 bill no  18 of  2011 the banking laws (amendment) bill, 2011 abillfurther to amend the banking regulation act, 1949, the banking companies (acquisition and transfer of undertakings) act, 1970 and the banking companies (acquisition and transfer of undertakings) act, 1980 and to make consequential amendments in certain other enactmentsbe it enacted by parliament in the sixty-second year of the republic of india as follows:— chapter i preliminary51 (1) this act  may be called the banking laws (amendment) act, 2011short title and commencement(2) it shall come into force on such date as the central government may, by notificationin the official gazette, appoint:10provided that different dates may be appointed for different provisions of  this act and any reference in any such provision to the commencement of this act shall be construed as a reference to the coming into force of that provision chapter ii amendments to the banking regulation act, 194910 of 1949insertion of new section 2a2 after section 2 of the banking regulation act, 1949 (hereinafter in this chapter referred to as the principal act), the following section shall be inserted, namely:—512 of 2003competition act not to apply in certain cases'' 2a  notwithstanding anything to the contrary contained in section 2, nothing contained in the competition act, 2002 shall apply to any banking company, the state bank of india, any subsidiary bank, any corresponding new bank or any regional rural bank or co-operative bank or multi-state co-operative bank in respect of the matters relating to amalgamation, merger, reconstruction, transfer, reconstitution or acquisition under—10(i) this act; (ii)  the state bank of india act, 1955;23 of 1955 38 of 1959(iii)  the state bank of india (subsidiary banks) act, 1959;155 of 1970(iv) the banking companies (acquisition and transfer of undertakings)act, 1970;21 of 1976(v) the regional rural banks act, 1976;40 of 1980(vi) the banking companies (acquisition and transfer of undertakings)act, 1980;39 of 2002(vii) the multi-state co-operative societies act, 2002; and20(viii) any state law relating to co-operative societies"amendment of section 53  in section 5 of the principal act, for clause (a), the following clause shall be substituted, namely:—'(a) ''approved securities'' means the securities issued by the central government or any state government or such other securities as may be specified by the reserve bank from time to time;'254  in section 12 of the principal act, in sub-section (1),—amendment of section 12(i) for clause (ii), the following clause shall be substituted, namely:—1 of 1956''(ii) that, notwithstanding anything contained in the companies act,1956, the capital of such banking company consists of—30(a) equity shares only, or (b) equity shares and preference shares:35provided that the issue of preference share shall be in accordance with the guidelines framed by the reserve bank specifying  the class of preference shares, the extent of issue of each class of such preference shares (whether perpetual or irredeemable or redeemable), and the terms and conditions subject to which each class of preference shares may be issued:401 of 1956provided further that no holder of the preference share, issued by the company, shall be entitled to exercise the voting right specified in clause (b) of sub-section (2) of section 87 of the companies act, 1956;'';(ii) the proviso shall be omitted; (iii) sub-section (2) shall be omitted5 after section 12a of the principal act, the following section shall be inserted, namely:—insertion of new section 12b5regulation of acquisition of shares or voting rights10'12b (1) no person (hereinafter referred to as "the applicant") shall, except with the previous approval of the reserve bank, on an application being made, acquire or agree to acquire, directly or indirectly, by himself or acting in concert with any other person, shares of a banking company or voting rights therein, which acquisition taken together with shares and voting rights, if any, held by him or his relative or associate enterprise or person acting in concert with him, makes the applicant to hold five per cent or more of the paid-up share capital of such banking company or entitles him to exercise five per cent or more of the voting rights in such banking companyexplanation 1—for the purposes of this sub-section,—(a) "relative" shall have the meaning assigned to it in section 6 of the companies act, 1956;1 of 195615(b) "associate enterprise" means a company, whether incorporated or not, which,—(i) is a holding company or a subsidiary company of the applicant;or(ii) is a joint venture of the applicant; or20(iii) controls the composition of the board of directors or otherbody governing the applicant; or(iv) exercises, in the opinion of the reserve bank, significantinfluence on the applicant in taking financial or policy decisions; or25(v) is able to obtain economic benefits from the activities of theapplicant;30(c) persons shall be deemed to be "acting in concert" who, for a common objective or purpose of acquisition of shares or voting rights in excess of the percentage mentioned in this sub-section, pursuant to an agreement or understanding (formal or informal), directly or indirectly cooperate by acquiring or agreeing to acquire shares or voting rights in the banking company35explanation 2—for the purposes of this act, joint venture means a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks(2) an approval under sub-section (1) may be granted by the reserve bank if it is satisfied that—(a) in the public interest; or40(b) in the interest of banking policy; or (c) to prevent the affairs of any banking company being conducted in amanner detrimental or prejudicial to the interests of the banking company; or(d) in view of the emerging trends in banking and international best practices;or45(e) in the interest of the banking and financial system in india, the applicant is a fit and proper person to acquire shares or voting rights:provided that the reserve bank may call for such information from the applicant as it may deem necessary for considering the application referred to in sub-section (1):provided further that the reserve bank may specify different criteria for acquisition of shares or voting rights in different percentages510(3) where the acquisition is by way of transfer of shares of a banking company and the reserve bank is satisfied that such transfer should not be permitted, it may, by order, direct that no such share shall be transferred to the proposed transferee and may further direct the banking company not to give effect to the transfer of shares and in case the transfer has been registered, the transferee shall not be entitled to exercise voting rights on poll in any of the meetings of the banking company(4) the approval for acquisition of shares may be subject to such conditions as the reserve bank may deem fit to impose, including a condition that any further acquisition of shares shall require  prior approval of the reserve bank and that the applicant continues to be a fit and proper person to hold the shares or voting rights15 20(5) before issuing or allotting any share to any person or registering the transfer of shares in the name of any person, the banking company shall ensure that the requirements of sub-section (1) are complied with by that person and where the acquisition is with the approval of the reserve bank, the banking company shall further ensure that the conditions imposed under sub-section (4), if any, of such approval are fulfilled(6) the decision of the reserve bank on the application made under sub-section(1) shall be taken within a period of ninety days from the date of receipt of the application by the reserve bank:25provided that in computing the period of ninety days, the period taken by the applicant for furnishing the information called for by the reserve bank shall be excluded(7) the reserve bank may specify the minimum percentage of shares to be acquired in a banking company if it considers that the purpose for which the shares are proposed to be acquired by the applicant warrants such minimum shareholding30 35(8) the reserve bank may, if it is satisfied that any person or persons acting in concert with him holding shares or voting rights in excess of five per cent of the total voting rights of all the shareholders of the banking company, are not fit and proper to hold such shares or voting rights, pass an order directing that such person or persons acting in concert with him shall not, in the aggregate, exercise voting rights on poll in excess of five per cent of the total voting rights of all the shareholders of the banking company:provided that the reserve bank shall not pass any such order without giving an opportunity of being heard to such person or persons acting in concert with him'6 in section 13 of the principal act,—amendment of section 1340(i) for the words "paid-up value of the said shares" occurring at the end, the words "price at which the said shares are issued" shall be substituted;(ii) the following explanation shall be inserted, namely:—'explanation—for the removal of doubts, it is hereby declared that expression "price at which the said shares are issued" shall include amount or value of premium on such shares'7 in section 18 of the principal act,—amendment of section 18(i) in sub-section (1),—(a) for the words "shall maintain in india", the words "shall maintain in india on a daily basis" shall be substituted;5(b) for the words "at least three per cent", the words "such per cent" shall be substituted;10(c) after the words "second preceding fortnight", the words "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" shall be inserted;(d) in the explanation, in clause (a), in sub-clause (ii), the words "or from the development bank" shall be omitted; (ii) after sub-section (1), the following sub-sections shall be inserted, namely:—15 20(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 sortfall 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 continues25(1b) notwithstanding anything contained in this section, if the reserve bank is satisifed, 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 interest30(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" 8 in section 24 of the principal act,—amendment of section 24(a) in sub-section (4), in clause (a), the words, brackets and letter "clause(a) of" shall be omitted;35(b) in sub-section (5), in clause (b), the words, brackets and letter "clause(a) of" shall be omitted;(c) in sub-section (8), the words, brackets and letter "clause (a) of" shall be omitted;409 after section 26 of the principal act, the following section shall be inserted, namely:—insertion of new section26a'26a (1) the reserve bank shall establish a fund to be called the "depositor education and awareness fund" (hereafter in this section referred to as the "fund")establishment of depositor education and awareness fund45(2) there shall be credited to the fund the amount to the credit of any account in india with a banking company which has not been operated upon for a period of ten years or any deposit or any amount remaining unclaimed for more than ten years, within a period of three months from the expiry of the said period of ten years:5providing that nothing contained in this sub-section shall prevent a depositor or any other claimant to claim his deposit or unclaimed amount or operate his account or deposit account from or with the banking company after the expiry of said period of ten years and such banking comapny shall be laible to repay such deposit or amount at such rate of interest as may be specified by the reserve bank in this behalf(3) where the banking company has paid outstanding amount referred to in subsection (2) or allowed operation of such account or deposit, such banking company may apply for refund of such amount in such manner as may be specified by the authority or committee referred to in sub-section (5)10(4) the fund shall be utilised for promotion of depositors' interests and for such other purposes as may be specified by the reserve bank from time to time15(5) the reserve bank shall, by notification in the official gazette, specify an authority or committee, with such members as the reserve bank may appoint, to administer the fund, and to maintain separate accounts and other relevant records in relation to the fund in such forms as may be specified by the reserve bank(6) it shall be competent for the authority or committee appointed under subsection (5) to spend moneys out of the fund for carrying out the objects for which the fund has been established'2010 after section 29 of the principal act, the following section shall be inserted, namely:—insertion of new section 29a power in respect of associate enterprises25'29a (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 act1 of 195630(2) notwithstanding anything to the contrary contained in the companies act,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 by one or more of its officers or employees or other persons(3) the provisions of sub-section (2) and (3) of section 35 shall apply mutatis mutandis to the inspection under this sectionexplanation—"associate enterprise" in relation to a banking company includes an enterprise which—35(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; or40(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; or45(vi) is able to obtain economic benefits from the activities of the banking company' 11 after part iia of the principal act, the following part shall  be inserted, namely:—insertion of new part iiab "part iiab supersession of board of directors of banking company5supersession of board of directors in certain cases1036aca (1) where the reserve bank is satisfied, in consultation with the central government, that in the public interest or for preventing the affairs of any banking company being conducted in a manner detrimental to the interest of the depositors or any banking company 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, supersede the board of directors of such banking company for a period not exceeding six months as may be specified in the order:provided that the period of supersession of the board of directors may be extended from time to time, so, however, that the total period shall not exceed twelve months15(2) the reserve bank may, on supersession of the board of directors of the banking company under sub-section (1)  appoint in consultation with the central government for such period as it may determine, an administrator (not being an officer of the central government or a state government) who has experience in law, finance, banking, economics or accountancy20(3) the reserve bank may issue such directions to the administrator as it may deem appropriate and the administrator shall be bound to follow such directions1 of 1956(4) upon making the order of supersession of the board of directors of a banking company, notwithstanding anything contained in the companies act, 1956,—(a) the chairman, managing director and other directors shall, as from the date of supersession, vacate their offices as such;251 of 195630(b) all the powers, functions and duties which may, by or under the provisions of the companies act, 1956 or this act, or any other law for the time being in force, be exercised and discharged by or on behalf of the board of directors of such banking company, or by a resolution passed in general meeting of such banking company, shall,  until the board of directors of such banking company is reconstituted, be exercised and discharged by the administrator appointed by the reserve bank under sub-section (2):provided that the power exercised by the administrator shall be valid notwithstanding that such power is exercisable by a resolution passed in the general meeting of such banking company35(5) the reserve bank may constitute, in consultation with the central government, acommittee of three or more persons who have experience in law, finance, banking, economics or accountancy to assist the administrator in the discharge of his duties(6) the committee shall meet at such times and places and observe such rules of procedure as may be specified by the reserve bank40(7) the salary and allowances to the administrator and the members of the committeeconstituted under sub-section (5) by the reserve bank shall be such as may be specified by the reserve bank and be payable by the concerned banking company45(8) on and before the expiration of two months before the expiry of the period ofsupersession of the board of directors as specified in the order issued under sub-section (1), the administrator of the banking company, shall call the general meeting of the company to elect new directors and reconstitute its board of directors(9) notwithstanding anything contained in any other law or in any contract, the memorandum or articles of association, no person shall be entitled to claim any compensation for the loss or termination of his office5(10) the administrator appointed under sub-section (2) shall vacate office immediately after the board of directors of such banking company has been reconstituted"12 in section 46 of the principal act,—amendment of section 46(a) in sub-section (1), for the words "and shall also be liable to fine", the words"or with fine, which may extend to one crore rupees or with both" shall be substituted;(b) in sub-section (2),—10(i)  for the words "two thousand rupees", the words "twenty lakh rupees"shall be substituted;(ii) for the words "one hundred rupees", the words "fifty thousand rupees"shall be substituted;15(c) in sub-section (4),—(i) for the words "fifty thousand rupees", the words "one crore rupees"shall be substituted;20(ii) for the words "two thousand and five hundred rupees", the words"one lakh rupees" shall be substituted13 in section 47a of the principal act, in sub-section (1),—amendment of section 47a(a)  in the opening portion, for the words, brackets and figures "sub-section (3)or sub-section (4)" the words, brackets and figures "sub-section (2) or sub-section (3)or sub-section (4)" shall be substituted;25(b) for sub-clauses (a) and (b), the following sub-clauses shall be substituted, namely:—30"(a) where the contravention or default is of the nature referred to in subsection (2) of section 46, a penalty not exceeding twenty lakh rupees in respect of each offence if the contravention or default persists, a further penalty not exceeding fifty thousand rupees for everyday, after the first day, during which the contravention or deafult continues;(b) where the contravention is of the nature referred to in sub-section (3)of section 46, a penalty not exceeding twice the amount of the deposits in respect of which such contravention was made;35(c) where the contravention or default is of the nature referred to in subsection (4) of section 46, a penalty not exceeding one crore rupees or twice the amount involved in such contravention or deafult where such amount is quantifiable, whichever is more, and where such contravention or deafult is a continuing one, a further penalty which may extend to one lakh rupees for everyday, after the first day, during which the contravention or deafult continues"4014 in section 51 of the principal act, in sub-section (1),—amendment of section 51(a)  after the words "provisions of sections", the figure and letter "2a," shall be inserted;(b) before the words, brackets, figures and letters "sub-sections (1b), (1c) and(2)  of sections 30", the figures and letter, "29a," shall be inserted 15  in section 56 of the principal act,—amendment of section 56(a) in clause (i) relating to substitution of section 18,—(a) in sub-section (1),—5(i) for the words "state co-operative bank", the words "a co-operative bank" shall be substituted;(ii) for the brackets and words '(hereinafter referred to as a"scheduled state co-operative bank")', the brackets and words '(hereinafter referred to as a "scheduled co-operative bank")' shall be substituted;10(iii) for the words "at least three per cent", the words "such per cent" shall be substituted; and(iv) after the words "second preceding fortnight", the words "as the reserve bank may specify, by notification in the official gazette, from time to time having regard to the needs for securing the monetary stability in the country" shall be inserted;15(b) in the explanation,—(i) in clause (a),—(1) in sub-clause (ii), the words "the development bank" shall be omitted;20(2) in sub-clauses (iii) and (iv), for the words "state cooperative bank", the words "co-operative bank" shall be substituted; (ii) in clause (c), for the letter and words "a corresponding new bank", the letters and words "a corresponding new bank of idbi bank ltd" shall be substituted;25(c) after sub-section (1), the following sub-sections shall be inserted, namely:—10 of 194930 35 40"(1a) if the balance held by co-operative bank referred to in subclause (cci) of clause (c) of section 56 of the banking regulation act, 1949, at the close of business on any day is below the minimum specified under sub-section (1), such co-operative bank 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 co-operatrive bank, that such defaulting co-operative bank had sufficient cause for its failure to comply 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 co-operative bank such exemptions from the provisions of this section as it thinks fit with reference to all or any of its officers or with reference to the whole or any part of its assets and liabilities";(b) in clause (o) relating to the modification of section 22,—(a) in sub-section (1),—(i) clause (a) shall be omitted;5(ii) after the proviso, the following proviso shall be inserted, namely:—10"provided further that nothing in this sub-section shall apply to a primary credit society carrying on banking business on or before the commencement of the banking laws (amendment) act, 2011, for a period of one year or for such further period not exceeding three years, as the reserve bank may, after recording the reasons in writing for so doing, extend";(b) in sub-section (2),—15 20(i) for the words "every primary credit society which becomes a primary co-operative bank after such commencement shall before the expiry of three months from the date on which it so becomes a primary co-operative bank", the words, brackets and figures "every primary credit society which had become a primary co-operative bank on or before the commencement of the banking laws (amendment) act,2011, shall before the expiry of three months from the date on which it had become a primary co-operative bank" shall be substituted;(ii) the words "other than a primary credit society" shall be omitted;(iii) in the proviso,—25(a) in clause (ii), for the words "thereafter, or", the word"thereafter," shall be substituted;(b) clause (iii) shall be omitted;(c) in clause (q) relating to modification of section 24,—(a) sub-clause (i) shall be omitted;30(b) for sub-clause (ii), the following sub-clause shall be substituted, namely:—'(ii) for sub-section (2a), the following sub-section shall be substituted, namely:—2 of 193435 40"(2a) a scheduled co-operative bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the reserve bank of india act, 1934 and every other co-operative bank, in addition to  the cash reserve which it is required to maintain under section 18, shall maintain in india, assets, the value of which shall not be less than such percentage not exceeding forty per cent of the total of its demand and time liabilities in india as on last friday of the second preceding fortnight as the reserve bank may, by notification in the official gazette, specify from time to time and such assets shall be maintained in such form and manner, as may be specified in such notification" ';(d) after clause (ri), the following clause shall be inserted, namely:—'(ria) in section 26a, for the words "banking companies", the words"co-operative bank" shall be substituted;',(e) in clause (s), in the opening portion, for the words and figures, "sections29 and 30", the word and figures "section 29" shall be substituted;(f) after clause (s), the following clause shall be inserted, namely:—5'(sa) for section 30, the following section shall be substituted, namely:—audit10 15"30 (1) without prejudice to anything contained in any other law for the time being inforce, where the reserve bank is satisfied that it is necessary in the public interest or in the interest of the co-operative bank or its depositors so to do, it may at any time by general or special order direct that an additional audit of the co-operative bank accounts, for any such transactions 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 appoint a person duly qualified under any law for the time being inforce to be an auditor of companies to conduct such 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 co-operative bank(2) the expenses of, or incidental to, the additional audit specified in the order made by the reserve bank shall be borne by the co-operative bank201 of 195625(3) the auditor referred to in sub-section (1) shall have such powers, exercise such functions vested in and discharge the duties and be subject to the liabilities and penalties imposed on auditors of companies by section 227 of the companies act, 1956 and also that of the auditors, if any, appointed by the law establishing, constituting or forming the co-operative bank to the extent the provisions of the companies act, 1956 are not inconsistent with the provisions of such law30(4) in addition to the matters referred to in the order under subsection (1) the auditor shall state in his report—(a) whether or not the information and explanation required by him have been found to be satisfactory;35(b) whether or not the transactions of the co-operative bank which came to his notice have been within the powers of the co-operative bank;(c) whether or not the returns received from branch offices of the co-operative bank have been found adequate for the purpose of his audit;40(d) whether the profit and loss accounts, shows a truebalance or 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 reserve bank and the shareholders of the co-operative bank'' ' chapter iii amendment to the banking companies (acquisition and transfer of undertakings) act, 1970amendment of section 35 of 1970516 in section 3 of the banking companies (acquisition and transfer of undertakings) act, 1970—(a) for sub-section (2a), the following sub-section shall be substituted, namely:—10"(2a) subject to the provisions of this act, the authorised capital of every corresponding new bank shall be three thousand crores of rupees divided into three hundred crores of fully paid-up shares of ten rupees each:provided that the corresponding new bank may reduce the nominal or face value of the shares, and divide the authorised capital into such denomination as it may decide with the prior approval of the reserve bank:15provided further that the central government may in consultation with the reserve bank and by notification in the official gazette increase or reduce the authorised capital as it deems fit so however that the shares in all cases shall be fully paid-up shares";20(b) in sub-section (2b), in clause (c), after the words "public issue", the words "or rights issue or by issue of bonus shares" shall be inserted;(c) in sub-section (2bb), after the words ''public issue'', the words ''or rights issue or by issue of bonus shares'' shall be inserted;(d) in sub-section (2bba), in clause (a), after the words "public issue", the words "or rights issue or by issue of bonus shares" shall be inserted;25(e) in sub-section (2c), after the words "public issue", the words "or rights issue or by issue of bonus shares" shall be inserted;(f) in sub-section (2e),—(i) for the words "one per cent", the words "ten per cent" shall be substituted;30 35(ii) in the second proviso, for the words "no preference shareholder shall be entitled to exercise voting rights in respect of preference shares held by him in excess of one per cent", the words "no preference shareholder, other than the central government, shall be entitled to exercise voting rights in respect of preference shares held by him in excess of ten per cent" shall be substituted chapter iv amendment to the banking companies (acquisition and transfer of undertakings) act, 1980amendment of section 340 of 19804017 in section 3 of the banking companies (acquisition and transfer of undertakings) act, 1980,—(a) for sub-section (2a), the following sub-section shall be substituted, namely:—45"(2a) subject to the provisions of this act, the authorised capital of every corresponding new bank shall be three thousand crores of rupees divided into three hundred crores of fully paid-up shares of ten rupees each:provided that the corresponding new bank may reduce the nominal or face value of the shares, and divide the authorised capital into such denomination as it may decide with the prior approval of the reserve bank:5provided further that the central government may, in consultation with the reserve bank, and by notification in the official gazette increase or reduce the authorised capital as it deems fit so however that the shares in all cases shall be fully paid-up shares";(b) in sub-section (2b), in clause (c), after the words "public issue", the words"or rights issue or by issue of bonus shares" shall be inserted;10(c) in sub-section (2bb), after the words "public issue", the words "or rights issue or by issue of bonus shares" shall be inserted;(d)  in sub-section (2bba), in clause (a), after the words "public issue", the words "or right  issue or by issue of bonus shares" shall be inserted;15(e)  in sub-section (2c), after the words "public issue", the words "or rights issue or by issue of bonus shares" shall be inserted;(f)  in sub-section (2e),—(i) for the words "one per cent", the words "ten per cent" shall be substituted20(ii) in the second proviso, for the words "no preference shareholder shall be entitled to exercise voting rights in respect of preference shares held by him in excess of one per cent", the words "no preference shareholder, other than the central government, shall be entitled to exercise voting rights in respect of preference shares held by him in excess of ten per cent" shall be substituted chapter v25 miscellaneous18 the enactments specified in the schedule are hereby amended to the extent and in the manner mentioned in the third column thereofamendment of certain enactments the schedule (see section 18)| sl no              short title     | amendment                         ||--------------------------------------|-----------------------------------|| 5                                    |                                   || 1                                   | the state financial corporation   || act, 1951 (63 of 1951)              | the words and figures "and        || the banking regulation act, 1949"    |                                   || 10 of 1949                          |                                   || shall be  omitted                   |                                   || 10                                   |                                   || 2                                   | the state bank of india act,      || 1955 (23 of 1955)                   | "and the banking regulation act,  || 1949" shall be omitted              |                                   || 10 of 1949                          |                                   || 3                                   | the state bank of india           || (subsidiary banks) act, 1959         | "and the banking regulation act,  || (38 of 1959)                        | 1949" shall be omitted           || 10 of 1949                          |                                   || 15                                   |                                   || 4                                   | the warehousing corporations      || act, 1962 (58 of 1962)              | "and the banking regulation act,  || 1949" shall be omitted              |                                   || 10 of 1949                          |                                   || 20                                   |                                   || 5                                   | the regional rural banks act,     || 1976 (21 of 1976)                   | "and shall also be deemed to be   || approved securities for the purposes |                                   || of the banking regulation act, 1949" |                                   || 10 of 1949                          |                                   || shall be omitted                    |                                   || 25                                   |                                   || 6                                   | the industrial finance            || corporation (transfer of             | "and the banking regulation act,  || undertaking and repeal)              | 1949" shall be omitted           || 10 of 1949                          |                                   || act, 1993 (23 of 1993)              |                                   || 7                                   | the industrial reconstruction     || bank (transfer of undertakings       | "and the banking regulation act,  || and repeal) act, 1997 (7 of 1997)   | 1949" shall be omitted           || 10 of 1949                          |                                   || 30                                   |                                   || 8                                   | the unit trust of india (transfer || of undertaking and repeal) act,      | "and the banking regulation act,  || 2002 (58  of  2002)                 | 1949" shall be omitted           || 10 of 1949                          |                                   | statement of objects and reasonsthe banking regulation act, 1949 being the law relating to banking has been in force for more than six decades it, inter alia, empowers the reserve bank to regulate and supervise the banking sector the banking companies are now operating in a liberalised environment in this scenario, it has become necessary that the banking companies in india are enabled to raise capital in accordance with the international best practices therefore, it is proposed to—(a) enable the nationalised banks to increase or decrease the authorised capital with approval from the central government and the reserve bank without being limited by the ceiling of a maximum of three thousand crores of rupees;(b) provide the nationalised banks to issue two additional instruments ("bonus shares"  and "rights issue") for accessing the capital market to raise capital required for expansion of banking business;(c) raise the ceiling on voting rights of shareholders of nationalised banks from one per cent to ten per cent;(d) make provisions to ensure that control of banking companies is in the hands of fit and proper persons, it should be mandatory for the persons to obtain prior approval from the reserve bank who propose to acquire five per cent or more of the share capital of a banking company;(e) confer power upon the reserve bank to impose such conditions as it deems necessary while granting such approval for acquisitions of five per cent or more share capital of a banking company (including specifying acquisition of a minimum percentage of shares in a banking company) if it considers necessary; and(f) remove the existing restriction on voting rights limited to ten per cent of the total voting rights of all the shareholders of the banking company 2 taking advantage of the liberalised environment, banking companies are engaging in multifarious activities through the medium of associate enterprises it has, therefore, become necessary for the reserve bank, as the regulator of the banking companies, to be aware of the financial impact of the business of such enterprises on the financial position of the banking companies it is, therefore, proposed to confer power upon the reserve bank to call for information and returns from the associate enterprises of banking companies also and to inspect the same, if necessary3 under the existing provision contained in section 36aa of the banking regulation act, 1949, the reserve bank has, inter alia, power to remove any director or other officers of a banking company, but such power is not adequate if the entire board of directors of a banking company is functioning in a manner detrimental to the interest of the depositors or the banking company itself it is, therefore, proposed to confer power upon the reserve bank to supersede the board of directors of a banking company for a total period not exceeding twelve months and appoint an administrator to manage the banking company during the said period4 the part v of the banking regulation act, 1949 applies to co-operative societies subject to modifications which, inter alia, allow a primary co-operative society to carry on business of banking till it has been granted a licence or a notice is notified that the licence cannot be granted to it for a sound and healthy banking system and to protect the interest of depositors, it has become necessary to ensure that only the co-operative societies licensed by the reserve bank should carry on the business of banking by fulfilling all the requirements specified by the reserve bank and it has become essential to provide the time limit of one year to be extended to three years within which a primary credit society should carry on the business of banking or stop the business of banking5 under the existing provisions of the competition act, 2002, the competition commission of india has power to regulate combination, which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in india it is proposed to insert a new section 2a in the banking regulation act, 1949 so as to exempt mergers of the banking companies from the applicability of the provisions of the competition act, 2002 the exemption of mergers of banking companies from the scrutiny of the competition commission of india would allow the reserve bank to approve mergers of banking companies in public or depositors' interest, in the interest of the banking system in india and to secure the proper management of the banking company in a timely manner without waiting for the approval of the competition commission of india6 the banking regulation (amendment) bill, 2005 was introduced in the lok sabha on the 13th may, 2005 to strengthen the reserve bank's supervisory and regulatory powers over the banking sector the bill was referred to the standing committee on finance for examination and report thereon based on the recommendations of the standing committee, it was decided to move official amendments to the bill in the lok sabha, but the bill could not be taken up for consideration and lapsed due to dissolution of the lok sabha the present bill incorporates certain provisions of the banking regulation (amendment) bill, 20057 in addition to the changes proposed in paragraphs 1 to 5, it is also proposed to,—(a) enable the banking companies to issue preference shares subject to regulatory guidelines of the reserve bank;(b) align the restriction on commission, etc, on sale of shares to issue price rather than to the paid-up value of shares;(c) establish a "depositor education and awareness fund" to take over in operative deposit accounts which have not been claimed or operated for a period of ten years or more;(d) substantially increase the penalties and fine for some violations of the banking regulation act, 1949;(e) confer power upon the reserve bank to levy penal interest in case of nonmaintenance of required cash reserve ratio;(f)  confer power upon the reserve bank to order a special audit of co-operative banks in public interest for a more effective supervision of co-operative banks 8 the banking laws (amendment) bill, 2011 seeks to amend the banking regulation act, 1949, the banking companies (acquisition and transfer of undertakings) act, 1970 and the banking companies (acquisition and transfer of undertakings) act, 1980 to make the regulatory powers of reserve bank more effective and to increase the access of the nationalised banks to capital market to raise capital required for expansion of banking business and also to make certain other consequential amendments in certain other enactments9 the bill seeks to achieve the above objects pranab mukherjeenew delhi;the 9th march,  2011 memorandum regarding delegated legislationclause 3 of the bill proposes to confer power upon the reserve bank to specify approved securitiesclause 4 of the bill proposes to empower the reserve bank to issue guidelines so as to specify the class of preference shares, the extent of issue of each class of such preference shares, and the terms and conditions subject to which, the preference shares may be issuedclause 5 of the bill confers power upon the reserve bank to specify different criteria for acquisition of shares or voting rights in different percentages this clause further empowers the reserve bank to specify the minimum percentage of shares to be acquired in a banking company by an applicantclause 7 of the bill confers power upon the reserve bank to specify the cash reserve ratio for select banks this clause further confers power upon the reserve bank to specify the conditions subject to which the select banks would be exempt from provisions of maintenance of specified level of cash reserve ratioclause 9 of the bill confers power upon the reserve bank to specify the rate of interest on unclaimed deposit this clause further confers power upon the reserve bank to specify the purposes for which the depositor education and awareness fund would be utilised this clause also confers power upon the reserve bank to notify an authority or committee to administer the depositor education and awareness fundclause 11 of the bill confers power upon the reserve bank to specify the rules of procedure for the committee to help the administrator appointed for the superseded banks this clause further confers power upon the reserve bank to specify the periodicity of the meetings and rules of procedure, salary and allowances payable to the members of the committee or administratorclause 15 of the bill confers powers upon the reserve bank to specify the cash reserve ratio for select cooperative banks this clause further confers power upon the reserve bank to specify the conditions subject to which the select cooperative banks would be exempt from provisions of maintenance of specified level of cash reserve ratio  this clause also confers power upon the reserve bank to specify such percentage of value of assets, in such form and manner, which shall be maintained in india by select cooperative banksthe matters in respect of which the notification or guidelines are issued or specified are all matters of procedure and administrative details and it is not practicable to provide for them in the bill itself the delegation of legislative power is of a normal character annexure extracts from the banking regulation act, 1949 (10 of 1949)|     |     |     |     |    ||------|------|------|------|-----|interpretation5 in this act, unless there is anything repugnant in the subject or context,—(a) "approved securities" means—2 of 1882(i) securities in which a trustee may invest money under clause (a), clause(b), clause (bb), clause (c) or clause (d) of section 20 of the indian trusts act, 1882;2 of 1882(ii) such of the securities authorised by the central government under clause (f) of section 20 of the indian trusts act, 1882, as may be prescribed;|     |     |     |     |    ||------|------|------|------|-----|12 (1) no banking company shall carry on business in india, unless it satisfies the following conditions, namely:—|                 ||------------------|| regulation of    || paid-up capital, || subscribed       || capital and      || authorised       || capital and      || voting rights of || shareholders    |(ii) that the capital of the company consists of ordinary shares only or of ordinary shares or equity shares and such preferential shares as may have been issued prior to the 1st day of july, 1944:provided that nothing contained in this sub-section shall apply to any banking company incorporated before the 15th day of january, 1937(2) no person holding shares in a banking company shall, in respect of any shares held by him, exercise voting rights on poll in excess of ten per cent of the total voting rights of all the shareholders of the banking company|                ||-----------------|| 1 of 1956      || restriction on  || commission,     || brokerage,      || discount, etc, || on sale of      || shares         |13 notwithstanding anything to the contrary contained in sections 76 and 79 of the companies act, 1956, no banking company shall pay out directly or indirectly by way of commission, brokerage, discount or remuneration in any form in respect of any shares issued by it, any amount exceeding in the aggregate two and one-half per cent of the paid-up value of the said shares|              ||---------------|| cash reserve || 26 of 1881   |18 (1) every banking company, not being a scheduled bank, shall maintain in india 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 at least three per cent of the total of its demand and time liabilities in india as on the last friday of the second preceding fortnight and shall submit to the reserve bank before the twentieth day of every month a return showing the amount so held on alternate friday 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 at the close of business on the preceding working dayexplanation—in this section, and in section 24,—(a) "liabilities in india" shall not include—    (ii) any advance taken from the reserve bank or from the development bank or from the exim bank or from the reconstruction bank or from the national bank or from the small industries bank by the banking company;    | 24             ||-----------------|| maintenance     || of a percentage || of assets      |(4) (a) if on any alternate friday or, if such friday is a public holiday, on the preceding working day, the amount maintained by a banking company at the close of business on that day falls below the minimum prescribed by or under clause (a) of sub-section (2a), such banking company shall be liable to pay to the reserve bank in respect of that day's default, penal interest for that day at the rate of three per cent per annum above the bank rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day; and        (5) (a)    (b) without prejudice to the provisions of sub-section (4), on the failure of a banking company to maintain as on any day, the amount so required to be maintained by or under clause (a) of sub-section (2a) the reserve bank may, in respect of such default, require the banking company to pay penal interest for that day as provided in clause (a) of subsection (4) and if the default continues on the next succeeding working day, the penal interest may be increased as provided in clause (b) of sub-section (4) for the concerned days [10] m c(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 clause (a) of subsection (2a), the reserve bank may not demand the payment of the penal interestexplanation—in this section, the expression "public holiday" means a day which is a public holiday under the negotiable instruments act, 188126 of 1881 [10] m c part iv miscellaneouspenalties46 (1) whoever in any return, balance-sheet or other document for or in any information required or furnished by or under or for the purpose of any provision of this act, wilfully makes a statement which is false in any material particular, knowing it to be false, or wilfully omits to make a material statement, shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine(2) if any person fails to produce any book, account or other document or to furnish an statement or information which under sub-section (2) of section 35 it is his duty to produce or furnish, or to answer any question relating to the business of a banking company which he is asked by an officer making any inspection or scrutiny under that section, he shall be punishable with a fine which may extend to two thousand rupees in respect of each offence, and if he persists in such refusal, to a further fine which may extend to one hundred rupees for every day during which the offence continues    (4) if any other provision of this act is contravened or if any default is made in—(i) complying with any requirement of this act or of any order rule or direction made or condition imposed thereunder, or(ii) carrying out of terms of, or the obligations under, a scheme sanctioned under sub-section (7) of section 45, by any person, such person shall be punishable with fine which may extend to fifty thousand rupees or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where a contravention or default is a continuing one, with a further fine which may extend to two thousand and five hundred rupees for every day, during which the contravention or default continuespower of reserve bank to impose penalty47a (1) notwithstanding anything contained in section 46, if a contravention or default of the nature referred to in sub-section (3) or sub-section (4) of section 46, as the case may be, is made by a banking company, then, the reserve bank may impose on such banking company—(a) where the contravention is of the nature referred to in sub-section (3) of section 46, a penalty not exceeding twice the amount of the deposits in respect of which such contravention was made;(b) where the contravention or default is of the nature referred to in subsection (4) or section 46, a penalty not exceeding five lakh rupees or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where such contravention or default is a continuing one, a further penalty which may extend to twenty-five thousand rupees for every day, after the first, during which the contravention or default continues [10] m capplication of certain provisions to the state bank of india and other notified banks51  (1) without prejudice to the provisions of the state bank of india act, 1955, or any other enactment, the provisions of sections 10, 13 to 15, 17, 19 to 21-a, 23 to 28, 29 [excluding sub-section (3)] sub-sections (1b), (1c) and (2) of sections 30, 31, 34, 35, 35a, 36 [excluding clause (d) of sub-section (1)], 45y to 45-zf, 46 to 48, 50, 52 and 53 shall also apply, so far as may be,  to and in relation to the state bank of india for any corresponding new bank or a regional rural bank or any subsidiary bank as they apply to and in relation to banking companiesprovided that—(a) nothing contained in clause (c) of sub-section (1) of section 10 shall apply to the chairman of the state bank of india or to a managing director of any subsidiary bank in so far as the said clause precludes him from being a director of, or holding an office in, any institution approved by the reserve bank;(b) nothing contained in sub-section (iii) of clause (b) of sub-section (1) of section 20 shall apply to any bank referred to in sub-section (1), insofar as the said sub-clause (iii) of clause (b) precludes that bank from entering into any commitment for granting any loan or advance to or on behalf of a company (not being a government company) in which not less than forty per cent of the paid-up capital is held (whether singly or taken together) by the central government or the reserve bank or a corporation owned by that bank; and(c) nothing contained in section 46 or in section 47a shall apply to,—(i) an officer or the central government or the reserve bank, nominated or appointed as director of the state bank of india or any corresponding new bank or a regional rural bank or any subsidiary bank or a banking company; or(ii) an officer of the state bank of india or a corresponding new bank or a regional rural bank or a subsidiary bank nominated or appointed as director of any of the said banks (not being the bank of which he is an officer) or of a banking company part v applications of the act to co-operative banks56 the provisions of this act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to banking companies subject to the following modifications, namely:—act to apply to co-operative societies subject to modifications   (f) for section 18, the following section shall be substitued, namely:—cash reserve2 of 1934 26 of 1881'18 (1) every co-operative bank, not being a state co-operative bank for the time being included in the second schedule to the reserve bank of india act, 1934 (hereinafter referred to as a "scheduled state co-operative bank"), shall maintain in india by way of cash reserve with itself or by way of balance in a current account with the reserve bank or the state co-operative bank of the state concerned or by way of net balance in current accounts, or, in the case of a primary co-operative bank, with the central co-operative bank of the district concerned, or in one or more of the aforesaid ways, a sum equivalent to at least three per cent of the total of its demand and time liabilities in india, as on the last friday of the second preceding fortnight and shall submit to the reserve bank before the fifteenth 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 friday or if any such friday is a public holiday under the negotiable instruments act, 1881 at the close of business on the preceding working dayexplanation—in this section and in section 24—(a) "liabilities in india" shall not include—   (ii) any advance taken from a state government, the reserve bank, the development bank, the exim bank, the reconstruction bank, the national housing bank, the national bank, the small industries bank or from the national co-operative development corporation established under section 3 of the national co-operative development corporation act, 1962, by the co-operative bank;26 of 1962(iii) in the case of a state or central co-operative bank, also any deposit of money with it representing the reserves fund or any part thereof maintained with it by any other co-operative society within its area of operation, and in the case of a central co-operative bank, also an advance taken by it from the state co-operative bank of the state concerned;(iv) in the case of a primary co-operative bank, also any advance taken by it from the state co-operative bank of the state concerned or the central co-operative bank of the district concerned;   (c) "net balance in current accounts" shall, in relation to a co-operative bank, mean the excess, if any, of the aggregate of the credit balances in current account maintained by that co-operative bank with the state bank of india or a subsidiary bank or a corresponding new bank, over the aggregate of the credit balances in current accounts held by the said banks with such co-operative bank;    (o) in section 22,—(i) for sub-sections (1) and (2) the following sub-sections shall be substituted, namely:—"(1) save as hereinafter provided, no co-operative society shall carry on banking business in india unless—(a) it is a primary credit society, or (b) it is a co-operative bank and holds a licence issued in that behalf by the reserve bank, subject to such conditions, if any, as the reserve bank may deem fit to impose:23 of 1965provided that nothing in this sub-section shall apply to cooperative society, not being a primary credit  society or a co-operative bank carrying on banking business at the commencement of the banking laws (application to co-operative societies) act, 1965 for a period of one year from such commencement23 of 1965(2) every co-operative society carrying on business as a co-operative bank at the commencement of the banking laws (application to co-operative societies) act, 1965 shall before the expiry of three months from the commencement, every co-operative bank which comes into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business shall, before the expiry of three months from its so coming into existence, every primary credit society which becomes a primary co-operative bank after such commencement shall before the expiry of three months from the date on which it so becomes a primary co-operative bank and every co-operative society other than a primary credit society shall before commencing banking business in india, apply in writing to the reserve bank for a licence under this section:provided that nothing in clause (b) of sub-section (1) shall be deemed to prohibit—   (ii) a co-operative bank which has come into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business at the commencement of the banking laws (application to co-operative societies) act, 1965 or at any time thereafter, or23 of 1965(iii) a primary credit society which becomes a primary co-operative bank after such commencement, from carrying on banking business until it is granted a licence in pursuance of this section or is, by a notice in writing, notified by the reserve bank that the licence cannot be granted to it ;   (q) in section 24,—(i) in sub-section (1), the words " after the expiry of two years from the commencement of this act," shall be omitted;(ii) for sub-section (2) and (2a), the following sub-sections shall be substituted, namely—"(2) in computing the amount for the purposes of sub-section (1),—2 of 1934(a) any balances maintained in india by a co-operative bank in current account with the reserve bank or by way of net balance in current accounts, and in the case of a scheduled state co-operative bank, also the balance required under section 42 of the reserve bank of india act, 1934 to be so, maintained;(b) any balances maintained by a central co-operative bank with the state co-operative bank of the state concerned; and(c) any balance maintained by a primary co-operative bank with central co-operative bank of the district concerned or with the state co-operative bank of the state concerned, shall be deemed to be cash maintained in india23 of 1965(2a) (a) notwithstanding anything contained in sub-section (1) or in subsection (2), after the expiry of two years from the commencement of the banking laws(application to co-operative societies) act, 1965 or of such further period not exceeding one year as the reserve bank, having regard to the interests of the co-operative bank concerned, may think fit in any particular case to allow—2 of 1934(i) a scheduled state co-operative bank, in addition to the average daily balance which it is or may be, required to maintain under section 42 of the reserve bank of india act, 1934, and(ii) every other co-operative bank, in addition to the cash reserve which is required to maintain under section 18, shall maintain in india, in cash or in gold valued at a price not exceeding the current market price or in unencumbered approved securities valued at a price determined in accordance with such one or more of, or combination of, the following methods of valuation namely, valuation with reference to cost price, market price, book value or face value, as may be specified by the reserve bank from time to time, an amount which shall not, at the close of business on any day, be less than twenty-five per cent or such other percentage not exceeding four per cent as the reserve bank may, from time to time, by notification in the official gazette, specify, of the total of its demand and time liabilities in india, as on the last friday of the second preceding fortnight(b) in computing the amount for the purpose of clause (a), the following shall be deemed to be cash maintained in india, namely:—2 of 1934(i) any balance maintained by scheduled state co-operative bank with the reserve bank in excess of the balance required to be maintained by it under section 42 of the reserve bank of india act, 1934;(ii) any cash or balances maintained in india by a co-operative bank, other than a scheduled state co-operative bank, with itself or with the state co-operative bank of the state concerned, or in current account with the reserve bank or by way of net balance in current accounts and, in the case of a primary co-operative bank, also any balances maintained with the central co-opeative bank of the district concerned, in excess of the aggregate of the cash or balances required to be maintained under section 18;    (s) for sections 29 and 30, the following section shall be substituted, namely:—    ————— extract from the banking companies (acquisition and transfer of undertakings) act, 1970 (5 of 1970)     chapter ii transfer of the undertakings of existing banks and share capitals of the corresponding new banks3   establishment of corresponding new banks and business thereof(2a) subject to the provisions of this act, the authorised capital of every corresponding new bank shall be one thousand five hundred crores of rupees divided into one hundred fifty crores fully paid-up shares of ten rupees each:provided that the central government may, after consultation 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—     (c) such amounts as the board of directors of the corresponding 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 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 (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 government 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 paidup capital which is in excess of the wants of the corresponding new bank:40 of 1980provided that in a case where such capital is lost, or is unrepresented by available assets because of amalgamation of another corresponding new bank or a corresponding new bank as defined in clause (b) of section 2 of the banking companies(acquisition and transfer of undertakings) act, 1980 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 paidup 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 time 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 ways(2c) the entire paid-up capital of a corresponding new bank, except the paid-up capital raised by public issue under clause (c) of sub-section (2b), shall stand vested in an allotted to, the central government(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:"provided that the shareholder holding any preference share capital in the corresponding new bank shall, in respect of such capital, have a right to vote only on resolutions placed before such corresponding new bank which directly affects the rights attached to his preference shares:provided further that no preference shareholder shall be entitled to exercise voting rights in respect of preference shares held by him in excess of one per cent of the total voting rights of all the shareholders holding preference share capital only"    ————— extracts from the banking companies (acquisition and transfer of undertakings) act, 1980 (40 of 1980)    capter ii transfer of the undertakings of existing banks and share capitals of the corresponding new banks3 (1)   establishment of corresponding new banks and business thereof(2a) subject to the provisions of the this act, the authorised capital of every corresponding new bank shall be one thousand five hundred crores of rupees divided into one hundred fifty crores fully paid-up shares of ten rupees each:provided that the central government may, after consultation 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 (l) may from time to time be increased by—    (c) such amounts as the board of directors of the corresponding new bank may, after consultation with the reserve bank and with the previous sanction of the central government, raise whether by public issue or preferential allotment or private placement, of equity shares or preference shares in accordance with the procedure 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 consisting of equity shares of each corresponding new bank:provided that the issue of preference shares shall be in accordance with the guidelines framed by the reserve bank specifying the class of preference shares, the extent of issue of each class of such preference share (whether perpetual or irredeemable or redeemable) and the terms and conditions subject to which, each class of preference shares may be issued(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 or preferential allotment or private placement under clause (c) sub-section (2b), be reduced by—(a) the central government, 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 reserva bank and with the previous sanction of the central government, by paying off any paidup capital which is in excess of the wants of the corresponding new bank:5 of 1970provided that in a case where such capital is lost, or is unrepresented by available assets because of amalgamation of another corresponding 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 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 paidup capital has been raised by public issue or preferential allotment or private placement 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 favout of the resolutin are not less than three times the number of the votes, if any, cast against the resolution by the shareholders so entiltled and voting, reduce its paid-up capital in any way    (2c) the entire paid-up capital of a corresponding new bank except the paid-up capital raised from public by public issue or preferential allotment or private placement under clause (c) of sub-section (2b), shall stand vested in, and allotted to, the central government    (2e) no shareholder of the corresponding new bank, other than 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:provided that the shareholder holding any preference share capital in the corresponding new bank shall, in respect of such capital, have a right to vote only on resolutions placed before such corresponding new bank which directly affects the rights attached to his preference shares:provided further that no preference shareholder shall be entitled to exercise voting rights in respect of perference shares held by him in excess of one per cent of the total voting rights of all the shareholders holding preference share capital only     extract from the state financial corporation act, 1951 (63 of 1951)    | 7            ||---------------|| additional    || capital of    || financial     || corporation   || and borrowing || powers       |2 of 1882 4 of 1938 10 of 1949(3) notwithstanding anything contained in the acts hereinafter mentioned in this subsection, such of the bonds and debentures issued by the financial corporation as are guaranteed by the state government as to the repayment of the principal and payment of interest and receipts issued by it for such of deposits as are guaranteed by the state government as to the repayment of the principal and payment of interest shall be deemed to be included among the securities enumerated in section 20 of the indian trusts act, 1882 and also to be approved securities for the purpose of the insurance act, 1938 and the banking regulations act, 1949    ————— extract from the state bank of india act, 1955 (23 of 1955)shares to be approved securities12 notwithstanding anything contained in the acts hereinafter mentioned in this section, the shares of the state bank shall be deemed to be included among 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 the banking regulation act, 19492 of 1882 4 of 1938 10 of 1949    ————— extract from the state bank of india (subsidiary banks) act, 1959 (38 of 1959)    shares to be approved securities20 notwithstanding anything contained in the acts hereinafter mentioned in this section, the shares of subsidiary bank shall be deemed to be included among 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 the banking regulation act, 19492 of 1882 4 of 1938 10 of 1949    ————— extract from the wareshousing corporations act, 1962 (58 of 1962)| 5            ||---------------|| shares to be  || guaranteed by || central       || government    || and to be     || trusted or    || approved      || securities   |2 of 1882 4 of 1938(2) notwithstanding anything contained in the acts mentioned in this sub-section, the shares of the central warehousing corporation shall be deemed to be included among the securities enumerated in section 20 of the indian trusts  act, 1882, and also to be approved securities for the purpose of the insurance act, 1938 and the banking regulation act, 1949 extract from the regional rural banks act, 1976 (21 of 1976)shares to be approved securities2 of 1882 10 of 19497 notwithstanding anything contained in the acts hereinafter mentioned in this section, the shares of a regional rural bank shall be deemed to be included among the securities enumerated in section 20 of the indian trusts act, 1882, and shall also be deemed to be approved securities for the purposes of the banking regulation act, 1949———— extract from the industrial finance corporation (transfer of  undertaking and repeal) act, 1993 (23 of 1993)10 notwithstanding anything contained in any other law for the time being in force, the shares, bonds and debentures of the company shall be deemed to be approved securities for the purposes of the indian trusts act, 1882, the insurance act, 1938 and the banking regulation act, 19492 of 1882 4 of 1938 10 of 1949shares, bonds and debentures to be deemed to be approved securities———— extract from the industrial reconstruction bank (transfer of undertakings and repeal) act, 1997 (7 of 1997)11 notwithstanding anything contained in any other law for the time being in force, the shares, bonds and debentures of the company shall be deemed to be approved securities for the purposes of the indian trusts act, 1882, the insurance act, 1938 and the banking regulation act, 19492 of 1882 4 of 1938 10 of 1949shares, bonds and debentures to be deemed to be approved securities———— extract from the unit trust of india (transfer of undertaking and repeal) act, 2002 (58 of 2002)17 notwithstanding anything contained in any other law for the time being in force, the shares, bonds, debentures and units of the specified undertakings shall be deemed to be approved securities for the purposes of the indian trusts act, 1882, the insurance act, 1938 and the banking regulation act, 19492 of 1882 4 of 1938 10 of 1949shares, bonds, debentures and units to be deemed to be approved securities————abillfurther to amend the banking regulation act, 1949, the banking companies (acquisition and transfer of undertakings) act, 1970 and the banking companies (acquisition and transfer of undertakings) act, 1980 and to make consequential amendments in certain other enactments————(shri pranab mukherjee, minister of finance)