id} for sub-section (5), the followin sub-section shall be substituted, namely:— (5) the governor of the reserve bank shall, in consultation with the chairman, appoint— (4) a member of'a local board nominated under clause (c} of sub-section (1) to be the president thereof; and (b) a member of a local board holding _ office under clause (b) or nominated under clause (¢) of that sub-section to be the vice-president thereof" 41 in ection 21a of the principal act, sub-section (2) shail be craitiea - amendment of section 21a 42 in section, 21b of the principal act, for the words "served by the branch register", the words "falling within the jurisdiction" shall' be substituted amendment of section 21b 13 in section 22 of the principal act,— (a) in sub-section (1) ,— amendment of section 22, (4) in clause (da), in the opening portion, the words, brackets and figure "of sub-section (1)" shall be omitted; (ii) for clause (kh), the following elause shall be substitutrr ed, namely: - "(h) in the case of an elected director, he is not registered as a holder in his own right of uneucumbered shares in the state bank of a nominal value of at least five thousand rupees: provided that in the case of a director appointed under clause (ca) or clause (cb) of section 19, the disqualification mentioned in clause (d) shall not operate"; : o (b) in sub-section (4), in clause (4), for the words and figures "hanking companies act, 1949", the words and figures "ranking regulation act, 1949"-shali be substituted i in section 24 of the principal act,— amendment of section 23 (a) in sub-section (3), the words, brackets and figure "of subsetion (1)" shall be omitted; ° (b) in sub-section (4), the words, brackets and figure "of subset ion (1)" shall be omitted; (c) sub-section g) shall be omitted, °  : 1h, in section 25 of the principal act— amendment of section (a) in subsection (2), in the portion beginning with - the 25 words "clause (cb) of sub-section (1)" and ending withthe wards "ag the case may be,", the following shall be substituted, namely: - 5 "clause (cb) of section 18 or of a member of a lozal beard other than the chief general manager, the vacancy shall be eis filled— {@} in the case of an elected director, by election; and (b) in the case of a director nominated under clause 10 (d) of seeticn 19 or a member of a local board nominated under clause (c) of sub-section (1) of section 21, by nomination in consultation with the reserve bank: provided that where the duration of the vacancy in the office of an elected director is likely to be less than six 5 months, the vacancy may be filled by the remaining directors"; (b) in sub-section (4), the words, brackets and agure "of subseciion (1)" shall be omitted 1g in section 31 of the principal act, in the proviso to sub-section 20 (3), in clause (iii), the words, brackets and figure "on sub-section (1)" shall be omitted - amendment of section 31, 17, in section 85 of the principal act, in sub-section (10), in clause amendment of section (a), tur the words and figures "banking companies act, 1949", the words and figures "banking regulation act, 1949" shall be substituted, 35 ii of 35 18 in section 36 of the principal act, in sub-section (4), for the words and figures "indian income-tax act, 1922", the words and figures "tncome-tax act, 1961" shall be substituted amendment of section 36 1961 j in section 49 of the principal act, in sub-section (2), in clause (ec), the words, brackets and figure "of sub-section (1}" shall be omit+ ag ted 30 : ' amendment of section 49 20 in section 50 of the principal act, in sub-section (2) - (i) for clause (b), the following clause half be substituted, amendment of section 56, namely: - "(b) the maintenance of register of shareholders, and the ticulars to be entered in such register in addition to those  specified in section 13, the safeguards to be observed in the maintenance of register of shareholders on computer floppies cr diskettes, the inspection and closure of the registér of shareholders and all other matters connected therewith;"; 49 ' gij in clause (c); for the words _ "served by the different ocal head wn (1) in clause (j), the words "on branch registers" shall be omitted, 21, (1) as soon as may be after the commencement of the state provisions 10 eank of india (amendment) act, 1993 all branch registers kept by the state bank at its local head offices, immediately before such commeacement, shall be closed and transferred tc the central office, (2) all applications or matters relating to the shares in the branch registers referred to in sub-section (1) pending at the local head offices immediately before the commencement of the state bank of india (amendment) act, 1993 shall be transferred to the central office and dealt with, or disposed of as if such applications or matters were made to, 15 or pending with, the central office, (3) every shareholder of the state bank holding shares in the denomination of one hundred rupees immediately before the commencement of the state bank of india (amendment) act, 1993 shall be entitled to have the share certificates héld by him replaced by share certi- 20 ficates of shares of equivalent value in the denomination of ten rupees in accordance with the procedure specified by the state bank in this behalf 1s 25 2, for section 13 of the banking, public financial institutions and negotiable instruments laws (amendment) 'act, 1988, 'the following section shall be substituted, namely:— - ' amendment o act 66 1988  "13, in section 21a of the state bank act—(a) fox sub-section (1), the following sub-section shall be ameandment af section 21a substituted, namely: - | w i) "(1) subject to the provisions contained in this section and in sub-section (2) of section 21, a member of a local board nominated under clause (e) of sub-section (1) of section 21 shall hold office for such term, not exceeding three years, as the central government may specify in 35 this behalf and thereafter until his successor has been duly nominated and shall be eligible for renomination: provided that no such director shall hold office continuously for a period exceeding six years"; | (0) after sub-section (4), the following sub-section shall be inserted, namely: - ' "(@) a member of a local board nominated under clause (c) of sub-section (1) of section 21 shall hold office during the pleasure of the central government" oxd 33 repeal of 1983, 23 (1) the state bank of india (amendment) ordinance, 1993 is hereby repealed (2) notwithstanding such repeal, anything done or 'any action taken under the principal aci, as amended by the said ordinance, shall be deemed to have been done or taken under the principal act, as amended by this act  statement of objecis and reasonsfollowing the recommendations of the committee on the financial system (narasimham committee) the reserve bank of india had intreduced a new set of norms for income recognition and provisioning and also for capital adequacy in relation to risk weighted assets these norms were designed to put the financial accounting and prudential standards of indian banks on a sound footing in line with current international practice following the introduction of these norms, all the nationalised banks ag well as the state bank of india will have ts puild up their capital base substantially over the next 3 years all panks have to ensure that their total capital equals at least 8 per cent ot their risk weighted assets by 31st march, 1996 this norm has to be reachtd by 3lst march, 1994 in the case of banks having overseas - operations 2 achievement of the prescribed capital adequacy norms is essential for the basic financial health of the banking system it is also essential for its international credibility since banks all over the world are adopting these standards which were laid down by the committee on banking regulations and supervisory practices set up by the bank of interna- : tional settlements 3 state bank of india, being a bank with overseas operations, is requived to reach a capital adequacy ratio of 8 per cent by 31st march, 1994 for this purpose, the state bank of india is required to mobilise substantial additional resources from the market the bank is, therefore, goming out shortly with a rights-cum-public issue 4 with a view to comply with the guidelines issued by the securities and exchange board of india and also to enable the bank to attract a large number of smaller individual investors and keeping in view the current market preference, certain amendments in the state bank of india act, 1955 are necessary to provide for () reduction in the face value of bank's share from rs 100 to rs 10; (i) removal of restriction of 200 shares on individual holdings, (iii) raising of ceiling placed on voting rights from 1 per cent to 10 per cent; (iv) doing away with the maintenance of branch registers at local head offices; (v) maintenance of central register at the central office and to keep that register in computer floppies or diskettes; and (vi) other consequential amendments on account of abolition of branch registers : - 5 as parliament was not in session, the president promulgated the state bank of india (amendment) ordinance 1993 (ord no, 38 of 1923) on the 15th october, 1998 6 the bill seeks to replace the above ordinance new dechr; the th november, 1993 manmohan singh  ding delegated legislationg to amend section 11 of the state bank of nat no shareholder, other than the reserve s4 to exercise voting rights in respect of any share: 2 of 10 per cent of the issued capital provided that such shareholder shall be entitled to exercise voting rights at such higher percentage as the central government may, after conspecify sultation with the ri 9 substitute section 13 of the state la, inter alia, that it shall be lawful fo2 2 clause 5 of bank of india ac the state bank ta + of shareholders in computer floppies guards as may be prescribed the safeor diskettes subject to suc g guards would be p: ad by means of regulations for framing of which necessary provisions have been made in section 50 of the act as contained in clause 20 of the bill consequent upon the abolition of the branch registers, regulations are required to be framed for determination of areas falling within the jurisdiction of each local head office for this pur- pose a new clause is proposed to be inserted in section 50(2) of the act as provided in clause 2) of the bill 4 3 the matters in respect of which notifications may be issued or regulations may be male in accordance with, the aforesaid provisions are matters of procedure and detail the delegation of legislative power contained in such provisions is, therefore, of a normal character iovised capital of the ide ed into twenty lakhs nent may increase or reduce the owever that the shares in all cases nundred rupees each resivicdi, g) mo person be registered as a shareholder in respect cf tons on any shares held by him, whether in his own name or jointly with any holdin a othe 1 excess of two hundred shares, or be entitled to payment of sny ¢ don the exeess shares held' by him, or to exercise any of tuc rights of a shareholder in respect of such excess shares otherwise tnaan for the ef selling them: ! provided that nothing contsined in this sub-section shall apply to— (a) the reserve bank; | i (b) a corporation; i (c) an insurer as defined in the insurance act, 1938; (d) a local authority; | ' (e) a co-operative society; and | g) a try lizious or charitable trust anything contained in sub-section (1), no perto that sub-section, other than the reserve xercise voting rights in respect of any shares held by him in excess of ofe per cent of the issued capital, shares to 12, notwithstanding anything contained in the acts hereinafter menbe apptov- tioned in this section, the shares of the state bank shall be deemed to be e curi- : 3 ane 3 , : at sa, es  included arnong the securities enumerated in section 20 of the indian ' 'trusts act, 1882, and also to be approved securities for the purposes of the insurance act, 1938, and th nking companies act, 1949, principal keep at its central office, a register, in one register (in this act referred to as the princiof sharegerein the following particulars so far as holders, | (i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number; a (ii) the date on which each person is so entered ag a share holder; ! eholder; gti) the date on v any person ceases to be a sl and (iv} stich other particulars as may be prescribed branch registers 14 (1) the state bank shall cause tc be kept its local bead offices branch registers which shall be deerned to be part of the principal a nm the areas © i 1egister, and in which shail be ent d the particu! ar as in the principal register of sharsholders wi i prescribed with ref reholder may apply to have his name transferred from (2) any sh one branch reg r to another in respect of the whole, but not any part, ing in gis name, and the state bank shall, subject to of the shares sta such concitions a3 may be prescribed, cause amanred accordingly, | ~ trusis neg 15, section 11, no notice of any + 2, shall be entered on the tc be entered vrincipal or any branch registcr or be receivable by the state bank on the register, 19, (1) the central board shall consist of the following, namely:— an to be appointed by the a chairman and a vice-che government in consultation wi n the reserve bank; compasition of the central board, with the reserve bank; ; appointed under subcio; i section ©) of section 21, ex offi ngs of the shareholders, (c) if the total amount of the hold other than the reserve bank, v gister three racnths before the is— (@) not more than ten per cent of the two directors, ' (i) more than ten per cent per cent cf such capital, three directors, and (iti) rmore than twer per cent, of such capital, four dirertors, to be elected in the preseribed manner by such holders; : (ea) one director, from a: i employess of the state bank, who are workmen, t 11 government in the manner provi (cb) one director, from state bank, as are not w government in the manner prov 1 act; : ot  term of  (iy + :  office of   chair- (3) 5 in sub-secman tion (5), of section hold office uy 1 managing 19 or nomir director, 'duly res ! thereafter until his cucee etc, » eleeted or nominated, and shall be provided that no such director shall hold office continuously for a period e eeding six years (3a) a director appointed under clause (ca) of clause (cb) of subsection (1) of section 19 or nominated uncer clause (d) of that subsection shall hold office for such term, not exceeding three years, as the central government may specify and thereafter until his suecessor shall have been duly appointed, and shall be eligible for re-appointment: ' provided that no such director shall hold office continuously for a period exceeding six years  (4) a director appointed under clause (c) or clause (cb) of gubsection (1) of section 19 or nominated under clause (d) or clause (e) or clause ({) of that sub-section shatl-hold office during the pleastire of the authority appointing or nominating him, as the case may be |     |     |     ||------|------|------|local 21 (1) there shall be constituted at each place where the state boards, bank has a local head office, a local board which shali consist of the following members, namely: - i |         |          |         |      |           |         |    |            |       | %        | a       | a     ||---------|----------|---------|------|-----------|---------|----|-------------|--------|----------|---------|-------|| ant     | (b)      | ali     | such | directors | elected | or | nominated   | to     | the      | central | board || under   | clause   | (c)     | or   | clause    | (d)     | or | sub-section | (1)    | of       | section | 19 as || inarily | resident | fa      | the  | area      | served  | by | the         | branch | register | of      | the   || local   | head     | office; | !    |           |         |    |             |        |          |         |       |ae  ¥ x (d) one member to be elected in the prescribed manner by the shareholders, other than the reserve bank, whose names are entered in the branch register of the local head office, if the total holdings of such shareholders amount to two and a half per cent of more of the total issued capital: provided that a person elected as a member of a local board under this clause shall not cease to be a member thereof for reason only that the total holdings as aforesaid fall below two and a half per cent, of the total issued capital, at any time after his election; & & ea % ea (2) where as a result of the establishment of any local head office (hereinafter referred to as the new local head office) for any area which is already served by the branch register of another local head office (hereinatfer referred to as the existing local head office) a local board (hereinafter referred to as the new local board) is constituted for the new local head office, any person who is, at the time of such constitution, holding office as a member of a local board (hereinafter referred to as the gxisting local board) for an existing local head office under clause {c) or clause (d) of sub-section (1) and is ordinarily resident in the area served by the branch register of 'the new local head office, shall cease to hold office as member of the existing local board and shall becorne a member of the pew local board and shall on becoming such member be deemed to have been nominated or, as the case may be, elected to the new liocal board and shall hold office as such member for the unexpired portion of his term of office as a member of the existing local board i : % ea   % (4) notwithstanding anything contained' in clause (d) of sub section (1),— () on the reconstitution of an existing local board for the first time on or after the commencement of the state bank of india (amendment) act, 1964, or | (b) on the constitution of a new local board under sub-section (2) of which an elected member of an existing local board does not in pursuance of that sub-section become a member the reserve bank shall nominate a member in place of the member to be elected under that clause and such nominated member shall be deemed to have been elected under the said clause () the governor of the reserve bank shall, in consultation with the chairman, appoint— ' () a member of a local board nominated or elected under clause (c) or clause () of sub-section (1) to be the president thereof, and | (b) a member of a local board holding office under clause (db) or nominsted or elected under clause (c) or clause (2) of that subsection to be the vice dent thereof: term of 2a o)     x | office    ||-----------|| member's  |board nomin the reserve bank of local board, 4 shall retire at the expiry of one year under sub-sect from the date powers val or special d of local board, tire, a local bo register of the local h | and subject to any geneom time to by the branch een constitutduties of the state forms of business ed, exercise all powers and pe bank relation to the business of ba (a, 0), ©, do, ds (h), @, () end (b) of subset out in clause: section (1) of section 6 of the e dation act, 1949, and such 19 of 1249, other forms of busitiess referred to in sub-section (1) of the said section 6, as may be approved by the central board in this behalf and shall also exercise such other powers rch other functions and duties as may be con rred on or & viral board: ib by the ce gned to provided that a local board shall transact the businesses of borrowing of money and the acquiring, holding, issui commission, wunderwriting and dealing in stock, funds, shares, ures, debenture stock, bonds, obligations, securities and investments, only it the central board approves any of such businesses in this behalf and confers or assigns any of such businesses to the local board ! a  ak a to be a director of the central raittee if-— 22, (1) no person shall be qual board or a member of a local board ov of a local co     fa (da) in the case of a director appointed under clause (ca) or clause (cb) of sub-section (1) of section 19,— disqu ali fications for directorship of central board of member (i) he is not serving in the state bank or has not been serving in it for a continuous period of at least five years; and ship of local boards or com- "mittees (4) he is of such age that there is a likelihood of his at taining the age of superannuation during his terra of office as a director; or  ®  e  (h) in the case of an elected director, he is not registered as a holder in his own right of unencumbered shaves in the state bank of a nominal value of at least five thousand rupees and in the case of an elected member of a nominal value of at least one thousand rupees: : provided that in the case of a dir rector appointed under clause (ca) or clause (cb) of sub-section (1) of section 19, the disqualification mentioned in clause (d) shall not operate: provided further that in the case of a xaember of local board nominated by the reserve bank under sub -section (4) of section 21, the disqualification mentioned in clause (h) -shall_not- operate for a period of six months from his 'becoming such' member ; a   % es % (4) in this section,— : oo  (a) "banking company" has the same meaning as in the banking companies act, 1949; i 10 of 1949,      removal from office of directors, ete, (3) the central government, after consulting the reserve bank, may remove from office any director appointed under clause (ca) or clause (cb) or nominated under clatse (d) of sub-section (1) of section 19 or any member cf a local board norainated under clause (c) of subsection (1) of section 21 and appoint or nominate, as the case may be, in another person ta fill the vacancy : ' la sharenol 1 , other than the reserve bank, may, by a resolution passed by majority of the votes of such shareholders holding in the aggregate not less than one-half of the share capital held by ail move any director elected under clause (c) of sub- 19 and elect in his stead another person to fill the ose names are entered on a branch register, other th ; nk, may, by a resolution passed by the votes olde ers holding in the aggregate not less than one-half of of the sh tal on the branch register held by such shareholders, reof a local board and elect in his stead another t the share cap move any ele person to fill casual vacancies, (2) where any vacancy occurs before the expiry of the term of office of a director, other than the chairman, vice-chairman or g managing director or a director appointed under clause (ca) or clause (cb) of sub-section (1) of section 1% or of a member of a local board other than the chief general manager, the vacancy shali be filled— (2) in the case of an elected director or member, by election; and : of a director nominated under clause (d) of (b) in th e b-section ) i member of a local board nominat- de of section 21, by nomination provided that where ition of the vacancy in the office of an elected director or member is likely to be less than six months, the vacancy may be filled by the remaining directors or members, as the case may be, by co-opting a £ on not disqualified under section 22 expiry of the term of office )} or clause (cb) of sub-secll be filled in accordance with y be, clause (cb), and the director so xe period specified under sub- meetings of the central board, the vtral | board when discussed uniess his be entered i possible opportunity disc @ board and shall not be present at as any such contract, loan, arrangement a presence is reqt d by the other directors for the purpose of eliciting information, and no director so required to be present s all vote on any such contract, joan, arrangement or proposal: provided that nothing contained in this sub-section shall apply to such director by reason only of his being— ' (gi) a shareholder (other than a hoiding not more than two per cent of the val aid-up company as defined in the companies ct, 1956, or an orporation establisted - 1 of 1956, by or under any law for the time being in force in india or any co-operative society with which or to which the state bank has entered into or made, or proposes to enter into or make, a contract, loan, arrangement or proposal; of ' be (ii) a director ex officio of the state bank of @ director of a subsidiary bank; or ' (tn) an officer or other employee of the state bank, +f he is a director appointed under clause (cc) or clause (eb) of gib-section (1) of section 19  35 (1)    (10) simultaneously with the appointment of a suitable person to take over the management of any banking institution under sub-section (9) state bank may acquire the pusiness or immediately thereafter, the central government shall issue direcof other panks tions to be followed by that person in the management of that banking institution for the purposes aforesaid and thereupon— 1 of 1956 (a) the provisions of the companies act 1956, or the banking ; 10 of 1949, companies act, 1949, or any other law for the time being in force or any instrument having effect by virtue of any such act or law, in so far as they are inconsistent with such directions, shall cease to apply to or in relation to that banking institution; bs ok es  chapter vii funds, accounts' and audit36, ()   integration and development , (4) no amount applied for any of the purposes specified in subsection (2) shall, for the purposes of the indian income-tax act, 1922, 11 of 1922 pe treated as income, profits or gains' of the state bank,  fund       cb  bis power of cen tral government (2) in particular, and without prejudice to the generality of the foregcing power, such rules may provide for— to make rules  &  (c) the manner of appointment of a director under clause (ca) or clause (cb) of sub- section (1) of section 19, and all other matters connected therewith or incidental thereto 50 (d power (2) in particular, and without prejudice to the generality of the foregoing power, such regulations may provide for— of central board to make regula-     ao tions (b) the maintenance of share registers, and the particulars to be entered in the principal register in addition to those specified in gection 13, the areas to be served by each branch register, the inspection and closure of the registers and all other matters conmected therewith; (c) the helding and conduct of elections under this act, including the allocation of elected directors to the various areas served by the different branch registers, and the final determination of doubts or disputes regarding the qualifications of candidates for election or regarding the validity of elections; % ht es  % (j) the holding of meetings of shareholders on branch registers and the business to be transacted thereat;  extract from ths banxine, pusiic financial institutions and negotiable instruments laws (amendment) act, 1988(66 of 1988) eb   43 in section 21a of the state bank act,—(a) {or sub-section (1), the following sub-section shall be sub- amend ment of section 21a, stituted, namely: - "(1) subject to the provisions contains in this section and in sub-section (2) of section 21, a member of a local board— (a) nominated under clause (c) of sub-sectio: (1) of section 21 shall hold office for such term, not exceeding three years, as the central government may specify in this behalf and thereafter until bis successor has-been duly nominated; (b) elected under clause (d) of subsection (1) of section 21 shall hold office for three years and thereafter until his successor has been duly elected, and shall be eligible for re-nomination or re-election, as the case may be: : provided that no such director sfiall hold office continuously for a period exceeding six years"; (b) after sub-section (4), the following subsection shall be inserted, namely: - : "(5) a member of a local board nominated under clause (c) of sub-section (1) of section 21 shall hold office during the pleasure of the central government"  