The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

(1) This Act may be called the Banking Companies(Acquisition and Transfer of Undertakings) Act, 1970. (2) The provisions of this Act (except section 21, which shall come into force on the appointed day)shall be deemed to have come into force on the 19th day of July, 1969.

In this Act, unless the context otherwise requires,-- (a) "appointed day" means the 14th day of February, 1970, being the day on which the BankingCompanies (Acquisition and Transfer of Undertakings) Ordinance, 1970 (Ord. 3 of 1970), waspromulgated; (b) "banking company" does not include a foreign company within the meaning of section 591 ofthe Companies Act, 1956 (1 of 1956); (c) "commencement of this Act" means the 19th day of July, 1969; (d) "corresponding new bank", in relation to an existing bank, means the body corporate specifiedagainst such bank in column 2 of the First Schedule; (e) "Custodian" means the person who becomes, or is appointed, a Custodian under section 7; (f) "existing bank" means a banking company specified in column 1 of the First Schedule, being acompany the deposits of which, as shown in the return as on the last Friday of June, 1969, furnishedto the Reserve Bank under section 27 of the Banking Regulation Act, 1949 (10 of 1949), were notless than rupees fifty crores; 1[(fa) "prescribed" means prescribed by regulations made under this Act;] (g) "Schedule" means a Schedule to this Act; (h) words and expressions used herein and not defined but defined in the Banking RegulationAct, 1949 (10 of 1949), have the meanings respectively assigned to them in that Act; 1[(i) words and expressions used herein and not defined either in this Act or in the BankingRegulation Act,1949 (10 of 1949) but defined in the Companies Act, 1956 (1 of 1956) shall have themeanings respectively assigned to them in the Companies Act, 1956.]

1[3. Establishment of corresponding new banks and business thereof.--(1) On the commencementof this Act, there shall be constituted such corresponding new banks as are specified in the First Schedule. (2) The paid-up capital of every corresponding new bank constituted under sub-section (1) shall, untilany provision is made in this behalf in any scheme made under section 9, be equal to the paid-up capitalof the existing bank in relation to which it is the corresponding new bank. 2[3[(2A) Subject to the provisions of this Act, the authorised capital of every corresponding new bankshall be three thousand crores of rupees divided into three hundred crores of fully paid-up shares of tenrupees each: Provided that the corresponding new bank may reduce the nominal or face value of the shares, anddivide the authorised capital into such denomination as it may decide with the prior approval of theReserve Bank: Provided further that the Central Government may in consultation with the Reserve Bank and bynotification in the Official Gazette increase or reduce the authorised capital as it deems fit so however thatthe shares in all cases shall be fully paid-up shares.] (2B) Notwithstanding anything contained in sub-section (2), the paid up capital of everycorresponding 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 corresponding new bank may, after consultationwith the Reserve Bank and with the previous sanction of the Central Government, transfer from thereserve fund established by such bank to such paid-up capital; (b) such amounts as the Central Government may, after consultation with the Reserve Bank,contribute to such paid up capital; 4[(c) such amounts as the Board of Directors of the corresponding new bank may, afterconsultation with the Reserve Bank and with the previous sanction of the Central Government, raisewhether by public issue 5[or rights issue or by issue of bonus shares] or preferential allotment orprivate placement, of equity shares or preference shares in accordance with the procedure as may beprescribed, so, however, that the Central Government shall, at all times hold not less than fifty-oneper cent. of the paid-up capital consisting of equity shares of each corresponding new bank: Provided that the issue of preference shares shall be in accordance with the guidelines framed bythe Reserve Bank specifying the class of preference shares, the extent of issue of each class of suchpreference shares (whether perpetual or irredeemable or redeemable) and the terms and conditionssubject to which, each class of preference shares may be issued.] 6[(2BB) Notwithstanding anything contained in sub-section (2) the paid-up capital of a correspondingnew bank constituted under sub-section (1) may, from time to time and before any paid-up capitalis 7[raised by public issue 5[or rights issue or by issue of bonus shares] or preferential allotment or privateplacement] under clause (c) of sub-section (2B), be reduced by-- (a) the Central Government, after consultation with the Reserve Bank, by cancelling any paid-upcapital which is lost, or is unrepresented by available assets; (b) the Board of Directors, after consultation with the Reserve Bank and with the previoussanction of the Central Government, by paying off any paid-up capital which is in excess of the wantsof the corresponding new bank: Provided that in a case where such capital is lost, or is unrepresented by available assets because ofamalgamation of another corresponding new bank or a corresponding new bank as defined in clause (d) ofsection 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)with the corresponding new bank, such reduction may be done, either prospectively or retrospectively, butnot 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 hasbeen 8[raised by public issue 9[or rights issue or by issue of bonus shares] or preferential allotment orprivate placement] under clause (c) of sub-section (2B), by resolution passed at an annual general meetingof the shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and thevotes cast in favour of the resolution are not less than three times the number of the votes, if any, castagainst 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 reducedby-- (i) extinguishing or reducing the liability on any of its shares in respect of share capital notpaid-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 available assets; or (iii) either with or without extinguishing or reducing liability on any of its paid-up shares, payingoff 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), thepaid-up capital of a corresponding new bank shall not be reduced at any time so as to render it belowtwenty-five per cent. of the paid-up capital of that bank as on the date of commencement of the BankingCompanies (Acquisition and Transfer of Undertakings) Amendment Act, 1995 (8 of 1995).] (2C) The entire paid-up capital of a corresponding new bank, except the paid-up capital 8[raised frompublic by public issue 9[or rights issue or by issue of bonus shares] or preferential allotment or privateplacement] under clause (c) of sub-section (2B), shall stand vested in, and allotted to, the CentralGovernment. (2D) The shares of every corresponding new bank not held by the Central Government shall be freelytransferable: Provided that no individual or company resident outside India or any company incorporated underany law not in force in India or any branch of such company, whether resident outside India or not, shallat any time hold or acquire by transfer or otherwise shares of the corresponding new bank so that suchinvestment in aggregate exceed the percentage, not being more than twenty per cent. of the paid-upcapital, 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 afirm or other association of individuals. (2E) No shareholder of the corresponding new bank, other than the Central Government, shall beentitled to exercise voting rights in respect of any shares held by him in excess of 10[ten per cent.] of thetotal voting rights of all the shareholders of the corresponding new bank. 11[Provided that the shareholder holding any preference share capital in the corresponding new bankshall, in respect of such capital, have a right to vote only on resolutions placed before suchcorresponding new bank which directly affects the rights attached to his preference shares: Provided further that 12[no preference shareholder, other than the Central Government, shall be entitledto exercise voting rights in respect of preference shares held by him in excess of ten per cent.] of the totalvoting rights of all the shareholders holding preference share capital only.] (2F) Every corresponding new bank shall keep at its head office a register, in one or more books, ofthe shareholders (in this Act referred to as the register) and shall enter therein the following particulars:-- (i) the names, addresses and occupations, if any, of the shareholders and a statement of the sharesheld by each shareholder, distinguishing each share by its denoting number; (ii) the date on which each person is so entered as a shareholder; (iii) the date on which any person ceases to be a shareholder; and (iv) such other particulars as may be prescribed: 13[Provided that nothing in this sub-section shall apply to the shares held with a depository.] (2G) Notwithstanding anything contained in sub-section (2F), it shall be lawful for everycorresponding new bank to keep the register in computer floppies or diskettes subject to such safeguardsas may be prescribed. (3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872) a copy of, orextract from, the register, certified to be a true copy under the hand of an officer of the corresponding newbank authorised in this behalf by it, shall, in all legal proceedings, be admissible in evidence.] (4) Every corresponding new bank shall be a body corporate with perpetual succession and a commonseal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, and tocontract, 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 inclause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) and may engage in 14[one ormore 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 theshare premiums and the balance, if any, standing to the credit of the reserve fund of the existing bank inrelation to which it is the corresponding new bank, and such further sums, if any, as may be transferred inaccordance with the provisions of section 17 of the Banking Regulation Act, 1949 (10 of 1949). 15[(7) (i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of theReserve 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 anyGovernment in India; and (b) undertaking and transacting any other business which the Reserve Bank may from time totime entrust to it. (ii) The terms and conditions on which any such agency business shall be carried on by thecorresponding 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 arisesbetween 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 CentralGovernment thereon shall be final. (iv) The corresponding new bank may transact any business or perform any functions entrusted to itunder clause (i), by itself or through any agent approved by the Reserve Bank.]

1[3A. Trust not to be entered on the register.--Notwithstanding anything contained insub-section (2F) of section 3, no notice of any trust, express, implied or constructive, shall be entered onthe register, or be receivable, by the corresponding new bank:] 2[Provided that nothing in this section shall apply to a depository in respect of shares held by it as aregistered owner on behalf of the beneficial owners.]

1[3B. Register of beneficial owners.--The register of beneficial owners maintained by a depositoryunder section 11 of the Depositories Act, 1996 (22 of 1996), shall be deemed to be a register ofshareholders for the purpose of this Act. Explanation.--For the purposes of section 3, section 3A and this section, the expressions "beneficialowner", "depository" and "registered owner" shall have the meanings respectively assigned to them inclauses (a), (e) and (j) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).]