bui no zoe of 1985  the llndustrlal development bank of ijndia (amendment) bill, 1985a blll further to amend the industrial development bank of india act, 1964 be it enacted by parliament in the thirty  ixth year of the republic of india as follows:-1 this act may be called the industrial development bank of india short (amendment) act, 1985 title l~ ot 1964 5 2 in section 2 of the industrial development bank ot india act, 1964 amend-(hereinafter referred to as the principal act) ,-ment of (a) in clause (c) ,-section 2 (i) for sub-clause (iii), the following sub-clause shall be s'lbstituted namely:-"(iii) mining including development of mines;"; iu (ii) in sub-clause (v), for the words "by air", the words "by nir or by ropeway or by lift" shall be substituted; (iii) for sub-clause (vi), the following sub-clause shall be substituted, namely:-" (1,i) the generation, storage or distribution of electricity or any other form of energy;"; (it) in sub-clause (vijtj) for the word "machinery", the words "machinery or equipment" shall be substituted; (v) foi: sub-clause (i;r), the following sub-clause shall be substituted, namely:-"(i;r) the setting up of, or development of, an industrial area or an industrial estate;"; (vi) for sub-clause (xii) and the exp1ana~ below that 5 sub-clause, the following sub-clauses and erplanation shall be substituted, namely:-'(xii) providing engineering, technical, financial, management, marketing or other services or facilities for industry: 10 (xiii) service industry such as altering, ornamenting, polishing finishing, oiling, washing, cleaning or otherwise treating or adapting any article or substance with it view to its use, sale, transport, delivery or disposal; (xiv) providing medical, health or other allied services; 15 (xv) providing services relating to information technology telecommunication or electronics; (rvr) leasing, sub-leasing or giving on hire or hire-purchase of industrial plants, equipments, machinery or other assets including vehicles, ships and aircraft; :zo (xvii) such other activity as the central government may having regard to the objects of this act, by notification in the official gazette, specify in this behalf; or (xviii) the research and development of any concept, technology design, process or product whether in relation 25 to any of the matters aforesaid, including any activities specified under sub-clause (xvii), or any other matter ezpla1l4tion-the expression "processing of goods" includes any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical 30 electrical' or any  other like operation'; (b) for clause (da) the following clause shall be substituted, namely:;;  , '(cia) "nationalised bank" means a corresponding new bank specified in the first schedule to the banking companies (ac- 35 quisition and transfer of undertakings) act, 1970 or a corres-5 of 197ci pondin~ new bank specified in the first schedule to the banking companies (acquisition and transfer of undertakings) act, 1980;' 40 at 1980 3  in section 3 of the principal act in subsection (4), the word "other" shall be omitted 40 4 • in section 4 of the principal act,-amendmentof section 3 amendmentof section4 (a) for the words "ode hundred crores of rupees" the words "one thousand crort's of mpees" shalt be substituted; (b) in the proviso, for the words "ftve hundred crores of rupees", the wents "two thousand erores of rupees" shall be substituted 4~ 5 in section 6 of the principal act, after sub-section (4), the following amendsub-spction shall be inserted, namely: -~t of section6 5 ii (4a) subject to the provisions of sub-section (4), every director nominated under sub-clause (iii) or sub-clause (v) of clause (e) of sub-section (1) shall hold office for such term not exceeding three years, as the central government may specify in this behalf" 6 in section 6a of the principal act, for clause (iii), the followin~ clause shall be substituted, namely:-10 62 of 1984 amendment of sec-"(iii) the industrial reconstruction bank of india, established lion 6a under section 3 of the industrial reconstruction bank of india act, 1984;" 7 in section fi of the principal act, in sub-section (1)-(a) after clause (c), the following clause namely:--shall be inserted, amendment of section 9 15 ii (ea) granting lines of credit or loans and advances to the industrial finallce corporation any state financial corporation or any other financial institution which may be notified by the central government in this behalf, for the purpose of any business of such corporation or institution;"; 20 (b) after clause (db), the following clause shall be namely:-inserted  (de) granting loa~ and advances to any person for purposes of investment in any indw;trial concern;"; (e) after clause (g) the following clauses shall be inserted, namely:- (ga) granting, opening, issuing, confirming or endorsing letters of credit and negotiating or collecting bills and other do· cuments drawn thereunder; (gb) providing consultancy and merchant banking service~ in or outside india; (ge) acting as the trustee for the holders of debentures or other securities; 35 (gd) acquiring, with the approval of the central government, the undertaking, including the business, assets and liabilities of any institution the principal object of which is the promotion or development of industry in india, or the grant of financial assistance for such promotion or development;"; (d) in clause (ii), after the word "technical" the words ie, legal, marketiiu{" shall be inserted; (e) for clause (k), the following clause shall be substituted, namely:- "(k) promoting, forming or conducting or associating in the promotion, formation or conduct of companies subsidiariflll societies, trusts or such other associations of persons as it may deem at;" 45 3 after section lla of the principal act, the following section shall be inserted, namely:-insertion of new section 11b power to acquire rights 10 "ub the development bank shall have the right to acquire, by trallsier or assienment, the rights and interests of any public financial institution as defined fn section 4a of the companies act, 1958 5 1 of 1858 (including, any other rights incidental thereto) in relation to any loan or advances aranted, or any amount recoverable by such institution, either in whole or in part, by the execution or issue of any ipstrument or by the transfer of any instrument or in any other manner" amend· ment of bec-tion 18 t in section ie of the principal act, in sub-section (2), after the words, figures and letters "the 30th day of june each year", the words "or such other date, as the central government may by notification in the official gazette, appoint" shall be inserted a81eadmentof section 21 tt in section 21 of the principal act, in sub-seetio (2), after the 15 wards, filul," and letter "the 30th day of june each year", the words "or such other date, as the central government may, by notification in the of8cial gazette, appoint" shall be inserted 11 for section 34 of the principal act, the following section shall be substituted, namely:-loio "34 nothing contained in the banking reaulatton act, 1949 escept section 34;a ad section 36ad thereof, shall apply to the nelopment bank" substitution of section 34 act 10 of iim9 nottoapply to ne"elopment bank  statement of objects and reasonsthe industrial development bank of india (the development bank) established under the industrial development bank of india act, 1964 is the principal financial institution for providing credit and other facilities for the development of industry, for coordinating the working of institutions engaged in financing, promoting or developing industries and for assisting the development of such institutions the development bank has been providing direct financial assistance to large and medium large industrial concerns and also providing help to small and medium industrial concerns through banks and state-level financial institutions in the light of experience gained over the years, it is felt necessary to make some new activities also eligible for financial assistance and to en-jarge the scope of business of the development bank to cover certain activities which the development bank could not take up in the absence of enabling provisions it is also felt necessary to enlarge tho! capital base so as to enable the development bank to cater to the growing volume of business it is also proposed to provide more operational ~exibility to the development bank to enable it to discharge more effectively its functions as the principal financial institution for the development of industries 2 the main proposals are as follows: (a) the present definition of 'industrial concern' as contained in the act does not include many important activities it is, therefore, proposed to widen the deftnition of 'industrial concern' so as to enable the development bank to provide financial assutanee to certain becton like storage of energy, development of mines, medical, health or allied services, leasing and sub-leasing activities, information technology, telecommunications and electronics it is also proposed to empower the central government to bring within the purview of the definition 'industrial concern' engaged in activities which may be found to be supportworthy (b) in view of the expanding volume of its business and the expected growth in the development bank's activities, it is proposed to raise the authorised capital of the bank from rs 500 crores to rs 1,000 crores which limit may be increased by the central government up to rs 2,000 crores by notification in the official gazette (c) it is proposed to enlarge the scope of business which the development bank can undertake by empowesing it to grant lines of credit or loans and advances, otherwise than by way of subscription to aharesldebentures, to industrial finance corporation of india, state financial corporations or any other financial institutions notifted by the central government, to grant loana and advances to any person for purposes of investment in any industrial project to open and advise letters of credi~ and to negotiate or collect bills and other documents drawn thereunder, to provide consultancy and merchant bank· ing services ill or outside india, to act as trustee for the holders of debentures and other securities and to provide for acquisition of business and undertaking of any other financial institution in view of these amendments the d(!velopment bank will be able to undertake these activities lind discharge its role as the principal financial institution (d) it is proposed to amend the act to enable the development bank to open offices even at the place where it has its head office (e) a new provision is sought to be inserted to enable the deve-,lopment bank to purchase the participation certificates under the participation certificate scheme operated by !dbi, ifci and icier providing for a single window clearance of the proposals for setting up an industrial unit, and speedy availability of funds for the project <f) presently, the directors nominated by the central government fr(\m amnngst the employees of the development bank and the financial institutions and persons having special skills and experience hold office during the pleasure of the central government it is proposed to provide that such members shall hold office for such 'term not exceeding three years as the central government may specify (g) the accounting year of the development bank at present is from 1st july to 30th june it is proposed to amend the act to provide flexibility to the development bank to change the accounting year, 'if need be 3 it is also proposed to make certain other minor and consequential amendments in the act 4 the bill seeks to achieve the above objects nzw dam: vishwanath pratap singh dated the 13th december, 1985  financial memorandumthe authorised and paid-up capital of idbi is rs 500 crores and rs 445 crores respectively, at present clause 4 of the bill seeks to increase the authdrised capital of the industrial development bank of india (lobi) from five hundred crores of rupees to one thousand crores of rupees, with an enabling provision to increase it to rupees two thousand crores by notification the proposed amendment would enable the central government to fix the authorised capital of the idbi by notification from time to time taking into account the actual requirements, within the !?!'escribed limit or two thousand crores of ruj>ees the central government alone is empowered to subscribe to the share capital of the lobi as per the idbi act the central government will, therefore, be required to subscribe to the share capital of the idbi to the extent of the enhanced amount of paid-up capital as may be fixed from time to time this would be a non-recurring expenditure from the consolidated fund of india the outgo of funds would be to some extent offset by the profit transferred annually by the idbi to government of india in 1984-85, the lobi transferred an amount of rupees thirty-two crores to the government of india 2 the bill would not involve any other recurring or non-recurring expenditure  annexure extracts fbok the lndtj's'l'iual dilvillopmi:nt bunt of indu n;t, 1964(18 of 1964) - - - - - z in this act, unless the context otherwise requires,- - - - ' (c) "industrial concern" means any concern engaged or to be engaged in,-- - - - - (iii) mining; - - - - - (v) the transport of passengers or goods by road or by water or by air; (m) the generation or distribution of electricity or any form of power; (vii) the maintenance repair, testing or servjcmg of machinery of any description or vehicles or vessels or motor boats or trailers or tractors: - - - - - (ix) the development of any contiguous area of land as an industrial estate; - - - - - (xii) the research and development of any process or product in relation to any of the matters aforesaid explanation-the expression "processing of goods" includes any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical, electrical or any other like operation - - - - - 5 of 1970 (cia) "na~ionalised bank" means a corresponding new bank specified in the first schedule to the banking companies (acquisition and transfer of undertakings) act, 1970; - - - - - 3 (1) - - -  - (4) the development bank may establish ofllces, branches or agencies at any o1her place in or outsiae india esta-· blishment and incorporation of industrial development bank otlndia 4 the authorised capital of the development bank shall be one hundred crores of rupees: authorised : capital provided that the central government may, by notification in the oftidal gazette, increase the said capital up to five hundred crores of rupees - - - - - finaneial institution 6a each of the institutions specified in this section, and no other institution, shall be regarded, for the purposes of this chapter, as a financial institution, namely:-- - - - - 10f 1956 (iii) the industrial reconstruction corporation of india limited, formed and registered under the companies act, 1956; - - - - - business of development bank 9 (1) the development bank shall function as the principal financial institution for co-ordinating the working of institutions engaged in financing, promoting or developing industry and for assisting the development of such institutions in such manner as it may deem appropriate and may carryon and trarisact any of the following kinds of business, namely:-- - - - - - (i) providing technical and administrative assistance to any industrial concern or any person for promotion, management or expansion of any industry; - - - - - (k) forming or conducting of subsidiaries for carrying out its functions; - - - - - ]8 (1) - - - - - (2) the board shall cause the books and accounts of the fund to be closed an\"! balanced as on the 30th day of june each year - - - - - accountsand audit of dcvclopment assistance fund 21 (1) -                             -                                               -                                                               -                                                                                - prepa-ration of ac-counts and ba-lance-sheet     (2) the board shall cause the books and accounts of the develop-ment bank to be closed and balanced as on the 30th day of june each rear               -                                -                                                -                                                                -                                                                                 -     34 nothing contained in the banking companies act, 1949, except section 34a thereof, shall apply to the development bank                -                                 -                                                  -                                                                   -                                                                                     - act 10 of 1949 not to ap-ply to deve-lop ment bank a bill further to amend the industrial development bank of india act, 1964 (shri vishwanath pratap srngh, minister of finance) 