 the small industries development bank--of india bilt,· 1989 ', arrangement of clauses chapter 1 preliminary clauses" 1 short title, extent and commencement '%"aeanitjww  chapter n establishment of the small industries development boo or india and capital thereof3 ~tablishment and incorporation of small industries development badk',oi ibma 4 authorised capital  chaptjim m ~<j&mj:nr of 'di&' smau 'ikdub'l'rlq imjrt5 management 6 constitution of board 7 managing director 8 disqualifications 9 vacauon aud r~icmof ,gfbce ,by directgrs 10 casual vacancies in office of managing director    11 meetings of'the 'baara 12 committees  chal'nm iv busini'ss of the ~ lbdiuiwiues bahjt13 business of small; industries bank 14 loans by central government , 15 borrowings and acceptance of deposit, ~·thsauii:idur~ bank  ( i ) 364 ls-l , clause1s investment , ~ : " r, 17 power to tranafer rights 18 power to acquire rights 19 loans ijl foreign currency , 20 grants donations, etc, to the small industries bank  chap'l'b v21 small industries development assistance fund 22 credits to small industries development assistance fund 23 utilisation of small industries development aasistanc:e fudcs 24 debits to small indusu-ies development assistance fund 25 accounts and audit of small industries developmedt aalstance fund 26 liquidation of small industries development auiltanc:e fund 27 small industries general fund 28 preparation of accounts and balance sheet 29 disposal of profits accruing to small industries gederal fund 30 audit 31 saving 32 transfer of part of business of development bank 33 staff of small industries bank ,m delegati_ of powers 36 returns \ 38 obugations as to ftdelity and seereey " , ,  the small induslriss developmsnt bank of djdia bill, 1q89 (~fls in troduced in ink sa~a)1 page (iii), agains t clause no 37,-for 11 in va lida te act" read "to in valida te acts" 2 page (iii), against clause no48,-fq r "ac t 28 (") f' 1891" reaq "ac t 18 0 f 1891" 3 page 3, line 18,-for "sm') 11 " read "small" 4 page 3, line 19,-fo r "be " ~ad "by" 5 page 4, agamst line 18, in the marginal citation,-fo r '~61 'j f 1986" rea d "6 1 0 f 198 1 ii 6 paf'e 4, line 22,-for "1'0 rm" redq "fro m" 7 - fag e 5, 1 in e 26,-8 page 10, liile 2, f'j;:' '~!'econ:menja llv1!l l'cad "accomanda tien" 9 page 14, line 32,-for "er:!jpl::;yee" read "employee" 10 page 20, line 33,-for_ "specied" r\)ad "sl')ecified," 11 page 21, jn the marginal heading to clause 42,-fqi: "small indutr-ies" read "small ind us tries" 12 page 26, lines 19 and 20,-for ':insert bank", insert the words ", the' !:q2q 'insert the words" or from the' ' 3 page 27, 1 ine 7,-~_ __for 'tince" read ''hence''  clauau37 defects in appointment not invalidate act etc 38 rights of small industries bank in case of default 39 power to seek assistance of chief metropolitan magistrate or distjrict magistrate 40 power to call for repayment before agreed period 41 special provisions for enforcement of claims by small induatrlel bank 42 small industries bank to have access to recordj 43 validity of loan or advance not to be questioned '"" indemnity of directors  45 protection of action taken under this act 48 nomination by depositors or holders of bonds or other securlti- 47 arrangement with small industries bank on appointment of directors to prevail 48 act 28 of 1891 to apply in relation to small industries bank 49 act 10 of 1949 not to apply to small industries bank  50 act 43 of 1961 not to apply to small industries bank 51 liquidation of small industries bank 52 power to make regulations 53 amendment of certain enactments it power to remove difftcultie a bill to ~tab«sh the small industries development bank of india as the principal financial institution fot the pr&moti&n, financingandc!tvelopment of i7jdmstry in the smau-scale sector and to ~rdin4te the functions of the institutions engaged in the promotion, financi1lg or developing industry in the small-scale sector and for matters connect· eel taerewit1to or iftcideetal thereto; bii it erac!ted by parliament in the fortieth year of the, republic of lndia as follows:- chaffer:! preliminarys 1 (1) this act may be called the small industries develqpu1ent bank of india act, 1989 (2) it extends to the whole of india short title, extent and commencement (3) it shall come into force on such date as the central government may, by notification, appoint and different dates may be appointed for 10 different provisions of this act 2 in this act, unless the context otherwise requires,-definitions (a) "board" means the board of directors ot the small industries ~eiopment, bank of india referred to in section 5; (b) "chairman" means the chairman referred to !n clause (4) of sub-section (1) of section 8; (c) "court" means the high court within the local limits ot wh08e jur1sd1ct1on,--(i) the defendant or respondent or, where there is more than 5 one defendant or respondent anyone of them-) " (1) has his registered office, or (2) carries on the whole or part of his business, at the time of commenceme!1t of any legal proceedings agaidlt him under this act, or 10 "(ii) the cause of action for such legal proceedings, wholly or in l'qrl arises; (d) "development bank" means the industrial development bank of india established under section 8 of the industrial developmalt bank of india act, 1964; 15 180t18m (e) "director" means a director nominated under sub-section (1) c)f section 6 and includes the managing director; (f) "export" means f'q>ort from indilt of products or services of any industrial concern in small-scale sector; (g) "import" means import into india of services or goods in- 20 eluding all materials, commodities and articles in a solid liquid or gaseou8 state and all forms of energy for the use of any industrial concern in the small-seale sector; (h) ''industrial concern in the small-scale sector" means an industrial concern as defined in clause (e) of section 2 of the indus- 25 trial development bank of india act 1964, and which is regarded 88 18 of 18m a amall-scale undertaking under section 11b of the industries (development and regulation) act, 1951; 6s of 1951 (i) "managing director" means the managing director appointed under sub-section (1) of section 7; i 30 u) "national small industries corporation" means the national small industries corporation limited registered under the companies act, 1956; 1 of 1866 (jc) "notification" means a notification published in the offtetal gazette; '35  (1) "prescribed" means prescribed by regulations made under this act;  ,(m) "small industries bank" means· the small indu$tl:i_ deve~ lopment bank of india established under sub-section (1) of section 3; lof 1858 (n) "state small industries corporation" means a state corpo- 40 ration, registered under the companies act 1956, for small industries ; in a state; 63 of 19~1 (0) "state financial corporation" means a financial corporation established under section 3 or section 3a or an institution notified under section 46 of the state financial corporations act, 1951; 4 1011958 (p) "state industrial development corporation" meana a state corporation registered under the companies act, 19~6, for the development of industries in a state; 18 of 196-4 s (q) words and expressions used herein and not defined but defined in the industrial development bank of india act, 1964, ahal1 have the meanings respec4ively assigned to them in that act  chapter il establishment of the small lndustlues development banlc oj' india am) capital tiiereof10 3 (1) with effect from such date as the central government may, by notification, appoint, there shall be established, for the purposes of this act, a corporation to be known as the small industries development bank of india (z) the small industries bank shall be a body corporate with the 1 s name atoresaid having perpetual succession and a common seal witb power, subject to the provisions of this act, to acquire, hold and dispoae of property and to contract, and may, by that name, sue or be sued ·fstab llahment and incorporationof smallld-dustries development badltof india (3) the head office of the smoll industries bank shall be at luclmow or at such other place as the central government may be notiacation 20 specify (4) the small industries bank shall establish offices, branches 01' agencies at any place in or outside india , (1) the authorised capital of the small industries bank shall be two hundred and fifty crores of rupees: autho· ri8ed capital 25 provided that the development bank may increase the said capital up to one thousand crores of rupees (2) the issued capital of the small industries bank shall be wholly subscribed by the development bank i i  chapter di management of the small industries bank30 manalement 5 (1) the general superintendence, direction and management of the affairs and business of the small industries bank shall vest in a board of directors, which may exercise all powers and do all acts and things which may be exercised or done by the small industries bank 3s (2) in the discharge of its functions under this act, the small induetries bank shall be guided by such directions in matters of policy involvidg public ·interest as thecedtral-· government, in·" conaultation with 'the development bank, or the development bank, may give in writing (3) save as otherwise provided in regulations made under this act 40 the ch8irman shall also have powers of general superintendence and direction of the affairs and business of the small industries bank and ~y also exercise all powers and do all acts and things which may be exerclmd of done by that bank (2) any director may resign his of6ee by giving notice thereof in writing to the authority that nominated him and on his resignatiobbeing accepted by such authority or if his resignation is not sooner accepted, on the expiry of three months from the receipt thereof by such nominating authority, he iiihall be deemed to have vacated hib office 5 leo if the managing director is, by infirmity, or otherwise rendered incapable of carrying out his duties or his absence on leave or otherwise in clreumstances invol  ing the vacation of his: oftice, the development bank may appoint another person to act in his place during his absence casual vacancies inoftlce of managid, director meetings otthe board 11 (1) the board shall meet at such times and places and shall 1'0 observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed (2) the chairman or, if for any reason he is unable to attend a meeting of the board any director nominated by the chairman in this behalf and in the absence of such nomination, any other director, elected is by the directors present from amongst themselves at the meeting, shall preaide at the meeting (3) all questions which come up before any meeting of the board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes the chairman or in his 20 absence, the person presiding shall have a second or casting vote com· mittees 12 (1) the board may oconstitute such committeelil whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons for such purpoliles as it may think fit (2) 'nte members of a committee shall be paid such fees and allow- 2s ances as may be determined by the board for attending the meetings of ally committee constituted under sub-section (1) and for attending to any other work of the small industries bank  chapter iv business of the small industries bankbusinl!ss ot small indus· tries bank u (1) the small industries bank shall fun::tion as the principal 30 financial institution for the promotion, financing and development of industrial oconcefns in the smal!-scale sector and shall also coordinate the functions of institutions engaged in promoting, financing and developing the industrial eoncerns in the small-scale sector and may carry on and tran!!act any of the following business, namely:-- 3' (i) granting loans and advances to any state finaneial corporation state industrial development corporation state small industries corporation, c;cheduled bank, state cooperative bank or such other financial institutions, as the central government may, on the recommendation of the development bank, specify by way of 40 refinance on such teml5 and condit:ons as it may deem fit to imp0'3e of any loans or advances granted to industrial concern in the smallscale sector by such corporation, bank or institution which are repayable within a period not exceeding twenty-five years; (ii) ecceptingt dilcounting or rediscounting bills of exchange and promissol'y notes made, drawn, accepted or endorsed by industrial concerns in the small-scale sector or by any person selling products manufactured by an industrial concern in the small-scale sector; s (iii) subscribing to, or purchasing stocks" shares, bonds ~ debentures of, any state financial corporation, state industrial development corporation, state small industries corporation, national small industries corporation or such other financial institutions, as the central government may, on the recommendation of the develeprnent bank, specify; 10 is (iv) granting lines of credit or loans and advances to any state financial corporation state industrial development corporation, , state small industriea corporation, national small industries corporation or such other financial institutions as the central government may, on the recommendation of the development bank, specify; (v) granting loans and advances to any industrial coneem in the small-seale sector or subscribing to, or purchasing, or lmderwriting the issue; of stocks, shares, bonds or debentures of, any such concern: 20 2s provided that nothing contained in this clause shall be deemed to preclude the small industries bank from granting loans or advances to, or subscribing to the debentures of, an industrial concem in the small-scale sector, the amounts outstanding thereon may be convertible at the option of the small industries bank into stocks or shares of that concern within the period the loan, advance or debenture is repayable 30 explanation-ln this clause, the expression "the amounts outstanding thereon" used in relation to any loan or advance, shall mean the principal, interest and other ~harges payable on such loan or advance as at the time when the amounts are sought to be ronverted into stocks or shares; (vi) granting loans and advances-(a) to any person exporting; or (b) to any person outside india, in connection with the pxport; or 35 (c) fol' the execution of turn-key projects outside india by any industrial concern in the small-scale sector; 40 (vii) granting loans and advances to a scheduled bank or any other bank or such flnancial institutions as the central government may, on the recommendation of the development bank, specify, by way of refinance of loans and advances granted by it for purposes of export; 45 (!)iii) accepting, collecting, discounting, rediscounting, purl!hasing selling or negotiating in or outside india, bills of exchange or promissory notes arising out of transactions, relating to export or import and granting of loans and advances in or outside india against such bills or promissory notes; (i:r) granting, opening, issuing, confirming or endorsing lettt'ts of credit and negotiating or collecting bills or other documents drawn thereunder; (x) granting lines of credit to the government of any foreign state or any financial institution or person outside india for the s purpose of export or impo1t; (xi) financing export from or import into india of machinery, equipment or other assets including vehicles ships and aircraftij all lease, sub-lease or hire-purchase basis by or for any industrial concern in small-scale sector; 10 (:rii) buying or selling of, or entering into such other dealinis in, foreign exchange as may be necessary for the discharge of the functions of the small industries bank; (xiii) opening of any account in any bank in or outside india or making of any agency arrangements with, or acting as an liient or 15 correspondent of, any bankl or other institution in or outside india (xiv) transferring for consideration any instrument relating to loans and advances granted by it to any industrial concern tn the small-scale sector; (xv) granting loans and advances to any person for pw'poser of 2() investment in any industrial concern in the small-scale sector; (m) guaranteeing loans raised from, or credit arra'!'lgements made with, any bank, financial institution or other lending agency' in any country outside india in foreign currency, with the approval of the central government, by industrial concern in the small-scale 25-sector; (xvii) guaranteeing deferred payments due from any industrial coneem in the small-scale sector; (xviii) guaranteeing-(a) loans raised by industrial concerns in the small-scale 30 sector which are floated in the public market, or (b) loans raised by any industrial concern in the small-scale sector from any scheduled bank or state co-operative b3nk or state financial corporation or state industrial cor-pol'ation or such other financial institutions as the central government may on 35 (the re:~mendation of the development bank, specify) (m) guaranteeing the obligations of any scheduled bank or state co-operative bank or state financial corporation or state jndustrial development corporation or state small industries corporation or such other financial institutions as the central govem- <toment may on the recommendation of the development bank, specify, arising out of, or in connection with, underwritin',j the issue of stocks, shares bonds or debentures of any industrial concern in the smallscale sector; (xx) providing factoring services to any industrial concern in the small-scale sector; (xxi) providing technical and financial con'jultancy, merchant banking and extension services; 5 (xxii) undertaking activities for promotion of industry in the small-scale sector including entrepreneural development programmes, raw material purehase, marketing support and promotion of, or financial support to agencies engaged in such activities; 10 (xxiii) acquiring, with the approval of the central government on the recommendation of the development bank, the und~rtaking including the business assets and liabilities of any institution the principal object of which is the promotion or development of indllstrj in the small-scale sector in india, or the grant of financial assistance felr such promotion or development; 15 (xxiv) leasing sub-leasing or giving on hire or hire-purchase any movable or immovable assets to any industrial rancern in the small-scale sector; 20 (xxv) undertaking research and surveys for evaluating or dealing with marketing or investments and undertaking and carrying on techno-economic studies in connection with the rlevelopment of industry in the small-scale sector (xxvi) providing technical, legal marketing and administrative assistance to any industrial concern in the small-scale sector or any person for promotion, management or expansion of any industrhll concern in the small-scale sector; 25 (xxvii) planning promoting and developing inrtustries in the small-scale sector; (xxviii) promoting, forming or conducting or associating in the promoti,on, formation or conduct of companies, subsidiaries, societies, 30 trusts or such other association of persons as it may deem fit; (xxix) acting as agent of-(a) the central government or of the reserve bank or of the development bank or (b) such other government or person as the development 35 bank may authorise; (xxx) doing any other kind of business which the central government may, on the recommendation of the devel~pment bank, authorise; (xxxi) generally doing such other acts and things as may be 40 incidental to or consequential upon, the exercise of its powers or the discharge of :ts duties under this act or any othe~ law for the time being in force including sale or transfer of' any of its assets (2) the small industries bank may receive in conslderation of any of the services mentioned in sub-section (1) such commission, brokf!rage,  , interest, remuneration or fees 2'& may be aii"eed upon (3) the small industries bank shall not grant any loan or aclvance or other financial recommendation on the security of its own bonds or debentures loans by central government 14 the central government may, after due appropriation made by parliament by law in this behalf, adv8dce to the small industries bank-(a) an interest free loan of such amount and repayable in such s instalments and in such other manner as may be determined by the central govenunent; and (b) such further sums of money by way of loan on such terms and conditions as may be agreed· upon: provided that the central government may en a request bein, mad~ io to it by the small iddustries bank, increase the number of iaataiment& or lter the amount of any instalmeat or vary the date on which any instalment is payable under clause (a) 1!s (1) the small industries bank may, for the purpose of carrying out its functions under this act-is (a) issue and sell bonds and debentures with or without the guarantee of the central government; (b) borrow money from the reserve bank-borrowinaaand acceptance of deposits by the small industries bank (i) repayable on demand or on the expiry of the fixed petiods not exceeding ninety days from the date on which the mone"y 20 is so borrowed against the security of stocks, nnds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law fo!' the time being in f(\rce in india; (ii) against bills of exchange or promissory notes arls1n~ out 25 of bona fide commercial o,r trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing; (iii) out of the national industrial credit (long term operations) fund established under section 46c of the reserve 30 bank of india act, 1934, for any of the purposes specifted in that 2 of 1934 section; (c) borrow money from the development bank or such other authority, organisation or institution as may be generally or specially approved by the development bank; 35 (d) accept deposits repayable after the expiry of such period and on such terms as may be generally or specially approved by the developmen: bank (2) the central government may, on a request being made to it by the small industries bank, guarantee the bonds and debentures issued by 40 that bank as to the repayment of principal and the pgyment of interest at such rate as may be fixed by that government  investment 18 the small industries bank may invest its funds in the sec~ritiea of the central government or of any state government or in deposits with 4s any scheduled bank, i power to transfer rights 17 the rights and interests of the small industries bank (including any other rights incidental thereto) in relation to any loan or advance granted or any amount recoverable by it may be transferred by the small industries bank either in whole or in part by the execution or iscjuc of 5 any instrument or by the transfer of any instrument by endorsement, or in any other manner in which the rights and interests in relation to such loan or advance may be lawfully transferred, and the small industries bank may, notwithstanding such transfer, act as the trustee for the transferee 1 of 1956 power to acquire rights 10 18 the small industries bank shall have the right to acquire by transfer or assignment, the rights and interests of any public financial institution a!'; defined in section 4a of the companies act, 1956 (including any other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable by such institution, either in whole 15 or in part by the execution or issue of any instrument or by the transfer of any instrument or in any othtr manner 46 of 1973 loans in foreign currency 19 (1) notwithstanding anything contained in the foreign exchange regulation act 1973 or in any other enactment for the time being in force relating to foreign exchange, the small industries bank may, for the 20 purposes of granting loans and advances under this act, borrow, with the previous consent of the central government and the development bank, foreign currency from any bank or finandal institution fn any foreign country or otherwise (2) the central government may where necessary_ guarantee any 25 loan taken by the small industries bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of interest and other incidental charges (1) all loans and advances granted by the small industries bank out of foreign currency borrowed under sub-section (1) shall be express-30 ed in terms of foreign currency as equivalent of indian currency calculated in accordance with the rate of exchange prevailing at the time of grant thereof and the amount due thereunder shall be repayable in equivalent indian currency, calculated in accordance with the rate of ex-change prevailing at the time of repayment of such loan or advance 35 (4) unless otherwise provided by the central government, any loss or pro lit in connection with any borrowing of foreign currency under sub-section (l) for the purpose of granting loans and advances under this act, or with its repayment to the concerned foreign lending agency, on account of any fluctuations in the exchange accruing-40 fa) during the period within which the loan or advance is repayable by the industrial concern in the small-scale sector or the puiod of actual repayment thereof by the concern, whichever if!! longer, shall be reimbursed by or paid to, as the case may be, the r~ipient of such loans and advan-ces; 45 (b) after the expiry of the period specifted in clause (a) ,-(i) shall be borne by the small industries bank in respect of nonnal market fluctuations in the rate of foreign exchon,g!; (iri) shall be reimbursed by, or paid to, as the case may be, the central government in respect of ftuctuations other than the dormal market ftuctuations in foreip exchange explanation-if any question arises as to whether any fluctuation as aforesaid is a normal market fluctuation or not the same shal~ be declo-5 ed by toe central government whose decision thereon shall be flnal 20 the small industries bank may rec€ive gifts, grants, donations, benefactions or other monies from government or an~v other source grants, donations, etc, to the small industries bank 10  small industries development assistance fund21 (l) with effect from such date as the central government may by notification, appoint, the small industries bank shall establish and maintain, a special fund to be called the small industries development assistance fund small industries developmenta8-sistance ftmd, (2) the small industries bank may, at any time, establish any fund 15 as part of the small industries development assistance fund for such purpose or purposes as may be approved by the central govemment on the recommendation of the development bank, or establish any other fund as may be required by or under any law foj' the time being in force (a) all amounts received for the purpose of that fund by way of loans, gifts, grants, donations, benefactions or otherwise from government or any other source; credits to 22 to the small industries development assistance li'und shall be 20 small c'redited-industries development assistance fund (b) repayments or recoveries in respect of loans, advances or 25 other facilities granted from the fund; (c) income or profits from investments made from the fund; and (d) income accruing or arising to the fund, by way of interest or otherwi!ie, on account of the application of the fund in accordance with tha provisions of section 23 l 30 23 the small industries bank may disburse or spend from the small industries deve)opment assistance fund, any amount for such purposes as the central government may, on the recommendation of the development bank, specify_ utilisation o'f small industries development assistance fund 2~ (i) to the small industries development assistance fund shall 35 be debited-, (a) such amounts as may from time to time be disbursed or spent under section 23;' i ' debits to small industries developmentalsistance fund (b) such amounts as may be required for discharging the liabilities in respect of loans received for the purpose of that fund; 40 (e) any loss arising on account of investment made out of that f'und; and (d) such expenditure arising out of, or in connection with, ihe ad~nistration and application of that fund as may be determined by the board ! : (2) no amount shall be debited to the small inciustries develop; 5 ment aseistance fund except as provided for in sub-section (1) 25 (1) the balance-sheet and accounts of small industries development assistance fund shall be prepared in such form and mannet as may be prescribed acco~ta and audit ot small industriel develop menta-tdstance fund (2) the board shall cause the books and accounts of the small in· 10 dustries development assistance fund to be closed and balanced as on the 31st day of marc~ each year or such other date as the development bank may specify l i (3) the small industries development assistance fund shall be audited by one or more auditors appointed by the development bank is under section 30 who shall make a separate report thereon (4) the provisions of sub-sections (2), (3) and (4) ot section 30 hall so far as may be, apply in relation to the audit of the small industries development assistance fund i  : (5) the small industries bank shall furnish to the central govern· 20 ment and the development bank within fow' months from the date od which the accounts of the small industries developmentasistadce fund are closed and balanced a copy of balance-sheet and accounts together with a copy of its auditors' report and a report on the operation of that fund during the relevant year and the central government 25 shall, as soon as may be after they( are received by it cause the same to be laid before each house of parliament 26 the small industries development assistance fund shall not be closed or wound up save by order of the central government and in such manner as that government may, on the recommendation of the 30· development bank direct liquida tion of small industries developmentalaibtance fund  small industries general fund, accowts and auditsmall industriel general fund z7 all receipts of the small industries bank other than those which are to be credited to the small industries development assistance fund 35 under this act shall be credited to a fund to be called the small industries general fund and all payments by the small industries bank other than those which are to be debited to the small industries development aalistance fund, shall be made out of the small industries general fund 28 (1) the balance-sheet and accounts of the small industries bank 40 shall be prepared in such form and manner as may be prescribed prepara· tion of accounts and bajadoe sheet (2) the board shall cause the books and accounts of the small industries bank to be closed and balanced as on the 31st day of march each year or such other date, as the development bank may specify 29 (1) the small industries bank may establish a reserve fund to which may be transferred such sums as that bank may deem fit out of the annual profits accruing to the small industries general fund disposal of profits ac:cruiq to aman industries gederal ftidd j • ,(2) after making provision for bad and doubtful debts, deprecla-s tlqn of assets and for au other matters for which provision is necessary or '~xpedie~t or' which is usually provided 'for by bankers and for "the reserve fund referred to in sub-section (1), the small industrial bank shall, transfer the balance of the net profits to the development bank audit 1io~j(1)·the aecounts of the small iddus~ bank shall be audited ' by auditors duly qualified to act as auditors under sub seci~ (1)01 10 ~tj~l,l-;:~ of, ~ecompanies~~t, 1956 who shall be appointed by the lof 1956 ~e:v:eio,pm~tb~·for such term and on such remuneration as the development bank may fix , , (2) the auditors shall: be supplied :with a copy of·the ~ual balapce-be!et of·the small industries bank and it sl)a!l be their duty to examine 15 it together with the accounts and vouchers relating thereto and they ~~ll have a list delivered to them of all books kept by the small industries bank and shah at all rettsonable times have access· to the books ,'1,j", -i' '"'- accounts· vouchers and other documents of the small industries bank   " " i ,            '  ~                     : ' ~                                     , j                                           i,                                                                             i                                                                                                                                         _                                                                                                                                                       - ; :; j ,(3) the auditors may, in relation to su~h accounts,                                                                                                                                                                                                  examine' 'any 20 j:p~e~f: ,o~~ ~ny ofticer or ~ther employee of the small indurtrlesbank ,and,  ~          be entitled torequ~re from the board or ()fficers or other em-ployees ~f the smau industries badk such information and explanation as they may think necessary jf~r the performance of their duties     (4) the auditors shall make a report to the s~al1 indu,stries bank 25 upon the annual balance-sheet and accounts examined by them and in every such report they shall state whether in their opinion the ba~,:, sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the small industries bank and in case they had called for 30 any explanation or information from the board or any oftlcer or other ~loyee of ~e sm!lu industries bank whether it has been given and whether it is satisfactory                                                                               ' (5) the small industries baqlc shall fumish, to, t,qe ~p?'~l qovernment and the developnfent bank within four months from ilie da~ 35 on"which ita aeceunts are :c1osedand ba~ced,' a <i9:py ot itswlante-sheet and accounts together with a copy of the auditors' report and a r!'txn-t of the working of the small industries bank during the relevant 'year, 'ana the central govemment shall, as soon as may be after they are received by it, cause the sarne to be laid before each house of parlis- 40 saving ~ent , st save as otherwise provided in sub-section (4) ofs~tl~ 25, noth-'1, " - , ,"! ' ' "_ j, fng contained in tbts chapter shall apply to the small industries development assistance fund  chapter vii  tram!p'ill :01' pam' of businbbs of development bankjz (1) on such date as the central government may, by notification, appoint,';the b1jlfidess, assets and liabilities, rights, interests, privileges and pbligattons of the pevelopment bank relating to the sm'all iildustries development fund and the nationalequity fund (hereinafter in this transfer of pari; of buslnem of development bank s~ctio'l ,referred to as funds) shall stand transferred to, and vest in, the email industries bank 1 '  explfm4flo7l-"small industries development fund" and "national equl"ty 'fund" mean the small industries development fund and national equity fund referred to as such in the books and accounts of the development bank on the day immediately preceding the date appointed in this bub-aection i (2) for the transfer to and vesting in, the small industries bank is under sub  section (1) pf~he funds, that bank s~all pay to the ' development bank such amount and on such terms and conditions as the development bank may determine i :,' (3) all contracts, deeds, bonds, agreements, powers of attq1'ney, grants of legal representation and other itlstruments of whatever nature 20 which relate to the funds and ~hich are subsisting or having effect immediately before the date referred to in sub-,ection (1) and to which the development bank is a party or which are in lavpur of the development bank sbau,- : i 2s (a) if they relate exclusively to the funds, be of full force and effect against or in favour of the small industries bank and may be enforced and acted upon as fully and effectively as if, i instead 'of the development bank, the small industl'ie~ "'bank had been 8 party thereto or as if they had been issued in favour of the small industries bank; and 30 3s '(b) if they relate not only to the funds but also to any of  the other business or functions of the development bank, be of full force and effect against or in favour of both the development bank and the small industries bank and may be enforced or acted upon as fullv and effe~tive1v as if in addition to the development bank the 8m'lll innu~tl'ies bank had also been ii prtiv t~ere­to or a~ if they had been i~sued ii', favour of ilie deve}opment bank and also the small industries bank "(4) if on the date referred to in sub-section (1) any suit, appeal or other legal proceeding of whatever nature relatin~ to the ftmds 40 is pending, the same shall not abate be discontinued o'r be in any wav prejud;dally affected bv rea,;'m of the transfer to the smnh industries bank of the b1lsiness of the development bank or of anything contained in this act, but the suit, appeal or other proceeding may,-(a) where it relates exclusively to the funds, be continued, prosecuted and enforced by pf ~gainst the small industries bank; ,and l 1 4s (b) where it relates not only to the funds but also to any of the other business or functions of the development bank, be continued, prosecuted and enforced by or against the development bank and the small industries bank or if the central governmeat by order in writing so directs, by or against such one of them,  s may be specified 1n such order i i (5) if any question arises as to whether any contract, deed, bond, ~ment, power of attorney, grant of legal representation or other instrument referred to in bub-section (3) or any sult, appeal or other legal proceeding referred to in suh-section (4) relates or relate exclu- 10 sively to the funds it shall be referred to the development bank for decision and the decision of the development bank thereon shall be final (6) the provisions of this section shall have effect notwithstanding anything contained in the industrial development bank of india act 18 of 1964 1964, or any other law or any instrument having force by' virtue of the is said act or other law 1 !  chapter wi miscj!:llaneousstaftat small indultriea bank 33 (1) the small industries bank may appoint such number of ofbcers and other employees as it considers necessary or desirable for 20 the efficient performance of its functions and determine the terms and conditions of their appointment and service (2) at any time before the expiry of six months from the appointed day, the development bank may in public interest, transfer to the small industries bank such members of its staff whom the develop- 2s ment bank considers as relevant to, or suitable for, the functions of the small industries bank, as on deputation with the small industries bank but such members shall hold office by the same tenure and upon the same terms and conditions of service as respects remuneration leave, provident fund, retirement or other terminal benefits as they' would 30 have held such office if the small industries bank had not been established and shall continue to do so until the development bank either on its own motion or at the request of the small industries bank re~ calls such member of staff to its service provided that every member of the stat! so transferred may elect to 3s go b'lck to the development bank by exercising an option in writing fo that effect before the expiry of a period of nine months from the appointed day, and on the exercise of such option, the development bank shall, before the expiration of a period of eighteen months from the appointed day, take back such member of the st,aff and he shall be deemed to itave 40 been on deputation to the small industries bank during the period he was a member of the 'staff of the small industries bank (3) notwithstanding anything contained in the industrial disputes act 1947 or in any other law for the time being in force, the absorption of any member of the staff by the small industries bank in its re2uiar service under this section shall not entitle such employee to any compensation under that act or other law and no such claim shall be entertained by any court, tribunal or other authority 5 e~lanation_for the purposes of this section, "appointed day" means the date of establishment of the small industries bank under section 3 delegation of powers 34 the board may, by general or special order, delegate to any director or committee constituted under section 12 or to any officer or 10 other employee of the small industries bank subject to ~uch conditions and limitations if any, as may be specified in the order such of its powers and duties under this act as it may deem necessary returns 35 the small industries bank shall furnish from time to time to the central government the reserve bank and the development bank such 15 returns as they may require obligations as to fidelity and secrecy 31 (1) the small industries bank shall not except as otherwise required by this act or any other law divulge any information relatinft to, or to the attairs of its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among 20 bankers necessary or appropriate for the small industries bank to divulge such information (2) the small industries bank may for the purpose of the efficient discharge of the functions under this act collect from or furnish to the central government reserve bank development bank state bank any 25 subsidiary bank, nationalised bank or other scheduled bank, state cooperative bank, state financial corporation state industrial development corporation state small industries corporation or the national small 'industries corporation or such other institutions as may be specified by the development bank credit information or other information 30 as it may consider useful for the purpose, in such manner and at such times, as it may think fit explanation-for the purpose of this sub-section the expression "credit information" shall have the same meaning as in clause (c) of 2 of 1934 section 45a of the reserve bank of india act 1934 subject tl) the modi-35 fication that "banking company" referred to therein shall mean a bank corporation 01' other institution referred to in this sub-section (3) every director, member of a committee aurlitor, officer or other employee of the small industries bank or the development bank whose services are utilised by the small industries bank under the provisions 40 of this act shall, before enterin,{! upon his duties, make a declaration of fidelity and secrecy in the form set out in the first schedule to this act 37 (1) no act or proceeding of the board or of any committee of the small industries bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the board or 45 the committee, as the case may be defects in appointment not to invalidate acts, ~tc (2) no act done by any person acting in good faith as a director shall be deemed to be invalid merely on the ground that he was disqualified to,be· a director or that t~re was any other defect in his 'appointment rights of small industries bank in i:abe of default 38 (l)where any industrial concern in the small-scale sector, which is under a liability to the small 'industries bank under an agreement; s makes any default in repayment of any loan or advance or any instillment thereof or in meeting its obligations in relation to any guanntee gjvep by 'the small industries bank or otherwise fails to comply with the terms of its agrpement with the small industries· bank,' 'the small industries bank shall have the right to take over the management, or 10 po~ession, or both of such industrial concern in the small-scale sector, as well as the right to transfer by way of lease or sale and reause the property pledged, mortgaged, hypothecated or assigned to the small industries l3ank' , (2) any transfer of property made by the small ~ndustrtes bank,in 15 exercise of its powers under sub-section (1) shall vest in tbe transferee ~ rights in or to the property transferred as if the transfer had been made by the owner of the property (3) the small industries bank shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from 20 go<?dsforming part of the security held by it as it had with'respeet to the original goods  (4) where any action has been taken against an industrlnl concern ijl ~he small scale se~tor under the provisions of sub-section (1), all costs, charges and expenses' which in the opinion of the small rndt1stri~ bank 25 have been properly incurred by it as incidental thereto shad be recoverable from the industrial conceu'll in the small-scale sector and the money ,wh~chis received by it shall, in the absence of any contract to 'the contrary, be held by it in trust to be applied firstly, in psyment of !ruch cost-s, charges and expenses and, sec9ndly, in ciischarge of the debt due 30 to the small industries bank, and tl;1e residue of the money so received shall be paid to tbe person entitled thereto in accordance with his rights and interests (5) where the small industries bank takes over the management or possession of an id(~ustrial concern in the small-scale 5ector under the 35 provisions of sub-section (1), the small industries bank shall be deemed to be the owner of such concern, for the purposes of suits by or"'~,gafnst the concern, and shall sue and be sued in the name of the concern power'" seekaasistance of chief metropolitan magistrate or district magistrate 39 (1) where any prpperty, effects o,r actionable claims are sold ,or 40 leased in pursuance of any power conferred by section 38, the small industries bank or any other person authorised by u may for the purpose of ,taking into ic'istody or under control any such oronerty ~ffects or actionable claims request, in writing the chief metropolitan magistrate o,rthe district maltistrate witbin whose jurisdiction any such 45 property effects, actionable claims books of accol}nt or other documents relating thereto may be situated or found to take possession the~of,· and the chief metropolitan mamstrate or the district magistrate sball, on such ;request being made to him,-' '' (0) take possession of such property effects, action~ble c1aims, so or books of account or other docu:mentsrelating thereto'; and  (b) forward them to the small industries bank or ~uch other person, as the case may be (2) for the purpose of securing compiiance with the provisions of s\lb-section (1), the chief metropolitan megistrate or the district ~trate may tak~ or cause to be taken such steps cmd use, or cause to be used, such force as may, in his opinion, be necessary s f,(~j n~ act, of the chief metropolitan megistrate or the district m:agistrate ,dokle in plu'suance of this section shall be called in q~on in an>, co~rt orbt,fore any authority    , ,400, notwithstanding anything in any agreement to the contrary~ ~e small industries bank may, by notice in writing, require any industrial 10 ~qrn in _ the small-scale sector to whj,ch, it has granted ~ylo~ or power to cad for repaymedt ·before agreed period ~v;n;lce to discharge forthwith in full its liabilities to the small ind\uliries :&l'lk-:;-(a) if it appears to the board that false or misleadin,g informattoninany material particular was given in the application for the 1'5 loan or advance; or (b) if the industrial concern in the small~scalesector has failed to comply with the terms of its contract with the small industrles bank in the matter of the loan or advance; or (c) if there is a reasonable apprehension that the industrial 20 concern in the small-scale sector is unable to 'pay its debt or that procemings for liquidation may be commenced in respect thereof; or (d) if the property pledged mortgaged, hypothecated or!assiiried to the small industries bank as security for the loan or advance is not insured and kept insured by the industrial concern in the small-25 scale sector to the satisfaction of the small industries  bank; or depreciates in value to such an extent that, in the opinion of the board, further securi~y to the satisfaction of the board should be given and such security is not given; or ' (e) if, without the permission of the board, any machinery " 'i' 30 plant or other equipment, whether forming part of, the security or otherwise, is removed from the premise!$ of the industrial concern in the small-scale sector without being replaced; or (f) if for aw rea:;;on it is necessary to protect the interests of the small industries bank 35 41(1) where an industrial concern in the small-scale sector, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the small industries bank or oulerwise fails to comply with the terms of its agreement with that bank 40 or where the small industries bank requires any industrial cqqcern in special pi'oyisions for enlorcementol claims by small industries bank ,~e small-scale sector to ~ake repayment of any loan or advance under section 40 and such iiid,ustrial concern fails to make such repayment, -hf 1882 then with<1ut prejudice to the provisioihi of sectiori 38 of this aet and section 69 of the transfer' of property act, 1882, any o·freer of that, bank, 45 generally or specially authorised by that bank in this behallf may apply to the court for one or more of the following reliefs namely:-(a) for an order for the sale of the property assigned, ('barged,  hypotqecated, mortgaged or pledged to that bank as security for the loan or advance; or so (b) for enforcing the liability of any surety; or (c) for an ad interim injunction restraining the industrial cod-cem in the small-scale sector from transferring or removing its machinery, plant or equipment from the premises of such industrial concern without the permission of the small industries bank, where such transfer or removal is apprehended 5 (3) an application under sub-section (1) shall state the nature and extent of the liability of the industrial concern in the small-scale sector to the small industries bank, the ground on which it is made and such other particulars as may be necessary for obtaining the relief prayed for (3) where the application is for the reliefs mentioned in dause  (cd 10 and clause (c) of sub-section (1) the court shall pass an ad interim order attaching the security or so much of the property of the industrial ooncem in the small-scale sector as would on being sold realise in its estimation an amount equivalent in value to the outstanding liability of such industrial concern to the small industries bank together with 15 costs of the proceedings taken under this section with or without an ad interim injunction restraining such industrial concem from transferring or removing its machin~ry, plant or equipment (4) where the application is for the relief mentioned in clause (b) of sub-section (1), the court shall issue a notice calling upon the surety 20  to show cause on a date to be specified in the notice as to why the liability should not be enforced (5) before passing any order under sub-section (3) or issuing a notice under sub-section (4) the court may, if it thinks fit, examine the ofticer making the application 2s (6) at the same time as it passes an order under sub-section (3), the court shall issue to the industrial concern in the small-scale sector or to the owner of the security attached, a notice accompanied by copies of the order, the application and the evidence, if any, recorded by the court calling upon such industrial concern or owner, to show cause on a 30 date to be specified in the notice, as to why the ad interim orde,r of attachment should not be made absolute or the injunction confirmed (7) if no cause is shown, on or before the date specled in the notice under sub-section (4), the court shall forthwith order the enforcement of the liability of the surety 3s (8) if no cause is shown on or before the date specified in the notice under sub-section (6), the court shall fonhwith make the ad interim order absolute and direct the sale of the attached property or confirm the injunction (9)  if cause its shown, the court shall proceed to investigate the 40 claim of the small industries bank in accordance with the provisiods contained in the code of civil procedure, 1908, in so far as such prov{o 8 of 1908 sions may be applied thereto (10) after making an investigation under itlb-section court may-(9), the 4s (a) confirm the order of attachment and direct the sale of the attached p1'loperty; (b) vary, ~he order of attachment so as to release a portion of " t,he property from attachment and direct the sale of the remainder -: ,pf the atiached property;  (c) re1easethe property from attachment; (d) confirm or dissolve the injunction; or 5 i '! i (e) di\ect t~e enforcement of the liability of t,e surety or rejl!ct the clajm made in this behalf: i' 1 pjooy,ided that -when rnakling"anorcier unper clause (c) or m&king an o  ~'rejecting the· claim to en~pctthe ~ility of the sucety under 1,jciseo(b), the court may make such furtherorder ~it thinks necessary to protect the interests of the small industries 8azlk and may apportion the cost of the proceedings in such manner as it thinks fit: ·1>rovided further that uriless the small industries sank intimates to t~~~court that it will not appeal against any order releasing any property 1~ from attachment or rejecting the claim to enforce the liabi11ty of the ,lsurety, such order shall not be given effect to, until the expiry of the period fixed under sub-8ection (12) within which an appeal may be pfi'ed or, itald appeal is fef~rr~, unless the court edl:rowerecmct~··appe~ ftqm~ ,dpdsiwls of the said colu't otb«;rwi~e ~ts 20 ufiw ~ t\1e appe~ i, ,disposed of  (11) an order of attachment or sale of property under this elltioa shall be carried into effect as far as practicable in the manner provided '0i1801l 'i~')~ c~de ,of qildl procedilr~" 1~, for the attac~entor bale of p~t:~ in e~i~ ,of ,a decree as if the small industries bank were 25 tlw!,deoree holdw_ ( ~, ie1~~ ally partyagriev;eci by an qrder under sub-section (7) i sub· t~9f3j~ 00 qr ,1ju~ection (10) ~ay, within thirty ~ from the date of:l~ ,qi'<ier, apjl-to ,the coutt empowered to heat appeaj,s from the decisions of the co1r!dwhich,jii~d ~he or~ and upon s~~h appeal the 30 appellate court may, after hearing the parties, pass such orders as it thinks proper   ' ,(1'7) where pl'ooeeclin  for uquidatiqllin respectof an industrial lcoacerll in theamau4cale sector jun,e eommenoed before an ,application ia,made undersu1hectiqn (1) np'thiag itt this  section eball be cobitr\1ed, 35 a~giviftg to the simllrindustriea~lidkady preference oyer the other c~ of·suc:b induatrjal·concem,jiot,codferred on it·by any other law (14) for the ;removal of doubts, it is hereby declared that any court cg~ten~ ~o grant ~ of interi'f!'! i~iunction ulld~r this section shall ~ " ~ ;hay,e the powe,r to appoin~ a rec;:'eiver and to exercise all the other 40 pblivtp:sm,cidental th~eto , : ,a (t) ;thesmal! industries baokchau have free ,a~qess to all such rteeataof· any institation' which seeks to avail of any credit facilities smail indo lries bank to have acceato records l·lf~ilte ·smalllnd1l8trie6 ,bank and :to all such records of any such person who seeks to avail of any crejiit facilities from iuc:h institution, 45 perusal whereof may appear to the small industries bank to be neces-, 1u ,eonnectionwnh he providing of finance or other ass~tance to sw 1nirtltution or therelnancing of any loan or advance made to such penon by the borrowing ~titu~jon (2) the small industries bank may require any institution or persod referred to in sub-section (1) to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition validity of loan orad· vance not to be questioned 43 notwithstanding anything to the contrary contained lit s any other law for the time being in force the validity of any joan or advance granted by the small industries bank in pursuance of the pr0-visions of this act shan not be called in question merely· on the grouad of non-compliance with the requirements of such other law as afofellllll or of any resolution, contract, memorandum, arucles of aasoc:iation or· •• , other instrument: provided that nothing in this section shall render valid any loan or advance obtained by any company :>r co-operative society where aucb company or co-operative society is not empowered by its memorandum 10 obtain loaua or advances 1s indem_ nity of directors 44 (1) every director shall be indemnified by the small industrlel bank against au losses and expenses incurred by him in, or in relatsoa to, the discharge of his duties, except such as are caused by bts on wilful act or default (2) a director shall not be responsible for any other director or for 20 any officer or other employee of the small industries bbdk or for iil1 loss or expenses resulting to the small industries bank or from the insufficiency or deficiency of the value of or title to, any property or security acquired or taken on behah of the small industries bank or toe insolvency or wron~ul act of any debtor or any person under obugatkjd 25 to the small 'industrtes bank or anything done in good faith in tlie  cution of the duties of his office or in relation thereto protection of action tak<:n under this act j 45 no suit or other legal proceeding shall lie against the small ind1lstries bank, chainnan or any director or any ofilcer or other employee of such bank 'or any otrur person authorised by that bank to d;acbarp 30 any functions under this act for any lou or damage caused or likely to be caused by anything which is in good faith done at intended to be done ia pursuance of this act or any other law or provillon haviag the foroe of law 46 (1) notwithstanding anythinj contained in any other law, when 35 a nomination in respect of any deposits, bonds or other securities kepi with or issued by the small industries bank is made in the prescribed manner, the amount due on such deposita bonds or other securities un, on the death of the depositor or holder thereof, vest in, and be paybie to, the nominee subject to any right, title, intej'elt or claim of idy ou 40 person, in relation to such deposits, bonds or other securities nomination by deposi ton or holders of bonds or other securi· tic'l (2) any payment by the small industries bank in accordance wt~ the provisions ot sub-section (1) shall be a full discharge of ita uabib, in respect of such deposits, bonds or iecurities 1011111 arrange-ment with sl1lallln dustries bank on appointmentof directors to prevail 47 (1) where any arrangement entered ·into· by -the small industrie:s bank with an industrial concern in the small scale sector provides for the appointment by the small industries bank cf one -or more directors of such industrial concern, such provision and any appointment of direc-5 tors made in pursuance thereof shan be valid and effective notwithltanding anything to the contrary contained in the companies act, 1956, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to that industrial concern, and any provision regarding share qualification, age-limit, 10 number of directorships, removal from office of directors and such like conditione contained in any such jawor instrument aforesaid, shall not apply to any director appointed by the small industries bank in purluance of the arrangement as aforesaid  (2) any directnr appointed as aforesaid shall-15 (4) hold oftlce during the pleasure of the small industries bank: and may be removed or substituted by any person by order in writing of the small industries bank; (b) not incur any obligation or liability' by ,reason only of his  being a director or for anything done or omitted to be done in good 20 faith in the discharge of his duties as a director or anything in relation thereto; (c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement 25 48 the bankers' books evidence act, 1891 shall apply in relation to small industries bank as if it were a bank as defined in section 2 of that act al,t 18 of is!)l to apply in rdation to small industries bank   nothing contained in the banking regulation act, 1949, except aection b4a and section mad thereof &hall apply ~ the small indus· 3o tribank | actio    ||----------|| 1949     || not      || to       || apply    || to small || indus-   || tries    || bank    |50 notwithstanding anything to the contrary contained in the income· tax act, 1961 or in any other enactment for the time being in force retating to income-tax or any other tax on income profits, or gains, the small industries bank shall not be liable to pay income-tax or any 35 other tax in respect of-| act      | 43    ||----------|-------|| of       |       || 1961     |       || not to   |       || apply    |       || to       |       || small    | in-   || dustries |       || bank    |       |(a) any income, profits t:jt pins aecruing or arising to the small ~ industries development assistance fund or any amount received in that fund; and  i (b) any income pi'oftts or gains derived or any amount received to by the small industries bank 51 no provylon of law reiatina' to the widdidgup of oompauies ior ccn:poj:atiods ihall ilpplr to the smalllad~iea ,banal 'and that bank shall not be placed in llqwdation save byordv of the 'cctral government and" in such manner as it may direct " uquidation of small induatries bank power to malteregulatidu 52 (1) the board may, with the previous approval of the ])evelop- 5 ,tl'i,'r ,-,! ment bank by notiiication, make reawatiods dot inconsistent with the provisions of chis act to provide lor au matters for which provision is necessary of expedient for the purpose of sivina effect to the provisions of this act : ,(  , _  _, ~ __  j - j wtji,1 « (2) in particular, and without prl!!j11d1te' tc:r the ~aaneratit1 of ~ fore- ' 10 going power, such regulations may' provide 10r-(a) the times and ~es of the meetioii of the board ad4i' the procedure to be followed at such meetings under sub-section (1) of aeedon 11 includmg quorum necewary for the trensiletion of ~ r business'  15 , ,"  (b) the form and manner in whic;h the balance-sheets and the accouilts of the small industries ~velopmentanstance fund under sub-sec'tion (1) of section 25 ~nd the small lhdustries bank (, under sub-section (1) of section 28 shaljbe prepared; 20 (c) the manner in which nominations may be made in terms of sub-section (1) of section 46; (d) generally the efficient conduct of the aft8il's of the small industries bank; • ' (e) any other matter which is to be or may be, prescribed ~ 25 (3) every regulation made under this act shall be laid, as &gon  may be after it is made, before each house of parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions and if, before the expiry of the session immediately following the session or the successive sessions 30 aforesaid, both houses agree in making any modification in the regulation or both iiousea agree that the ngtilation' bould' not be 'made,·thej reewaticn shall thereafter haft·eft~ obly iri sueh modlflec!,'fem ozi'bj·ot flo effect, as the case may be; so, however, that any such modiablltlonet :,t annulment shall be without prejudice to the validity of anything pre- 35 vioualy done under that regulation 53 the enactments specified in parts i, ii, iii and iv of the second schedule to this act shall be amen lied in the maimer ~edthetetriand such amendments shall take effect' on the date of establishment of we small indl"stties bank amend· mentof certain enactments power to remove difftcult1e8 ,', 54 if any difficulty arises in giving effect to the provisions of this 40 act, the central government ~ay in oqmultation with tbe development bank, by order, doan)1'thing, notrinpo~t wuh8\&qb proviaicea, fw the purpose of removing the difficulty: provided that no such order shall be made after the expiration of three 45 years from the date on which this act receives theusent of the president (,'  declaration oj fidelity and secrecyit  "  , ,  "'  , do hereby declare that i will  5 faithfully, tnw, aad, to the best;, of my &kill and ability execute and per-~ form the duties required of me as curector, member of """  , ,i, , , , •• , , , , , , , , ,  committee, auditor, ofticer, other employee (as the case'  be) otthe, small lndustries development bank of india and which tf'  1 i'8l1ne ·to· the oftice or poawoil held by me in or in relation to 10 aileitci,bldk  ,i~j_:_lal'" i further declare that 1 will dot colliinunicate or allow to be communicated to any person not legally entitled thereto any information relating to the afi:alcs of the small industries developmellt bank of india or to the aftairs of  any penm  b,avidgl8dy 'dealaing with the said bank, nor 15 will 1 allow any such person $e u,ect ,or have accesa to any books or document belonging to or in the possession of the said bank relating to· ttbaai,wlot ide aid bim,iq -or tbeb1l8iness of any person having any dealing with the said bank (signature) signed before me  'the second schedule20  ~el section 53) ami:lmjollll't or certain dactments part ia:mbimmkn'lll to· tbi: ~ bmz! 01' india act, 1934 (2 or 1934) 25 l m1 mttion 2,after clause ~e), insert the following clause, namely:-'( el)"small industries bank" means the small industries development bank of india established under section 3 of the small industries development bulk, of india act, 1989;' 2 in ~ ,1~ 30 (a) in clause (4g), aftet th~ words "the reconstruction bank", idaeti itbe wiorda "gt, ,~, 1 small industries bank" i (b) in clause (4h) i after the wotds "the development bank", insert the words "or·tbe small indutrie bank"; (el in clause (+f), for the words "or the reconstruction bank", substitute the words "the reconstruction bank or the small industries bank"; i (d) in clause (12b), for the words "the reconstruction bank", substitute the words "the reconstruction bank or the small industries bank" 40 3 in section 42, in sub-clause (ii) of clause (e) of the explanation to sub-section (1), after the wql'ds "or from the national bank", insert th~ words "or from the small industries bank", 4 in section 46c, in sub-section (3), indauaea (c) and (d), after the words "or the reconstruction bank" wherever they occur, idmrt the worda "ar the small industries bank"  part it ajw:ndment to the lndus'l'rlal d!sputes act, 1imll· (14 of 1947)in section 2, in clause (bb), after the words "the industrial dev lopment banlq of india," insert the words "the small industries dev~ ment bank of india established under section 3i of the small lwiuatdii development bank of india act, 1989," 10  part uti amendment to the banking b&gl1la1'ion ac£,1948 (10 or 1949) " 11 in section 5, after clause (n), insert the followmg clauae namalj:-r '( ni) "small industries ,bank" means the small industries 15 development bank of india established under section 3 of the small industries development bank of india act, 1989;' , 2 in section 18 in sub-section (1), in the explanation, in clause (a), in sub-clause (ii), after the words "or from the national bank", insert bank", insert the words ", the small ljildustries bank," 20 3 in section ma, in sub-section (3), after the words "the national bank", insert the words ",the small; industries bank" 4 10 section 36ad, in su})section (3), after the words l'the national bank", insert· the words ",the small industries bank," 5 in section 56, in sulh:lause (ii) 0:( clause (a) ,of the e~ 2s under clause (j), after the words "the national bank", insert the word8 i, the small industries bank,"  part,iv amendment to the paykbnt of bonus ai!i, 1_(21 01' 1965) /, 30 in section 32, in clause (ix) ,after sub-clause (f), the following subclause shall be inserted, namely:-"(fa) the small industries development bank of indiaestablished under section 3 of the small industries development bank of india act, 1989" i' '5  statement of objects and reasons ihere has been a long standing demand of the tiny and small industries that there should be an apex bank for them the intention of the gover~ent to establish the' small industries development bank of india tcf strengthen and broad-base the existing institutional arrangements to ~eet the requirements of industries in the small-scale sector was made cl~ar in the budget speech for the year 1988-89 hnce this bill 2 in this bill, it is proposed to establish a statutory corporation known as 'the small industries development bank of india', wholly owned subsidiary of the industrial development bank of india, to function as principal financial institution for the promotion, financing and development of industry in the small-scale sector and to coordinate the functions of the institutions engaged in the promotion, financing or develbplng industry in that sector lt is also proposed that the bank would gtve special attention to the export oriented industrial units in' that smtbr  3 the resources of this bank will mainly comprise of contributions from 'the industrial development bank of india in the form of loans and mares and may' include' market borrowings and short-term and longterm funds from the reserve bank of india and loans from the governlileili of india  i~ is alsq proposeq' to transfer to this bank the business y,sets: and liabilities, rights, interests, privileges and obligations of the l~trial development bjulk of india relating to the small industries development fund and the national equity fund   'nbw dahi; s b chavan the 2nd may, 1989 clause 2 seeks to define certain expressions used in the bill ~  expression "industrial concern in the small-scale sector" has been defl:o~ as an industrial concern within the meaning of section 2(c) of the i~cs~ trial development bank of india act, 1964 and which is regarded •• small-scale undertaking for the purposes of the industries (develop~"!lt and regulation) act, 1951 the definition is comprehensive enough to cover all forms of small-scale industdal units or enterprises lne4ulng those in the tiny and decentr~d sector ola'll8e 3 provides for the establishment of the small industries development bank of india and establishment of its offices, branches and agencies ' ': i clause 4 provides fo:r the authorised capital ot  the small lndua~! development bank its authorised capital will be ra 250 croll8l,w, may be increased up to rs 1000 crores by the development bank  issued capital will initially be subscribed by the development bank ' clause 5 provides for the management ,of ·the smauiadutrle8 i~ and for the vesting of the affairs and b\1sidessof t1lat bank ill aboutlj4 directars : clause 6 provides for the constitution of the board of i>ireetors ·headed' by the chairman the chairman of the developemnt bank, if he s - whole-time chairman and if he is nota whole-tbne chainnan, the m8dai- ing director of that bank, shall be the ex o1jicio chairman of the proposed bank, in addition there will be thirteen directors, two representing the central government, one representing the reserve bank and ten other from various institutions and fields the managing director of the small industries bank shall be the ex of!icio director it also provittds ,far'jthe term of office of, and the fee and allowances payable t,' the ,dlrectort~ clause 7 provides for the appointment of the managing director of the small industries bank and his powers and duties it also provides for the salary and allowances payable to him and other conditions of service including tbe term of office clause 8 provides for the disqualifications to hold the ofrce of, or cod-tinue as, di:rector ' cla'u - '~e 9 provides for the vacation of the oftlce and resignation by the directors ' ,, :' clause 10 empowers the development bank to appoint a person to act as the managing director in case of, casual vacancy in the office of the managing director i clause 11 provides for the meetings of the board and the manner in which such meeting! are to be conducted ,' •• ,  "  :'1 - :~'""·'i· , - ',  '''i ''-: ' ,/,",,; l'~ i!"~rs' tae,boud to qolj8iitute vadoua, ,cqmmitieeaand provides far the fee and, allowances payable ) ,to the ,memberseif 1m c~uunittees clause 13 provides for the business whioh, lule' small, :lddpakift balik shall transact the business which is at present being transacted by·the·~velopmenti'bmk relating to irtdastr-ies in the 1ftiudl-scale'aec\or, shin' be trlt1sac~d by·the proposed' bank inter alia·ft'anting loans-and savances' to 8j1y'"state-1rinancialcofporation, etc  bank,- etc'by way _·af refinancing of any' loell'ls  or  udvances " granted to' 'indttstrial eoncern':ld tbe ~,jl scale sector accepting discounting or"rec:discounting ot bills of '~ehange,··etc ii18de h¥jdduatrlal conc~ in the small scale sector "1jimmbijig,tc!j£!'drehisij18 'a4loeks, lah8l'es,boncis,·or debentures of  , state financiallcorporatkm" e1c '"tjnm:tng·luatls· a11d arn11ees' to~-bidustrial eoncern in'ihe  8dii!f1l··wale sector guaranteeing the obligations of the schedule banks, etc in contj~b!i wllth 4be tsmleliof ::·"~ks,j -  illg~ad~~jto·;id1ylindublria1 oon~ern in the small"scale ~r planning, promoting and ,developing industries in small saaleihct j -,=l,aue 14 ,provicies for the loans to the small industries bank by the €jeatr~l government   £!mt:iiltf! 15 empawers !the !small ,induswies bank to issue andsell ,boada dl!~,,·etc,· with'·or·'without guarantee of the central, qovemmemt and to borrow money from the reserve bank or from the developmetlt :am or: suah other authority or organisation, etc, as may be approved by the, devalppment bank it further provides that the central government may 011 a request being made by the bank, guarantee the bonds and d~r1tlttes' ·isltnedby' it clause 16 empowers the small industries bank to invest its funds in f:!w!' ~i4!s~'" ~ qmettrlment or·in depoeits 'with the--bcheduled j:jadlrb clause 17 enipowers the small industries bank to transfer its rights attd mt8ft!litt!f'inrelation to auy;joanoradvances clause 18 empowers the small indttstriesbank to acquire the rights and interests of any public financial institution   c1au,se 19 empowers the small industries bank to borrow amounts in fprt;ign curamcy with the previous consent of the central government and the develpproent bank it further provides for giving guarantee by the central government far such loans, if necessary : cjajue ~' enables the small industries bank to receive gifts, grants, etc, from ~ent- ,or 'any- other sources cllcl'u$e 21 deals with the establishment of small industries development asswance fund clause 22, specifies the nature of t1ae amount, cll8dited, -to the ; small blduatries development assistance fund clause 23 provides the manner of utiliaation of the small industries development assistmnce fund clause 24 specifies the amounts to be debited to the small industries development assistance fund clause 25 deals with the preparation of the baladce-sheet and account of the small industries development assistance fund and the audit thereof it also provides for laying before each house of parli~t the copy of the balance-sheet, accounts and audit report, etc clawe 26 deals with the manner of closing and winding up of the sm~ industries development assistance fund clawe 27 provides that the receipts of the small industries bank other than those credited to the smalllnduatries development asailtadat fund shall be credited to the smalllndustries general fund clause 28 deals with the preparatioll of balance-sheet and accounta of the small industries bank clause 29 provides for establishment of a reserve fund to which  nain amounts of annual profit to the bank shalj be credited clawe 30 deals with the audit of the accounts of the small indusiriea bank it also provides for laying of the auditors' report and the l'eport of ita working before each house of parliament clause 32 provides for transfer of assets, liabilities, rights, interests, privileges, obligations of the development bank relating to the small industries development fund add the national equity fund to the small industries bank and vesting of such business, etc, in the smallldduatriea bank , iu clau8e 33 deals with the transfer of staff of the development bank to the proposed bank with an option to come back to the development bank clause 34 deals with the delegation of powers to any director or com-mittee or any officer or other employee of the small 'industries bank clous8 35 provides fq1: furnishing of returns as may be required, by tbe central government or the reserve bank or the development bank clawe 36 provides for the obligations of directors, members of the committee, officers and other employees of the bank as to fidelity and secrecy i clauae 37 provides that the acts or proceedings of the board, etc, shall not be questioned on the ground of any vacancy or defect in the constitution of the boar:i or on the ground that a person is disqualified to be a director or any defect in his appointment as such director clause 38 empowers the small industries bank to take over the management or possession of any industrial concern in the smaltscale sector which makes any default in repayment of loan, advances, etc clause 39 empowers the small industries bank ta> seek assistance of the chief metropolitan magistrate or the district magistrate for getting the order under clause 38 enforced ezau,e 40 empowers the small industries bank to call for repayt1ledt before the agreed period under certain circumstances cl4uae 41 provides for th~ special provisions for enforcement of claims by the small industries bank in high courts clause 42 enables the small industries bank to have free access to the reeorda of any institution which seeks to avail of any credit facility from & l '  cl4un 48 ensures that the validity of any loan or advance granted by the small industries bank shall not be called in question ( clause 44 provides that every director shall be indemnified by the small industries bank against all losses, etc, incurred by him except such as are caused by his own wilful act or default clcjuse 45 protects the directors, omeers, etc, for any action taken in good faith ' clawe 46 seeks to provide for nomination by depositors, holders of bonds or securities kept with the small-scale industries clause 47 provides that the arrangement with the small industries , bank for appointment of directors of any industrial concern shall prevafi ad such appointment shall be valid and e1!ectlve ,  clauses 48 and 49 seek to regulate the appucation of the bankers' b~ks evidence act, 1981 and" to a limited extent, the banking regula  tlon act, 1949 to the small industries bank clame 50 seeks to exempt the small industries bank from income-tax and other direct taxes at income, profit or gains on the lines of sbnilar exemption given to the development bank clause 51 provides that the small industries bank shall not be placed in liquidation save by an order of the central government clame 52 empowers the board, with the previous approval of the development bank, to make regulations for the purposes of giving effect to the provisions of this act it further provides that every regulation made shall be laid before each house of parliament clame 53 provides for the amendment of the reserve bank of india act, 1934, the industrial disputes act, 1947, the banking regulation act, 1949 and the payment of bonus act, 1965 clause 54 empowers the central government to remove any difficulty in giving effect to the provisions of this bill / clause -1 ',of the bu1' provides that the- central (lqvernmeut  after due appropriation made by parliament by law in this behalf, advance  to the small industries bank an interest-free loan of such amount as may be1i  ed· b,yl\he-,cantital ·g(}vemment' atid a;ffurih  r~ gd~&h terms and conditiona'ti'may,be' agreed,up6n' 14j 1!sinoc,poii!ih:ite!a,lbf stage to visualise the a~ounts that the central govel1lm~nt ~ay mw avahabn' to tli~!' 'small industries development sank ot 'ind& untmt 1lfe , a~a:ici"cl8use ' , \' ', 2 sub-clause (2) of clause 15 provides that the central government ~;y, in certain circumstances guarantee the :l'epaym8lltofprilacip~~ the payment of interest in respect of bonds and debentures issuejb, tbf, small industries bank sub-clause (2) of clause 19 provides for a similar g1ltrfa~;\ if n~ssaty, in re!ij~' of loan 'ratsedby th~ shtli1' 'illditttt! res bank in foreign currency the ~tent' ~ of this contfngent"l lilibtilft, dej?ends upon the size of the market borrowings, 1be ejj:a~ 8lqqwlt cabnbt 'be visualised at this stage under the aforesaid cia_ 3 clause 19(4) (b) (iilf pf'o\tt~ that; ift' cermnl,~ft~l ~ , loss mf~nnec~ion with the borrowing of the foreign c~~ ~sub-cwe (11' of t1iat clause shall be reimbursed by the central'governlden~ 1fiit  ~tee tnvol~s u&biffty of a contingent nature and 'the exf»ult 'of ,uc1i l;ability for any establishment· known only aft~r the bank start{talie; t~ca:dng 4i !'to other provision of the bm involves any other expencmure," recurring or non-recurring, out of the consolidated fund of lnd!8 clausedl!pnmdea xtratthe smau:lndubtriea· dwelopjll8l'ltiaaiitistance fund which will be held and marutaed by the small industries bank may be wound up, if necessary, in stich manner as the central government may, by order direct clause 51 makes similar provision is regards the ~rfndu8~ries, bank 2 clause 52 empowers the board of directors of the smalt"imtt1ittilj bank to make degulation with the previous appl'oval of the-development bank for matters relating to the times and places of the meeting$, of tpe ~dj a!fttat1te preeedure' to be f611tiwed'in' such meetings tht f6rtn· ahd manner in which tl1'ebalimce-:sheet of the small industrie' developmettt" assistance fund and the small industries bank shall be prepared, and tbe manner in which nominations may be made in terms of clause 46 :jr"~~,tb\ matter" withrespeat to ,which ~egulatiors m or~rlq~ t4p, ~~-w:ovisici~: are sought to be made are, ma~ters of ~~ or det~pr inat~rs _pl ,~p~t of  which it is not practicable to') __ express provisions in the legislation itself, the delegation of legislative pemr "  a b01'inar:chanoter _, ~ 1  i ,  j ~ - r " - i· "', i l __ _  ~  brraacts from tid: rbs1!:rve bank of india act, ibm(2 of 1934) - - - - - i in this act, unless there is anything repugnant in the subject' ol "coqtat, - - - - - 17 the bank shall be authorised to carry on and transact ~ aa,vertd kinds of business hereinafter specified, namely:-- - - - - (40) the making of loans and advances to, and the purchasldg of bonds and debentures of the development bank or the exim bank or the reconstruction bank out of the national industrial cred1t "(long term operations) fund established under section 48c; (48) the making to the deveropment bank" of loadl add advances (a) repayable on demand or on the expiry of fixed peri0d8 not exceeding ninety days from the date of such loan or advance against the security of stocks funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in torce in india; or " (b) against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transaetions bearing two or more good signatures and maturing within five years from the date of such loan or advance; (4-1) the making to scheduled banks, the development bank, the exim bank or the reconstruction bank, the industrial finance corporation and any other financial institution as may, on the recommendation of the bank be approved in this behalf by the central government ot loans and advances repayable on demand or otherwiae and against such security and on such other terms and conditions as may be approved in this behalf by the central board tor the purpose ot ena"oling s'uch banks, or financial institution, as the cue may be, to purchase foreign exchange from the bank for the purpoi8 of financing the import of capital goods or for such other purpoaes as may be approved by the central government; - - - - ! (12b) the making of loans and advances in foreign currenclee to 1cbedu1ed banks, the development bank, the exim bank or ~ reconstruction bank, the industrial finance corporation, any state financial corporation and any other financial institution 81 may, on the recommendation of the bank, be approved by the central government and on such terms and conditions as may be spedfted by the central board in this behalf, against promissory note of iuch bank or financial institution, as the case may be: ,' ~  provided that the borrowing bank or financial institution, u the case may be, furnishes a declaration in writing to the effect that-(0) it has made loans and advances in foreign currencies for financing international trade or for the import of capital goods or for such other purposes as may be approved by the central government; and (b) that the amount of loans or advances so made and outstanding at any time will not be less than the autatandidg amount of the loans or advances obtained by it from the badk; - - - - - 42 (1) every bank included in the second schedule shall maintain with the bank an average daily balance the amount of which thajl not be less than three per cent of the total of the demand and· time liabilities in india of such bank as shown in the return referred to in sub-section (2): provided that the bank may, by notification in the gazette of india increase the said rate to such higher rate as may be specified in the notification so however that the rate shall not be more than fifteen per cent of the total of the demand and time liabilities e:rplanotion-for the purposes of this section,- ~ ,( (a) "average daily balance" shan mean the average of the balances held at the close of business on each day of a fortnight; - - - - - (c) ''liabilities'' shall not include-(i) the paid-up capital or the reserves or any crecltt balance in the profit and loss account of the bank, (ii) the amount of any loan taken from the bank or from the development bank or from the exim bank or from the reconstruction bank or from the national bank 260f 1962 (iii) in the case of a state co-operative bank, aljo any loan taken by such bank from a state government or from the national co-operative development i corporation es1abil1sbed under the national co-operative development corporation act, 1962 and any deposit of money with such bank representing the reserve fund or any part tl)ereof maintained with it by any co-operative society within its area of operation; - - •• - - die' (1) ,                    -                             -                                      -                                              , ," '~)'-'the am:ount in the said fund shall be applied p1the'~:only ~]:heffouowing objects, namely:-                                                   :,1 ~ :                                                                            -                                                                                                                                            -                                                                                                                                                                                                              -                                                                                                                                                                                                                                                                               - matiooal idclultrial credit (loda term operatioal) fund        (c) the making to the exim bank or the recomtruction'lnk  as the  case may be, of loans and advances for th!l p~_ of any nl!ntsttress "bf the' exlm bank or the :reconstruction bmk, u ~ cue ·~inly' be;                                                                        ••• ',              (d) the purchasing of bonds and debentures issued by the ex1m  '11atl3't or' the' reconstruction bank, as the case may be                                            -                                                                 -                                                                                      -                                                                                                          -  "extract from the in1;)ustrial dispptes act, in?(14 of lp47) '0'  - - - - - debitton 2 in this act, unless there is anything repugnant in the 8u"ject or 0;1 eoimttt~    , :,1 '  '  - - - - 100f 1,, :"," /,j  , ',' ·(lxj) "banking eompany":means abankidg complldy 18  dii section 5 of the banking companies act, 1949, haviiq) bflllit:wnor other establishments in more than one state, and includes the nijlpor1import bank of iridia, the industrial recodbtnjcfden :'ank '  ,: of ibdta,: the industrial development bank of india, the~relmnerbld1k !l of 1970 ',of of,~dia, the state bank of -india, a correspondinfvnar lbaakil"" stituted under section 3, of ~he ban 1dng companies (jirqaislddn mad transfer of undertakings) act, 1970, a corresponding new bank constituted under section 3 of the banking companies (aeqtirtflon· and transfer of undertakings) act, 1980,· and any· subsidiary· bank as ~(un ute state' bank of· india (subsidiary· bank,) &:tj,t959j 4001 1'10 38 of 1''' - - - - - 'hi m,o! _  extr~-from' 'rhe banktng 'regula'non'a~, 't~9 (10 of 194\) 'ji i,t in,:,  "/\ , r:"  - • - - ~ "n, l, \ r interpretation i " " ",i'~' ulis:m-t, [,unless there is anything i'epugnantin 4he-:abject or context,-- - - - - 26 of 1881 18 (1) every banking company, not being a scheduled bank cash reshalj maintain in india by way of cash reserve with itself or by serve way of balance in a current account with the reserve bank or by way of net balance in current acco'unts or in one or more of the aforestlid 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 fridays 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 day expzanation-in this section, and in section 24,-(4) "liabilities in india" shall not include-- - - - - (ii) any advance taken from the reserve bank or from the dewlopment bank or from the exim bank or from the recolwtructon bank or from the national bank by the banking company; - - - - - 34a (1) - - - - - j)roduelion of document of coafidc lial nature (3) for the purposes of this section "banking company" includes the reserve bank, the development bank, the exim bank the reconstruction bank, the national bank, the state bank of india, a corresponding new bank, a regional rural bank and a subsidiary bank - - - - -  part lib prohibition of certain activl'nbs in relation to banking companiesj6ad (1) - - - - punish - menta fer certaib :ldivities in relation &0 bankinl' ~'on'f'adie, (3) for the purposes of this section "banking compqy" includes the rese>t've bank the development bank, the exim bank the reconstruction bank the nati~nal bank, the state bank of r4ia, a corresponding ntw bank, a regional rural bank and a 'subsidiary buk  part v the provisions of this act, as in force tor the time being, shall apply to, or in relation to, co-operative societies  they apply to, or in relation to, banking companies subject to the following modifications namely:-ad to  ppiy to co-operati¥c societiel 5~to :e  (j) for section 18, the following section shall be substituted namely:-cashrc sei'ft "18 (1) every co-operative bank, not being a state c0-operative bank for the time being included in ute ~nd schedule to the reserve bank of jndia act  1934 (hereinafter referred to as a· "sched-uled state co-operative bank"), 'ihall maintain in india by way of cash reserve with itself or by  way ofba~ce in a ,current account with the reserve bank: or the state co-operatlve bank of the· state concerned or' by way of net balance in current accounts or, in the cue of a primary oo-operative bank with the central co-operative bank of the district concerned, 'or in one or more of the aforesaid ways, a sum equivalent 10 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 15th day of every month a return showing the amount so held on altemate fridays during a month with parti-culars 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 c10se of business on the preceding working day 26 ()f 1881 explanation-in this section and in section 20{- 2 of 1934 - (a) "liabilities in india" shall not include-   ' (ii) any advance' taken from ii' state government, the reserve bank, the development bank the exim bank, the reconstruction bank, the national b~nk or from the national co-operative development corporation established under section 3 of the national cooperative development corporation act, 1962 by the co-operative bank; - - - -  extracts from the payment of bonus mr, 1966(21 or 1985) - - -  - 32 nothing in this act shall apply, to- - -  - act not to apply to certain eluaes of employees  it billto establish the small industries development bank of india as the principal financial institution for the promotion, financing and d~ lopment of industry in the small-scale sector and to co-ordinate the functions of the institutions engaged in the promotion, financing or developing industry in the small-scale &ector and for matters connected therewith or incidental thereto (shti s b chaoon, miftiater of fift41rce) 