 arrangement of clauses chapter i plul:l:dnnary clauses1 short title and commencement 2 definitions  chapter u transfer of the undertakings 01" bxib'!'imo banks3 establishment of corresponding new banks and business thereof 4 undertaking of existing banks to vest in corresponding new banks 5 general effect of vesting  chapter iii payment and determination or compi:n8nrion6 payment of compensation 'i constitution of the tribunal 8 tribunal to have powers of a civil court 9 procedure of the tribunal  chapter iv management of corusponding low banks10 head office and branches 11 corresponding new bank to be guided by the directions of the central government 12 advisory board to aid and advise the custojian 13 power of central government to make scheme  chapter v miscellaneous clauses14 closer of accounts and disposal of prollts 15 removal from offlceof directors, etc 16 obligations as to fidelity and secrecy· 17 custodian to be public servant 18 certain defects not to invalidate acts or proceedings 19 indemnity 20 references to existing banks on and from the commencement of this act 21 dissolution 22 power to make rules 23 rules and schemes to be laid before parliament 24 power to make regulations 25 amendment of certain enactments 26 removal of difficulties 27 repeal and saving the first schedule the second schedule the third schedule bju no 70 or 1969  the banking companies (ac9uisition and transfer of undertakincj's) bill i969 a billto provide for the acquisition and tramfer of the undertakings of certain banking companies in order to serve bette'r the needs of development of the economy in conformity with national policy and objectives and for matters connected therewith or incidemcli thc1'eto be it en~cte'd by parliament in the twentieth year of the republic of india as foilows:-  chapter ipreliminary 5 1 (1) this act may be called the banking companies (acquisition short title and transfer of undertakings) act, 1969 :~mence de1fnitionll (2) it shall be deemed to have come into force on the 19th day of july, mento 1969 2 in this act, unless the context otherwise requires,-(b) "existing bank" means a banking company specified in column 1 of the first schedule, being a company the deposits of which, as shown in the return as on the last friday of june, 1969, furnished to the reserve bank under section 27 of the banking regulation act, 1949, were not less than rupees fifty crores; s hi ef 1m • (c) "corresponding new bank", in relation to an existing bank, means the body corporate specified against such bank in column 2 of the first schedule; (d) "custodian" means the person who becomes, or is appointed, a custodian under section 10; 10 (e) "prescribed" means prescribed by rules made under this act; (f) "tribunal" means the tribunal constituted under section 7; (g) words and expressions used herein and not defined but defined in the banking regulation act, 1949, have the meanings is respectively assigned to them in that act i of im9  chapter ii transfer of the undertakings of existing banks3 (l) on the commencement of this act, there shall be constituted such corresponding new banks as are specified in the first schedule 20 j:stabllilhment of correapondlnj( n~ banks and business thereof (2) the paid-up capital of every corresponding new bank constituted under sub-section (1) shall, until any provision is made in this behalf in any scheme made under section 13, be equal to the paid-up capital of the existing bank in relation to· which it is the corresponding new bank 25 (3) the entire capital of each corresponding new bank shall stand vested in and allotted to the central government (4) every ~orresponding new bank shall be a body corporate with perpetual succession and a common seal and shall sue and be sued in its name 30 (5) every corresponding new bank shall carryon anj transact the business of banking as defined in clause (b) of section 5 of the banking regulation act, 1949, and may engage in one or more forms of business specified in sub-section (1) of section 6 of that act, and shall have power 10 of 1949 to acquire and hold property, whether novabie- 01' immovable, for the 3s purposes of its business and to di3pose of the same (6) every corresponding new bank shall establish a reserve fund to which shall be transferred the share premiums and the balance, if any, standing to the credit of the existing bank in relation to which it is the corresponjing new bank, and such further sums, if any, as may be transferred in accordance with the provijions ·of section 17 ·of the bank- r:40 ing regulation act, 1949 18 of 1949 4 on the commencement of this act, the undertaking of every existing underbank shall be transferred to, and shauvest in, the eorrespondidg aew  tfaki~g  b--1 0 existing - banks to vest in correspondlnr new bank • 5 (1) the undertaking of each existing bank shall be deemed to g3n~ralf 5 include all assets, rights, powers, authorities and privileges and all ~e~k~ property, movable and immovable, cash balances, reserve funds, investments and all other rights and interests arising out of such property as were immediately before the commencement of this act in the ownership, possession, power or control of the existing bank in relation 10 to the undertaking, whether within or without india, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing bank in relation to the undertaking ]5 (2) if, according to the laws of any country outside india, the provisions of this act by themselves are not effective to transfer or vest ·any asset or liability situated in that country which fotins part of the undertaking of an existing bank to, or in, the corresponding new bank, the affairs of the existing bank in relation to such asset or liability :w shall, on and from the commencement of this act, stand entrusted to the chief executive officer for the time being of the corresponding new bank, and the chief executive officer may exercise all powers and do all such acts and things as may be exercised or done by the (xisting bank for the purpose of effectively winding up the affairs of that bank (j) the chief executive officer of the corresponding new bank shall, in exercise of the powers conferred on him by sub-section (2), take all such steps as may be required by the laws of any such country outside india for the purpose of effecting such transfer or vesting, and in connection therewith may either himself or through any person authorised by 30 him in this behalf realise any asset and discharge any liability of the existing bank (4) notwithstanding anything contained in sub-section (2), on thp commencement of this act, no person shall make any claim or demand or take any proceeding in india against any existing bank or 35 any person acting fn fts name or on its behalf except in so far as may be necessary for enforcing the provisions of this section or except in so far as it relates to any offence committed by such person (5) unless otherwise expressly provided by this act, all contracts, deeds, bonds, agreements powers of attorney, grants of legal 40· representation and other instruments of whatever nature subsisting or having effect immediately before the commencement of this act· and to which the existing bank is a party or which are in favour of the existing bank shall be of as full force and effect against or in favour of the corresponding new bank, and may be enforced or acted upon as 45 fully and effectually as if in the place of the existing bank the corre,,-ponding new bank had been a party thereto or as if they had been issued in flf,vpur of the corresponding new bank (6) if, on the date of commencement of this act, any suit, appeal or other proceeding of whatever nature is pending by or against the existing bank, the same shall not abate, be discontinued or be, in ~y way, prejudicially affected by reason of the transfer of the undertaking of the existing bank or of anything contained in this act, but the 5 suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corresponding new bank (7) nothing in this act shall be construed as applying to the assets, rights, powers, authorities and privileges and property, movable and immovable, cash balances and investments in any country outside 10 india (and other rights and interests arising out of such property) of any existing bank operating in that country if, under the laws in force in that country, it is not permis,ib1e for a banking company owned or controlled by government, to carryon the business of banking there  chapter iii payment and determination of compensationpayment of compenaation 6 (1) the central government shall give compensation to each existing bank for the acquisition of its undertakidg and such compeasauon shall be detennlned in accordance with the principles speelfted in the second schedule and in the madder hereinafter set out, that is 20 to 8&y,-(a) where the amount of compensation can be fixed by agreement, it shall be detennlned in accordance with soch agreement; (b) where no such agreement can be reached, the central government shall refer the matter to the tribunal within a !lerioc1 of 25 three months from the date on which the central government and the existing bank tau to reach an !tgreement regarding the amount of compensation (2) notwithstanding that separate valuations are calculated under the principles specified in the second schedule in respect of the several 30 matters referred to therein, the amount of compensation to be given shall be deemed to be a single compensation to be given for the undertaking as a whole (3) the amount of col11jpensation determined in aceotdance with the foregoing provisions shall be paid to each existing brnk in promissory 35 notes or stock certificates of the central government, issued and repayable at par, and maturing at the end of ten years from the date on which the compensation is paid and carrying interest at the rate of four and - half per cent per annum: provided that where the amount of such compensation is not a mnl- 40· tipje of one hundred rupees, any excess over the highest such multiple shall be paid by a cheque drawn on the reserve bank '7 (1) the central government may, for the purposes of this aet constitute a tribunal which $haij consist or a chairman aud two other , memben constitution of the tnbunal (a) the chairman of the tribunal shall be a person who is, or hac: been, a judge of a high court or of the supreme court, and, of the two other members of the tribunal, one shall be a person who, in the opinion of the central government, has had experience of banking and the other 5 shall be a person who is a chartered accountant within the meaning of 88 of 1941 the chartered accountants' act, 1949 (3) if, for any reason, a vacancy occurs in the office of the chairman, or any other member of the tribunal, the central government may fill the vacancy by appointing another person thereto in accordance with 10 the provisions of sub-section (2) and any proceeding may be continued before the tribunal so constituted from the stage at which the vacancy had occurred (4) the tribunal may for the purpose of determining any compensation payable under this act, choose one or more persons is having special knowledge or experience of any relevant matter to assist it in the determination of such compensation b the tribunal shall have the powers of a civil court, while trying tribunal 5 of 1801 a suit under the code of civil procedure, 19'08, in respect of the follow- ~::~ ing matters, namely:-of a civu court 20 (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on ailidavits; (8) issuing commissions for the examination 01 witnesses or 2s documents t (1) the tribunal shall have power to regulate its own procedure procedure of the (2) the tribunal may hold the whole or any part of its inquiry in tribunal camera (3) any arithmetical or clerical error in any order of the tribunal 30 or any error arising therein from an accidental slip or omission may at any time, be corrected by the tribunal either of its own motion or on the application of any of the parties  chapter iv management of corresl'qnding new banks3' 10 (1) the head office of each corresponding new bank shall be at h= d such pl-ace as the central government may, by notification in the official ~aneh~ gazette, specify in this behalf, and, until any such place is so specified, hall be at the place at which the head office of the existing bank, in re-_ iation to which it is the corresponding new bank, is on the date of the com-40mencement of this act, located (2) the general superintendence and direction of the affairs and business of a corresponding new bank shall until any provision to the contrary is made under any scheme made under section 13, vest in a custodian, who shall be the chief executive officer of that bank and 4s may exercise all powers and do all acts and things as may be exercised or done by that bank (j) the chairman of the existing bank holding oftlce a such im  mediately before the commencement of this act, s?all be the custodian of the corresponding new bank and shall recelve the same emoluments as he was receiving immediately before such commencem~: s provided that the central government may, if it is oi opinion that it is necessary so to do, appoint any other person as the custodian of a corresponding new bank and the custodian so appointed shall receive such emoluments as the central government may specify in this behalf (of) the custodian shall hold office during the pleasure of the centralia government 11 (1) every corresponding new bank shall, in the discharge of its function, be guided by such direction in regard to matters of policy involving public interest as the central government may, after consultation with the governor of the reserve bank, give is correlponding new bank to be guided by the directions of the central government (2) if any question arises whether a direction relates to a matter of policy involving public interest, it shall be referred to the central government and the decision of the central government thereon hall be final advisory board 12 (1) there shall be an advisory board to aid and advise the 20 custodian in the discharge of his duties: to aid and adere c!fe provided that the advisory board shall be dissolved on the constituuat ian  tion of a board of directors in pursuance of a scheme made under clause (b) of sub-section (2) of section 13: provided further that the central government may, if it io of opinion 2s that it is necessary so to do, dissolve the advisory board at any other  time (2) the advisory board shall consist of such persons as the central government may, by notification in the official gazette, appoint 13 (1) the central government may, after consultation with the 30 reserve bank, make a scheme for carrying out the provisions' of·  tbis act power of central government to make icbem4 (2) in particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:-35 (a) the capital structure of the corresponding new bank, 80 however that the paid-up capital of any such bank shall not be in excess of rupees fifteen crores;  (b) the constitution of the board of directors, by whatever name called, of the corresponding new bank and all such matters in eon- 40 nection therewith or incidental thereto as the central government: may consider to be necessary or expedient; (c) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this act (3) the central government may, after consultation with the reserve 4s bank, make a scheme to amend or vary the scheme made under lubsection (1) m ~l) !very corresponding new bank shall· enie iti dooki to be ciolun cloaed a:'ld balazreed on the 31st dy ot decembt!r of ech year dud'ibau of ac-s appomt, with· the prev10ua approval gf the reael'ft bank, auc:utors tor :!rtl the audit fif itt aeeounts :jlp08al profits (2) !j\'ery auditor of a correspoiiding new bank shall be a persoii who is quallfied to act as an auditor of a company tiiic1er scclipii226  of uie 1 of 1858 companies act, 1956, and shall receive such refuunera'tlon as the reserve 10 bank may fix in consultation with the central government (,) bwry auciitor shad he supplied with a copy of the anduai balincea_ulciprofit a~ 10 accoullt tnd a list of all books kept hy t~ emftsponding new bank, and it shall be the duty ot tlt~ 8ucihtbr to e_1i1iile tile balance-sheet an:1 pro~t and loss account w~th the accounts a~4 vouchers is relating thereto, and m the performance at his duties, the auditor-(~) ,hall have at au reasenable times, aeeess to the books, accounts and ouler dcilcwnent& of the corresponding new bank, (11), may, at tl1eexpeqe of the corresponding new barak employ acqo~ or o~he, pejsoil,i to "t him in inv_~ wcb accounts, and ao (ic) may in relation to suoa 8c8oi1ik'~ _diide the qlltodian or 1g6' ~ of the alivisory botird or any ofticer or empioreeof the qpiteiiljollldiac aew bank (4) every auditor of a corresponding new bank shali make a report  tile' omtral ofrvel"ftliled upeft tbe aftftual balance-sheet· a!id accountl as iiad in e~ luch repon mall st  (d) whether, in his opinioil, the dalahce-sheet is  tun" ind' lair balance-sheet containing all the necessary pal'ttcullr ati8!is; pta· perl, dl'mva(,up-to'alt ti& edllit " tnt!·iilm-·felr vie, ofithe affairs of the corresponding new bank, and in c_ iva ha& ~ f&r any e:q»lmation or information, w~ether it has been siven 8ild whether it is ibtlsfactory; (b) whether or not the transactions of the correspon<fins new bimk, ~hbve'ceme tt; 1m notfet, haw beeft· wftl\iil:tbe powers at that &'ant; :hi (u)'i ~ 01' l10t the' mturas' recet"ed from t_ omce cd  __ of; tile egft'ebjrjadiag new babk' have bemfouncr adthlijate :fer' tile!  plidpoie cst· hi audit; (d) whether the profit and loss account shows a· tn,ae- balaftee of profit or loss for the period covered by such account; and 4p (e)" any othl!r matter wblcll' he con!llders should be broup,t to the" notk:e" of the central government i~ (s)' the report of the audltbt· 811a11 be ve~e'd, s~m' au6 tr~tted ' to tile central'government' iii deb i11i~ei' alll'lay tie p~~ (6) the auditor shall also forward a copy of the audit report to the corresponding new bank and to the reserve bank (7) after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is necessary under any law, or which are s usually provided for by banking companies, a corresponding new bank shall transfer the balance of profits to the central government 15 (1) every person holding office as chairman, managing or other director of an existing bank shall, on the commencement of this -act, be deemed to have vacated office: 10 removal from offtce of directors, etc provided that nothing in this sub-section shan be construed as preventing any existing bank from constituting a board of directors or appointing any managing or other director with a view to transacting the following business, namely:-(a) registration of the transfer or transmission of shares; is (b) arriving at an agreement about the amount of compensation payable under this act or appearing before the tribunal for obtaining a determination as to the amount of compensation; (c) distribution to each shareholder of the amount of compensation receivej by it under this act lor the acquisition of its under- 20 taking; (d) carrying on the business of banking in any country outside india if under the law in force in that country any bank, owned or controlled by government, is prohibited from carrying on the business of banking there; :2 s (e) carrying on any business other than the business of banking: provided further that such board of directors or managing or other' director may be appointed at a meeting of the shareholders of the existing bank convened-(i) in accordance with the provisions of section 169 of the com- 30 -pam' es act 1956 or 1 of 11118 , , (ii) by the central government, where the shareholders of theexisting bank have not convened such meeting (2) the central government may, if it is of the opinion that it is necessary so to do, authorise an existing bank to bear such reasonable 3s expenditure for discharging any of the functions referred to in clause (a), (b) or (c) of the proviso to sub-section (1) and may further authorise the corresponding new bank to advance any amount in connection therewith to the existing bank and any amount so advanced shall be recouped from out of the compensation payable to the existing bank 40 under this act - (3) save as otherwise provided in sub-section (1), all officers and other employees of an existing bank shall become, on the commence  ment of this act, officers and employees of the corresponding new bank: and shall -hold their offices  or services in that bank on the same terms 45 and conditions and with the same ,rights to pension, gratuity and other matters as would have been admissible to them if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and continue to do so unless and until their employment in the corresponding new bank is terminated or until their remu-s neration, terms or conditlons are duly altered by the corresponding new bank (4) for the persons who immediately before the commencement of this act were the trustees for any pengion, provident, gratuity or other like fund constituted for the officers or other employees of an existing 10 bank, there shall be substituted as trustees such persons as the central government may, by general or special order specify 14 of 194'1 (5) notwithstanding anything contained in the industrial disputes act, 19'47, or in any other law for the time being in force, the transfer of the services of any officer or other employee from an existing hank is to a corresponding n~ bank shall not entitle such officer or nny other employee to any compensation under this act or any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority 16 (1)' every corresponding new bank shall observe, except as obligations 20 otherwise required by law, the practices and usages customary' among as t'? bankers, and, in particular, it shall not divulge any information relating :n~1ity to or to the affairs of its constituents except in circumstances in which ,ecrecy: it is, in accordance with law or practice and usage customary among bankers, necessary or appropriate for the corresponding new bank to 25 divulge such information (2) every director, member of a local board or a committee, or auditor, adviser, officer or other employee of a corresponding new bank shall before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the third schedule 30 (3) every custodian of a corresponding new bank shall, as soon as possible make a declaration of fidelity and secrecy in the form set out in the third schedule 45 ot 186:> 1'7 every custodian of a corresponding new bank shall be deem¢ to  be a public servant for the purposes of chapter ix of the indian penal fous~odian 35 code public servant 18 (1) all acts done by the custodian, acting in good faith, shall, cert  notwithstanding any defect in his appointment or in the procedure, be dele:: valid not to !invalidate acts or (2) no act or proceeding of any board of directors or a local board proceedinp 40 or committee of a corresponding new bank shall be invalid merely on the ground of the existence of any vacancy, or defect in the constitution of~ such board or committee, as the case may be (3) all acts done by a person acting in good faith as a director or member of a local board or committee of a corresponding new' bank 45 shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or dil'qualitication or had terminated by virtue of any provision contained in any law for the time being in force: provided, that nothing in this ~ ahau ~ cwejtled to give wuifb to an)' act cione by a director or membe:r of··' 8,1ocal aopd oreoimjuuee 01' corresponding new bank after his appomtm~t bas been· s~·to e corresponding new bank to be invalid or to hve 1iel'm,inated indemnity 19 (1) every custodian of a corresponding new bank "nd' every s officer of the central government and of the reserve bank shall'be ~d:@~¥ by such bank against all losses and ex~' 2nses incqrr,d by ~,in o~ in relation ·to the discharge of bis duties excej;lt sucb is have bee!d: ""w;e<i by his owll wilful act or ~~ult, (2) a director or member of a local board or coj'qmittee of a corres- ii) ponding new bank:' shall not be responsible for any loss or expe11lje ~ to such badk by the i~ciency: or deficiency of the val~ of, ~ ~ to, anywoper,ty or securit)' acquireri of taken  on ljehalf of ~ ~spor¥iiog new bank, or· 1;iy t1;le ijlsolv~ or wrongful 3ct q{, aqy ~~ or debter, or by any:thiug dg~ ill or in relatiqll to the execu- 15 ~ ~of t:he du,ties ~ his offiee, unlesa sucb~ expen$~ ins1)jficienc:y 9r ~~y ws c:l~ toa,ny· wiuul act or 4efault on the pad of s\l,eb director or member =r  knvteierence to any ·existi»l· bank in ":1" 'n'~ 1iban this - ad, or· id  any contract or other iltlttlhnem' shall he- ,  ~ • ' a ao and , lji'iniac& totm con_podding new bdk i relemoa-j;,) it tile • rom"""'" mento! tbisact dliiojutlon zl (1)' notwithstanding anything contained in any other law for the time being in force, an existing bank shall, on such date as the central govei1imlllt may, by notiftcration in the ofitati' gazetr, speeify ilnthis ~" s1add dissolved :as (2) no provisiqq of-l~, ~latini to willding qp ot cqrppr,ij()jls ~j11 apply to a corresponding new bank and no correspontiing new bank shall be tn'aced in 'itq,uidationsave by order of the cl!ntral goverri1!lt!'nt bad in sucbrnanner as' it may direct • ••  ~:c (i) tp~ c~nttal government may, by notification in the official 30 ,~~~, majte su~h niles as it,,~ay think 'fit to clrry out-tbe'pl'ovimons of this act (2) in particular, and without prejudice to the generality of the foregoing powers, such rules may provide for all or any of the following macters, dajllely:-35 (a) the manner in which the business of the advisory a-ol'd shall be transacted and the procedure to be followed at the meettnp ~~reo~; (b) fetes and; iillowanees wbieh"maybe><p&i,d to'm~,of~ ue advitljry board<~orattenciing ·any··meeti()i{'itherbfl8'd!i)j\,of" ally 40 committee that may ,be· eonatituted by the; beui!i; (c) ·the formation of any committee whether"of the' 'adwlilory boi/m or' of· 'the eonellpond~g: ne,w bank, ~d the, ~~  of powen ancihfudctions ,tosuahcommittees;  '('oi"'tuhother~,~te;·,\vhkh4,~ tq be ofr mbj· ~ 45 pracribec1 ••• 4f1')' rule and every scheme made by the central government b=t,  ta6s aet bball be laid, as boon as may be, after it  made, :'lald before each house of parliament while it is in session fora total period ~r:-of thirty days which may be comprised in one session or in two successive mellt s sessions, and 1~ before the expiry of the session in which it is 10 laid or the session immediately following, both houses agree in making any mo'dific'ation in the rule or scheme or both houses agree that theru'le or sdleme'skoald ngt be made, the rule 01' scheme shau·thereafter ha've e1fect om,' in 1alc:'b· medtfted form or be of no effect, 88' tile' <oye may be; 80, 10' ~vel"j that tmy such modifieation or 'annulment shah be withdttt prejudice to the vaf!i~ty of m;thi1'lg previously done under that ruht or scheme, -88 the case blay be u (1) the board of directors of a corrcspotkiing new ba may, after power oq1'i'i'tatign wita·, tbc reserve bank and w:th the previous sanction of to ~ti ' is iju, central qovemment, make regulatio0'5, not inconsistent with the rea,""" ons pl'1wwora of this act and any rule or scheme made thereunder, to provide for,  an matters for, giving effect to the provisions of thjs act ~) in particular and wit1lout prejudice to the generality' of thtf foregoing power, the regulations may provide for all or any of the following 30' matters, namely:-(4) the powers, functions and duties of local boa\'ldsantf t"e8frictions, conditions or limitations, if any, subject to which they may be exercised or performed, the formation and constitution of local  commi  ,·aml' 'ccmimee  11floca1 board (including the number of 25 ' - ez:e'·of"uy 'sueij eomnmtee), thepewer6, -functions· and:duties aftm& <"'ciiirnittees,· th~, holding -ef meetings of  local committees and cc:aaittilell 'ofloctal :boardsastd, the ,conduct of buainessthereat; (b) the manner in which the business of the local board!lshall brtr8ldllcted ,-and ,·the ippoeedure in cormection therewith; 30' 35  (e)th'ede~gittion of'pbwers and' functions ot the board,()f'directors of' a corresponding new brnk to ·the general nlarag& cmrectol", 'ofilber or ot1ier employee of' that·, bank; (d) the conditions or limitations subject to which the egt'res-'pmuting- new ·-biidk ·may· appoint officers, advisers and other emplo--ywesrand'·lfjx! tileir-retauftel'a'ion and· other, terms and ·conjitions of -toe; (e) the dtlt:es ajlld' c!o!iduct"of ofticers, advisers and· &iller empld~of 'the eorrespondii1g new 'bar; (1) the establishment and ma;ntenance of superannuation, pen- siodj 'pft)vige!ltror-~oijaer' ftnlda for· the ,benefit -of officers or employees 40 !oirthe'~l'ile!lpqtlding~new-rbank or of th~ dependants of such omcez:s or~mp1oyees' and • thegranting of ·suoerannuation allowances, annui- til!8)lnd  ,enaieutpayable out of·sucb·,funds; (g) the conduct and d~ttee ;df':legal -proceebing,s"by 'or ~~  the cor'espqdjing new bank and the manner of s:gnlj~g pleadings, 4s (h) the provision of'a seal ftjrl the' icot'fe6pondill'g  '!lew ,k rui the manner ofewett of llts 'use'; it>' 111e- form1111r,r itird:merij1"whieh' 'contraet6 birding·o1l th~ corresponding new b~ may be executed; (;) the conditions and the requirements subject to which loans or advances may be made or bills may be d:scounted or purchased by the correspon:hng new hank; (k) the persons or authorities who shall administer any pension, provident or other fund constituted for the benefit of officers or em-5 ployees of the corresponding new bank or their dependants; (i) the preparation and submission of statements of programmes of activities and financial statements of the corresponding new bank and the )'eriod for which and the time within which such statements and estimates are to be prepared and submitted; and 10 (m) generally for the efficient conduct of the affairs of the corresponding new bank (3) until any regulation is made und  r sub-section (1), the articles of association of the existing bank and every regulation, rule, bye-law or order made by the exi~ting bank shall, if in force at the commence- 15 ment of this act, be deemed to be the regulations made under subsection (1) and shall have effect accordingly and any reference therein to any authority of the ex:sting ba,u shall be deemed to be a reference to the corresponding authority of the corresponding new bank  15 (1) in the banking regulation act, 1949,- 20 10 of im9amendment of certain enactments (a) in section ma, in sub-section (3), for the words "and any subsidiary bank", the words, figures and brackets "a corresponding new bank constituted under section 3 of the banking companies (acquisition and transfer of undertakings) act, 1969, and any subsidiary bank" shall be substituted; 2' (b) in section 36ad, in sub-section (3), for the words "and any subsidiary bank", the words, figures and brackets "a corresponding new bank constituted under section 3 of the banking companies (aequisition and transfer of undertakings) act, 1969, anti gny subsidiary bank" shall be substituted; 30 (e) in section 51, for the words "or any other banking institution notified by the central government in this behalf', the words, figures and brackets uor any corresponding new bank constituted under section 3 of the banking companies (acquisition and transfer of undertakings) act, 1969, or anv other banking institution notified 35 by the central government in this behalf" shall be substituted 14 of 1947 (2) in the industrial disputes act, 1947, in section 2, in clause (bb) , for the words "and any subsidiary bank" the words, figures and brackets "a corresponding new bank constituted undei' section 3 of the banking companies (acquisition and transfer of undertakings) act, 1969, and any subsidiary bank" shall be substituted 40 411 of 1949 (3) in the banking companies (legal practitioners' clients' accounts) act 1949, in section 2, in clause (a) for the words uand any subsidiary bank", the words, figures lind bracket<; "a corresponding new bank constituted under section 3 of the banking companiec; (acquirition and transfer of undertakings) act, 1969, and any subsidiary bank" shall be substi- 45 tuted 218 if any diftlculty arises in giving e1fect to the provisions of this act, removal of the central government may make such order, not inconsistent with thecwllculuee provisions of this act, as may appear to it to be necessary for the purpose of removing the diftlculty: s provided that no such power shall be exercised after the expiry of a period of two years from the commencement of this act aof w69 m (1) the banking companies (acquisition and transfer of under-reoeal takings) ordinance, 1969, is hereby repealed and savina (2) notwithstanding such repeal, anything done or any action taken, 10 meluding any order made, notification issued or direction given, under the said ordinance shall be deemed to have been done, taken, made, issued or given, as the case may be, under the corresponding provision of this" act c_ • = ------------------------------~----~~----,~--~~l bam' gi' ilmiia ~e4 cltotil"1i1 j3uk, 0i18tu bank of india limited bank 61 india punjab national bank limited; punjab national bank bank of baroda limited bank of baroda united commercial bank limited united commercial bank canara bank limited canara bank united bank of india limited united bank of india dena bank limited dena bank ," ~'" syndicate bank limited syndicate bank union bank of india limited union bank of india allahabad bank limited allahabad bank indian bank limited indian bank bank of maharashtra limited bank of maharashtra indian overseas bank limited indian overseas bank  principles of comp~nsation1 the compensation to be paid by the central government to each existing bank in respect of the acquisition cf the undertaking thereof shall bean amount equal to the sum-total of the value of the assets of the existing bank as on the commencement of this act, calculatea in accordance with the provisions of part i, les the sum total of the liabilities computed and obligations of the existing bank calculated in accordance with the provisions of part ii  part i-assetsfor the purposes of this part, "assets" means the total of the fe howing: -(a) the amount of cash in hand and with the reserve bank and the state bank of india (including foreign currency nptes which shall be converted at the market rate of exchange); (b) the amount of balances with any bank whether on deposit or current account, and money at call and short notice, balances held outside india being converted at the market rate of exchange: provided that any balapces which are not realisable in full shall be deemed to be debts and valued accordingly; (c) the market' value, as on the day immediately before the commencement of this act, of any securities, shares, debentures, bonds and other investments, held by the bank concerned explanation-for the purposes of this clause-(i) securities of the central and state governments [other than the securities specified in clauses (ii) and (iii) of this explana-tion] maturing for redemption within five years from the commencement of this act shall be valued at the face value or the market value, whichever is higher; (ii) securities of the central government, such as post office certificates and treasury savings d:po~it certificates and any other securities or certificates issued or to be issued under the small savings schemes of the central go',ernment, shall be valued at their face value or the encashable value as on the day immediately before the commencement of this act, whichever is higher; (iii) where the market value uf any govemment security such as the zamindari abolition bond or other simuar'8ecurities in re61pect of which the principal is payable in instalments, is not ascertainabk or is, for any reason not considered as refiecting the fair valuti thereof or as otherwise appropriate, the securities shall be valued at such an amount as js considered reasonable having regard to the" instalments of principal and intl~re~t remaining to be paid, th~ period during which such instalmt'nts at'p payable, the yield of any security, issued by the government to which the security pet'taifis and having the same or approximately the same maturity, and other relevant factors;  (iv) where the market value of any security, share debenture, borid or other investment is not co:1sidered reasonable by reason of its having been affected by abnormal factors, the investment inay be valued on the ba!';is of its average market value ovef any reasdtiabie period:   tv) whete the market vallie of arty security, !ihare, debenture, bond or other irtvestment is not ascertainablel only such value, if any shall be taken into account a;:; is considered reasonable havin~ tegard to the financial position of the issuing ccncern, the dividend paid by it during the preceding !ive years and other relevant factors; (d) the amount of advances (indllding loans cash credits, overdrafts, bills purchased and disco'jo!cd) and other dt'hts whc1hf'r secured or unsecured, to the extent to which they are reasonably considered recoverable, having regard to the value of the security, if any the operation on the account, the reported worth and respectability of the borrower the prospects of rpalisation and other relevant considerations; (e) the market value of any land or buildings; (f) the total amount of the premia paid, in respect of all leas('-hold properties, reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid bears to the total tenn of the lease; (g) the written down value as per books, or the realisable value, as may be considered reasonable, of all furniture, fixtures and fittings; (h) the market or realisable value', as may be appropriate, of other assets appearing on the books of the bank, no value being allowed for capitalised expenses, such as share selling commission, organisational expenses and brokl:'rage, losses incurred and similar other items  part il-liabhitiesfor the purposes of this part, "liabilities" means the total amount of all outside liabilities existing at the commencement of this act, and all contingent liabilities which the corresponding new bank may reasonably be expected to be required to meet out of its own resources on or after the date of commencement of this act  certain dividends not to be taken into account2 no sepa:rate compensation shall be payable for any dividend in dividend in respect of any period immediately preceding the commencement of this act: provided that nothing in this paragraph shall preclude the payment of any dividend which was declared before such commencement  (see sub-sections (2) and (3) of section 16)  declaration of fidelity and secrecy1  , do hereby declare that i will fa ithfully, truely and to the best of my skill and ability execute anj perform the duties required of me as custodian, director, member of local board, member of local committee, auditor, adviser, officer or other c>m· ployee (as the case may be) (jf the >i< and which properly relate to the office or position in the said· held by me i further declare that i will not communicate or -allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the - or to the affairs of any person having any ~ealing with the - ; nor wi11 i allow ary such person to inspect or heve access to any books or documents belonging to or in the possession of the - and relating to the business of the - or to the business of any person having any dealing with the • - name of corresoondinll new bank to be filled in  statement of objects and reasonsthe bill seeks to replace the banking companies (acquisition and transfer of undertakings) ordinance, 1969 2 the banking system touches the lives of millions and has to be inspired by a larger social purpose and has to subserve national priorities and t'bjectives, such as rapid growth in agriculture, small industries and exports, raising of employment levels, encouragement of new enterpl"eneurs and the development of backward areas for this purpose, it is necessary for government to take direct retponsibility for the extension and diversification of banking services and for the working of a substantial part of the banking system accordingly, the' bill seeks to nationalise 14 major indian scheduled banks with deposits of rs 50 crores or more 3 the provisions of the bill are explained in detail in the notes on ~l1ses new dilhli the 23rd july, 1m p govinda· menon  president's recommendation under article 117 of the constitution of india[copy of letter no f4(43)-bc/67 dated the 23rd july, 1969, from shri p govinda menon minister of law to the secretary, lok sahha] - - -   the chief justice of india (shri m hidayatullah) discharging the functions of the president having been informed of the subject matter of the proposed banking companies (acquisition and transfer of undertakings) bill, 1969, recommends the introduction of the bill in the lok sabha under clause (1) of article 117 and its consideration under clause (3) of article 117 of the con~titution  - - - '" '" clause 2 seeks to insert definitions of certain new expresllions in the act the proposed definitions are self-explanatory clause 3 seeks to provide for the constitution of 14 new banks with the share capital of each bank being allotted to the central government each ne,q bank shall be a body corporate and shall carry on the business of banking claw:'~ 4 seeks to provide for the transfer and ve!iltmg of 1" existing banks, as mentioned in the first schedule, in the corresponding new banks clause 5 clarifies the general effect of vesting so that the business of each new bank continues uninterrupted cla1lse 6 seeks to provide for the payment of compensation to each existing bank for the acquisition of the undertaking in accordance with the principles specified in the second schedule such compensation will be paid in the central government promissory notes or stock certiftcates at par of e maturity of 10 years at 4~ per cent interest if no agreement is reached with the bank regarding the quantum of compensation, the clause provides for the reference of the question to the tribunal clause 7 seeks to provide for the constitution of a tribltnal consisting of a chairman and two other members clause 8 seeks to confer the powers of a civil court on the tribunal clause 9 seeks to confer on the tribunal the power to regulate its own procedure clause 10 seeks to specify the head office of each bank and to provide for thl! appointment of the chairman of an existin~ bank as the custo~ dian for the new bank until the constitution of board of directors in terms of the scheme that may be framed by the centrnl government under section 13 of the act it also seeks to empower the central government to appoint any other person as a custodian of the new bank, if the centra] government so considers it necessary clatlse 11 seeks to provide for the issue of directions by the central government in regard to matters of policy involving public interest clawle 12 seeks to provide for the constitution of an advisory board pending the constitution of a board of directors in pursuance of a scheme that may be framed under section 13 of the act c/·ause 13 empowers the central government to make a scheme for the capital structure of each bank and for the constitution of the board of directors for the new bank and all other matters which are necessary for carrying out the provisions of the act clah'ie 14 contains provisions regarding accounts and audit of each bank clause 15 provides for the vacation of oftice of the existing directors of each bank, but allows it to constitute a board of directors for the transaction of certain specified types of business the morc important of which are the distribution to each shareholder of the amount of compensation received by it and for carrying on the busine&s of banking in any country outside india if under the law of that country the transfer of business to a bank owned by the government :s1l0~ permissible clause 16 seeks to place an obligation on every new bank ad to the fidelity and secrecy relating to accounts of ,the individual constituents of every b:mk clause 17 seeks to make every custodian 'of new bank a public servant for the purposes of chapter ix of the indian penal code clause 18 seeks to provide protection for anything done in good faith to the custodian/board of directors for any aeticn irrespective of any defect in their appointment clause 19 seeks to provi'de indemnity to every custodian of the bank and officer of the central government or the reserve bank against all losses not wilfully caused clause 20 provides for the construction of references clause 21 provides for the dissolution o~ existing bank clauses 22 to 24 provide for the rule and regulation making power of the central government clause 25 provides for the application of certain enactments to the new banks clause 26 empowers the central government to make orders to remove any difficulties in the application of the act clause 27 provides for the repeal of the ol'dmancc clauses 4 and 6 provide for the acquisition of the undt!rtaking of the exist1n& banks and the payment of compensation on the basis of the market value of the assets less the outside liabilities in accordanc~ with the principlel!l set out in the second schedule the compensation is pay· able in the form of marketable central government securities to be issued at par clause 7 provides for the constitution of a tribunel, consisting of a chairman and two other members to determine the compensation payable in the case of any existing bank if the amount arrived at ill accordance with the provisions in the second schedule and offered by the central government is not acceptable to that bank 2 the compensation will be payable with reference to the actual assets and liabilities of the existing banks as on the date of the commenc1ment of the banking companies (acquisition and transfer of undertakings) ordinance, 1969 the value of these assets and the extent of the liabilities will have to be ascertained after an investigation i£md scrutiny of the records of the existing banks and may also have to be settled by the tribunal if a reference is made to the tribunal under clause 7 of the bill it is not possible at this stage to in'dicate the precise -amount of the compensation, which will be payable by the central government but it is estimated that having regard to the total amount of the assets and liabilities of the fourteen existing banks, the compensation payoable for the acquisition of their undertakings may be about rs 75 crores this amount may have to be paid by the cent,'aj government over a period of two to three years but it is not possible tj indicate at this stage the exact quantum of compensation tbat may have to be disbursed in the current or the following financial years 3 as regards recurring expenditure, this will arise nut of interest on government securities paid for compensation the rate of interest specified in the bill is 450 per cent for a maturity of ten years on this basis the amount of the interest liability every year will be rs 3375 crores 4 as regards the expenditure on the setting up of a tribunal, this is likely to be incurred only if such a tribunal is set up in the event of an agreement not being reached with any of the existing banks if a tribunal is set up, recurring expenditure at the rate of about rs 3 lakhs per annum maybe incurred during the period for which it continues to function the non-recurring expenditure is not likely to exceed rs 50,000  memorandum regarding delegated legislationclause 13 of the bill empowers the central government to make a scheme in consultation with the reserve bank forcarryidg ,out the pro:vjsionsof the act the scheme will inter alia provide fo'l" mattersl'e!1ating to capital structure of the corresponding new bank, the conmtuuon of the board of directors oan such incl'dental or consequential matters u may be board of directors and such incidental or consequential matters as may be fore both houses of parliament and every such scheme be subject to modification or annulment by parliament clause 14 empowers the central government to prescribe the iilbddcr of verification and transmission of the rep;>rt of the auditor clause 22 of the bill empowers the central government to make rules to carry out the purposes of the act the mattel's in respect of which such rules may be made, inter alia, relate to the manner in whichtbe busilreas of the advisory board shall be transacted, fees an'd allowaaoes etc which may be paid to the members of the advisory bcoard, the formation of any committee of the advisory board or of the correspgdding new bank and for similar matters every rule made by the central government shall be laid before both houses of parliament an'd shall be subject to modification or annulment by parliament clause 24 empowe:rs the board of directors of a new bank to frame regulations (for the transaction of its business) in consultation with the reserve bank and with the previous sanction of the central government such regulations shall not be inconsistent with the provisions of the act or the rules made thereunder to carry out the purposes of the act the moatters in respect of which ally scheme, rule and regulaticn may be made ere generally matters of procedure and administrative tletall and it is not practicable to provide for them in the bill itself the delegation of legislative powers is, therefore, of a normal character i  ,  - -    part ii business of b\nking companies - • - • - ma (1) -  - productionof (3) for the purposes of this section, "banking company" includes the documents · s b k of con1l-industrial development bank of india, the reserve bank, the tate an dential of india and any subsidiary bank nature -  - - -  part 1m prohibition of certain activities in relation to banking companies36ad (1)    - punishments for (3) for the purposes of this section, "banking company" includes the ce~ reserve bank, the industrial development bank of india, the state bank f::e"t~~~n of intlia, and any subsidiary bank ~ bankldgcom->i<   - panies   part iv   miscellaneous •- - 51 without prejudice to the provisions of the state bank of india 4pplica-23 of 19515 act, 1955, or any other enactment, the provisions of section 10, 13 to 15, !o::a~ 17, 19 to 21, 23 to 28 29 (excluding sub-section (3) ) 31, 34, 35, 35a, 36 provi-(excluding clause (d) of sub-section (1», 46 to 48, 50, 52 and 53 shall :a~n~t~e also apply, so far as may be, to and in relation to the state bank of b8ll;k of india or any other banking institution notified by the central govern- i~~la and ment in this behalf as they apply to and in relation to banking com- ~ot~~ed panies: banks provided that-(a) nothing contained in clause (c) of sub-section (1) of section 10 shall apply to the chairman of the state bank of india or to a general manager of any subsidiary bank in so far as the said clause precludes him from being a director of, or holding an office in, any institution approved by the reserve bank; (b) nothing contained in section hi ~hall apply to the holding by the state bank of india of shares in the capital of any such subsidiary bank; and (c) nothing contained in section 46 or in section 47a shall apply to any officer of the central government or the reserve bank or the state bank of india, nominated or appointed as director of the state bank of india, or any such subsidiary bank cr any other banking institution notified by the central government under this section  -  - - -  extrac'l's from the industrial disputes act, 1947- - - (14 of 1947) - -  chapter i-  preliminary •- - definitions - 2 in this act, unless there is anything repugnant in the subject or context,-- - - - - (bb) "banking company" means a banking company as' defined in section 5 of the banking companies act, 1949, having branches or 10 of 1949 other establishments in more than one state, and includes the industrial development bank of india, the reserve bank of india, the state bank of india and any subsidiary bank as defined in the state bank of india (subsidiary banks) act, 1959; 38 of 1959 - - - - -  extracts from the banking companies (legal practitioners' clients' accounts) act, 1949(46 of 1949) - - - - - definitions 2 in this act, unless there is anything repugnant in the subject or context-(a) "banking company" means any banking company as defined in section 5 of the banking companies act 1949, and includes the 10 of 1949 state bank of india and any subsidiary bank as defined in the state bank of india (subsidiary banks) act, 1959; 38 of 1959 (b) "legal practitioner" has the same meaning as in the legal practitioners act, 1879 18 of 1879 - - - -   billto provide for the acquisition and transfer of the undertakings of certain banking companies in order to serve better the needs of development of the economy in conformity with national policy and objectives and for matters connected therewith or incidental thereto (sh1'i p govinda menon, minister of law and social welfare) i 