Banking Companies (Acquisition and Transfer of Undertakings) Act : Power of Central Government to make

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

Act No : 40

Section : Power of Central Government to make scheme.

9. Power of Central Government to make scheme. (1) The Central Government may, after consultation with the Reserve Bank, make a scheme for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:-- (a) the capital structure of the corresponding new bank1*, (b) the constitution of the Board of Directors, by whatever name called, of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient; (c) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution, the transfer of the whole or any part of the undertaking of a 2*corresponding new bank to any other corresponding new bank or banking institution or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank; (d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act. 3*(3) Every Board of Directors of a corresponding new bank, cons- tituted under any scheme made under sub-section (1), shall include-- (a) not more than two whole-time directors to be appointed by the Central Government after consultation with the Reserve Bank; (b) one director who is an official of the Central Government to be nominated by the Central Government: Provided that no such director shall be a director of any other corresponding new bank. Explanation.-- For the purposes of this clause, the expres- sion "corresponding new bank" shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970); (c) one director who is an officer of the Reserve Bank to be nominated by the Central Government on the recommendation of the Reserve Bank. Explanation.-- For the purpose of this clause, "an officer of the Reserve Bank" includes an officer of the Reserve Bank who is deputed by that Bank under section 54AA of the Reserve Bank of India Act, 1934 (2 of 1934) to any institution referred to therein; (d) not more than two directors to be nominated by the Central Government from amongst the Securities Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the National Bank for Agriculture and Rural Development established under secction 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981), public financial institutions as specified in sub-section (1), or noti-fied from time to time under sub-section (2), of section 4A of the Companies Act, 1956 and other institutions established or constituted by or under any Central act or incorporated under the Companies Act, 1956 (1 of 1956), and having not less than fifty-one per centth. of the paid-up share capital held or controlled by the Central Government: (e) one director, from among such of the employees of the corresponding new bank who are workmen under clause (s) of sec- tion 2 of the Industrial Disputes ACt, 1947 (14 of 1947), to be nominated by the Central Government in such manner as may be specified in a scheme made under this section; (f) one director, from among the employees of the corres- ponding new bank who are not workmen under clause (s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947), to be nominated by the Central Government after consultation with the Reserve Bank; (g) one director who has been a Chartered Accountan for not less than fifteen years to be nominated by the Central Government after consultation with the Reserve Bank; (h) subject to the provisions of clause (i) not more than six direcctors to be nominated by Central Government; (i) where the capital issued under clause (c) of sub-section (2B) of section 3 is-- (I) not more than twenty per cent. of the total paid-up capital, not more than two directors, (II) more than twenty per cent. but not more than forty per cent. of the total paid-up capital, not more than four directors, (III) more than forty per cent. of the total paid-up capital, not more than six directors, to be elected by the shareholders, other than the Central Gover- nment, from amongst themselves, Provided that on the assumption of charge after election of any such directors under this clause, equal number of directors nominated under clause (h) shall retire in such manner as may be specified in the scheme. (3A) The directors to be nominated under clause (h) or to be elected under clause (i) of sub-section (3A) shall-- (A) have special knowledge or practical experience in respect of one or more of the following matters, namely:-- (i) agricultural and rural economy, (ii) banking, (iii) co-operation, (iv) economics, (v) finance, (vi) law, (vii) small-scale industry, (viii) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the corresponding new bank; (B) represent the interests of depositors; or (C) represent the interests of farmers, workers and artisans. (3A) where the Reserve Bank is of the opinion that any director of a corresponding new bank clected under clause (i) of sub-section (3) does not fulfil the requirements of sub-section (3A), it may, after giving to such director and the bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall co-opt any other person fulfilling the requi- rments of sub-section (3A) as a director in place of the person so removed till a director is duly elected by the shareholders of the corresponding new bank in the next annual general meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the corresponding new bank as a director. 1. Omitted by Act 37 of 1994, s. 14 (w.e.f.3-4-1995). 2. Subs. by Act 66 of 1988, s. 36 (w.e.f. 30-12-1988). 3. Subs. by Act 37 of 1994, s. 14 (w.e.f. 3-4-1995). 4. Subs. by Act 36 of 1992, s. 3 (w.e.f. 1-11-1992). 181 (4) The Central Government may, after consultation with the Reserve Bank, make a scheme to amend or vary any scheme made under sub-section (1). (5) On and from the date of coming into operation of a schem made under this section with respect to any of the matters referred to in clause (c) of sub-section (2) or any matters incidental, conse- quential and supplemental thereto,-- (a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and right or liability in relation to any of them including the trustees or other persons, managing or in any other manner connected with, any of them; (b) the properties and assets of the corresponding new bank or, as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand trans- ferred to, and vested in, and the liabilities of the corres- ponding new bank or, as the case may be, of the banking insti- tution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of, the corporation or corporations brought into existence by recons- titution of the banking institution or the corresponding new bank, as the case may be. Explanation 2*[I]-- In this section, "banking institution" means a banking company and includes the State Bank of India or a subsidiary bank. Explanation 2*[II]-- For the purposes of this section, the exp- ression "corresponding new bank" shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970). 3*[(6)] Every scheme made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the scheme or both Houses agree that the scheme should not be made, the scheme shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that scheme.