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THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959

Title : THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959

Year : 1959



(1) Every person who and any State Government which immediately before the appointed day is registered as a holder of shares in the books of an existing bank shall be given by the State Bank such compensation in respect of the transfer to the State Bank of the shares in the capital of that bank as is determined in accordance with the principles contained in the First Schedule.

(2) The amount of compensation to be given in accordance with the principles contained in the First Schedule shall be determined in the first instance by the State Bank, in consultation with the Reserve Bank, and shall be offered by it to all those to whom compensation is payable under sub-section (1) in full satisfaction thereof.

(3) If the amount of compensation offered by the State Bank in terms of sub-section (2) is not acceptable to any shareholder of an existing bank, such share-holder may, before such date as may be notified by the Central Government in the Official Gazelle, request the Central Government, in writing to have the mailer referred to the Tribunal.

(4) If, before the date notified under sub-section (3), the Central Government receives request, in terms of that sub-section, from not less than one-fourth in number of the shareholders, holding not less than one-fourth in value of the paid-up share capital of the existing bank, the Central Government shall have the matter referred to the Tribunal for decision.

(5) If, before the date notified under sub-section (3) the Central Government docs not receive requests as provided in that sub-section, the amount of compensation offered by the State Bank, and where a reference has been made to the Tribunal, the amount determined by it, shall be the compensation payable under sub-section (1) and shall be final and binding on all parties concerned.

(6) Subject to the provisions of the succeeding sub-sections, the amount of compensation shall be paid,-

(a) If the shareholder has not applied for shares of the corresponding new bank in accordance with the provisions of sub-section (7), by a cheque drawn on the State Bank; and

(b) If he has applied for share of the corresponding new bank in accordance with the provisions of that sub-section, in shares of the corresponding new bank to the extent of the value of such shares allotted to him and the balance by a cheque drawn on the State Bank.

(7) Any shareholder of an existing bank to whom compensation is payable under this section may, before the expiry of three months from the date of the final determination of the amount of such compensation under sub-section (5), or such extended period as the State Bank may think lit in any particular case to allow, apply to the State Bank for the transfer to him of shares in the capital of the corresponding new bank in lieu of such compensation or part thereof; and for the purposes of such transfer, the value of each share of the corresponding new bank shall be such as may be determined in this behalf by the State Bank with the approval of the Reserve Bank.

(8) On receipt of an application under sub-section (7) the State Bank shall issue to the corresponding new bank a warrant, in the form specified in the rules made under this Act, directing it to transfer in favour of the person specified in the warrant such number of shares as may be allotted to the applicant in accordance with sub-sections (9) and (10) out of the shares in the capital of that bank standing allotted to the State Bank under the provisions of this Act, and the corresponding new bank shall be bound to comply with such warrant.

(9) A shareholder of an existing bank who has applied for shares in the capital of the corresponding new bank shall be allotted-

(a) Such number of shares, having such total face value as would bear to forty-five percent, of the issued capital of the corresponding new bank the same proportion as the paid-up value of his shares in the capital of the existing bank in respect of which be is paid compensation bears to the total paid-up capital of that bank; and

(b) If the total number of shares allotted under clause (a) to all applicants is less than forty-five per cent, of the issue capital of the corresponding new bank, such number of additional shares as the State Bank may deem fit having regard to the provisions of this Act, the circumstances of the case and the desirability of securing as wide a distribution of shares among as large 'a number of shareholders as possible.

Explanation.-For the purpose of determining the number of shares under this sub-section fractions of a share shall be disregarded.

(10) Notwithstanding anything contained in sub-section (9). an allotment of shares under that sub-section shall not be made in such a manner that the State Bank holds at any time less than fifty-five percent, of the issued capital of the corresponding new bank.

(11) A warrant issued by the State Bank under sub-section (8) shall not be liable to duty under the Indian Stamp Act, 1899.

(12) Nothing contained in this section shall affect the rights inter se between the holder of any share in an existing bank, and any other person who may have an interest in such share and such other person shall be entitled to enforce his interest against the compensation awarded to the holder of such share, but not against the State Bank.

1*(13) For the purposes of this section,-

(a) "Corresponding new bank" does not include the State Bank of Patiala and means in relation to the Bank of Jaipur Limited the institution constituted under section 3 as the State Bank of Bikaner;

(b) "Existing bank" includes the Bank of Jaipur Limited, but does not include the Bank of Patiala. ]

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1. Substituted for form sub-section (13) by the State Associated Banks (Miscellaneous Provisions) Act, 1962(56 of 1962), Section 3 w.e.f. 1-1-1963.

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(1) The State Government of Punjab in respect of the Bank of Patiala 2[***] and the Reserve Bank in respect of the Hyderabad Bank, shall be given, by reason of the provisions of this Act or of the amendmerits contained in Pan V or Part VII of the Third Schedule, such compensation by the State Bank as is determined in accordance with the principles contained in the First Schedule.

(2) The amount of compensation to be given in accordance with the principles contained in the First Schedule shall be determined in the first instance by the State Bank, and shall be offered by it to the State Government of Punjab, 3[***], or the Reserve Bank, as the casemay be, in full satisfaction of the compensation payable under sub-section (1):

Provided
that in determining the amount of compensation to be offered to the Suite Government of Punjab4[***], the State Bank shall consult the Reserve Bank.

(3) If the amount of compensation offered by the State Bank in terms of sub-section (2) is not acceptable to the State Government of Punjab, 3[***] or the Reserve Bank as the vase may be, the State Government concerned or the Reserve Bank, may, before such date as may be notified] by the Central Government in the Official Gazette, request the Central Government to have the matter referred to the Tribunal for decision, and where any such request is received, the Central Government shall refer the mailer accordingly.

(4) If, before the date notified under sub-section (3) the State Government of Punjab, 3[***] or the Reserve Bank as the case may be has not made any such request, the amount of compensation offered by the State Bank, and where a reference has been made to the Tribunal, the amount determined by it, shall be the compensation payable under sub-section (1) and shall be final and binding on all parties concerned.

1*(5) The amount of compensation shall be paid by a cheque drawn of the Reserve Bank.
 
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1. Substituted for "State Government of Bombay" by the Bombay Reorganisation (Adaptation of Laws on Union Subjects) Order, 1961 w.e.f. 1-5-1960.

2. Omitted by the State Bank of Saurashtra (Repeal) and the State Bank of India (Subsidiary Banks) Amendment Act, 2009 w.e.f. 01.06.2010 previous text was :-

"the [State Government of Gujarat] in respect of the Saurashtra Bank"

3. Omitted by the State Bank of Saurashtra (Repeal) and the State Bank of India (Subsidiary Banks) Amendment Act, 2009 w.e.f. 01.06.2010 previous text was :-

"the [State Government of Gujarat]"

4. Omitted by the State Bank of Saurashtra (Repeal) and the State Bank of India (Subsidiary Banks) Amendment Act, 2009 w.e.f. 01.06.2010 previous text was :-
"or the [State Government of Gujarat]"

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(1) The Central Government may for the purposes of this Act constitute a Tribunal which shall consist of a Chairman and two other members.

(2) The Chairman shall be a person who is, or has been, a Judge of a High Court or has been a Judge of the Supreme Court and of the two other members, one, shall be a person, who, in the opinion of the Central Government, has had experience of commercial banking and the other shall be a person who is a chartered accountant within the meaning of the Chartered Accountants Act, 1949.

(3) If, for any reason, a vacancy occurs in the office of the Chairman or any other member of the Tribunal, the Central Government shall fill the vacancy by appointing another person thereto in accordance with the provisions of sub-section (2) and any proceeding may be continued before the Tribunal so reconstituted from the stage at which the vacancy occurred.

(4) The Tribunal may for the purpose of determining any compensation payable under this Act. choose one or morepersons having special knowledge or experience of any relevant matter to assist it in the determinal ton of such compensation.



(1) The Tribunal shall have the powers of a Civil Court while trying a suit under the Code of Civil Procedure, 1908, in respect of the following matters, namely:-

(a) Summoning and enforcing the attendance of any person and examining him on oath.

(b) Requiring the discovery and production of documents;

(c) Receiving evidence on affidavits; and

(d) Issuing commissions for the examination of witnesses or documents.

(2) Notwithstanding anything contained in sub-section (1) or in any other law for the time being in force, the Tribunal shall not compel the Reserve Bank, the State Bank or any sub-sidary bank-

(a) To produce any books of account or other documents which the Reserve Bank, the State Bank or the subsidiary bank claims to be of a confidential nature;

(b) To make any such books or document part of the record of the proceedings before the Tribunal; or

(c) To give inspection of any such books or documents to any party before it or to any other person.



(1) The Tribunal shall have power to regulate its own procedure.

(2) The Tribunal may hold the whole or any part of its enquiry in camera.

(3) Any clerical or arithmetical mistake in any order of the Tribunal or any error arising therein from any accidental slip or omission may at any time be corrected by the Tribunal either of its own motion or on the application of any of the parties.

Last updated on July, 2016

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