amendment 9 in section 11 of the prineipal act, in sub-section ()— f section eee 11, "(0 for the words "the sponsor bank", the words "the central government or any other authority prescribed by the central government for the purpose" shall be substituted; and (i in the proviso, in clause (@), for the words "national bank", the words, "sponsor bank" shall be substituted amendment 10 in section 17 of the principal act, in the second proviso to sub-seetion (/), forthe of seston 17 portion beginning with the words "and, in determining such remuneration," and ending with the words "status in the notified area" the words "from time-to-time in terms of periodical \wage revisions of officers and employees of nationalised commercial banks and in determining national industrial tribunal headed by hon'ble justice shri obul reddy read withthe relevant verdict ofthe hon'ble supreme court pronounced on 31st october, 2001," shall be substituted amendment 11, in section 18 of the principal act, in sub-section (2), after clause (b), the following of section 18, clause shall be inserted, namely:— "() for granting loans and advances to the state government and state sponsored autonomous bodies for the purpose of creation of rural infrastructure like roads, 'ransport, electricity, irrigation facilities and any other matter connected with rural development and generation of rural employment" amendment 12, section 22 of the principal act shall be tenumbered as sub-section (/) thereof and of section 22 after sub-section (/) as so renumbered, the following sub-section shall be inserted, namely:— "(2) all term deposit certificates issued by regional rural bank for a maturity period of not less than five years shall be entitled to rebate as allowed under sections 30l and 88 of the income tax act, 1961", arieadmeat 13, in section 234 of the principal act, in sub-section (3),— \mendmen ht "in clause (a), the words and brackets excepting such of them as not being workmen within the meaning of industrial disputes act, 1947 are specially mentioned in the notification)" shall be deleted; (i after clause (4), the following clause shall be inserted, namely: - "(e) the manner in which the shares ofa particular sponsor bank held in the transferor regional rural bank shall be transferred to the sponsor bank of the transferee regional rural bank", lasertion 4, after section 24a of the principal act, the following section shall be inserted, of new namely:— section 24b 35 constitution "24b (1) the central government in consultation with the reserve bank and ha hae at the national bank may by a notification in the official gazette or by a separate act of a the parliament constitute a national rural bank of india or by such other name as specified in the notification or act, with a chairman and such other number of memebrs, as it may specify in the said notification or in the specified act, drawn from banks, financial institutions, academicians and experts in rural development and 40 rural banking (2) the apex authority so constituted shall recommend to the central government about the policy guidelines to be followed by regional rural bank and sponsor banks and 45in particular help the central government in matters of selection of chairman of regional rural banks and act as the negotiating forum for settlement of demands and disputes with trade unions of officers and employees of regional rural banks (3) the authority shall perform such other functions as may be assigned to it from time 'o time and exercise such powers as may be prescribed by the central government"  statement of objects and reasonsregional rural banks (rrbs) have come to stay as an inseparable part of the country's rural credit system, around 38 per cent of the cases implemented so far in the country under different poverty alleviation schemes have been negotiated by these regional rural banks which also organise and finance over 50 per cent of the country's self-help groups the regional rural bank-system has, therefore, to be nurtured and strengthened in the interest of the rural masses the merging needs of the rural economy would be very high and in the scenario on the anvil with agriculture being highly industrialized, massive investment in the rural economy would be imperative the regional rural banks, therefore, have to be geared up to assume a pivotal role in the process of economic regeneration of rural india with funds mobilized from the rural areas in order to make the regional rural banks more responsive to the needs of the rural masses as enshrined in the preamble to the regional rural banks act, 1976 and to remove their inbuilt limitations, some changes in their physical, operational and administrative structure are urgently required a few suggestions to improve and strengthen the system of regional rural banks have been given in the bill as mentioned under:— (@ to enhance the spatial coverage of regional rural banks and to extend their areas of coverage; (ii) to strengthen the resource-base of the banks by infusion of funds from different agencies; (iii) to delink the sponsor bank to the maximum possible extent from the affairs of regional rural banks in order to provide recognised banks a level playing field in the current competitive scenario; (iv) to ensure unity of approach, unity of command and accountability of the functionaries at different levels; () to allow employees' participation in the management and decision-making and to have a negotiating forum of their own the proposed amendments are likely to enhance viability of rrbs, make them financially sound and attitudinally pro-people by nurturing and exploiting the rich experience and inner dynamism developed in the course of the last two and a half decades and at the same time, provide the rural people a strong bank of their own to face the challenges of the changing scenario, 'the bill seeks to achieve the above objectives new detui; basudeb acharia june, 7, 2004,  president's recommendation under articles 117 (1), 274(1) and 117(3) of the constitution{copy of letter no 12(1)/2004-rrb, dated 11 august, 2004 from shri p chidambaram, minister of finance to the secretary-general, lok sabha] the president, having been informed of the subject matter of the regional rural banks (amendment) bill, 2004 (amendment of section 2, etc) by shri basudeb acharia, membér of parliament, recommends the introduction under articles 117(1) and 274(1) and consideration of the bill under article 117(3) of the constitution in lok sabha financial memorandumclause 3 of the bill seeks to establish regional rural banks clause 5 seeks to increase the authorised capital of each regional rural bank from five crores of rupees to five hundred crores of rupees clause 6 seeks to increase the issued capital of each regional rural bank from the existing limit of minimum twenty-five lakli of rupees and maximum one crore of rupees to five crores of rupees clause 14 envisages to constitute an apex national rural bank of india which would also involve some recurring and non-recurring expenditure for creating and maintaining the infrastructural facilities for the apex authority the bill, therefore, if enacted, would involve expenditure from the consolidated fund of india, a recurring expenditure of about rupees five hundred crore per annum is likely to be involved from the consolidated fund of india a non-recurring expenditure of about rupees five crore is also likely to be involved from the consolidated fund of india annexure extract from the regionat rurat banks acr, 1976 chapter i      1(/)      (2)      short title, extent and 'commencement q)      2 (a)      definitions (6) "     (c)      @) "notification area" means the local limits, specified under sub-section (1) of section 3, within which a regional rural bank shall operate; (©) "prescribed" means prescribed by rules made under this act; i)      (2) "sponsor bank", in relation to a regional rural bank, means a bank by which such regional rural bank has been sponsored; (a) "state government" means,— (a in relation to a regional rural bank established in a union territory, the central government; (ii) in relation to a regional rural bank established in a state, the goverment of that state;      '  chapter i3 (1) the central government may, if requested so to do by a sponsor bank, by notification in the official gazette, establish in a state or union territory, one or more regional rural banks with such name as may be specified in the notification and may by establishment and incorporation of regional rural banks the said or subsequent notification, specify the local limits within which each regional rural bank shall operate       offices and agencies 4 (1) a regional rural bank shall have its head office at such place in the notified area as the central government may, after consultation with the "national bank" and the sponsor bank, specify by notification in the official gazette (2) a regional rural bank may, if it is of opinion that it is necessary so to do, establish its branches or agencies at any place in the notified area, authorised capital5 the authorised capital of each regional rural bank shall be "ive crores of rupees divided into five lakhs" of fully paid-up shares of one hundred rupees each: provided that the central government may, after consultation with the "national bank" the sponsor bank, increase or reduce such authorised capital; so, however, that the authorised capital shall not be hundred rupees each |             |             |            |                |                 |                 |            |                 |            |               |             |             |           |             | issued      | capital    ||-------------|-------------|------------|----------------|-----------------|-----------------|------------|-----------------|------------|---------------|-------------|-------------|-----------|-------------|-------------|------------|| 6          | (1)         | the        | issued         | capital         | of              | each       | regional        | rural      | bank          | shall,      | in          | the       | first       | instance,   | be         || such        | as          | may        | be             | fixed           | by              | the        | central         | government | in            | this        | behalf,     | but       | it          | shall       | in         || be          | less        | than       | twenty-five    | lakhs           | of              | rupees     | or              | exceed     | one           | crore       | of          | rupees   |             |             |            || (2) of      | the         | capital    | issued         | by              | a               | regional   | rural           | bank       | under         | sub-section | (1),        | fifty     | per         |             |            || cent       | shall       | be         | subscribed     | by              | the             | central    | government;     | fifteen    | per           | cent,       | by          | the       | concerned   |             |            || state       | government  | and        | thirty         | five            | per             | cent, by   | the             | sponsor    | bank;         |             |             |           |             |             |            || (3)         | the         | board      | may,           | after           | consultation    | with       | the             | "national  | bank"         | the         | concerned   | state     |             |             |            || government  | and         | the        | sponsor        | bank            | and             | with       | the             | prior      | approval      | of          | the         | central   | government, |             |            || from        | time        | to         | time,          | increase        | the             | issued     | capital         | of         | the           | regional    | rural       | bank;     | and,        | where       |            || additional  | capital     | is         | issued,        | such            | capital         | shall      | also            | be         | subscribed    | in          | the         | same      | proportion  |             |            || as          | is          | specified  | in             | sub-section     | (2)            |            |                 |            |               |             |             |           |             |             |            ||            |            |           |               |                |                |            |                 |            |               |             |             |           |             |             |            || board       | of          |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || directors  |             |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || 9          | (1)         | the        | board          | of              | directors       | shall      | consist         | of         | the           | chairman    | appointed   | under     | sub-        |             |            || section     | (/)         | of         | section        | 11,             | and             | the        | following       | other      | members,      | namely:—    |             |           |             |             |            || (a)         | two         | directors, | who            | are not         | officers        | of         | the             | central    | government,   | state       |             |           |             |             |            || government, | reserve     | bank,      | national       | bank,           | sponsor bank    | or         | any other bank, | to         | be            |             |             |           |             |             |            || nominated   | by          | the        | central        | government;     |                 |            |                 |            |               |             |             |           |             |             |            || (6)         | one         | director,  | who            | is              | an              | officer    | of              | the        | reserve       | bank,       | to          | be        | nominated   | by          |            || that        | bank;       |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || (c)         | one         | director,  | who            | is              | an              | officer    | of              | the        | national      | bank,       | to          | be        | nominated   | by          |            || that        | bank;       |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || (d)         | two         | directors, | who            | are             | officers        | of         | the             | sponsor    | bank,         | to          | be          | nominated | by          |             |            || that        | bank;       | and        |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || (e)         | two         | directors, | who            | are             | officers        | of         | the             | concerned  | state         | government, | to          | be        |             |             |            || nominated   | by          | that       | government    |                 |                 |            |                 |            |               |             |             |           |             |             |            ||            |            |           |               |                |                |            |                 |            |               |             |             |           |             |             |            || term        | of          | office     |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || of          | director   |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || 10         | a           | director   | (other         | than            | that            | chairman)  | shall           | hold       | office        | for         | such period | not       |             |             |            || exceeding   | two         | years,     | from           | the             | date            | when       | he              | assumes    | office,       | as          | the         | authority | nominating |             |            || him         | may         | specify    | at             | the             | time            | when       | the             | nomination | is            | made,       | and         | may,      | on          | the         | expiry     || said        | period,     | continue   | to             | hold            | office          | until      | his             | successor  | has           | been        | nominated   | and       | shall       | also        |            || be          | eligible    | for        | re-nomination |                 |                 |            |                 |            |               |             |             |           |             |             |            || chairman   |             |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || 11         | (1)         | "the       | sponsor        | bank"'shall     | appoint         | an         | individual      | to         | be            | the         | chairman    | of        | a           | regional    |            || rural       | bank        | and        | specify        | the             | period,         | not        | exceeding       | five       | years,        | for         | which       | such      | individual  | shall,      |            || subject     | to          | the        | provisions     | of              | sub-section     | (4),       | hold            | office     | as            | the         | chairman,   |           |             |             |            ||            |            |           |               |                |                |            |                 |            |               |             |             |           |             |             |            || (6)         | ifthe       | chairman   | is,            | by              | infirmity       | or         | otherwise,      | rendered   | incapable     | of          | carrying    | out       | his         |             |            || duties      | or          | is         | absent,        | on              | leave           | or         | otherwise,      | in         | circumstances | not         | involving   | the       | vacation    | of          |            || office,     | the         | central    | government     | may             | appoint another | individual | to              | act        | as            | the         | chairman    | during    |             |             |            || the         | absence     | of         | the            | first-mentioned | chairman       |            |                 |            |               |             |             |           |             |             |            ||            |            |           |               |                |                |            |                 |            |               |             |             |           |             |             |            || staff       | of          |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || regional    | rural       |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || banks       |             |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || 17(2)      | a           | regional   | rural          | bank            | may             | appoint    | such            | number     | of            | officers    | and         | other     | employees   |             |            || as          | it          | may        | consider       | necessary       | or              | desirable  | in              | such       | manner        | as          | may         | be        | prescribed  | for         | the        || efficient   | performance | of         | its            | function        | and             | may        | determine       | the        | terms         | and         | conditions  | of        | theit       |             |            || appointment | and         | service:   |                |                 |                 |            |                 |            |               |             |             |           |             |             |            || provided    | that        | it         | shall          | be              | lawful          | for        | a               | sponsor    | bank,-if      | requested   | so          | to        | do          | by          | a          || rural       | bank        | sponsored  | by             | it,             | to              | send,      | such            | number     | of            | officers    | or          | other     | employees   | on          | deputation || to          | the         | regional   | rural          | bank            | as              | may        | be              | necessary  | or            | desirable   | to          | the       | efficient   | performance | of         || its         | functions:  |            |                |                 |                 |            |                 |            |               |             |             |           |             |             |            |provided further that the remuneration of officers and other employees appointed by a regional rural bank shall be such as may be determined by the central government, and, in determining such remuneration, the central government shall have due regard to the salary structure of the employees of the state government and the local authorities of comparable level and status in the notified area,       business which 18(1)      | a     | regional    ||-------|-------------|| rural | bank        || may   | transact   |(2) without prejudice to the generality of the provisions of sub-section (1), every regional rural bank may, in particular, undertake the following types of business, namely:— (a)   + +  (®) the granting of loans and advances, particulary to artisans, small entrepreneurs and persons of small means engaged in trade, commerce or industry or other productive - activities, within the notified area in relation to the regional rural bank    +   22 for the purpose of the income tax act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on income, profits or gains, a regional rural bank shall be deemed to be a co-operative society |               | regional    | rural    ||---------------|-------------|----------|| bank          | to          | be       || deemed        | to be       | 2        || co-operative  |             |          || society       | for         |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          || purpose       | of          | the      || income        | tax         |          || act,          | 1961        |          || 23           |             |          || (a)           |             |          || (1)           |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          || 'amalgamation |             |          || of            | regional    |          || rural         | banks      |          || q)            |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          ||              |             |          |(3) every notification issued under sub-section (7) may also provide for all or any of the following matters, namely:— (a) the continuance in service of all the employees of the transferor regional rural banks (excepting such of them as not being workmen with the meaning of the industrial disputes act, 1947 are specifically mentioned in the notification) in the transferee regional rural bank at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be, by which they were being governed, immediately before the date on which the amalgamation takes effect; 7 (d) the continuance by or against the transferee regional rural bank of any pending legal proceeding by or against any transferor regional rural banks and such consequential, incidental and supplemental provisions, as may, in the opinion of the central government, be necessary to give effect to the amalgamation     miscellaneous,24 () a regional rural bank shall, in the discharge of its functions, be guided by such directions in regard to matter of policy involving public interest as the central government may, after consultation with the reserve bank, give, | power       | of    ||-------------|-------|| central     |       || government  |       || to          | give  || directions, |       |(2) ifany question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the central government thereon shall be final       