Banking Companies (Acquisition and Transfer of Undertakings) Act,1980

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Act No : 40


Section : Establishment of corresponding new banks and business thereof.

3. Establishment of corresponding new banks and business thereof. (1) On the commencement of this Act, there shall be constituted such corresponding new banks as are specified in column 2 of the First Schedule. (2) The paid-up capital of every corresponding new bank constituted under sub-section (1) shall, until any provision is made in this behalf in any scheme made under section 9, be equal to the paid-up capital of the existing bank in relation to which it is the corresponding new bank. 3*(2A) Subject to the provisions of this Act, the authorised of every corresponding new bank shall be one thousand five hundred crores of rupees divided into one hundred and fifty crores fully paid- up shares of ten rupees each: Provided that the Central Government may, after consulation with the Reserve Bank and by notification in the Official Gazette, increase or reduce the authorised capital as it thinks fit, so however that after such increase or reduction, the authorised capital shall not exceed three thousand crores or be less than one thousand five hundred crores, of rupees. (2B) Notwithstanding anything contained in sub-section (2), the paid-up capital of every corresponding new bank constituted under sub-section (1) may from time to time be increased by-- (a) such amounts as the Board of Directors of the corres- ponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, transfer from the reserve fund established by such bank to such paid-up capital; (b) such amounts as the Central Government may, after consu- ltation with the Reserve Bank, contribute to such paid-up capital; (c) such amounts as the Board of Directors of the corres- ponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, raise by public issue of shares in such of shares in such manner as may be prescribed, so however that the Central Government shall at all times hold not less than fifty-one per cent. of the paid-up capital of each corresponding new bank. 4*(2BB) Notwithstanding anything contained in sub-section ( 2), the paid-up capital of a corresponding new bank constituted under sub-section (1) may, from time to time and before any paid-up capital is raised by public issue under clause (c) of sub-section (2B), be reduced by-- (a) the Central Covernment, after consultation with the Reserve Bank, by cancelling any paid-up capital which is lost, or is unrepresented by available assets; (b) the Board of Directors, after consultation with the Reserve Bank and with the previous sanction of the Central Government, by paying off any paid-up capital which is in excess of the wants of the corresponding new banks: Provided that in a case where such capital is lost, or is unrepr- esented by available assets because of amalgamation of another corres- ponding new bank or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) with the corresponding new bank, such reduction may be done, either prospectively or retrospectively, but not from a date earlier than the date of such amalgamation. (2BBA) (a) A corresponding new bank may, from time to time and after any paid-up capital has been raised by public issue under clause (c) of sub-section (2B), by resolution passed at an annual general meeting of the shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by the shareholders so entitled and voting, reduce its paid-up capital in any way. (b) Without prejudice to the generality of the foregoing power, the paid-up capital may be reduced by-- (i) extinguishing or reducing the liability on any of its shares in respect of share capital not paid-up; (ii) either with or without extinguishing or reducing liability on any of its paid-up shares, cancelling any paid-up capital which is lost, or is unrepresented by availa- ble assets; or (iii) either with or without extinguishing or reducing liability on any of its paid-up shares, paying off any paid-up share capital which is in excess of the wants of the corresponding new bank. (2BBB) Notwithstanding anything contained in sub-section (2BB) or sub-section (2BBA), the paid-up capital of a corresponding new bank shall not be reduced at any time so as to render it below twenty-five per cent. of the paid-up capital of that bank as on the date of commencement of the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995 (8 of 1995). (2C) The entire paid-up capital of a corresonding new bank, except the paid-up capital raised by public issue under clause (c) of sub-section (2B), shall stand vested in, and allotted to, the Central Government. (2D) The shares of every corresponding new bank not held by the Central Government shall be freely transferable: Provided that no individual or company resident outside India or any company incorporated under any law not in force in India or any branch of such company, whether resident outside India or not, shall at any time hold or acquire by transfer or otherwise shares of the corresponding new bank so that such investment in aggregate exceeds the percentage, not being more than twenty per cent. of the paid-up capital, as may be specified by the Central Government by notification in the Official Gazette. Explanation.--For the purposes of this clause, "company" means any body corporate and includes a firm or other association of indi- viduals. (2E) No shareholder of the corresponding new bank, other than the Central Government, shall be entitled to exercise voting rights in respect of any shares held by him in excess of one per cent. of the total voting rights of all the shareholders of the corresponding new bank. (2F) Every corresponding new bank shall keep at its head office a register, in one or more books, of the shareholders (in this Act referred to as the register) and shall enter therein the following particulars:-- (i) thec names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each share- holder, distinguishing each share by its denoting number; (ii) the date on which each person is so entered as a share- holder; (iii) the date on which any person ceases to be a share- holder; and (iv) such other particulars as may be prescribed. (2G) Notwithstanding anything contained in sub-section (2F), it shall be lawful for everry corresponding new bank to keep the register in computer floppies or diskettes subject to such safeguards as may be prescribed. (3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (15 of 1972), a copy of, or extract from, the register, certified to be a true copy under the hand of an office r of the corresponding new bank authorised in this behalf by it, shall, in all legal proceedings, be admissible in evidence. 5*3A. Trust not to be entered on the register. Notwithstanding anything contained in sub-section (2F) of section 3, no notice of any trust, express, implied or constructive, shall be entered on the register, or be receivable, by the corresponding new bank. (4) Every corresponding new bank shall be a body corporate with perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, and to contract, and may sue and be sued in its name. (5) Every corresponding new bank shall carry on and transact the business of banking as defined in clause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and may engage in 6*one or more of the other forms of business specified in sub-section (1) of section 6 of that Act. (6) Every corresponding new bank shall establish a reserve fund to which shall be transferred the share premiums and the balance, if any, standing to the credit of the reserve fund of the existing bank in relation to which it is the corresponding new bank, and such further sums, if any, as may be transferred in accordance with the provisions of section 17 of the Banking Regulation Act, 1949 (10 of 1949). (7) (i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch, for-- (a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India; and (b) undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it. (ii) The terms and conditions on which any such agency business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon. (iii) If no agreement can be reached on any matter referred to in clause (ii), or if a dispute arises between the corresponding new bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final. (iv) The corresponding new bank may transact any business or perform any functions entrusted to it under clause (i), by itself or through any agent approved by the Reserve Bank.


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