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THE STATE BANK OF INDIA ACT, 1955

Title : THE STATE BANK OF INDIA ACT, 1955

Year : 1955



(1) The State Bank shall maintain a special fund to be known as the Integration and Development Fund into which shall be paid-

(a) The dividends payable to the Reserve Bank on such shares of the State Bank held by it as do not exceed fifty-five per cent. of the total issued capital; and

(b) Such contributions as the Reserve Bank or the Central Government may make from time to time:

2*[Provided that if the balance in the Integration and Development Fund on the date of declaration of any dividends by the State Bank is rupees five crores or more, no amount shall be paid into that Fund under clause (a) and the dividends payable to the Reserve Bank shall be paid to that Bank; and if such balance on such date is less than rupees five crores, only so much of the dividends then payable as will bring such balance to rupees five crores shall be paid into that Fund and the balance of such dividends shall be paid to the Reserve Bank.]

(2) The amount in the said Fund shall be applied exclusively for meeting-

(a) Losses in excess of such yearly sum as may be agreed upon between the Reserve Bank and the State Bank and attributable to the branches established in pursuance of sub-section (5) of section 16; 1*

2*[(aa) Subsidies granted by the State Bank to a subsidiary bank with the approval of the Reserve Bank; and]

(b) Such other losses or expenditure as may be approved by the Central Government in consultation with the Reserve Bank.

(3) Subject to the provisions of sub-section (2), the said Fund shall be the property of the Reserve Bank and no shareholder or the State Bank or any other person shall have any claim to the amount held in the said Fund.

(4) No amount applied for any of the purposes specified in sub-section (2) shall, for the purposes of the 4*[Income tax Act, 1961 (43 of 1961)] be treated as income, profits or gains of the State Bank.]

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1. The word "and" omitted by Act 38 of 1959, s. 64 and Sch. III
(w.e.f.10-9-1959).

2. Ins. by ibid. s. 64 and Sch. III (w.e.f. 10-9-1959).

3. Ins. by Act 26 of 1959, s. 7.

4. Subs. by Act 3 of 1994, s. 18, for certain words (w.e.f. 15-10-1993).

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The State Bank shall establish a Reserve Fund which shall consist of-

(a) The amount held in the Reserve Fund of the Imperial Bank transferred to the State Bank on the appointed day; and

(b) Such further sums as may be transferred to it by the State Bank out of its annual net profits before declaring a dividend.



(1) After making provision for bad and doubtful debts, depreciation in assets, equalisation of dividends, contribution to staff and superannuation funds and for all other matters for which provision is necessary by or under this Act or which are usually provided for by banking companies, the State Bank may, out of its net profits, declare a dividend.

(2) Subject to the provisions of paragraph 6 of the First Schedule, the rate of dividend shall be determined by the Central
Board.



The Central Board shall cause the books of the State Bank to be closed, and balanced 1*[as] on the 31st of December 2*[or such other date in each year as the Central Government may, by notification in the Official Gazette, specify] year:

3*[Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the closing and balancing of, or for other matters relating to, the books in respect of the concerned years.]

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1. Ins. by Act 48 of 1973, s. 14 (w.e.f. 31-12-1973).

2. Subs. by Act, 66 of 1988, s. 14, for certain words (w.e.f.
30-12-1988).

3. Ins by s. 14, ibid. (w.e.f. 30-12-1988).

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(1) 5* The State Bank shall furnish to the Central Government and to the Reserve Bank 1*[within three months from the 31st day of December 2*[or the date specified under section 39, as the case may be] shall as on which its books are closed and balanced] its balance sheet, together with the profit and loss account and the

3*[auditors report and a report by the Central Board on the working and activities of the State Bank"] during the period covered by the accounts:

4*[Provided that the Central Government may, after consultation with the Reserve Bank, extend the said period of three months by such further period, not exceeding three months, as it may think fit.]

(2) The balance sheet and the profit and loss account shall be signed by the chairman, vice-chairman, managing directors, if any, and a majority of the other directors.

(3) The State Bank shall also, within two months from the date on which its accounts are closed and balanced, transmit to the Central Government and the Reserve Bank a statement showing, as far as may be available, the name, address and occupation off, and the number of shares held by, each shareholder of the State Bank as on the said date.

6*[(4) The Central Government shall cause the auditors report and the report by the Central Board on the working and activities of the State Bank to be laid, as soon as may be after they are received, before each House of Parliament 7***.]

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1. Subs. by Act 48 of 1973 s. 15, ibid., for certain words (w.e.f.
31-12-1973).

2. Ins. by Act 66 of 1988 s. 15, ibid (w.e.f. 30-12-1988).

3. Subs. by Act 1 of 1984, s. 44, for certain words (w.e.f.
15-2-1984).

4. Ins. by Act 48 of 1973, s. 15, ibid. (w.e.f. 31-12-1973).

5. Ins. by Act 1 of 1984, s. 44 (w.e.f. 1984).

6. Omitted by Act 81 of 1985 s. 3 (w.e.f. 1-5-1986).

7. Subs. by s. 16, ibid., for certain words (w.e.f. 31-12-1973).

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(1) The affairs of the State Bank shall be 1*[audited by two or more auditors] duly qualified to act as auditors of companies under 2*[section 226 of the Companies Act, 1956 (1 of 1956), who shall be appointed by the Reserve Bank in consultation with the
Central Government.

(2) The auditors shall receive such remuneration as the Reserve Bank may fix in consultation with the Central Government.

(3) An auditor may be a shareholder but no director or member of a Local Board or of a Local Committee or an officer of the State Bank shall be eligible to be an auditor during his continuance in office as such director, member or officer.

(4) An auditor shall on relinquishing office be eligible for reappointment.

(5) The auditors shall severally be, and continue to act as, auditors until the 3*[annual] general meeting after their respective appointment, and if any vacancy arises before the expiry of the term of office of an auditor, the vacancy may be filled by the Reserve Bank.

(6) Every auditor shall be supplied with a copy of the annual balance sheet and profit and loss account, and a list of all books kept by the State Bank, and it shall be the duty of the auditor to examine the balance sheet and profit and loss account with the accounts and vouchers relating thereto, and in the performance of his duties, the auditor-

(a) Shall have, at all reasonable times, access to the books, accounts and other documents of the State Bank;

(b) May, at the expense of the State Bank, or if he is appointed by the Central Government, at the expense of the Central Government, employ accountants or other persons to assist him in investigating such accounts;
and

(c) May, in relation to such accounts, examine any director or any member of a Local Board or of Local Committee or any officer of the State Bank.

(7) The auditors shall make a report to the Central Government upon the annual balance sheet and accounts, and in every such report they shall state-

(a) Whether, in their opinion, the balance sheet is a full and fair balance sheet containing all the necessary particulars and properly drawn up so as to exhibit 4*[a true and fair view] of the affairs of the State Bank, and in case they have called for any explanation or information, whether it has been given and whether it is satisfactory;

(b) Whether or not the transactions of the State Bank which have come to their notice have been within the powers of the State Bank;

(c) Whether or not the returns received from the offices and branches of the State Bank have been found adequate for the purpose of their audit;

(d) Whether the profit and loss account shows a true balance of 5*[profit of loss] for the period covered by such account; and

(e) Any other matter which they consider should be brought to the notice of the shareholders or the Central Government, as the case may be.

6*[Explanation 1.-For the purposes of this Act,-

(a) The balance sheet shall not be treated as not disclosing a true and fair view of the affairs of the State Bank, and

(b) The profit and loss account shall not be treated as not showing a true balance of profit or loss for the period covered by such account, merely by reason of the fact that the balance sheet or, as the case may be, the profit and loss account, does not disclose any matters which are, by the provisions of the Banking Regulation Act, 1949 (10.of 1249), read with the relevant provisions of this Act, not required to be disclosed.

Explanation 2: For the purposes of this Act, the accounts of the State Bank shall not be deemed as having not been properly drawn up on the ground merely that they do not disclose certain matters if-

(i) Those matters are such as the State Bank is, by virtue of any provision contained in the Banking Regulation Act, 1949 (10 of 1949), read with the relevant provisions of this Act, or any other Act, not required to disclose; and

(ii) The provisions referred to in clause (i) are specified in the balance sheet and profit and loss account of the State Bank or in the auditor’s report.]

(8) The auditors shall also forward a copy of the audit report to the State Bank.

(9) Without prejudice to anything contained in the foregoing provisions, the Central Government may appoint at any time such auditors as it thinks fit to examine and report on the accounts of the State Bank.

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1. Subs. by Act 48 of 1973 s. 15, ibid., for certain words (w.e.f.
31-12-1973).

2. Subs. by Act 26 of 1959, s. 8 for "sub-section (1) of section 144.of the Indian Companies Act, 1913".

3. Subs. by Act 26 of 1959, s. 8, for "first".

4. Subs. by Act 35 of 1964, s. 13, for "a true and correct view"
(w.e.f. 1-12-1964).

5. Subs. by Act 26 of 1959, s. 8, for "profit and loss".

6. Ins. by Act 48 of 1973, s. 16 (w.e.f. 1-12-1964).

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(1) A general meeting 1*[in this Act] referred to as annual general meeting (shall be held 2*[in each year] at such time and at such place where there is a local head office of the State Bank 3*** and a general meeting may be convened by the State Bank at any other time:

4*[Provided that such annual general meeting shall be held before the expiry of six weeks from the date on which the balance sheet, together with the profit and loss account and auditors report, is under sub-section (1) of section 40, forwarded to the Central Government or to the Reserve Bank, whichever date is earlier.]

(2) The shareholders present at an annual general meeting shall be entitled to discuss the balance sheet and the profit and loss account of the State Bank made up to the previous 31st day of December 5*[or the date specified under section 39, as the case may be] the report of the Central Board on the working 6*[and activities] of the State Bank for the period covered by the accounts and the auditor’s report on the balance sheet and accounts.

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1. Subs. by Act 48 of 1973, s. 18q, for certain words (w.e.f. 31-12-
1973).

2. For the State Bank (Compensation on Imperial Bank Shares) Rules, 1955. see Gazette of India, Extraordinary, Part II, Sec. 3 page 1409.

3. Ins. by Act 48 of 1973, s. 18 (w.e.f. 31-12-1973).

4. Ins. by Act 1 of 1984, s. 47 (w.e.f. 15-12-1984).

5. Ins. by Act 66 of 1988, s. 17 (w.e.f. 30-12-1988).

6. Certain words Omitted by Act 3-6-1994, s. 19 (w.e.f. 15-10-1993).

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Last updated on September, 2016

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