 the industrial development bank of inola bill,1964 arrangement of clauses chapter i preliminary clauni1 2 short title, extent and commencement definitions  chaprer iiestablisido:nt 01' 'flu industrial development bank of hmia and capital thereof s establishment and incorporation of industrial development bank of india 4 authorised and issued capital  chapter iii management of the development bame5 management: 6 board of directors 7 executive committee and other committees 8 fees and allowances of direotors and memben of mmmlttees:  chapter iv businjas or the devaopment bank 9 business of development bank10 loans by central government 11 borrowings and acceptance of deposits by development ~aftk 12 loe'ns in foreill'l curren~ 18 gnnta, donations, etc, to development bank  chaprer v development assistance fund cla~14 development assistance fund 15 credits to developmertt assistance fund 16 utilisation of development assistance fund 17 debits to development assistance fund 18 accounts and audit of development assistance fund 19 liquidation of development assistance fund   - chapi'er vi general fund, accounts and audit20 general fund 21 preparation of accounts and balance-sheet 22 disposal of profits accruing to general fund 23 audit 24 saving  chapter vii transfer of business of refinance corporation i'ollindustry25 transfer of assets and liabilities of refinance corporation for industry'  chapter viii miscellaneous26 staft of development bank 27 delegation of powers 28 returns: 29 obligation as to fidelity and secrecy 30 defects in appointments not to invalidate acts, etc 31 indemnity of directors j2 protection of action taken under this act 33 act 18 of 1891 to apply in relation to development bank 34 act 10 of 1949 not to apply to development bank  clauba35 act 43 of 1961 and act 14 of 1963 not to apply to development bank 36 liquidation of development bank 37 power to make regulations 38 amendment of certain enactments the first schedule the second schedule - bill to e6t4blilh the induaitigl development bank of india for promding credu and other facilities for the development of industf'ji and for m4tterb connected therewith and further to amend certain ~ be it euacted by parliament in the fifteenth year of the republic of india as follows:-chapter i  preliminary5 1 (1) this act may be called the industrial development bank short of india act, 1964 title, extent add (2) it ex1ends to the whole of intia commencement (3) it shall come into force on such date as the central government may, by notiftcation in the ofticial gezette, appoint and differ-10 ent dates may be appointed for different provisions of this act z in this act, unless the context otherwise requires,-definitions (a) "board" metn'ls the board of directors of the development bank; (b) "development bank" means the industrial develop-15 ment bank of india establtshed under section s; (c) "industrial concern" means any concern engaged or to be engaged in the manufacture, preservation or processing of goods or in shipping or in mining or in the hotel industry or in the transport of passengers or goods by road or by water or by 20 ' at in the generation or distribution of electricity or any other form of power explamtion-the expression "processing of goods" includes any art or process for producing, preparing or making an article by lubjecting any material to a manual, mechanical, chemical, electrical or any other like operation; 1~ of 1948 (d) "industrial finance corporation" means the industrial $ finance corporation of india established under the industrial finance cljrporation act, 1948; (p) "prescribed" means prescribed by regulations made under this act;' (f) "reserve bank" means the reserve bank of in,dia con- 10 f stituted under the reserve bank of india act, 1934; 20 1934 (g) "scheduled bank" means a bank for the time being included in the second schedule to \he reserve bank of india act, 1~; 2~1 (h) "state co-operative bank" has the same meaning as in is the reserve bank of india act, 1934; 2 of 1934 (i) "state financial corporation" means a financial corporation established under section 3 or section 3a of the state financial corporation act, 1951 and includes the madras industrial investment corporation limited ' 20 83 of 1951  chapl'er ii establishment of the industrial development bank of india and capital thi:lleof3 (1) with effect from such date as the central government may, by notification in the official gazette, appoint, there shall be eatab- 25 lished for the purposes of this act a corporation to be known as the industrial development bank of india eatabliahmentand incorporationo! industrial development beak of india (2) the development bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this act, to acquire, hold and 30 dispose of property and to contract, and may, by that ~e, tue or be sued (3) the head office of the development bank shall be at bombay or at such other place as the reserve bank may, by notification in the official gazette, specify (4) the development bank may establish offices, branches or 35 agencies at any other place in or outside india 4 (1)' the authorised capital of the deve10pment sank shail be authoriled fifty crores of rupees: and issued provided that the reserve bank may, with the previous approval capital of the central government, increase the said capital up to one hun-s <ired crores of rupees (2) the issued capital of the development bank shail, in the first instance, be ten crores of rupees, but the reserve bank may, with the previous approval of the central government, increase the issued capital from time to time up to such amount as it thinks fit 10 (3) the issued capital of the development bank shall be wholly subscribed by the reserve bank  chapl'er m managdient qf the development banjtis 5 (1) the general superintendence, direction and management manageof the affairs and business of the development bank shall vest in 8 ment board of directors, which may exercise all powers and do all acts and things which may be exercised clii' done ,by the development bank 20 (2) save as otherwise provided in regulations made under this act, the chairman and in his absence the vice-chainnan shall also have powers of general superintendence, direction and management of the affairs and business of the development bank and may exercise all powers and do all acts and things which may be exercised or done by the development bank 25, (3) subject to the provisions of this act, the board in discharging its functions shall act on business principles with due regard to public interest ," 6, u) the board shall consist of such persons as for the time be- board of ing hold office as directors on ,the central board of the reserve director • 30 bank , , (2) the governor of the reserve bank shall be the chairman and a deputy governor of the reserve bank nominated hy that bank in this behalf shall be the vice-chairman of the board (3) the board shall meet at such times and places and shall - 3s observe such rules of procedure in regard to the transaction of bueiness at its meetings as may be prescribed (4) the chairman or, if for any reason he is unable to attend a meetina of the board, the vice-chairman or, in the event of 'both the chatrman and fihe vice-chairman bem, unable to attend the meettng any other director nominated by the chairman in this behalf, aball preside at the meeting (5) all questions which come up before any meeting of the !)oard shall be decided by a majority of votes of the directors preaent and 5 voting, and in the event of an equality of votes, the chairman or in his absence, the viee-ehainnan, or in the abaenee ot both t1l&e elaairman and the vice-chairman, the person pnliding, ihall have second or casting 'vote (6) save as provided in sub-section (5), every director of the 10 board shan have one vote 7 (1) the board may constitute an executive committee consisting of such number of directors as may be prescribed executive committee and other (2) the executive committee shall clifjcba:rfe ijucb functions  may be prescribed or as may be delegated to it by the board j s (3) the board may constitute such other oommitteea whetbel' consisting wholly of directors or wholly ofoth  penoiji or partly of directors and partly of other persom for such putpole or ~ as it may think fit (4) the executive committee or any other eommittee eonautut- ao ed under this section shall meet at such tlmea and plaees ajlid sijad observe such rules of procedure in regard to the tranaactloft fjf bul  ness at its meetings as may be prhcrfbed 8 the directors and the memder& of a committee ithall be paid fees md such fees and allowances as may be prescribed for attending the 2$ ~l~~_ces meetings of the board or of any committee constituted bl punllt8dce ton and of this act and for attending to any other ork of the deft!opmembers ment bank: ofeommitteet provided that no fees shall be payable to any dtn!etoll' or member who is an officer of the government or to the governor or a ~ 30 governor of the reserve bank or any officer of that bank  chapter iv businfs8 or the development bmfkt (1) the development bank may carry on and transact bay of buliness ot tu fouowing kinds of business, namely : -" development bank (a) granting loans and advarrees to-(i) the industrial finance corp«  kjft, ba1 stat rin- aneial corporation or any othft flnaac'-l iljlututioa whwa may be notiaed by the central government in this behalf, by way of refinance of any loans or advances granted to industrial concerns by such corporation or institution which are repayable on the expiry of not less than three years and not more than twenty-five years; 5 (ii) any scheduled bank or state co-operative bank, by way of refinance of any loans or advances granted to industrial concerns by such bank which are repayable on the expiry of not less than three years and not more than ten years; 10 (iii) any scheduled bank or state co-operative !bank or the industrial finance corporation or any state financial corporation or any other financial institution which may be notified by the central government in this behalf, by way of refinance of any loans or advances granted to industrial concerns or group of industrial concerns by such bank or iillstitution which are for the purpose of, or in connection with, the export of capital goods, commodities or merchandise from india and are repayable on the expiry of not leu than six months and not more than ten years; 20 (b) subject to such conditions as may be prescribed, accepting, discounting or re-discounting bills of exchange and promissory notes of industrial concerns; (c) subscribing to or purchasing stocks, shares, bonds or debentures of the industrial finance corporation, any state financial coo'poration or any other financial institution which maybe notified by the central government in this behalf; 35 (j) granting loan and advances to any industrial concern or su'bscribing to, or purchasing, or underwriting the issue of, stocks, shares bonds or debentures of any industrial concern: provided that nothing contained in this clause shall be deemed to preclude the development bank from granting loans or advances to, or subscribing to debentures of, an industrial concern which may at the option of the development bank be convertible into stocks or shares of that concern within the period the loan, advance or debenture is repayable; (e) guaranteeing deferred payments due from any industrial concern; (f) guaranteeing-(i) loans raised by industrial concerns which are boated in the public market; and (n) loans raised by industrial eoi'icemsftoamlny scheduled bank or state co-operative bank or the industrial finance corporation or any state financial corporation or any other financial institution whic::h may be ngti1ied by the central government in thisbehalf~ s (g) guaranteeing the obligations -&f any scheduled bank or state :co-operative hank or -the lrulustriat ftrumee corporation or any state financial corporation or any othel' ftnaneial institution which may be notified by the central govemmentin tbis behalf, arising out of, or in connection with, underwriting the issue of 10 stocks, shares, bonds or debentures of any in~ustrial concern; {11,) undertaking research and su'i"v~ys for evaluating or dealing with marketing or investment and undertaking and carrying :oil techao-ecoaom:ie studies in eormeetior with the developmeat of industry; t~ (i) providing technical and administrat4ve assistance to any industrial concern or any person for promotion, manapment or expansion of any industry; (;) planning, promoting 8jld developing industries to fill up gaps in the industrial structure in india; 20 (k) forming or conducting of subsidiaries for carryine out its functio~s; (l) performing functions i entrusted to, or required of, the devewpment bank by this act or by any other law fof the time beint in force; 25 (m) doing any other kind of business which the central govemment, on the tecommendation of the reserve bank, may authorile; (n) generally doing such other acts and tlaings as may be incidental to, or consequential upon, the exercise of iul powers or 30 the discharge of its duties under this act or anr other law for- the time being in force including sale or transfer' of any of its usets (2) 'nle development bank may receive in consideration of any of the services mentioned in sub-section (1) such commission, brokerage, intel'etlt, remuneratign or fees as may be agreed upon 3' (3) the development bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or hbentuna 10 til ceiit  l govemmedt  y,  ",  loua "" by pai'i1ammlt ,"  w ba tjda ,w-if, aelvuce to the »wehr  central bank-government s (a) 8d interet free loan of ten crores of rupees, repayable in 8ft  equal annual instalments, cojdjqencinc on the pto of a period of fifteen yean from the date of the receipt of the loan; and (b) iaiclb furdler aums of moaey ),y 'way -of  oft such term ad ·aoactitioaa as may h apeed upea: 10 provided that the central government may, on a refiil-t being made to it by the development bank, increase the number «if  or  the iftdoudt of oymsta1ment or ry the date 8ft ,weit ", inltalmeltt is payable under 6ase (a) 11 (1) the development bank may, for the purpose of carrying borrowing t 'ts f t' d tho act and accept-is qu 1 unc lons un er is ,-anee ot (cl) issue and sell bonds and debentutes with or without the deposits by guarantee of the central government; developmentbank (b) borrow money from the reserve bank-20 (i) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money-is 90 borrowed 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 th~ time being in force in india; (ii) against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date 'm the borrowing; 30 (iii) out of the national industrial credit (long term operatiom) fund established under section 46c of the reserve bank of lndia act, 1934 for any of the purposes specified in that section; , (c) borrow money from such other aqthority, organisation or institution in india as may be generally or specially approved by the central government; 35 ' (d) accept deposits repaya,ble after the expiry of a period which shall not be less than twelve months from the date of the making of the deposit on such terms as may generally or specially be approved by the:reserve ·bank (z) the central government may, on a request htng made to it by the development bank, guarantee the bonis and debentures l-aed by that bank as to the repayment of principal and the payment of interest at such rate as may be bed by that government loans in foreign currency 12 (1) notwithstanding anything contained in the foreign ex- s change regulation act, 1947 or in any other enactment for the time t of 1847 being in force relating to forei~ exchange, the development bank may for the purpose of granting loans and advances under this act, borrow, with the previous consent of the central govemment, forei~ currency from any bank or ftnanciallnsutution in any foreign country 10 or otherwise (2) the central govemment may, where necessary guarantee any loan taken by the develooment bank under tlub-liectlen (1) olr any part thereof as to th1! reoavment of principal and the payment of interest and other incidental charges '$ (1) all loans and advances out of foreign currency borrowed under sub-section (1) shall be ~anted by the development bank in indian currency and shall be repayable in indian currency (4) any loss or proflt accruing in connection with any borrowing of foreign currency under sub-section (1) for the purpose of grant- 20 ing loans and advances or its repayment en account of any fluctuations in the rates of exchange shall be reimbursed by or paid to, the recipients of such loans and advances 13 the development bank may receive gifts grants donations or benefactions from government or any other source 2$ grants, donations, etc, to developmentbank  chapter v development assistance funddevelopment assistance fund 14 with effect from such date as the central govemment may, by notiftcation in the ofticial gazette, appoint, the development bank shall establish a special fund to be called the development assist- 30 ance fund 15 to the development assistance fund shall be credtted-(a) all amounts received for the purposes of that fund by way of loans, gifts, granta, donations or benefactions from gov ernment or any other source; 3s credits to development assistance fund (b) repayments or recoveries in respect of loans, advances or other facilities granted from the fund; (c) income or proflts from investments made from the fund; and (d) income accruing or arising to the fund, by way of inter· est or otherwise, on account of the application of the fund in be-s cordance with the provisions of section 16 16 (1) where the development bank considers it necessary or utilisation desirable so to do, it may, subject to the provisions of sub-sections of deve-(2) and (3), disburse or spend from the development assistance ~;s~~ce fund any amount on account or in consequence of the grant of any j'und 10 loan or advance, or on account or in consequence of entering into any arrangement, under clause (d) or clause (e) or clause (f) or clause (g) of sub-section (1) of section 9: provided that before granting any such loan or advance to an industrial concern or entering into any such arrangement with or 15 in relation to an industrial concern, the development bank shall obtain the prior approval of the central government (2) before seeking the approval of the central government under sub-section (1), the development bank shall satisfy itself that banking or other financial institutions or other agencies are not likely to 30 grant such loan or advance to the industrial concern or to enter into any such arrangement with or in relation to the industrial concern in the ordinary course of business (3) the central government, before giving its approval, shall satisfy itself that such loan, advance or arrangement is necessary as 2, a matter of priority in the interests of the industrial development of the country (4) for the removal of doubts it is hereby declared that nothing contained in this section shall be deemed to preclude the development bank from granting any loan or advance or from entering into 30 any arrangement under clause (d) or clause (e) or clause <i) or clause (g) of sub-section (1) of section 9 without the approval of the central goverrunent, if no amount in respect thereof is to be disbursed or spent from the development assistance fund 17 (1) to the development assistance fund shall be debited--i debita to develop-(a) such amowlts as may from time to time be disbursed or ment spent under sub-eections (1) to (3) of section 16; msistanee fund ('b) such amounts as may be required for discharging the llabuiues in respect of loans 'received for the purposes of that fundi (c) any 10815 arisidg on aceount of investment maa: oot of that fund; and (d) such expenditure arising out of, or in connection with, the administration ill'ld application of the fwld as may be determined by the board:  (2) no amount shall be debited to the development assistance fund except as provided for in sub-section (1) 18 (1) the balance-sheet and accounts of the development assistance fund shall be prepared in such form and manner as may be prescribed ' 10 accounts andaudtt of development assistance fund (2) the board shall cause the books and accounts of the fun to be closed and balanced as on the 30th day of june each year (3) the fund shall be audited by one or more auditors appointed by the reserve bank under section 23 who shall make a separate report thereon is (4) the provisions of sub-sections (2), (3), (4) and (6) of section 23 shall, so far as may be, apply in relation to the audit of the development assistance fund (5) the development bank shall furnish to the central government and the reserve bank within four months from the date 20 qil which the accounts of the fund are closed and balanced, a copy of the balance-sheet and accounts together with a copy of the auditors' report and a report on the operation of the fund during the relevant year and the deftlopment bank shall cause to be published in the omcial gazette copies of the said balance-sheet, accounts and 35 reports 1 • the 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 direct  liquidationof development a8istance fund  chapter vi general fund, accounts and audit general 10 all receipts of the development bank· other than tboee which j'wld are to be credited to the development aisiatance fulld udd&r thil act shall be credited to a fund to be  called the general fund and all payments by the development bank, other than those which are to be debited to the development alltltanee fund, shall be made out o! the geaeral fund 3' ti (l) n "8"= ebeet adgl lioco\mia 01 the development bank prepareshall be prepared in such fonn and manner as meybe prescribed tion of accounts (2) the board shall cause the books and accounts of the deve- and lopment bank to be closed and balanced as od the 30th day of june balance - s each year  sheet zl (1) the development bank may establish a reserve fund to dispoaal which may· be transferred such sums as that bank may deem fit out of profits of the annual profits accfuing to the general fund accruing tf general (2) after making provision for bad and doubtful debts, deprte- fund 10 ciation of assets and for all other matters for which provision is necnsary or expedient or which is \llually provided for by bankers and for the reserve fund referred to in sub-aection (1), the development bank shall transfer the balance of the net profits to the reserve bank is 23 (1) the accounts ·of the development bank &hall be audited audit by auditors duly qualified to act as auditors under 6ub-section (1) of section 226 of the companiej ai:rt 1956 who shall be appointed by the reserve bank for such term and on such remuneration as the reserve bank may fix 20 (2) the auditors ~ be supplied with a copy of the adilual balanee-sheet of the development bank and it shall be their duty to examine it together with the acco~ts and vouchers relating thereto and they shall have a list delivered to them of ali books kept by the development bank and shali at ail reasonable times have a,ccess to ~s the books, accounts, vouchers and other documentas of the developme:1t bank (3) the auditors may, in relation to such accounts, examine any di:rector or any officer or other employee of the development bank and shall be entitled to require from the board or officers or other 30 employees of the development bank such information and explanation as they may think necessary for the performance of their duties (4) the auditors shall make a repon to the development bank upon the annual balance-sheet and accounts examined by them and in every such report they shall state whether in their opinion the 3' bala~ce-6heet is a full and fair balance-sheet con~iningall necessax: particulars and properly drawn up so as· to exhibit" a true and fair view of· the' state 'of affairs of the development bank and in case they had called for any explanation or inforniation from the board or any officer or other employee of the development bank whether 040 it has been given and whether it·is satisfactory' (5) the development bank shall furnish to the relerve bank within four months from the date on whioh its accountll are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditors' report and a report of the working of the ])evelopment bank during the relevant year, and the development s bank shall cause to be published in the official gazette copies of the said balance-sheet, accounts and reports (6) without prejudice to anythina contained in the preceding sub-sections, the central government may at any time appoint the comptroller and auditor-general of imlia to examine and report 10 upon the accounts of the development bank and any expenditure incurred by him in connection with such examination and report shall be payable by the development bank to the comptroller and auditor-general of india savin, %4 save as otherwise provided in bub-section (4) of section 18, r$ nothing contained in this chapter shall apply t6 the development a6sistance fund  chapi'er vii transfer of business of rennance corporation j'or lndu8nrytransfer 25 (1) on such date as tile central gover~t may, by noti- 20 of assets tication in the official gazette, appoint, the entire undertaking of and liabili- the refinance corporation for industry, limited (hereinafter in this ties of chapter referred to as "the company") including all business, pro-~~~c_e perty, assets and liabilities, rights, interests, privileges, anci obligation for tions of whatever nature, shall stand transferred to and vest in the 2s industry development bank (2) as compensation for the transfer of the undertaking of the company to the development bank under sub-section (l), the development bank shall pay in cash to the company an amount equal to the total paid-up capital of the company for the purpose of being distributed to the shareholders of the company in proportion to 3~ their contribution to such paid-up capital (3) all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the date referred to in su8-section (1) and to which the company is a party or 35 which are in favour of that company shall be of full force and e1fect against or in favour of the development bank, as the case may be and may be enforced or acted upon as fully and et!ectually  jf instead of the company thedeftl~rrt bank had been a party thereto or as if they had been wuef;i in favour of the development bank  (4) if 011 the date refe1'red to in sub-jection (1) july suit, appeal s or other legal proceec:lingof whatever aature, is pending by or against the company, the same shall not abate, be discontmued or be in any way prejudicially affected by reason of the transfer to ,the development bank of the undertaking of the company w: of anything contained in this act, but the suit, appecuor other proceedine may 10 be continued, prosecuted and enforced by or a~t the development bank (5) the central government may appoint, whether ()j1 or after the date referred to in aubaeetion (l',·a fnitable person to take ov  tlie management of thecompany tor the purpose of witlding up i, its dairs and distributing its asaet and mnultadeou9ly with such appointment the ceatral government may isslle directiodb to be followed by the person in the management of the company fof the purpose aforesaid and thereupon-(4) the provisiofts of the companies act, ·1956 or any other law for the time being in foree or any 1nstrmnent having eftect 'by virtue of any such act or other law, in so far as they are inconsistent with such directio~, shall cea to apply to, qi' in relation to, the company;· ( (b) au persons in c'harge of the management, including any pel'8m1 holdin« oftlee as manager or director, of the company immediately before the issue of such directions, shan be deemed to have vacated their office as such; and (c) the pel'soil appointed to take over the management 01 the compaoy slvtll, in acoql"dance with those dw:ectious, take au such steps as may be neceasary to f-dlit"1h~ ~ up of its  new's and tbe distpbjltion of its ais8ts , , (6) the central government, when satisfied that nothing further req1lii7cs ·to be d6de in01lder to wind up the diaira of the  coolpey, may • by «cler ill wl'itm" idi!'eet that as frmn 8u~ date s may be· 3s speeified ~hs'eidf the ctompan,- 1jhall stand ,tlissolv'f:!lli and tftereapglll any such direction shall have dect ·accordingly  - (7) the :provibions of :thissection shall-haveeftect notwitbstand-irw aq~ co;owned in the companies act, l,9pi·pr any otljei' law 'or any instrument baving force by virtue of such act or ~er law  chapter viii miscellaneousstaft of 26 (1) the development bank may appoint such number of om-developcera and employees as it considers necessary or desirable for the ment bank efficient performance of its functions and detennine the terms and 5 oondicons of their appointment and service (2) without prejudice to the provisions of sub-section (1), it shall be lawful for the development bank to utilise, and for the reserve bank to make available the services of, such staft of the reserve bank on such terms and conditions as may be agreed upon 10 between the development bank and the reserve bank dele,ation 21 the board may, by general or special order, delegate to any of powers committee of directors constituted under section 7 or to any director or to any otlicer or other employ\!e of the development bank, subject to such conditions and limitations, if any, as may be specified 15 in the order, such of its powers and duties under this act as it may deem necessary returns 28 the development bank shall furnish, from time to time, to the central government and the reserve bank such returns as the central government or, as the case may be, the reserve bank, may 20 require obllption as tome lity cd secrecy 29 (1) the development bank shall not, except as otherwise required by this act or any other law, divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage 25 customary among bankers, necessary or appropriate for the development bank to divulge such information (2) every director, member of a committee, auditor or officer or uther employee of the deve10pment bank or of the reserve bank, whose services are utilised by the development bank under the pro- 30 visions of this act, ahall, before entering upon his duties, make r  declaration of fidelity and secrecy in the form set out in the first schedule to this act j)efeetl in appoint-menta not tolnvalldate acta, etc 30 (1) no act or proceeding of the board or of any committee of th'e development bank shall be questioned on the ground merely of 35 the existpnce of any vacancy in, or defect in the constitution of the , board or the committee, as the case may be (2) no act done by any person acting in good faith as a director shall be deem-ed to be invalid merely on the ground that he was disqualified to be a director or that there was any other defect in btl 40 appointment 31 (1) every director shall be indemnified by the development indemnlt,' bank against all losses and expenses incurred by him in, or in rela- of dir  tion to, the discharge of his duties, except such as are caused by his tor • own wilful act or default s (2) a director shall not be responsible for any other director or for any officer or other employee of the development bank or for any loss or expenses resulting to the development bank from the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the development bank or 10 the insolvency or wrongful act of any debtor or any person under obligation to the development bank or anything done in good faith in the execution of the duties of his office or in relation thereto 32 no suit or other legal proceeding shall lie against the deve- otprot~ioll    acuon lopment bank or any director or any officer or other employee of the taken is development bank or any other person authorised by the develop- under tlu ment bank to discharge any functions under this act for any loss or act damage caused or likely to be caused by anything which is in good faith done or intended to' be done in pursuance of this act or any other law or provision having the force of law 20 33 the bankers' books evidence act, 1891 shall apply in relation act 18 of to the development bank as if it were a bank as defined in section 1891 to 2 of that act apply in relation t developmentbank 34 nothing contained in the banking companies act, 1949, except act 10 of section 34a thereof, shall apply to the development bank 1949 not to apply to developmentbank 25 35 notwithstanding anything to the contrary contained in the act 43 of income-tax act, 1961, the super profits tax act, 1963 or in any other 1961 and enactment for the time being in force relating to income-tax, super- act 14 of t --oth  fi  1963 not to ax or super p,vuts tax, or any er tax on mcome, pro ts or gams, apply to the development bank shall not be liable to pay income-tax, super- develop-30 tax, super profits tax or any other tax in respect ofment bank (a) any income, profits or gains accruing or arising to the development assistance fund or any amount received in that fund; and (b) any income, profits or gains derived of any amount re-3s ceived by the pevelopment bank '~' 'm no provision of law relating to the winding, up of eompen:iee ~ or corporations shall apply to the development bank and the nevement bank lopment bank shan nat be placed in uquidation save by order of the central government and in such manner as it may direct power to 37 (1) the board may,' with the previous approval of the reserve s :::: rqu- bank, make regulations not inconsistmt with 'this act to provide for  all matters for which provision is necessary or expedient for the purpo~ of giving effect to the provisions of this act~ (2) in particular and without prejudice to the generality of the' foregoing power such regulations tnay provide ftlr-10 t (a) the times and places of the meetings of the board or of ,any' committee cojilstituted under this act and the proc:e<iuj;:e to be followed at auch meetings including the quorum necessary for the transaction of business; (b) the constitution and functions of the executive conurdt- is tee; (c) the fees and allowances that may be paid to the directors and the members of a committee; (d) ,the conditions which the devf!lopment binkmay impose in granting loans or adv~ or· enter1ngtwto any other 20 arrangements; (e) the conditions on which the development bank may accept, discount or rediscount bills of exchange or promissory note8; ~, (f) the investment (whetber by way of deposit hi 'baub or 2s otherwise) of the amounts in the development assistance fund or the general fund which are not for the time being required for the transaction of business; i' , (g) the form and manner in which the balance-sheets and , the accounta of the development assiuu~ce fund and the deve- '30 lopment bank shall be prepared; ,,  )j " (h) the forms of returns and statements required under this ~ 0, ~ (i), the duties and conduct, salaries, allowances and conditions of service of officers and other employees of the develop- 3s ment bank; (j) the establishment and maintenance of provident or other benefit funds tor officers and other employees of the development bank; (k) generally, the eft\cient conduct of the affairs of the development bank; and (1) any other matter which is to be, or may be, prescribed (3) any regulation which may be made by the board under this ~ act may be made by the reserve bank within three months of the establishment of the development bank; and any regulation so made may be altered and ·rescinded by the board in the exercise of its powers under this act 38 the enactments specified in parts i to iv of the second sche- amend-10 dule to this act shall be amended in the manner directed in the first ment of column thereof and such amendments shall take effect on the dates certatin enac -specified in the ~ond column of that schedule menta  the firs'i1 schedule [see section 29(2)] is declaration of fidelity and secrecyi  do hereby declare that i will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as director, member of  committee, auditor, officer or other employee (as the case may be) of the industrial deve-30 lopment bank of india and which properly relate to the office or posi-tion held by me in or in relation to the said development bank i further declare that i will not communicate or allow to be communicated to any person not legally entitled thereto any infonnation relating to the affairs of the industrial development bank of india 25 or to the affairs of any person having any dealing with the said development bank, nor will i allow any such person to inspect or have access to any books or documents belonging to or in the possession of the said development bank and relating to the bwliness of the said development bank or the business of any person having any 30 dealing with the said development bank signed befewe me,  amendment of certain ,nactmmls part iamendments to the rbsbrvb bank op india act, 1934 (2 of 1934) s amendments date on which amendmenta shall take effect  (2) (i) the date of establishment of the development bank 10 i in section 2, after clause (bbb), insert the following clause, namely :-'(bbbb) "development bank" means the industrial development bank of india established under the industrial development bank of india act, 1964;' 2 in section s-is -do-20 (a) in sub-section (1),-(i) in clause (a), for the word "three'" substitute the words "not more tban four"; (io in clause (c), for the word "six", substitute the word "ten"; (b) in sub-section (4), omit the words, brackets and figure "subject to the provisions of sub-section (6)"; (e) omit sub-section (6) -do-3 in sub-section (2) of section 13, for the words "three directors", substitute the words "four directors" 4 in section 17--00-(a) after clause (4f), insert the following clauses, namely:-"(4g) the making ofloans and advances to, and the purchasing of bonds and debentures of, the development bank out of the national indu~trial credit (long term operations) fund established under section 46c; | amendments                            | date on which amendments    ||---------------------------------------|-----------------------------|| shall take effect                    |                             || (2)                                   |                             || (i)                                   |                             || (fii) the making to the development  |                             || bank                                  |                             || of                                    | loans and                   || (a)                                   |                             || repayable on demand or on             | the                         || piry                                  |                             || offixed                               | periodo;                    || ing ninety days, from the date        |                             || of                                    |                             || such loan!or advunce against the      |                             || 10                                    |                             || security                             | of                          || securitiesi( other                    |                             || than                                  | immovable                   || property) in which a trustee          |                             || is                                    |                             || authorised to invest trust money      |                             || by any law for the time being in      |                             || 1                                     |                             || s                                     |                             || force in india; or                    |                             || as                                    |                             || 30                                    |                             || the                                   |                             || date                                  | of                          || of                                    |                             || the development bank                 |                             || national                              |                             || industrial                            |                             || credit                                |                             || (lona term                            |                             || ()peratjon)                          |                             || fund                                 |                             || (b)                                   |                             || against the security                  | of                          || exchange                              | or                          || arising out                           |                             || of                                    |                             || bona                                  | fide                        || commer-                               |                             || cial or trade transactions bearing    |                             || two                                   |                             || or                                    | more good signatures and    || maturing within five years from       |                             || the date                              |                             || of                                    | such loan                   || 1ldvan-                               |                             || ces;"j                                |                             || (b)                                   |                             || in clause                             |                             || (8a),                                 |                             || after the words,                      | "the                        || deposit insurance corporation",       | insen                       || the words                             | "the                        || s                                    |                             || after section 46b,                    | insen                       || tion,                                 |                             || namely:-                              | -                           || "46c                                 |                             || (1)                                   |                             || the                                   | bank shall establish and    || maintain a                            |                             || fund                                  | to be known                 || national indu8trial credit (long term |                             || operations)                           |                             || fund                                  | to                          || be                                    |                             || credited-                             |                             || (a)                                   |                             || an initial sum                        | often                       || 35                                    |                             || by the bank;                          |                             || (b)                                   |                             || such further sums                     | of                          || as                                    |                             || the                                   |                             || bank                                  |                             || may contribute                        |                             || every                                 | year:                       || provided                              | that                        || during each                           | of                          || years                                 |                             || commencing with the year end-         |                             || ing on the 30th day                   |                             || of                                    |                             || june,                                 |                             || i96s                                  |                             || shall not be less than                | five                        || of                                    | rupees:                     || provided                              |                             || funher                                | that the central            || 4s                                    |                             || government may,                       | if                          || stances so require, authorise the     |                             || bank to reduce the said               |                             || i                                     |                             || sum                                   |                             || r                                     |                             || of                                    |                             || five                                  | crores                      || &dyorye&r                            |                             |amendments date on which amendments ihau tiike effect (2) 5 10 (2) the amount in the said fund shall be applied by the bank only to the following objects, namely :-(a) the making to the development bank of loans and advances for the purpose of the purchase of, or subscription to, stocks, shares bonds or debentures iasued by the industrial finance corporation established under the industrial finance corporation act, 1948, a state financial corporation established under the state financial corporations act, 1951, or any other financial institution which may be notified by the central government in this ~h~orfurthefu~of~ other business 0 the development bank; (b) the purchasing of bonds and debentures issued by the development bank"  part u ambndmiht t-o thb industrial disputes acc, 1~7 (14 oil j947)amendment date on which amendment sba1l tab effea 30 (i) (2) m section 2, in clause (bb), after the words "and the dale of e8tllbijtbllltllt of includes", insert the words "the industrial the developd:lltal: beak development bank of india," partiu 35 ambndmi!nts to the industrim ftlomci colijgaatlcdr ~~ 1948 (is of l~)  amendments da~ on wbich amendments shiu take effect (i) (2~ 40 the date of atabtishment of the ~dopou:at anit i in section 2, after clause (b), insert the following clause, namely :-'ebb) "development bank" meaa the industrial development bank at india established under the indunrial :development bank of india ad, 1964;' amendments date on which amendments shall take effect 2 in section 4,-s (a) omit sub-sections (s) and (6); and the date appointed by the central government under sub-section (1) of section 4a of the industrial finance corporation act, 1948 as inserted by this act (b) in sub-section (7), for the words "the central government, the reserve bank", substitute the words "the de-10 velopment bank" 3 after section 4, insert the following section, the date of establishment of namely ;-the development bank "¢ (1) on such date as the central government may, by notification in the official gazette, appoint-15 transfer of ahara and mc:reuc of capital 20 (a) all shares of the corporation held by the central government and the reserve bank shall stand transferred to and vest in the development bank and as compensation therefor the de¥elopment bank shall pay to the central government and to the reserve bank respectively the face value of the shares held by that government and by tha t bank; 30 35 (b) the capital issued by the corporation shall be increased by such number of shares as the central government may specify in this behalf and all such shares shall stand allotted to and be subscribed by the development bank, so however that after such increase the development bank holds not less than fifty per cent of the paid-up capital of the corporation ~2) if and when the remaining shares 10 the capital of the corporation, or any part thereof, are issued, such further shares shall be offered to the holders of the shares of the corporation in proportion, as nearly as circud,1stances admit, to the capital paid-up on those shares at the date of such further issue: 45 provided that if any such shares remain unallotted, they shall be subscribed for by the development bank" amendments date on which amendments shall take effect (i) (2) 4· in section 6~-the date (4) in sub-section (3), for the words "the central appointed by the government 5 central government" substitute the wqrds "the development bank"; under sub-section (1) of section4a of the industrial finance corporation act, 1948 as inserted by this act (b) for sub-section (4), substitute the following sub-~ection, namely:-j 10 " (4) if any dispute arises between the development bank and the board as to whether a question is or is not a question of policy, the dispute shall be referred to the central government whose decision thereon shall be final"; (c) in sub-section (j), for the words "laid down by the central government", substitute the words "given by the development bank"; in section 10,-do 5· (a) in sub-section (1)-30 35 (i) in clause (a), for the words" the board", substitute the words "the development_bank"; (ii) in clause (aa), for the words" the central government" substitute the words "the development bank"; (iii) in clause (b), for the words ''the central board of the reserve bank", substitute the words ''the central government"; (it') in clause (d), for the words ·'the central government, the reserve bank", substitute the words ''the development bank"; (b) after sub-section (1) insert the following sub-section, namely:-"(2) on the date appointed under sub-section (1) of section 4a, the directors holding office under clause (44) or clause (b) immediately before the said date shall be deemed to have vacated their offices as such  45 amendments (i) date on which amendment shall take effect (2) -----------------------------s 6 in section loa in sub-section (1), for the words" by tbe board " substitute the words " by the development bank"  10 the date appointed by the cenual government under sub-section (1) of section fa of tbe industrial finance corporation act, 1948 as inserted by this act do do do do do do 7 in section ii, in the proviso to subsection (4) insert at the end the words "or of the development bank" 8 in section 13 in sub-section (1), after the i s words "the central government may", insert the words "after consultation with the development bank" 9 in section 13a, for the words "with the board", substitute the words :'''with 20 the development bank" 10 in section 17, in sub-section (6), for the words "the central government or the reserve bank", substitute the words "the development bank or the central 2s government" ii in section 18, for the words "the central government" substitute the words "the development bank" 12 in section 21, in sub-section (4), after 30 the words "borrow money from the central government", insert the words "or the development bank" and after the words "borrowed by the corporation from the central government", insert 35 the words "and the development bank" 13 in section 23, in sub-section (1)-do (a) in clause (h), for the words "the central government", substitute the words "the development bank"; 45 50 (b) after clause (i), insert the following clause, namely:- h(ii) acquiring with the approval of the development bank the undertaking including the business, assets and liabilities of any institution the principal object of which is the promotion or development of industry in india, or the grant of financial assistance for such promotion or development;" amendments (i) date on which amendments shall tab effect (2) in section 24,-the date appointed by the (1 (or the words "one crore", central government under s wherever they occur, substitute sub-section (i) of section the words "two crores"; 4a of the industrial (i,) for the words "the central finance corporation government" substitute act, 1948, as inserted the words "the development by this act 10 bank" do is for section 32a, substitute the following section, namely:-special raerve fodd is 20 "32a (1) au dividends accruing on the shares of the corporation held by the central government and the reserve bank immediately before the date appointed by the central government under sub-section (1) of section 4a in respect of any completed accountinf period, whether declared or not, shal be credited to a special reserve fund (i) all dividends accruing to the development bank shall, instead of being paid to it, be also credited to the said fund until the aggregate of the sums credited to the fund under sub-section (1) and this sub-section exceeds one crore of rupees·  30 (3) the central government, the reserve bank and the development bank only shall have claims to the said fund" do 3s 16 in section 34-(ii) in sub-section (1)-(,) for the words "the central government in consultation with the comptroller and auditor-general of india", substitute the words ''the development bank"; (ii) for the words "the central government", where they occur for the lecond time, substitute the words ''the development bank"; 4s (b) in 8~b-section (4), for the words "the comptroller and auditor-general of india", substitute the words "the development bank"; (c) omit sub-section (s) ; amendments date on which amendments shall take effect (2) (d) for sub-section (6), substitute the following sub-section, namely :-5 10 is "(6) without prejudice to anything contained in the preceding subsections, the central government may, at any time, a~point the comptroller and auditor general of india to examine ~d rep on upon the accounts of the corporation and any expenditure incurred by him in connection with such examination and repon shall be payable by the corporation to the comptroller and auditor-general of india" central government under 20 17 in section 35-the date appointed by the (a) in sub-section (2), for the words "central government", at both p!aces where they occur, sub3titute the words "development bank"; sub~8ection (1) of section 4a of the industrial finance corporation act, 1948 as insened by this act (b) in sub-section (3), for the words "and the reserve bank", substitute thewords "the reserve bank and the development bank" do 18 re-number section 36 as sub-section (1) thereof, and-30 (a) in sub-section (1) as so re-numbered, for the words "other than the central government and the reaerve bank", substitute the words "other than the development bank"; 3s (b) after sub-section (1) as so re-numbered, insen the following sub-sections, namely:-40 "(2) after the acquisition of the shares as provided by sub-section (i), the central government shall transfer the shares to the development bank on that bank paying an amount equal to the amount paid by the central government for such acquisition 45 amendments date on which amendments shall take effect |                                        | (3) after the transfer           | of                         | the shares by    ||----------------------------------------|----------------------------------|----------------------------|------------------|| the                                    | central government               | to                         | the              || de-                                    |                                  |                            |                  || velopment bank under sub-section       |                                  |                            |                  || (2),                                   |                                  |                            |                  || the                                    | central government may           |                            |                  || direct by notification in the official |                                  |                            |                  || gazette                                |                                  |                            |                  || that                                   | with effect from                 |                            |                  || such date                              |                                  |                            |                  || as                                     |                                  |                            |                  || may                                    |                                  |                            |                  || be                                     |                                  |                            |                  || specified in the                       |                                  |                            |                  || notification the entire undertaking    |                                  |                            |                  || of                                     | the                              | corporation, including all |                  || business, property, assets             |                                  |                            |                  || and                                    | lia-                             |                            |                  || bilities, rights (including            |                                  |                            |                  || the                                    | right                            |                            |                  || to                                     | recover loans and advances gran- |                            |                  || ted                                    | by                               | the corporation in accord- |                  || ance                                   |                                  |                            |                  || with the provisions                    | of                               |                            |                  || this                                   |                                  |                            |                  || act), interests, privileges and obli-  |                                  |                            |                  || gations                                |                                  |                            |                  || of                                     | whatever nature,                 | shah                       |                  || stand transferred                      | to                               | and vest in the            |                  || development bank                      |                                  |                            |                  |(4) por the purpose of giving effect to the transfer of the undertaking of the corporation to the developmentbank, the central governm::nt shall, hy ord~r in writing frame a scheme providing for all matters for which provision isnecessary, and the scheme so framed shall be binding upon the corporation, its 'creditors and employees and the development bank and shall have effect notwithstanding anything to the contrary contained in any law for the time being in force or in any contract or other instrument (5) the provisions of this section shall have effect notwithstanding anything contained in this act or any other law or any instrument having force by virtue of such act or other law" 19 after section 40a insert the following section, namely :-removal of "40b (1) if any difficulty arises in giving difllcultiea effect to the provisions of this act, the central government may, by order published in the official gazette, make such provisions not inconsistent with the date appointed by the  central government under 45 sub-section (i) of tection 4a of the industrial finance corporation act, 1948 as inserted by this act | date                       | on                     | which amendmen ts    ||----------------------------|------------------------|----------------------|| amendments                 |                        |                      || (i)                        |                        |                      || ~hall                      |                        |                      || take effect               |                        |                      || (2)                        |                        |                      || 5                          |                        |                      || 10                         |                        |                      || the purposes oflhis act    |                        |                      || as                         | appear                 |                      || to it                      |                        |                      || necessary                  |                        |                      || or                         | expedient for removing |                      || the                        |                        |                      || difficulty                |                        |                      || (2)                       |                        |                      || an order under sub-section |                        |                      || (1)                        |                        |                      || may                        |                        |                      || be                         |                        |                      || made                       |                        |                      || 80                         |                        |                      || as                         |                        |                      || to                         | have retrospective     |                      || effect froul a date        |                        |                      || not                        | earlier                | tban                 || the                        | date appointed         | under                || sub-sec~                   |                        |                      || tion                       |                        |                      || (1)                        |                        |                      || of                         |                        |                      || section                    |                        |                      || 4a"                      |                        |                      |20 15 in section 42, in sub-section (1), after the the date appointed by the words "the central government may", the central government insert the words "in consultation with under sub-section (1), the development bank" of section 4a of the industrial finance corporation act 1948, as inserted by this act do 20 21 in section 43, in sub-section (1), for the words "the reserve bank", substitute the words "the development bank" ----------------- --_   part iv amendment to thb banking companii!s acr, 1949 (10 of 1949)| amendment                  | date on which amendment    ||----------------------------|----------------------------|| shall take effect          |                            || (2)                        |                            || in                         | section 34a,               || word - 'includes" , insert |                            || the                        | words                      || ''the                      |                            || in-                        | the development bank      || 3                          |                            || 0                          |                            || dustrial development bank  | of                         | statement of objects and reasonsthe existing arrangements for the provision of credit for the expansion or development of industry are not adequate in relation to the needs of the various enterprises or projects it is proposed, therefore, to establish a new institution, to be known as the industrial development bank of india it will be a wholly-owned subsidiary of the reserve bank of india and will be managed by a board of directors, consisting of persons who are for the time being members of the central board of the reserve bank 2 the industrial development bank of india will be able to coordinate the activities of all the institutions which are or may be concerned with the provision of finance for industrial development it will be in a position to provide refinance to these institutions or to grant direct loans to industrial concerns or to promote and develop key industries, as circumstances may require 3 the provisions of the bill are explained in detail in the notes on clauses t t krishnamachari new delhi; the 18th february, 1964  recommendation under articles 117 and 274 of the co~~onofind~[copy of letter no f 2 (102) corp/63, dated the 21st february, 1964 from shri t t krishnamachari, minister of finance to the secretary, lok sabh8l] the vice-president discharging the functions of the president having been informed of the subject matter of the proposed industrial development bank of india bill, 1964, recommends the introduction of the bill in the lok sabha under clause (1) of article 117 and clause (1) of article 274 and its consideration under clause (3) of article 117 of the constitution ! czauae 2 provides for the definition of the expressions used jn the! bill the proposed definition of an industrial concem is :teasonabl,y wide and will include all industrial units or enterprises, wbefher they are la the pivate 'or the public sector 8lld whether or not th'!'y -are inool;pora~ udder the co~es act or under any other:law clause 3 provides for the establishment of the industrial development bank of india and its branches and agencies clause 4 provides for the share capital and ownershipdl ,the industrial develqpment bank like the industrial development bank of canada, it will be a whouy-owned subsidiaxy of the central bank of _the country its authorised capital will be rs 50 crores, but may be increased to rs 100 crores with the previous approval of the central govellnment the issued capital will be initially lb 10 crotes, but :may be increased from time to time with the previous approval of the central govenunent clauses 5 and 6 provide for the managemeut mthe jniuidrial development bank it is proposed (on the analogy of the provision in seetion 3 of the lrlduatr-ial development bank act, ::ij9m:oi'canada) that the bow ,of directors shoulni cjudlibt of persons who ,are, fer the time hemg, directors 'of the -central board aftbe treierve bank the-governor 9f the deserve bauk will-he the chairman of tbebouci of 'dift!etors -anda deputy governor·of 1he reserve badk ,of ·iagia nomhufted by 'that bank, wid be 'thevme-chaimiad flftlle boatd clause 7 provides for the constitution ot executive and other earnmiuees lor carrying out -any functions or duties which may be delegated or allotted to them by the board of directors clause 9 provides for the business which the new institution is expected to transact it will,like the kftditanstalt m iweit 'g8i!jllbny and the media credito in ltaiy,reftnance long 'or ,medium term loads granted by other financial institutions or banks the long term loans refinanced by the new institution are expected to be 'repaid within a period of twenty-flve 'years and -medium 'term loam are expaeted ,to be repaid wrthin a period df ten ye8'l'fl 1f industrial 'concerns nqwre financial accommodation, in connection with the eqmbt at 'capital goods or other commodfties on deferretlpayment terms and thegnnt of credit 'facilities to the importers df ,uch goods er !coljlldodjtiel outside india, the industrial development bank will be able to l1'ant the necessary accommodation, for periods up to ten years, but subject to the exchange control regulations governing such exports short term loans, granted ·fora period of less than three years for financing the normal requirements of industrial concerns or for a period of less than six months for financing exports, will not be refinanced by the industrial development bank w'nere loans or other accommodation may not be available to any industrial concern from the existing financial institutions or from the commercial banking system, the industrial development bank will assist the concern by granting loans directly to it or by subscribing to the issue of shares, bonds or debentures by it or by guaranteeing its obligations no special provision has been made as regards the nature or types of security against which refinance or direct assistance, as the case may be, can be granted apart from being able to exercise bome degree of discretion in regard to these matters, the industrial development bank will be able to accept or discount the bills of industrial concerns, arising out of bona fide commercial or trade transaetions, either directly, or when such bills are presented through scheduled or state co-operative banks ~ the industrial development bank will underwrite new issues, particularly in cases in which facilities for this purpose may not normally be available it can provide technical or administrative assistance to industrial concerns, and undertake research or technoeconomic studies and surveys, on its own initiative or otherwise, with a view to promoting the establishment of new enterprises like tha japanese development bank, the industrial development bank of india will be able to develop key industries which are important from the point of view of future industrial growth or the overall needs of the economy the industrial development bank will be in a position to form subsidiaries for any or all of these purposes clauses 10 to 12 provide for the grant of loans by the central government to, and borrowing from other sources by, the industrial development bank the central government will be authorised to grant an interest-free loan of rs 10 crores to the industrial deve--lopment bank, when it is established the loan, if granted, will be repayable in easy instaime~ts, after a period of fifteen years the income accruing to the industrial development bank from the utilisation of the funds attributable tothis loan will enable it to meet ita expenses, until such time as its earnings or income from other resources are adequate to meet its normal or average expenditure the central government will, apart from this initial loan, grant to the industrial development bank such other loans as may be necessary from time to time on the usual terms and conditions like all financial institutions, the industrial development bank will be able to borrow from the market on its own bonds or debentures the bonds or debentures will not be guaranteed by the central government, if such a guarantee is not considered necessary normal banking accommodation for periods up to ninety days will be available to the new institution from the reserve bank on the usual terms and conditions the industrial development bank will, in addition, be entitled to loans and advances from the l'teserve bank, on the security of the commercial or trade bills of industrial cod-cerns maturing within five years, which are held in the portfolio of the industrial development bank (vide aiso the notes on clause 9) the reserve bank will establish a new fund, to be known as the national industrial credit (long-term operations) fund, to which allocations will be made from out of the surplus profits of the reserve bank before they are transferred to the central government loans from this fund will be granted to the industrial development bank for enabling it (a) to acquire shares in other financial institutions which may be concerned with the grant of credit for indus:' trial purposes, or (b) to subscribe to the bonds or debentures of such institutions, or (c) to finance the industrial development badk's own 'businell • '  the industrial pevelopment bank will be able to borrow amounts i~ foreign currenc~es on such terms and conditions 'as may be ap j?~oyed by the c~ntral goy~~ent '      '   "' ' ' , , '   " ,    " ' clause 13' enablelf the industriil developmentba11l to'reeeiw ilfty  amount' from any source otherwise than by way of loans  , clauses 14 to 19 relate to the pr~vision for the grant of dassfistanth~e , to industry from another special fund which will be create or is purpo~_ in other countries, where development banks have been estabtfshed, it is not unusual for governments to place at the disposal of these banks counterpart, trust or other funds for supplementing the resources which may otherwise be available to them the development assistance fund in this case will be created with an appropriate initial contribution from the central government and will be credited from time to time with such further sums as may be necessary, having regard to the qemands of indian industry the ftmd wm be managed by the industrial development bank and will h utntsed f<)r granting asststance to essential industrial enterpriaea 1ft circumstances in which, on' purely commercial considerationa or i:h the light of the standards or criteria which are normally followed, loans are not likely to be granted to these enterprises by banks or other financial institutions the industries which are likely to be assisted will be those which, for various reasons, such as the heavy investment which may be involved or the anticipated' rate of return on capital, may not be able to obtain funds or resources in the usual course, but may nevertheless be of such importance that special provision for assisting them will be justified the accounts of the development assistance fund will be main  1:iiided sepandlely, and a report on the operations of this fund will be mlbmitted to· the central government cl'a:uses 20 to 24 provide for the mainten8nee of' aceounts in rei'-peet of all transactions other than those relating to the development aasibtadce fund, the creation of a g~neral, reserve fund, the 'prepantiod at the aadual balance-sheet and profit and loss accounts of the development bank in respect of these other transactions, and the awut add publicatign of the balance-sheet and accounts 11te proftts of the indusbial development bank, after making provision for bad aad, doubtful debts, depreciation, reserves and other appropriations will 1m tranlferred to the reserve bank ctawe 25 provide far the transfer to the industrial devetopment bank at any later stage, if this is considered necessary, of the uftciewtaking and business of the refinance corporation for industry; 1'idb  jmtitutioa wluch wu established id june 1958 has been refinancing 'lj'ec'u11"'p4erm loana, granted to medium-sized enterprises by ~er­clal banks, state ~rative banks and state flnancfal cotpojattons it will eontinue to carry on this business, even after the tn4ust:rfa1 ~ 4i&- b-  he-abuahad, bwi if in the, lidat of any further d:eftdopua::nts  for administrative or other reasons it becomes necessary for the business of refinancing of industrial credit to be undertaken mainly or solely by the industrial deftjlgpment bank, the shares of the reserve bank, the life ldsurance corperati4la, the state bank and' other commercial banks in the reftnuce cot'pora~ tion for industry will be taken over dy the industrial development bank, on the payment of eompensation equal flo the £me value gf these shares claue:s 26 to 34 pl'oyide for the staff of the industrial development bank, tm eelegation of powers, obligfltions as to secrecy,the idded&1dty of girectors add other matters for which provfsibn ill \w\lally made in similar enactments  cz4use' 35 provides for the exemption of the industrial development bank from income and other direct taxes clejuae 38 prcwides f« amendments to the resetw bank of lndi8 act, 1914, the lodustrial disputes act, 1947, the mdustrial finance col1poratlon act, 1948 and the banking companies act, lba the amendments to the reserve bank of india act are main1¥ conaequential the reserve bank will be enabled to subscribe to the share capital of the industrial development bank, to create the national industrial credit (long-term operations) fund and to grant to the industrial development bank donnal banking accommodation or special loans for periods up to five years on the security of trade or commercial bills in view of the incorporation of the industrial development bank as a wholly-owned subsidiary of the reserve bank· and the other responsibilities which have recently been entrusted to the reserve bank, it is proposed! that the ililiilber of direet:ors on the central board of the rieserve- badk shouw be mcreesed frem 15 to 20, by the appointment of an' addi:tiodal dej)1lt, governor (who may become the vice-chairman of tize 1bd\lllkial development bank) and the nomination of four additional non-oftlcia! directors under clause (c) of sub-section (1) of section 8 of the reserve bank of india act the amendment to the industrial disputes act, 1947 is intended to make it clear that the appropriate government in relation to any industrial disputes involving the industrial development bank will be the central government 'the amendments to the industrial finance corporation act, 1948 are intended (a) to facwtatethe transfer at par value of the shares now held in the corporation by the reserve bank and the central government to the industrial development bank and to ~ble the industrial development barik tei acquire additional shares in the corporation so as to increase its total holdings up to fifty per cent of the paid-up capital of the corporation, and (b) to provide for c0nsequential changes in various provisions relating to the constitution of the board of directors of the corporation, the issue or directions to, or borrowing by, the corporation, the special reserve fund and accounts and audit the industrial finance corporation will, after it is reconstituted, continue to function as an independent institution managed by a board of directors, consisting of a chairman and two directors appointed by the central government, four directors nominated by the industrial development bank and six directors elected as at p~t by the remaintna shareholders the corporation's 'powen will be extended so as to enable it to take qver, with the approval of the industrial development bank, any institution concerned with the provision of industrial finance if in the light of any further developments, it is considered: necessary or desirable that the industrial finance corporation should become a wholly-owned subsidiary of the industrial developmentbank or be merged in that institution, the central government will acquire and transfer to the industrial development bank the shares in the industrial finance corporation (other than those which may already be held by the industrial development bank) on the terms and conditions which are already specified in section 316 of the industrial finance corporation act pro vision has been made for the transfer at that stage, if considered necessary, of the business and undertaking of the industrial finan~ corporation to the industrial development bank the amendment to the banking companies act, 1949 is for thl purpose of extending to the industrial development bank the benefit of protection against any demand by any tribunal or authority ud-der the industrial disputes act, 1947 for information regardidi inner reserves '  (," •• '''roo  ~ "! •   ,  clause 10 of the bill provides that the central government may grant an interest-free loan of rs 10 crores to the industrial development bank, after it has been established, and that the government may grant to the new institution from time to time such further loans as may be necessary sub-clause (2) of clause 11 provides that the central government may in certain circumstances guarantee the repayment of principal and the payment of interest in respect of the bonds and debentures issued by the industrial development bank and sub-clause (2) of clause 12 provides for a similar guarantee, if necessary, in respect of any loan raised by the industrial develop-ment bank in foreign currencies clause 15 provides for the credit to the development assistance fund of certain sums which may be appropriated for this purpose 2 it is expected that a loan of 10 crores will be gnntted to the industrial development bank during 1964-65 it i!i not possible at this stage to anticipate when or how other loans may have to be granted to the new institution or to indicate the amount of the grant which may have to be made for credit to the devel<jt)ment assist8dce i'wu:l clause 19 provides that the development assistance fund which wid be 'tteld'am4 meaged '" fhe lnttdsti iall development bank may be wt>uft:d up,lf necessary, in such 'ftlanneras thecerrtral -govern-1m!'l'l't may direct clause 38 makes simflar proviiionas ft'g&rds 'lte industrial development bank clause 37 empowers the bgard 01 directors of theladustrial development bank to make regwatiodb with the preldeusapproval of the be&erve bank for matters relating to the constiiution of the exeouti¥e ·committee, the tranaaction 01 busibess by the board of din!etors ud ,ihe committlees, the fees and allowances to be paid to the ginetora and members 01 eommittees, the conditions on wliich joana, awadces ~r other financial accommodation my be ganted, the form and manner in which the bajance,sheet and accounts are to be prepared and for other similar or connected purposes   ,part ill 'fijif the secodd sehedu1e eil\pow8rs the cen1ral govern, eat to brame a auitableacheme, if necessail', to provide for the vadder ,of the business and ~ of the industrial finance c~n to ·tbe liddusirial development bank the matters in respect of which power is conferred on the-qm tral government or on the board under clauses 19, 36, 37 and part m of the second schedule relate to the day to day administration of the industrial development bank or to the implementation of the policy which ~ already embodied in the bill rnd the delegation of legislative power is of a normal character (2 or 1934) - - - - - -  (1) the central board shall consist of the following direetors, compolinamely: -:dc':ntral (a) a governor and three deputy gowjillors to be appoint- board and ed by the central government;  term of ofticeot (e) lix directors to be nominated by the central govern- director'll - - - - - - ment; and - - - - - - (4) the governor and a deputy governor shall hold offtce for luch term not exceeding five years as the central government may fix when appointing them, and shall be eligible for re-appolntment a director nominated under clau8e (c) of sub-section (1) shall, subject to the provisions of sub-section (6), hold office for a period of four years a director nominated under clause (d) of sub-section (1) shall hold offlce during the pleasure of the central government - - - - - - (6) out of the six directors first nominated under clause (e), of sub-section (1), two shall retire at the ~nd of one year, two at the end of two years and the last two at the end of three years, the directors 80 to retire being determined by lot - - - - - - 13 (1) - - - - m'eetidal otthe (2) any tlm!e directors may require the governor to convene a central meeting of the central board at any time and the governor shall board forthwith convene a meeting accordingly  - - - - - - 17 the bank shall be authorised to carry on and transact the bus~ leveral kinds of business hereinafter specified, namely: -~ mar - - - - - tranact (8a) the purcbue and lale of shares in, or the capital of the agrieu1tural reftnanee corporation, the deposit insurance corporation, the state bank or any other bank: or financial tnsu-tquon notifted by the central government in thjs behalf;   - - -    (1 cw 1947)- - - - ~ i; ia tilt act,  1 tilere is anytbiq l'4t~ ill "the< ~c or context,-- - - (bb) "banking company" means a bankiitg company u ddwtd' in, liiet1on 5 of the baakirg companies aa\ ln9, having 10 of 1m, branches or other establishments in more than one sy1~, ~ includ81 the reserve bank of india,: the sta~ bank ot india q~ nay ,\j,bsicuary bank as, defined t,n the state bank of india  <s\llw~at'y bajlq) act, 1959; j' of 1959  eiftactii no~ 'ftie industiual p'inakei: cobi'oila'l'ion ai::r-, lti&8(15 or 1948) - - - - 4 (1') - - - share capital addlhareholden (5) if any shares referred to id iub sect10n (3) remain unalloutd they shall de subscrided for by the central govei'!ll1\ent and tbe reserve ba~ in such proportion as may be agreed on between them: provtded that the central oovemmen·t and th  rve bauk may dispose of the shares subscribed for by'them la pursua~ of this sub-section to any scheduled bank, inaup8dee eompady idftitment trust or other like financlal institution or any ccjo-operative bank to w~ch abar-es of the c~poraijonm~ be tranfej1'ed \ldder iiu~ section (1) ' : (~) ~,~,d wlle!) the r~atni~j iha~ or any' part  thereof are iasq~4" tb, centraj gov~rnmejlt rut, th~ rese:r,v:e aank wu rd the w,utrtio))l refen:~ ~ ~ s"p-~ctigp (3) of thij, 1i(!c;tlqn illa¥ subscribe {9j: ~cp abares in th, iiq)e, ~opql'tiol), 41 ~qr, tb &it lmui and the provtsiol'll of suqsectiolu <i) and (5) of this aectlqj1 shall alio apply to such tharei ! (7) shares of the corporation shall not be transferable except to the central government, the reserve bank, any scheduled bank, any 1iis\1ta11ee  coriipany, wt inwstment trtmt or ah~ 1>thet like fbwlcial tiutitu'tidh at any co-ooperative bank in aecordadct 'with thenpl:at10na matl~ m thti bfhajf i - - - - i (1)· - - - - mana,,-(3) in the discharge of its said functions the board shall be guid- menl eel by such instructions on questions of policy as may be given to it by the centr81 govetnment (4) if any dispute arises between the central government lild the board as to whether a question is or ~ not a question of policy, the decision of the central government shall he final «5) ,if ihe board laid tio caity out the instl'uctions on the question >of potier laid 1l0wn by the central government, the central government shall have the power to supersede the board and appoint a newboatd in us -placet& funetion until a properly constituted board is set up the decision of the central government as to the grounds for superseding the board shall not be questioned in any court of law - - - - - 10 (1) the board of directors shall consist of the following, ba~ (if namely:-d~ (0) a ohatnaan to 'be biipoin~ by the central government ;after comlultation with the board; {(4) four idireetora nomijlateci by the central gdyemmentj (b) two directors nominated by the centr81 board of the retet\re bank; - - - - - (d) two directors elected iii the prescribed manher by die shareholders of the corporation, other than ·the -centr81 gci\p-ernmeht, the res~rve bank, the scheduled banks and co-operative banks; - - - - - ~a (j' the cfiaifftiian (jf tl' board ihtu recf!ivesuc:h salary and chairman allowands atftay be d~· by the board with the approyal of the ,of the cedtral government loud - - - - - u (1) - - - - - 'l'ermof oftlee and retirement (4) directors shall be paid such fees as may be prescribed far atot diree-tending the meetings of the board and, if they are members of the tors central committee or any other committee appointed by the corporation, far attending meetings of such committee: provided that nothing in this sub-section shan apply to the chairman or to any other director who is a servant of the government - - - - - llemovalot 13 (1) the central government may at any time remove the chairman -cbairrnan from office anddireetorafrom  - • - • -  galee casual 1m u the chairman of the board is by infirmity or otherwise vacancyof rendered incapable of carrying out his duties or is absent 011 leave chairman or otherwise in cireumstances not involving the vacation of his appointment, the central government may, after consultation with the board, appoint another person to act in his place during hii ·-absence  - - - - 17 (1) - -  - - meetfnp of board ~com­mittee (6) if, for any reason, a director nominated under clause (cj4) or clause (b) of section 10 is unable to attend any meeting of the board, the central government or the reserve bank, as the case may be, may depute any other penon to attend the laid meeting and such person shall, for all purposes of the said meeting, be deemed to be a director nominated under clause (04) or clause (b), u the case may be, of the said section oftleesand agencies 18 the corporation shall establish its head office in delhi and offices in bombay, calcutta, kapur and madras, and may, with the previous sanction of the central government, establish offices or agencies in other places in india$\bullet$\(\bullet(4) the corporation may also, £,'1' the purpose of carr;yin"out tta functions under this act, borrow money from the central g0vernment on alch tem8 add conditions as may be agreed upon: provided that the total amount borrowed by the corporation from the central government under this iuh-lection 8nd from the reserve bank under clause ('b) of sub-section (3) together with the amount of bonds and debentures issued under sub-section (1) and outstanding shall not at any time in the aggregate exceed ten time the amount of the paid-up share capital and the reserve fund of the corporation : i transact 23 (1) the corporation shall, subject to the provisions of this businea act be authorised to carry on and transact the following kinds of which the b  el corpora-uslne8s, nam y:-tionma:y - - - - - (h) retaining as part of its assets any stock, shares, bonds or debentures which it may have to take up in fulftlment of its underwriting liabilities, so however that it disposes of the stock, shares, bonds, or debentures so acquired as early as practicable but in no case, the stocks, shares, bonds or debentures so acquired shall be retained beyond a period of seven years from the date of such acquisition, except with the permission of the central government; (i) granting loans or advances to, or subscribing to debentures of, industrial concerns, repayable within a perted not exceeding twenty-five years from tbe date on which they are granted or subscribed to, as the case maybe: provided that nothing contained in this clause shall be deemed to preclude the corporation from granting loans or advances to, or subscribing to debentures of, an industrial concern, which may at the option of the corporation be convertible into stock or shares of that concem within the period the loan, advance or debenture is repayable; and - - - - - k the corpor~ion shall n~ enter into any arrangement under limit of clauses (a) and (\) of sub-sectlon (1) of section 23 with a single accommoindustrial concern for an amount exceeding one crore of rupees in dation the aggregate: provided that the aforesaid limit of one crore of rupees may be exceeded with the prior approval of the central government - - - - - 32a (1) all dividends accruing on the shares of the corporation special held by the central government and the reserve bank shall, instead reserve of being paid to them, be credited to a special reserve fund until fund the aggregate of the sums 80 credited exceeds fifty lakhs of rupeea (~) no sharehold~r of the corporation other th~ the centril goveririnent or -the reserve bank shan have any claim to the specia1 r8erv! -fund i'!fetred to in sub-section "( 1)  - - - - - audit m (1) the affainof the corporation shall be audited by not jess than twoauditcas duly qualified to act as auditors of ccmlpa1'deumd8't sub-ooction (1) of section 226 of the companies -a'ct, -ui6,:~ ,lgf t oflg58 whom shall be appointed by the central government in consultation with the comptroller and auditor-general of india and the other auditor or auditors elected in the prescribed nwmar by 'the parties mentioned in sub-section (3) of section 4 and such remuneration as the "cenual government may fix shall be paid to the auditors by the corporation - - - - - '(4)'l'he 'central government may in eonsaltatton with the comptroller -and auditor-general of india at 1l1ly 'time tssuedirectiobs to the auditors requiring them to report to it upon the ildequacy of measures taken by the corporation for the protection of its share-holdr~ and creditors or upon the sufficiency -of their procechue in ~u4iting the ,aftaira of the corpo~tion,and may at any time 8diarge or extend the scope af the audit or direqt that a diiferent proeedure in audit be adopted or direct that any other examination be made by the auditors if in its opididn the public interelt so ftqu1res (5) the corporation shall send a copy of every report of the auditots to the comptroller and auditor-general of india at least one mo'nth before it is plaeed before the shareholders (6) notwithstanding anytbingcontained in the precec:linj subsections, the comptroller and auditor-general of india may, either of his own motion or on a request received in this behalf from the central government, undertake such audit and at such times &1 he may, consider necessary: pj:oovided tb wbere the central qovernment is -requiredto m&1ae any payment on account of the guarantee given by it ,1iulder ,timl 5 or sub-section (2) of section 21 or sub-section (2) of section z7, as tlfe 'case may oejsuch audit shan be undertaken by the tomptrouer and ailifitor-"gen'eral of india ' - - - - " re~ 35 (f) ' - - - (~ th~corporation shall furnish in the prescn'bed form to the o!ntralgovernment and to the reserve bank at least once in evei1 ~ror ai frequently as the central government or the ~rve 'l:laillt may require a statement showing the classification of its loans and investments and of loans guaranteed by it and underwriting agreements entered into by it (3) the corporation shall furnish to the central government and the reserve bank within four months of the close of the financial year a statement in the prescribed form of its assets and liabilities as at the close of that year together with a profit and loss account for the year and a report of the working of the corporation during the year, and copies of the said statement, account and report shall be published in the official gazette and shan be laid before parliament 38 in the event of the central government at any time deciding acquiaito acquire the shares held by shareholders other than the central lib'on otb  - area y government· and the reserve bank the shareholders shall be paid tbe central for the shares so acquired an amount equal to the paid-up value of governthe shares together with a premium calculated at the rate of one per ment cent of the paid-up value for every year from the date of issue to the date of acquisitiqtl, subject to a maxjmwn of t~ pel\ cent_ - - - - - ft (1) the central government may make rules not incons,istent power of with the provisions of this act, to give effect to the provisions of this central act, and where there is any inconsistency between the rules and the gov::-regulations made under this act the rules shan prevail ::e rules  - - - - - 43 (1) the board may, after consultation with the reserve bank pow,:::f and with the previous sanction of the central government, make re- :'::'e r:gugulations not inconsistent with this act and the rules made there- lations under to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this act - - -  - extract from the banking companies act, 1949 (10 of 1949) - -  - - ma (1) - - - - - production ofdoeu-(3) for thep~, of this section, "banking company" includes menta of the reserve bank, the state bank of india and any subsidiary bank confidential as defined in the state bank of india (subsidiary banks) act, 1959 nature  - - - - - -  --, biu to eatabush the industrial develcrment bank of india for providing credit and other facilities for the development of industry and for matters connected therewith and further to amend certwn enactments (shri t t krishnamaclujri, minister 0/ finan&e) 