnish a copy of the said return to the National
Bank.]
(3) For the purposes of this section,
4
[(a) assets in India shall be deemed to include export bills drawn in, and import bills drawn
on and payable in India and expressed in such currencies as the Reserve Bank may from time to
time approve in this behalf and also such securities as the Reserve Bank may approve in this behalf
notwithstanding that all or any of the said bills or securities are held outside India;]
5
[(b) liabilities in India shall not include the paid-up capital or the reserves or any credit
balance in the profit and loss account of the banking company;]
6
[(c)] quarter means the period of three months ending on the last day of March, June,
September or December.
26. Return of unclaimed deposits. Every banking company shall, within thirty days after the
close of each calendar year, submit a return in the prescribed form and manner to the Reserve Bank as
at the end of such calendar year of all accounts 7[in India] which have not been operated upon for ten
years, 8***:
Provided that in the case of money deposited for a fixed period the said term of ten years shall be
reckoned from the date of the expiry of such fixed period:

1. The wo a -1-2013).
2. Subs. by Act 33 of 1959 s. 16, for sub-sections (1) and (2) (w.e.f. 1-10-1959).
3. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 1-5-1982).
4. Subs. by Act 20 of 1950, s. 7, for clause (a) (w.e.f. 18-3-1950).
5. Ins. by Act 33 of 1959, s. 16 (w.e.f. 1-10-1959).
6. Clause (b) relettered as clause (c) by s. 16, ibid. (w.e.f. 1-10-1959).
8-3-1950).
8. Certain words omitted by Act 55 of 1963, s. 14 (w.e.f. 1-2-1964).

32
 1
[28. Power to publish information. The Reserve Bank or the National Bank, or both, if they
consider it in the public interest so to do, may 2[publish
(a) any information obtained by them under this Act in such consolidated form as they think
fit;
(b) in such manner as they may consider proper, any credit information disclosed under the
Credit Information Companies (Regulation) Act, 2005 (30 of 2005).]
29. Accounts and balance-sheet. (1) At the expiration of each calendar year 3[or at the expiration
of a period of twelve months ending with such date as the Central Government may, by notification in
the Official Gazette, specify in this behalf,] every banking company incorporated 4[in India], in respect
of all business transacted by it, and every banking company incorporated 5[outside India], in respect of
all business transacted through its branches 6[in India], shall prepare with reference to 7[that year or
period, as the case may be,] a balance-sheet and profit and loss account as on the last working day of
8
[that year or the period, as the case may be,] in the Forms set out in the Third Schedule or as near
thereto as circumstances admit:
9
[Provided that with a view to facilitating the transition from one period, of accounting to another
period of accounting under this sub-section the Central Government may, by order published in the
Official Gazette, make such provisions as it considers necessary or expedient for the preparation of, or
for other matters relating to, the balance-sheet or profit and loss account in respect of the concerned
year or period, as the case may be.]
(2) The balance-sheet and profit and loss account shall be signed
(a) in the case of a banking company incorporated 6[in India], by the manager or the principal
officer of the company and where there are more than three directors of the company, by at least
three of those directors, or where there are not more than three directors, by all the directors, and
(b) in the case of a banking company incorporated 5[outside India] by the manager or agent of
the principal office of the company 6[in India].
(3) Notwithstanding that the balance-sheet of a banking company is under sub-section (1) required
to be prepared in a form other than the form 10[set out in Part I of Schedule VI to the Companies Act,
1956 (1 of 1956)], the requirements of that Act relating to the balance-sheet and profit and loss account
of a company shall, in so far as they are not inconsistent with this Act, apply to the
balance-sheet or profit and loss account, as the case may be, of a banking company.
3
[(3A) Notwithstanding anything to the contrary contained in sub-section (3) of section 210 of the
Companies Act, 1956 (1 of 1956), the period to which the profit and loss account relates shall, in the
case of a banking company, be the period ending with the last working day of the year immediately
preceding the year in which the annual general meeting is held.]
11
[Explanation. In sub-section (3A), year means the year or, as the case may be, the period
referred to in sub-section (1).]

1. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for s. 28 (w.e.f. 12-7-1982).
2. Subs. by Act 30 of 2005, s. 34 and the Schedule, for certain words (w.e.f. 14-12-2006).
3. Ins. by Act 66 of 1988, s. 8 (w.e.f. 30-12-1988).
4. Subs. by Act 20 of 195 -3-1950).
5. Subs. by s. 3, ibid -3-1950).
6. Subs. by s. 3, ibid -3-1950).
-12-1988).
8. Subs. by s. 8, ibid -12-1988).
9. Subs. by s. 8, ibid., for the proviso (w.e.f. 30-12-1988).

(7 -1-1957).
11. Ins. by Act 66 of 1988, s. 8 (w.e.f. 30-12-1988).

34
 (4) The Central Government, after giving not less than three months notice of its intention so to do
by a notification in the Official Gazette, may from time to time by a like notification amend the Forms
set out in the Third Schedule.
1
[29A. Power in respect of associate enterprises. (1) The Reserve Bank may, at any time, direct
a banking company to annex to its financial statements or furnish to it separately, within such time and
at such intervals as may be specified by the Reserve Bank, such statements and information relating to
the business or affairs of any associate enterprise of the banking company as the Reserve Bank may
consider necessary or expedient to obtain for the purpose of this Act.
(2) Notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), the
Reserve Bank may, at any time, cause an inspection to be made of any associate enterprise of a banking
company and its books of account jointly by one or more of its officers or employees or other persons
along with the Board or authority regulating such associate enterprise.
(3) The provisions of sub-sections (2) and (3) of section 35 shall apply mutatis mutandis to the
inspection under this section.
Explanation. associate enterprise in relation to a banking company includes an enterprise
which
(i) is a holding company or a subsidiary company of the banking company; or
(ii) is a jont venture of the banking company; or
(iii) is a subsidiary company or a joint venture of the holding company of the banking
company; or
(iv) controls the composition of the Board of directors or other body governing the banking
company; or
(v) exercises, in the opinion of the Reserve Bank, significant influence on the banking company
in taking financial or policy decisions; or
(vi) is able to obtain economic benefits from the activities of the banking company.]
30. Audit. 2[(1) The balance-sheet and profit and loss account prepared in accordance with
section 29 shall be audited by a person duly qualified under any law for the time being in force to be an
auditor of companies.]
3
[(1A) Notwithstanding anything contained in any law for the time being in force or in any contract
to the contrary, every banking company shall, before appointing, re-appointing or removing any auditor
or auditors, obtain the previous approval of the Reserve Bank.
(1B) Without prejudice to anything contained in the Companies Act, 1956 (1 of 1956), or any other
law for the time being in force, where the Reserve Bank is of opinion that it is necessary in the public
interest or in the interest of the banking company or its depositors so to do, 4[it may at any time by order
direct that a special audit of the banking company's accounts, for any such transaction or class of
transactions or for such period or periods as may be specified in the order, shall be conducted and may
by the same or a different order either appoint a person duly qualified under any law for the time being
in force to be an auditor of companies or direct the auditor of the banking company himself to conduct
such special audit] and the auditor shall comply with such directions and make a report of such audit to
the Reserve Bank and forward a copy thereof to the company.
(1C) The expenses of, or incidental to 5[the special audit] specified in the order made by the
Reserve Bank shall be borne by the banking company.]

1. Ins. by Act 4 of 2013, s. 9 (w.e.f. 18-1-2013).

2. Subs. by Act 58 of 1968, s. 8, for sub-section (1) (w.e.f. 1-2- 1969).
3. Ins. by s. 8, ibid. (w.e.f. 1-2-1969).
4. Subs. by Act 66 of 1988, s. 9, for certain words (w.e.f. 30-12-1988).
5. Subs. by s. 9, ibid -12-1988).

35
 (2) The auditor shall have the powers of, exercise the functions vested in, and discharge the duties
and be subject to the liabilities and penalties imposed on, auditors of companies by 1[section 227 of the
Companies Act, 1956 (1 of 1956)]. 2[, and auditors, if any, appointed by the law establishing,
constituting or forming the banking company concerned].
(3) In addition to the matters which under the aforesaid Act the auditor is required to state in his
report, he shall, in the case of a banking company incorporated 3[in India], state in his report,
(a) whether or not the information and explanations required by him have been found to be
satisfactory;
(b) whether or not the transactions of the company which have come to his notice have been
within the powers of the company;
(c) whether or not the returns received from branch offices of the company have been found
adequate for the purposes of his audit;
(d) whether the profit and loss account shows a true balance 4[of profit or loss] for the period
covered by such account;
(e) any other matter which he considers should be brought to the notice of the share holders of
the company.
31. Submission of returns. The accounts and balance-sheet referred to in section 29 together
with the auditor's report shall be published in the prescribed manner and three copies thereof shall be
furnished as returns to the Reserve Bank within three months from the end of the period to which they
refer:
Provided that the Reserve Bank may in any case extend the said period of three months for the
furnishing of such returns by a further period not exceeding three months:
5
[Provided further that a regional rural bank shall furnish such returns also to the National Bank.]
32. Copies of balance-sheets and accounts to be sent to registrar. 6[(1) Where a banking
company in any year furnishes its accounts and balance-sheet in accordance with the provisions of
section 31, it shall at the same time send to the registrar three copies of such accounts and balance-sheet
and of the auditor's report, and where such copies are so sent, it shall not be necessary to file with the
registrar, in the case of a public company, copies of the accounts and balance-sheet and of the auditor's
report, and, in the case of a private company, copies of the balance-sheet and of the auditor's report as
required by sub-section (1) of section 220 of the Companies Act, 1956 (1 of 1956); and the copies so
sent shall be chargeable with the same fee and shall be dealt with in all respects as if they were filed in
accordance with that section.]
(2) When in pursuance of sub-section (2) of section 27 the Reserve Bank requires any additional
statement or information in connection with the balance-sheet and accounts furnished under section 31,
the banking company shall, when supplying such statement or information, send a copy thereof to the
registrar.
33. Display of audited balance-sheet by companies incorporated outside India. Every
banking company incorporated 7[outside India] shall, not later than the first Monday in August of any
year in which it carries on business, display in a conspicuous place in its principal office and in every

-2-1969).
2. Ins. by Act 66 of 1988, s. 9 (w.e.f. 30-12-1988).
-3-1950).
-2-1964).
5. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 1-5-1982).
6. Subs. by Act 33 of 1959, s. 19, for sub-section (1) (w.e.f. 1-10- 1959).
-3-1950).

36
 1
[35A. Power of the Reserve Bank to give directions. (1) Where the Reserve Bank is satisfied
that
(a) in the 2[public interest]; or
3
[(aa) in the interest of banking policy; or]
(b) to prevent the affairs of any banking company being conducted in a manner detrimental to
the interests of the depositors or in a manner prejudicial to the interests of the banking company; or
(c) to secure the proper management of any banking company generally,
it is necessary to issue directions to banking companies generally or to any banking company in
particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or
the banking company, as the case may be, shall be bound to comply with such directions.
(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any
direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such
conditions as it thinks fit, subject to which the modification or cancellation shall have effect.]
4
[35AA. Power of Central Government to authorise Reserve Bank for issuing directions to
banking companies to initiate insolvency resolution process. The Central Government may, by
order, authorise the Reserve Bank to issue directions to any banking company or banking companies to
initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016).
Explanation.
clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).
35AB. Power of Reserve Bank to issue directions in respect of stressed assets. (1) Without
prejudice to the provisions of section 35A, the Reserve Bank may, from time to time, issue directions to
any banking company or banking companies for resolution of stressed assets.
(2) The Reserve Bank may specify one or more authorities or committees with such members as the
Reserve Bank may appoint or approve for appointment to advise any banking company or banking
companies on resolution of stressed assets.]
5
[35B. Amendments of provisions relating to appointments of managing directors, etc., to be
subject to previous approval of the Reserve Bank. (1) In the case of a banking company
(a) no amendment of any provision relating to 4[the maximum permissible number of directors
or] the 6[appointment or re-appointment or termination of appointment or remuneration of a
chairman, a] 7[managing director or any other director, whole-time or otherwise] or of a manager or
a chief executive officer by whatever name called, whether that provision be contained in the
company's memorandum or articles of association, or in an agreement entered into by it, or in any
resolution passed by the company in general meeting or by its Board of directors shall have effect
unless approved by the Reserve Bank;
8
[(b) no appointment or re-appointment or termination of appointment of a chairman, a
managing or whole-time director, manager or chief executive officer by whatever name called, shall
have effect unless such appointment, re-appointment or termination of appointment is made with
the previous approval of the Reserve Bank.]
9
[Explanation. For the purposes of this sub-section, any provision conferring any benefit or
providing any amenity or perquisite, in whatever form, whether during or after the termination of the
term of office 10[of the chairman or the manager] or the chief executive officer by whatever name called

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

2. Subs. by Act 7 of 1961, -3-1961).
3. Ins. by Act 58 of 1968, s. 10, (w.e.f. 1-2-1969).
4. Ins. by Act 30 of 2017, s. 2, (w.e.f. 4-5-2017).
5. Ins. by Act 1 of 1984, s. 30 (w.e.f. 15-2-1984).
6. Subs. by Act 58 of 1968, s. 11, ibid ointment or re- -2-1969).
-
(w.e.f. 1-10-1959).
8. Subs. by Act 58 of 1968, s. 11, for clause (b) (w.e.f. 1-2-1969).
9. Added by Act 33 of 1959, s. 21 (w.e.f. 1-10-1959).
-2- 1969).

39
or the managing director, or any other director, whole-time or otherwise, shall be deemed to be a
provision relating to his remuneration.]
(2) Nothing contained in sections 1[268 and 269, the proviso to sub-section (3) of section 309,
sections 310 and 311, the proviso to section 387, and section 388] (in so far as section 388 makes the
2
[provisions of sections 269, 310] and 311 apply in relation to the manager of a company) of the
Companies Act, 1956 (1 of 1956), shall 3[apply to any matter in respect of which the approval of the
Reserve Bank has to be obtained under sub-section (1)].
4
[(2A) Nothing contained in section 198 of the Companies Act, 1956 (1 of 1956) shall apply to a
Banking company and the provisions of sub-section (1) of section 309 and of section 387 of that Act
shall, insofar as they are applicable to a banking company, have effect as if no reference had been made
in the said provisions to section 198 of that Act.]
(3) No act done by a person 5[as chairman or a managing or whole-time director] or a director not
liable to retire by rotation or a manager or a chief executive officer by whatever name called, shall be
deemed to be invalid on the ground that it is subsequently discovered that his 6[appointment or
re-appointment] had not taken effect by reason of any of the provisions of this Act; but nothing in this
sub-section shall be construed as rendering valid any act done by such person after his 8[appointment or
re-appointment] has been shown to the banking company not to have had effect.]
36. Further powers and functions of Reserve Bank. (1) The Reserve Bank may
(a) caution or prohibit banking companies generally or any banking company in particular
against entering into any particular transaction or class of transactions, and generally give advice to
any banking company;
(b) on a request by the companies concerned and subject to the provisions of section 7[44A],
assist, as intermediary or otherwise, in proposals for the amalgamation of such banking companies;
(c) give assistance to any banking company by means of the grant of a loan or advance to it
under clause (3) of sub-section (1) of section 18 of the Reserve Bank of India Act, 1934
(2 of 1934);
8
[(d) 9[at any time, if it is satisfied that in the public interest or in the interest of banking policy
or for preventing the affairs of the banking company being conducted in a manner detrimental to
the interests of the banking company or its depositors it is necessary so to do,] by order in writing
and on such terms and conditions as may be specified therein
(i) require the banking company to call a meeting of its directors for the purpose of
considering any matter relating to or arising out of the affairs of the banking company, or
require an officer of the banking company to discuss any such matter with an officer an officer
of the Reserve Bank;
(ii) depute one or more of its officers to watch the proceedings at any meeting of the Board
of directors of the banking company or of any committee or of any other body constituted by it;
require that banking company to give an opportunity to the officers so deputed to be heard at
such meetings and also require such officers to send a report of such proceedings to the Reserve
Bank;
(iii) require the Board of directors of the banking company or any committee or any other
body constituted by it to give in writing to any officer specified by the Reserve Bank in this

2. Subs. by Act 1 o -2-1984).

3. Subs. by Act 33 of 1959, s. 21, for certain words (w.e.f. 1-10-1959).
4. Ins. by Act 1 of 1984, s. 30 (w.e.f. 15-2-1984).
-t -2-1969).
6. Subs. by s. 11, ibid -2-1969).
-10-1959).
8. Subs. by Act 95 of 1956, s. 8, for cl. (d) (w.e.f. 14-1-1957).
9. Subs. by Act 58 of 1968, s. 12, for certain words (w.e.f. 1-2- 1969).

40
 behalf at his usual address all notices of, and other communications relating to, any meeting of
the Board, committee or other body constituted by it;
(iv) appoint one or more of its officers to observe the manner in which the affairs of the
banking company or of its offices or branches are being conducted and make a report thereon;
(v) require the banking company to make, within such time as may be specified in the
order, such changes in the management as the Reserve Bank may consider necessary 1***.]
(2) The Reserve Bank shall make an annual report to the Central Government on the trend and
progress of banking in the country, with particular reference to its activities under clause (2) of section
17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in such report its suggestions, if any,
for the strengthening of banking business throughout the country.
(3) The Reserve Bank may appoint such staff at such places as it considers necessary for the
scrutiny of the returns, statements and information furnished by banking companies under this Act, and
generally to ensure the efficient performance of its functions under this Act.
2
[36A. Certain provisions of the Act not to apply to certain banking companies. (1) The
provisions of section 11, sub-section (1) of section 12, and sections 17, 18, 24 and 25 shall not apply to
a banking company
(a) which, whether before or after the commencement of the Banking Companies (Amendment)
Act, 1959 (33 of 1959), has been refused a licence under section 22, or prohibited from accepting
fresh deposits by a compromise, arrangement or scheme sanctioned by a court or by any order made
in any proceeding relating to such compromise, arrangement or scheme, or prohibited from
accepting deposits by virtue of any alteration made in its memorandum; or
(b) whose licence has been cancelled under section 22, whether before or after the
commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959).
(2) Where the Reserve Bank is satisfied that any such banking company as is referred to in
sub-section (1) has repaid, or has made adequate provision for repaying all deposits accepted by the
banking company, either in full or to the maximum extent possible, the Reserve Bank may, by notice
published in the Official Gazette, notify that the banking company has ceased to be a banking company
within the meaning of this Act, and thereupon all the provisions of this Act applicable to such banking
company shall cease to apply to it, except as respects things done or omitted to be done before such
notice.]
3
[PART IIA
CONTROL OVER MANAGEMENT
36AA. Power of Reserve Bank to remove managerial and other persons from office. (1)
Where the Reserve Bank is satisfied that in the public interest or for preventing the affairs of a banking
company being conducted in a manner detrimental to the interests of the depositors or for securing the
proper management of any banking company it is necessary so to do, the Reserve Bank may, for
reasons to be recorded in writing, by order, remove from office, with effect from such date as may be
specified in the order, 4[any chairman, director,] chief executive officer (by whatever name called) or
other officer or employee of the banking company.
(2) No order under sub-section (1) shall be made 5[unless the chairman, director] or chief executive
officer or other officer or employee concerned has been given a reasonable opportunity of making a
representation to the Reserve Bank against the proposed order:
Provided that if, in the opinion of the Reserve Bank, any delay would be detrimental to the interests
of the banking company or its depositors, the Reserve Bank may, at the time of giving the
opportunity aforesaid or at any time thereafter, by order direct that, pending the consideration of the

1. Certain words omitted by Act 58 of 1968, s. 12 (w.e.f. 1-2-1969).

2. Ins. by Act 33 of 1959, s. 23 (w.e.f. 1-10-1959).
3. Ins. by Act 55 of 1963, s. 18 (w.e.f. 1-2-1964).
4. Subs. by Act 58 of 1968, s. 13, f -2- 1969).
5. Subs. by s. 13, ibid -2- 1969).

41
 (2) No such application shall be maintainable unless it is accompanied by a report of the Reserve
Bank indicating that in the opinion of the Reserve Bank the banking company will be able to pay its
debts if the application is granted:
Provided that the 1[High Court] may, for sufficient reasons, grant relief under this section even if
the application is not accompanied by such report, and where such relief is granted, the 1[High Court]
shall call for a report from the Reserve Bank on the affairs of the banking company, on receipt of which
it may either rescind any order already passed or pass such further orders thereon as may be just and
proper in the circumstances.
2
[(3) When an application is made under sub-section (1), the High Court may appoint a special
officer who shall forthwith take into his custody or under his control all the assets, books, documents,
effects and actionable claims to which the banking company is or appears to be entitled and shall also
exercise such other powers as the High Court may deem fit to confer on him, having regard to the
interests of the depositors of the banking company.]
3
[(4) Where the Reserve Bank is satisfied that the affairs of a banking company in respect of which
an order under sub-section (1) has been made, are being conducted in a manner detrimental to the
interests of the depositors, it may make an application to the High Court for the winding up of the
company, and where any such application is made, the High Court shall not make any order extending
the period for which the commencement or continuance of all actions and proceedings against the
company were stayed under that sub- section.]
4
[38. Winding up by High Court. (1) Notwithstanding anything contained in section 391
section 392, section 433 and section 583 of the Companies Act, 1956 (1 of 1956), but without prejudice
to its powers under sub-section (1) of section 37 of this Act, the High Court shall order the winding up
of a banking company
(a) if the banking company is unable to pay its debts; or
(b) if an application for its winding up has been made by the Reserve bank under section 37 or
this section.
(2) The Reserve Bank shall make an application under this section for the winding up of a banking
company if it is directed so to do by an order under clause (b) of sub-section (4) of section 35.
(3) The Reserve Bank may make an application under this section for the winding up of a banking
company
(a) if the banking company
(i) has failed to comply with the requirements specified in section 11; or
(ii) has by reason of the provisions of section 22 become disentitled to carry on banking
business in India; or
(iii) has been prohibited from receiving fresh deposits by an order under clause (a) of
sub-section (4) of section 35 or under clause (b) of sub-section (3A) of section 42 of the
Reserve Bank of India Act, 1934 (2 of 1934.); or
(iv) having failed to comply with any requirement of this Act other than the requirements
laid down in section 11, has continued such failure, or, having contravened any provision of
this Act has continued such contravention beyond such period or periods as may be specified in
that behalf by the Reserve Bank from time to time, after notice in writing of such failure or
contravention has been conveyed to the banking company; or

-12-1953).
2. Ins. by s. 5, ibid. (w.e.f. 30-12-1953).
3. Ins. by Act 33 of 1959, s. 25 (w.e.f. 1-10-1959).
4. Subs. by s. 26, ibid., for section 38 (w.e.f. 1- 10-1959).

49
 (b) if in the opinion of the Reserve Bank
(i) a compromise or arrangement sanctioned by a Court in respect of the banking company
cannot be worked satisfactorily with or without modifications; or
(ii) the returns, statements or information furnished to it under or in pursuance of the
provisions of this Act disclose that the banking company is unable to pay its debts; or
(iii) the continuance of the banking company is prejudicial to the interests of its depositors.
(4) Without prejudice to the provisions contained in section 434 of the Companies Act, 1956
(1 of 1956), a banking company shall be deemed to be unable to pay its debts if it has refused to meet
any lawful demand made at any of its offices or branches within two working days, if such demand is
made at a place where there is an office, branch or agency of the Reserve Bank, or within five working
days, if such demand is made elsewhere, and if the Reserve Bank certifies in writing that the banking
company is unable to pay its debts.
(5) A copy of every application made by the Reserve Bank under sub-section (1) shall be sent by
the Reserve Bank to the registrar.]
1
[38A. Court Liquidator. (1) There shall be attached to every High Court a court liquidator to be
appointed by the Central Government for the purpose of conducting all proceedings for the winding up
of banking companies and performing such other duties in reference thereto as the High Court may
impose.
2
* * * * *
(4) Where having regard to the number of banking companies wound up and other circumstances of
the case, the Central Government is of opinion that it is not necessary or expedient to attach for the time
being a court liquidator to a High Court, it may, from time to time, by notification in the Official
Gazette, direct that this section shall not have effect in relation to that High Court.]
3
[39. Reserve Bank to be official Liquidator. 4[(1)] Notwithstanding anything contained in
section 38A of this Act or in section 448 or section 449 of the Companies Act, 1956 (1 of 1956), where
in any proceeding for the winding up by the High Court of a banking company, an application is made
by the Reserve Bank in this behalf, the Reserve Bank, the State Bank of India or any other bank notified
by the Central Government in this behalf or any individual, as stated in such application shall be
appointed as the official liquidator of the banking company in such proceeding and the liquidator, if
any, functioning in such proceeding shall vacate office upon such appointment.]
5
[(2) Subject to such directions as may be made by the High Court, the remuneration of the official
liquidator appointed under this section, the cost and expenses of his establishment and the cost and
expenses of the winding up shall be met out of the assets of the banking company which is being wound
up, and notwithstanding anything to the contrary contained in any other law for the time being in force,
no fees shall be payable to the Central Government, out of the assets of the banking company.]
6
[39A. Application of Companies Act to liquidators. (1) All the provisions of the Companies
Act, 1956 (1 of 1956), relating to a liquidator, in so far as they are not inconsistent with this Act, shall
apply to or in relation to a liquidator appointed under section 38A or section 39.

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

2. Omitted by Act 95 of 1956, s. 14 and Schedule (w.e.f. 14-1-1957).
3. Section 39 has been amended by Acts 52 of 1953, sections 4 and 7; Act 23 of 1955, s. 53 and the Fourth Schedule; Act 79
of 1956, s. 43 and the Second Schedule; Act 95 of 1956, s. 14 and the Schedule; Act 33 of 1959, s. 27 and Act 37 of 1960,
s. 2 to read as above.
4. Section 39 re-numbered as sub-section (1) thereof by Act 58 of 1968, s. 16 (retrospectively).
5. Ins. by s. 16, ibid. (with retrospective effect).
6. Ins. by Act 33 of 1959, s. 28 (w.e.f. 1-10-1959).

50
 1
[44. Powers of High Court in voluntary winding up. (1) Notwithstanding anything to the
contrary contained in section 484 of the Companies Act, 1956 (1 of 1956), no banking company may be
voluntarily wound up unless the Reserve Bank certifies in writing that the company is able to pay in full
all its debts to its creditors as they accrue.
(2) The High Court may, in any case where a banking company is being wound up voluntarily,
make an order that the voluntary winding up shall continue, but subject to the supervision of the court.
(3) Without prejudice to the provisions contained in sections 441 and 521 of the Companies Act,
1956 (1 of 1956), the High Court may of its own motion and shall on the application of the Reserve
Bank, order the winding up of a banking company by the High Court in any of the following cases,
namely:
(a) where the banking company is being wound up voluntarily and at any stage during the
voluntary winding up proceedings the company is not able to meet its debts as they accrue; or
(b) where the banking company is being wound up voluntarily or is being wound up subject to
the supervision of the court and the High Court is satisfied that the voluntary winding up or winding
up subject to the supervision of the court cannot be continued without detriment to the interests of
the depositors.]
2
[44A. Procedure for amalgamation of banking companies. (1) Notwithstanding anything
contained in any law for the time being in force, no banking company shall be amalgamated with
another banking company, unless a scheme containing the terms of such amalgamation has been placed
in draft before the shareholders of each of the banking companies concerned separately, and approved
by a resolution passed by a majority in number representing two-thirds in value of the shareholders of
each of the said companies, present either in person or by proxy at a meeting called for the purpose.
(2) Notice of every such meeting as is referred to in sub-section (1) shall be given to every
shareholder of each of the banking companies concerned in accordance with the relevant articles of
association indicating the time, place and object of the meeting, and shall also be published at least once
a week for three consecutive weeks in not less than two newspapers which circulate in the locality or
localities where the registered offices of the banking companies concerned are situated, one of such
newspapers being in a language commonly understood in the locality or localities.
(3) Any shareholder, who has voted against the scheme of amalgamation at the meeting or has
given notice in writing at or prior to the meeting to the company concerned or to the presiding officer of
the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the
scheme being sanctioned by the Reserve Bank, to claim from the banking company concerned, in
respect of the shares held by him in that company, their value as determined by the Reserved Bank
when sanctioning the scheme and such determination by the Reserve Bank as to the value of the shares
to be paid to the dissenting share holder shall be final for all purposes.
(4) If the scheme of amalgamation is approved by the requisite majority of shareholders in
accordance with the provisions of this section it shall be submitted to the Reserve Bank for sanction and
shall, if sanctioned by the Reserve Bank by an order in writing passed in this behalf, be bindings on the
banking companies concerned and also on all the shareholders thereof.
3
* * * * *
(6) On the sanctioning of a scheme of amalgamation by the Reserve Bank, the property of the
amalgamated banking company shall, by virtue of the order of sanction, be transferred to and vest in,
and the liabilities of the said company shall, by virtue of the said order be transferred to, and become
the liabilities of, the banking company which under the scheme of amalgamation is to acquire the

1. Subs. by Act 33 of 1959, s. 30, for section 44 (w.e.f. 1- 10-1959).

2. Ins. by Act 20 of 1950, s. 8.
3. Omitted by Act 55 of 1963, s. 19 (w.e.f. 1-2- 1964).

54
business of the amalgamated banking company, subject in all cases to 1[the provisions of the scheme as
sanctioned].]
2
[(6A) Where a scheme of amalgamation is sanctioned by the Reserve Bank under the provisions of
this section, the Reserve Bank may, by a further order in writing, direct that on such date as may be
specified therein the banking company (hereinafter in this section referred to as the amalgamated
banking company) which by reason of the amalgamation will cease to function, shall stand dissolved
and any such direction shall take effect notwithstanding anything to the contrary contained in any other
law.
(6B) Where the Reserve Bank directs a dissolution of the amalgamated banking company, it shall
transmit a copy of the order directing such dissolution to the Registrar before whom the banking
company has been registered and on receipt of such order the Registrar shall strike off the name of the
company.
(6C) An order under sub-section (4) whether made before or after the commencement of section 19
of the Banking Laws (Miscellaneous Provisions) Act, 1963 (55 of 1963) shall be conclusive evidence
that all the requirements of this section relating to amalgamation have been complied with, and a copy
of the said order certified in writing by an officer of the Reserve Bank to be true copy of such order and
a copy of the scheme certified in the like manner to be a true copy thereof shall, in all legal proceedings
(whether in appeal or otherwise and whether instituted before or after the commencement of the said
section 19), be admitted as evidence to the same extent as the original order and the original scheme.]
3
[(7) Nothing in the foregoing provisions of this section shall affect the power of the Central
Government to provide for the amalgamation of two or more banking companies 4*** under section
396 of the Companies Act, 1956 (1 of 1956);
Provided that no such power shall be exercised by the Central Government except after consultation
with the Reserve Bank.]
5
[ 6[44B.] Restriction on compromise or arrangement between banking company and
creditors. 7[(1)] Notwithstanding anything contained in any law for the time being in force, no 8[High
Court] shall sanction a compromise or arrangement between a banking company and its creditors or any
class of them or between such company and its members or any class of them 9[or sanction any
modification in any such compromise or arrangement unless the compromise or arrangement or
modification, as the case may be,] is certified by the Reserve Bank 10[in writing as not being incapable
of being worked and as not being detrimental to the interests of the depositors of such banking
company].]
11
[(2) Where an application under 12[section 391 of the Companies Act, 1956 (1 of 1956)] is made
in respect of a banking company, the High Court may direct the Reserve Bank to make an inquiry in
relation to the affairs of the banking company and the conduct of its directors and when such a direction
is given, the Reserve Bank shall make such inquiry and submit its report to the High Court.]

-2-1964).
2. Ins. by s. 19, ibid. (w.e.f. 1-2-1964).
3. Ins. by Act 37 of 1960, s. 5 (w.e.f. 19-9-1960).
-3-1961).
5. Subs. by Act 20 of 1950, s. 9, for section 45 (w.e.f. 18-3-1950).
6. Section 45 renumbered as section 44B by Act 37 of 1960, s. 6 (w.e.f.19-9-1960).
7. Section 44B re-numbered as sub-section (1) thereof by Act 52 of 1953, s. 9 (w.e.f. 30-12-1953).
8. Subs. by s. 4, ibid., for -12-1953).
-2-1964).

(w.e.f. 30-11-1953).
11. Ins. by s. 9, ibid. (w.e.f. 30-12-1953).

(w.e.f. 14-1-1957).

55
 1
[45. Power of Reserve Bank to apply to Central Government for suspension of business by a
banking company and to prepare scheme of 2[reconstruction] or amalgamation. (1)
Notwithstanding anything contained in the foregoing provisions of this Part or in any other law or
3
[any agreement or other instrument], for the time being in force, where it appears to the Reserve Bank
that there is good reason so to do, the Reserve Bank may apply to the Central Government for an order
of moratorium in respect of 4[a banking company].
(2) The Central Government, after considering the application made by the Reserve Bank under
sub-section (1), may make an order of moratorium staying the commencement or continuance of all
actions and proceedings against the company for a fixed period of time on such terms and conditions as
it thinks fit and proper and may from time to time extend the period so however that the total period of
moratorium shall not exceed six months.
(3) Except as otherwise provided by any directions given by the Central Government in the order
made by it under sub-section (2) or at any time thereafter, the banking company shall not during the
period of moratorium make any payment to any depositors or discharge any liabilities or obligations to
any other creditors 5[or grant any loans or advances or make investments in any credit instruments].
6
[(4) During the period of moratorium 5[or at any other time], if the Reserve Bank is satisfied that
(a) in the public interest; or
(b) in the interests of the depositors; or
(c) in order to secure the proper management of the banking company; or
(d) in the interests of the banking system of the country as a whole,
it is necessary so to do, the Reserve Bank may prepare a scheme
(i) for the reconstruction of the banking company, or
(ii) for the amalgamation of the banking company with any other banking institution (in
this section referred to as the transferee bank ).]
(5) The scheme aforesaid may contain provisions for all or any of the following matters, namely:
(a) the constitution, name and registered office, the capital, assets, powers, rights, interests,
authorities and privileges, the liabilities, duties and obligations of the banking company on its
reconstruction or, as the case may be, of the transferee bank;
(b) in the case of amalgamation of the banking company, the transfer to the transferee bank of
the business, properties, assets and liabilities of the banking company on such terms and conditions
as may be specified in the scheme;
(c) and change in the Board of directors, or the appointment of a new Board of directors, of the
banking company on its reconstruction or, as the case may be, of the transferee bank and the
authority by whom, the manner in which, and the other terms and conditions on which, such change
or appointment shall be made and in the case of appointment of a new Board of directors or of any
director, the period for which such appointment shall be made;

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

-6-2020).
-3-1961).
4. Subs. by s. 4, ibid. -3-1961).
5. Ins. by Act 39 of 2020, s. 3 (w.e.f. 26-6-2020).
6. Subs. by Act 7 of 1961, s. 4, for sub-sections (4) to (9) (w.e.f. 24-3-1961).

56
 (d) the alteration of the memorandum and articles of association of the banking company on its
reconstruction or, as the case may be, of the transferee bank for the purpose of altering the capital
thereof or for such other purposes as may be necessary to give effect to the reconstruction or
amalgamation;
(e) subject to the provisions of the scheme, the continuation by or against the banking company
on its reconstruction or, as the case may be, the transferee bank, of any actions or proceedings
pending against the banking company immediately before the 1[reconstruction or amalgamation];
(f) the reduction of the interest or rights which the members depositors and other creditors have
in or against the banking company before its reconstruction or amalgamation to such extent as the
Reserve Bank considers necessary in the public interest or in the interests of the members,
depositors and other creditors or for the maintenance of the business of the banking company;
(g) the payment in cash or otherwise to depositors and other creditors in full satisfaction of their
claim
(i) in respect of their interest or rights in or against the banking company before its
reconstruction or amalgamation; or
(ii) where their interest or rights aforesaid in or against the banking company has or have
been reduced under clause (f), in respect of such interest or rights as so reduced;
(h) the allotment to the members of the banking company for shares held by them therein
before its reconstruction or amalgamation [whether their interest in such shares has been reduced
under clause (f) or not], of shares in the banking company on its reconstruction or, as the case may
be, in the transferee bank and where any members claim payment in cash and not allotment of
shares, or where it is not possible to allot shares to any members, the payment in cash to those
members in full satisfaction of their claim
(i) in respect of their interest in shares in the banking company before its reconstruction or
amalgamation; or
(ii) where such interest has been reduced under clause (f) in respect of their interest in
shares as so reduced;
(i) the continuance of the services of all the employees of the banking company (excepting such
of them as not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947)
are specifically mentioned in the scheme) in the banking company itself on its reconstruction or, as
the case may be, in the transferee bank at the same remuneration and on the same terms and
conditions of service, which they were getting or, as the case may be, by which they were being
governed, immediately before the 1[reconstruction or amalgamation]:
Provided that the scheme shall contain a provision that
(i) the banking company shall pay or grant not later than the expiry of the period of three years
from the date on which the scheme is sanctioned by the Central Government, to the said employees
the same remuneration and the same terms and conditions of service 2[as are, at the time of such
payment or grant, applicable] to employees of corresponding rank or status of a comparable
banking company to be determined for this purpose by the Reserve Bank (whose determination in
this respect shall be final);
(ii) the transferee bank shall pay or grant not later than the expiry of the aforesaid period of
three years, to the said employees the same remuneration and the same terms and conditions of
service 2[as are, at the time of such payment or grant, applicable] to the other employees of
corresponding rank or status of the transferee bank subject to the qualifications and experience of
the said employees being the same as or equivalent to those of such other employees of the
transferee bank:

-6-2020).
-2-1984).

57
 Provided further that if in any case under clause (ii) of the first proviso any doubt or difference
arises as to whether the qualification and experience of any of the said employees are the same as or
equivalent to the qualifications and experience of the other employees of corresponding rank or
status of the transferee bank, 1[the doubt or difference shall be referred, before the expiry of a
period of three years from the date of the payment or grant mentioned in that clause,] to the Reserve
Bank whose decision thereon shall be final;
(j) notwithstanding anything contained in clause (i) where any of the employees of the banking
company not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947)
are specifically mentioned in the scheme under clause (i), or where any employees of the banking
company have by notice in writing given to the banking company or, as the case may be, the
transferee bank at any time before the expiry of the one month next following the date on which the
scheme is sanctioned by the Central Government, intimated their intention of not becoming
employees of the banking company on its reconstruction or, as the case may be, of the transferee
bank, the payment to such employees of compensation if any, to which they are entitled under the
Industrial Disputes Act, 1947 (14 of 1947), and such pension, gratuity, provident fund and other
retirement benefits ordinarily admissible to them under the rules or authorisations of the banking
company immediately before the 2[reconstruction or amalgamation];
(k) any other terms and conditions for the reconstruction or amalgamation of the banking
company;
(l) such incidental, consequential and supplemental matters as are necessary to secure that the
reconstruction or amalgamation shall be fully and effectively carried out.
(6) (a) A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the banking
company and also to the transferee bank and any other banking company concerned in the
3
[reconstruction or amalgamation], for suggestions and objections, if any, within such period as the
Reserve Bank may specify for this purpose.
(b) The Reserve Bank may make such modifications, if any, in the draft scheme as it may consider
necessary in the light of the suggestions and objections received from the banking company and also
from the transferee bank, and any other banking company concerned in the amalgamation and from any
members, depositors or other creditors of each of those companies and the transferee bank.
(7) The scheme shall thereafter be placed before the Central Government for its sanction and the
Central Government may sanction the scheme without any modifications or with such modifications as
it may consider necessary; and the scheme as sanctioned by the Central Government shall come into
force on such date as the Central Government may specify in this behalf:
Provided that different dates may be specified for different provisions of the scheme.
4
[(7A) The sanction accorded by the Central Government under sub-section (7), whether before or
after the commencement of section 21 of the Banking Laws (Miscellaneous Provisions) Act, 1963
(55 of 1963), shall be conclusive evidence that all the requirements of this section relating to
reconstruction, or, as the case may be, amalgamation have been complied with and a copy of the
sanctioned scheme certified in writing by an officer of the Central Government to be a true copy
thereof, shall, in all legal proceedings (whether in appeal or otherwise and whether instituted before or
after the commencement of the said section 21), be admitted as evidence to the same extent as the
original scheme.]

-2-1984).
-6-2020).
3. Subs. by s. 3, ibid -6-2020).
4. Ins. by Act 55 of 1963, s. 21 (w.e.f. 1-2-1964).

58
 (8) On and from the date of the coming into operation of the scheme or any provision thereof, the
scheme or such provision shall be binding on the banking company or, as the case may be, on the
transferee bank and any other banking company concerned in the amalgamation and also on all the
members, depositors and other creditors and employees of each of those companies and of the
transferee bank, and on any other person having any right or liability in relation to any of those
companies or the transferee bank 1[including the trustees or other persons managing, or connected in
any other manner with, any provident fund or other fund maintained by any of those companies or the
transferee bank.]
(9) 2[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] the properties and assets of the banking company shall, by virtue of and to
the extent provided in the scheme, stand transferred to, and vest in, and the liabilities of the banking
company shall, by virtue of and to the extent provided in the scheme, stand transferred to, and become
the liabilities of the transferee bank.
(10) If any difficulty arises in giving effect to the provisions of the scheme, the Central Government
may by order do anything not inconsistent with such provisions which appears to it necessary or
expedient for the purpose of removing the difficulty.
(11) Copies of the scheme or of any order made under sub-section (10) shall be laid before both
Houses of Parliament, as soon as may be, after the scheme has been sanctioned by the Central
Government, or, as the case may be, the order has been made.
(12) Where the scheme is a scheme for amalgamation of the banking company, any business
acquired by the transferee bank under the scheme or under any provision thereof shall, after the coming
into operation of the scheme or such provision, be carried on by the transferee bank in accordance with
the law governing the transferee bank, subject to such modifications in that law or such exemptions of
the transferee bank from the operation of any provisions thereof as the Central Government on the
recommendation of the Reserve Bank may, by notification in the Official Gazette, make for the purpose
of giving full effect to the scheme:
Provided that no such modification or exemption shall be made so as to have effect for a period of
more than seven years from the date of the acquisition of such business.
(13) Nothing in this section shall be deemed to prevent the amalgamation with a banking institution
by a single scheme of several banking companies in respect of each of which an order of moratorium
has been made under this section.
(14) The provisions of this section and of any scheme made under it shall have effect
notwithstanding anything to the contrary contained in any other provisions of this Act or in any other
law or any agreement, award or other instrument for the time being in force.
(15) In this section, banking institution means any banking company and includes the State Bank
of India 3*** 2[or a corresponding new bank].
1
[Explanation. References in this section to the terms and conditions of service of as applicable to
an employee shall not be construed as extending to the rank and status of such employee.]
4
[PART IIIA
SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS
45A. Part IIIA to override other laws. The provisions of this Part and the rules made thereunder
shall have effect notwithstanding anything inconsistent therewith contained in the

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

2. Subs. by s. 34, ibid., for certain words (w.e.f 15-2-1984).
2020, s. 3 (w.e.f. 26-6-2020).
4. Subs. by Act 52 of 1953, s. 10, for Part IIIA (w.e.f. 30-12-1953).

59