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| Home > Indian Bare Acts > THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964 > CHAPTER IV BUSINESS OF THE DEVELOPMENT BANK |
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| THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964 |
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Title : THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964
Year : 1964
Act :
CHAPTER IV
BUSINESS OF THE DEVELOPMENT BANK
9.Business of Development Bank.
9. Business of Development Bank. (1) 2*[The Development Bank shall function as the principal financial institution for co-
ordinating the working of institutions engaged in financing, promoting or developing industry and for assisting the development of such institutions in such manner as it
----------------------------------------------------------------------
1 Subs. by Act 52 of 1975, s. 10, for the proviso (w.e.f. 16-2-
1976).
2 Subs. by s. 11, ibid., for "The Development Bank may" (w.e.f. 16-
2-1976).
3 Subs. by Act 5 of 1995, s. 11 (w.e.f. 12-10-1994).
237.may deem appropriate and may] carry on any transact any of the following kinds of business, namely:--
(a) granting loans and advances to--
(i) the Industrial Finance Corporation, any State
Financial Corporation or any other financial institution 1*[which approved by the Board in this behalf], by way of refinance of any loans or advances granted to industrial concerns 2*** by such Corporation or institution which are repayable 3*[within a period not exceeding twenty-five years];
(ii) any scheduled bank or State co-operative bank, by way of refinance of any loans or advances granted to industrial concerns 2*** by such bank which are repayable 3*[within a period not exceeding fifteen years];
(iii) any schedule bank or State co-operative bank or the Industrial Finance Corporation or any State
Financial Corporation or any other financial institution 1*[which may be approved by the Board in this behalf], by way of refinance of any loans or advances granted to industrial concerns
4*[including concerns exporting products of industrial concerns)] or group of industrial concerns by such bank or institution which are for the purpose of, or in connection with, the export of capital goods, commodities or merchandise from India 3*[or the execution of any turnkey project outside India by any industrial concern as aforesaid or by any person in
India, and, in any case, are repayable--
(i) within a period not exceeding twelve years in the case of persons outside India, and
(ii) within a period not exceeding fifteen years in other cases] i.
(b) subject to such conditions as may be prescribed, accepting, discounting or re-discounting bills of exchange and 3*[promissory notes made, drawn, accepted or endorsed
----------------------------------------------------------------------
1. Subs, by Act 5 of 1995, s. 12, for certain words (w.e.f 12-10-1994)
2. Certain words ins. by Act 75 of 1972, s. 3, omitted by Act 52 of
3. Subs. by Act 75 of 1972, s. 3 for certain words.
4. Ins. by s. 3, ibid.
238.by industrial concerns or by any person selling capital goods manufactured by one industrial concern to another industrial concern];
(c) subscribing to or purchasing stocks, shares, bonds or debentures of the Industrial Finance Corporation, any
State Financial Corporation or 1*[any other financial institution, whether within or outside India,] 2*[
Board which may be by the in this behalf approved];
3*[(ca) granting lines of credit or loans and advances to the Industrial Finance Corporation, any State Financial
Corporation or any other financial institution which may be notified by the Central Government in this behalf, for the purpose of any business of such
Corporation or institution;]
(d) granting loans and advances to any industrial concern or subscribing to, or purchasing, or underwriting the issue of stocks, shares, bonds or debentures of any industrial concern:
Provided that nothing contained this clause shall be deemed to preclude the Development Bank from granting loans or advances to, or subscribing to debentures of, an industrial concern, 1*[the amounts outstanding thereon may be convertible at the option of the Development
Bank] into stocks or shares of that concern within the period the loan, advance or debenture is repayable.
4*[Explanation.--In this clause, the expression "the amounts outstanding thereon" used in relation to any loan or advance, shall mean the principal, interest and other charges payable on such loan or advance as at the time when the amounts are sought to be converted into stocks or shares;]
4*[(da) granting loans and advances--
(i) to any person exporting products of industrial concerns; or
(ii) to any person outside India, in connection with the export of capital goods from India; or
(iii) for the execution of turn-key projects outside India by any industrial concern or by any person in India;
(db) transferring for consideration any instrument relating to loans and advances granted by it to industrial concerns;]
3*[(dc) granting loans and advances to any person for purposes of investment in any industrial concern;]
(e) guaranteeing deferred payments due from any industrial concern;
----------------------------------------------------------------------
1. Subs. by Act 75 of 1972, s. 3, for certain words.
2. Subs. by Act 5 of 1991, s. 12, for certain words (w.e.f. 12-10-1994).
3 Ins. by Act 35 of 1986, s. 7.4. Ins. by Act 75 of 1972, s. 3.239.(f) guaranteeing--
(i) loans raised by industrial concerns which are floated in the public market; and
(ii) loans raised by industrial concerns from any scheduled bank or State co-operative bank or the
Industrial Finance Corporation or any State Financial
Corporation or any other financial institution 1*[which may be approved by the Board in this behalf];
(g) guaranteeing the obligations of any scheduled bank or
State co-operative bank or the Industrial Finance
Corporation or any State Financial Corporation or any other financial institution 1*[which may be approved by the Board in this behalf arising out of, or in section with, undertaking the issue of stocks, share, lands or destbuter of any indistrial cinwih;
2*[(ga) granting, opening, issuing, confirming or endorsing letters of credit and negotiating or collecting bills and other documents drawn thereunder;
(gb) providing consultancy and merchant banking services in or outside India;
(gc) acting as the trustee for the holders of debentures or other securities;
(gd) acquiring, with the approval of the Central Government, the undertaking, including the business, assets and liabilities of any institution the principal object of which is the promotion or development of industry in
India, or the grant of financial assistance for such promotion or development;]
(h) undertaking research and surveys for evaluating or dealing with marketing or investments and undertaking and carrying on techno-economic studies in connection with the development of industry;
(i) providing technical 2*[,legal marketing] and administrative assistance to any industrial concern or any person for promotion, management or expansion of any industry;
(j) planning, promoting and developing industries to fill up gaps in the industrial structure in India;
3*[(k) promoting, forming or conducting or associating in the promotion, formation or conduct of companies, subsidiaries, societies, trusts or such other associations of persons as it may deem fit;]
4*[(ka) acting as agent of--
(i) the Central Government or of the Reserve Bank, or
(ii) such other Government or person as the
Central Government, 5*[in consultation with] the
Reserve Bank, may authorise;]
(l) performing functions entrusted to, or required of, the
Development Bank by this Act or by any other law for the time being in force;
----------------------------------------------------------------------
1. Subs. by Act 5 of 1995, s. 12, for certain words (w.e.f. 8-10-1994)
2. Ins. by Act 35 of 1986, s. 7.3. Subs. by s. 7, ibid. for cl. (x)
4. Ins. by Act 75 of 1972, s. 3.5. Subs. by Act 52 of 1975, s. 11, for "on the recommendation of"
(w.e.f. 16-2-1976).
240
(m) doing any other kind of business which the Central
Government 1* may authorise;
(n) generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or the discharge of its duties under this
Act or any other law for the time being in force including sale or transfer of any of its assets.
(2) The Development Bank may receive in consideration of any of the services mentioned in sub-section (1) such commission, brokerage, interest, remuneration or fees as may be agreed upon.
(3) The Development Bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or debentures.
9A.
Prohibited business.
2*[9A. Prohibited business.- (1) The Development Bank shall not enter into any kind of business with any industrial concern, of which any of the directors of the Development Bank is a proprietor, partner, director, manager, agent, employee or guarantor, or in which one or more directors of the Development Bank together hold substantial interest:
Provided that this sub-section shall not apply to any industrial concern if any director of the Development Bank--
(i) is nominated as a director of the Board of such concern by Government, or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or by a Corporation established by any other law; or
(ii) is elected on the Board of such concern by virtue of shares held in the concern by Government, or a
Government company as defined in section 617 of the
Companies Act, 1956 (1 of 1956), or by a Corporation established by any other law,
by reason only of such nomination or election, as the case may be.
Explanation.--"Substantial interest", in relation to an industrial concern, means the beneficial interest held by one or more of the directors of the Development Bank or by any relative [as defined in clause (41) of section 2 of the Companies Act, 1956 (1 of
1956)] of such director, whether singly or taken together, in the shares of the industrial concern, the aggregate amount paid-up on which either exceeds five
----------------------------------------------------------------------
1. The words "on the recommendation of the Reserve Bank" omitted by
Act 52 of 1975, s. 11 (w.e.f. 16-2-1976).
2. Ins. by Act 75 of 1972, s. 4.241.lakhs of rupees or five per cent. of the paid-up share capital of the industrial concern, whichever is the lesser.
(2) The provisions of sub-section (1)--
(i) shall not apply to any industrial concern as specified therein if the Development Bank is satisfied that it is necessary in the public interest to enter into business with that concern, and entering into any kind of business with such industrial concern shall be in accordance with and subject to such conditions and limitations as may be prescribed;
(ii) shall not apply to any transaction relating to the business entered into prior to the commencement of the
Industrial Development Bank of India (Amendment) Act,
1972 (75 of 1972), and all such business and any transaction in relation thereto may be implemented or contained as if that Act had not come into force;
(iii) shall apply only so long as the conditions precedent to such disability as set out in the said sub-section continue.]
10.Loans by Central Government.
10. Loans by Central Government.-The Central Government may, after due appropriation made by Parliament by law in this behalf, advance to the Development Bank--
(a) an interest free loan of ten crores of rupees repayable in fifteen equal annual instalments, commencing on the expiry of a period of fifteen years from the date of the receipt of the loan; and
(b) such further sums of money by way of loan on such terms and conditions as may be agreed upon:
Provided that the Central Government may, on a request being made to it by the Development Bank, increase the number of instalments or alter the amount of any instalment or vary the date on which any instalment is payable under clause (a).
11.Borrowings and acceptance of deposits by Development Bank.
11. Borrowings and acceptance of deposits by Development Bank.-
(1) The Development Bank may, for the purpose of carrying out its functions under this Act,--
(a) issue and sell bonds and debentures with or without the guarantee of the Central Government;
242.(b) borrow money from the Reserve Bank--
(i) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money is so 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 the 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 of the borrowing;
(iii) out of the National Industrial Credit (Long
Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934) for any of the purposes specified in that section;
(c) borrow money from such other authority, organisation or institution in India as may be generally or specially approved by the 1*[the Board].
(d) 2*[(d) accept deposits on such terms as may be approved by the Board.]
(2) The Central Government may, on a request being made to it by the Development Bank, guarantee the bonds and debentures issued by that bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.
11A.
Power to transfer rights.
1*[11A. Power to transfer rights.-The rights and interests of the
Development Bank (including any other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable, by it may be transferred by the Development Bank, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument by endoresement, or in any other manner in which the rights and interests in relation to such loan or advance may be lawfully transferred, and the Development Bank may, notwithstanding such transfer, act as the trustee for the transferee.]
11B.
Power to acquire rights.
2*[11B. Power to acquire rights.-The Development Bank shall have the right to acquire, by transfer or assignment, the rights and interests of any public financial institution as defined in section 4A
of the Companies Act, 1956 (1 of 1956) (including any other rights incidental thereto) in relation to any loan or advances granted, or any amount recoverable by such institution, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument or in any other manner.]
----------------------------------------------------------------------
1. Subs. by Act 5 of 1995, s. 13, for certain words (w.e.f.
12-10-1994).
2. Subs. by s. 13, for cl. (d) (w.e.f. 12-10-1994).
3. Ins. by Act 75 of 1972, s. 5.4. Ins. by Act 35 of 1986, s. 8.243.12.Loans in foreign currency.
12. Loans in foreign currency.- (1) Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1947 (1 of 1947) or in any other enactment for the time being in force relating to foreign exchange, the Development Bank may, for the purpose of granting loans and advances under this Act, borrow, with the previous consent of the
Central Government, foreign currency from any bank or financial institution in any foreign country or otherwise.
(2) The Central Government may, where necessary, guarantee any loan taken by the Development Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of interest and other incidental charges.
1* * * * *
----------------------------------------------------------------------
1 Subs. by Act 75 of 1972, s. 6, for sub-sections (3) and (4).
2 Sub-sections (3) and (4) omitted by Act 5 of 1995, s. 14, (w.e.f.
12-10-1994).
244.13.Grants, donations, etc., to Development Bank.
13. Grants, donations, etc., to Development Bank. The Development
Bank may receive gifts, grants, donations or benefactions from
Government or any other source.
Last updated on February, 2008
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