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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



Every person holding office as chairman, director, member of the Board of Management (including a member of a local or advisory committee), managing director, general manager, manager (other than manager of a branch), deputy managing director, deputy general manager, assistant general manager or adviser, as the case may be, in an existing bank (other than the Bank of Patiala), 1*[and the hyderabad Bank] immediately before the appointed day, shall be deemed to have vacated that office on the appointed day, and notwithstanding anything, contained in this Act or in any other law for the time being in force or in any agreement or contract, such person shall not be entitled to any compensation for the loss of office or for the premature termination of any agreement or contract relating to his employment, except such pension, compensation or other benefit as the corresponding new bank,2*[or the Hyderabad Bank], as the case may be. may, with the approval of the State Bank, grant to him, having regard to what be would have received it this Act had not been passed and if his employment had ceased on the appointed day in the ordinary course:

Provided that nothing in this section shall be deemed to prevent any person who has so vacated his office in any of the said banks from being renominated or reappointed to any office in a subsidiary bank in accordance with the provisions of this Act.
 
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1. Substituted 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 Hyderabad Bank and the Saurashtra Bank"

2. Substituted 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 Hyderabad Bank or the Saurashtra Bank"
 
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(1) The State Bank may, from time to time, give directions and instructions to a subsidiary bank in regard to any of its affairs and business, and that bank shall be bound to comply with the directions and instructions so given.

(2) Subject to any such directions and instructions, the general superintendence and conduct of the affairs and business of a subsidiary bank shall, as from the appointed day, vest in a Board of Directors who may, with the assistance of the 1*[managing director], exercise all powers and do all acts and things as may be exercised or done by that bank.

(3) The Board of Directors of a subsidiary bank shall, in discharging its functions under this Act, act on business principles, regard being had to public interest.

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1. Substituted fur the words "general manager" by the State Bank Laws (Amendment) Act, 1973(48 of 1973), Section 21 w.e.f. 1-7-1974.

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(1) Subject to the provisions of sub-section (2) the Board of Directors of a subsidiary bank shall consist of the following:-

4*[(a) The Chairman for the time being of the State Bank, ex officio or an official of the State Bank or of the subsidiary bank nominated by him as Chairman, 9*[in consultation with the Reserve Bank and with the approval of the Central Government];]

1*[(aa) the managing director appointed under sub-section (1) of section 29 or under section 32;]

5*(b) One director, possessing necessary expertise and experience in the matters relating to regulation or supervision of commercial banks, 10*[to be nominated by the Central Government on the recommendation of the Reserve Bank];

(c) Not more than five directors to be nominated by the State Bank of whom not more than three shall be officers of that bank:

2*Provided that any nomination of a director made by the State Bank under this clause shall, except in so far as it relates to an officer of that bank, be in consultation with the Central Government. I

1*(ca) One director from among the employees of the subsidiary bank, who arc workmen, to be appointed by the Central Government in the manner provided in the rules made under this Act:

(cb) One director, from among such of the employees of the subsidiary bank as are not workmen, to be appointed by the Central Government in the manner provided in rules made under this Act.]

6*[(d) Not more than three directors to be elected in the following manner, namely:-

(i) If the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than one per cent. of the total issued capital, and equal to or less than sixteen per cent. of such capital, one director to be elected, in the prescribed manner, by such shareholders and two directors shall be nominated by the State Bank, or

(ii) If the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than sixteen per cent. of the total issued capital and equal to or less than thirty-two per cent. of such capital, two directors to be elected in the prescribed manner by such shareholders and one director shall be nominated by the State Bank, or

(iii) If the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than thirty-two per cent. of the total issued capital, all the three directors to be elected, in the prescribed manner, by such shareholders:

Provided that in case, the total amount of holdings of the shareholders of a subsidiary bank (other than the State Bank) is not more than one per cent. of the total issued capital, all three directors shall be nominated by the State Bank and such directors shall, for the purposes of this Act, be deemed to be directors elected under this clause.

Explanation.-For the purposes of this sub-section, the total amount of holdings of the shareholders (other than the State Bank) whose names are on the register of shareholders of the subsidiary bank three months before the date fixed for election of directors shall be taken into account]

(e) A director, if any, to be nominated by the Central Government 3[*].

(2) Notwithstanding anything contained in clause (d) of sub-section (1), on the first constitution of the Board of Directors, the directors referred to in the said clause shall be appointed by the State Bank and the directors so appointed shall, for the purposes of this Act, be deemed to have been elected within the meaning of the said clause,7[* * *]

(4) An officer of 8[***] the State Bank may be nominated as a director of a subsidiary bank by virtue of his office.

(5) The directors nominated under sub-section (2) shall retire at the expiry of one year after the appointed day.

(6) Any nomination or appointment of a director made by the State Bank under this Act shall, except in so far as it relates to an Officer of that bank, be 11*[in consultation with the Central Government].
 
25A - 12*Fit and proper status of an elected director

(1) The Directors to be elected under clause (d) of sub-section (1) of section 25 shall-

(a) Have special knowledge or practical experience in respect of one or more of the following matters, namely:-

(i) Agricultural and rural economy,

(ii) Banking,

(iii) Co-operation,

(iv) Economics,

(v) Finance,

(vi) Law,

(vii) Small-scale industry,

(viii) Any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the subsidiary bank;

(b) Represent the interests of depositors; or

(c) Represent the interests of farmers, workers and artisans.

(2) Without prejudice to the provisions of sub-section (1) and notwithstanding anything to the contrary contained in this Act or in any other law for the time being in force, no person shall be eligible to be elected as director under clause (d) of sub-section (1) of section 25 unless he is a person having fit and proper status based upon track record, integrity and such other criteria as the Reserve Bank may notify from time to time in this regard.

(3) The Reserve Bank may also specify in the notification issued under sub-section (2), the authority to determine the fit and proper status, the manner of such determination, the procedure to be followed for such determinations and such other matters as may be considered necessary or incidental thereto.

(4) Where the Reserve Bank is of the opinion that any director of a subsidiary bank elected under clause (d) of sub-section (1) of section 25 does not fulfill the requirements of sub-sections (1) and (2), it may, after giving to such director and the subsidiary bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall co-opt any other person fulfilling the requirements of the said sub-sections as a director in place of the person so removed till a director is duly elected by the shareholders of the subsidiary bank in the next annual general meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the subsidiary bank as a director.]

25B - 12*Power of Reserve Bank to appoint additional directors

(1) If the Reserve Bank is of the opinion that in the interest of banking policy or in the public interest or in the interests of the subsidiary bank or its depositors, it is necessary so to do, it may, from time to time and by order in writing appoint, with effect from such date as may be specified in the order, one or more persons to hold office as additional directors of the subsidiary bank.

(2) Any person appointed as additional director in pursuance of this section shall-

(a) Hold office during the pleasure of the Reserve Bank and subject thereto for a period not exceeding three years or such further period not exceeding three years at a time as the Reserve Bank may specify;

(b) Not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the execution of the duties of his office or in relation thereto; and

(c) Not be required to hold qualification shares in the subsidiary bank.

(3) For the purpose of reckoning any proportion of the total number of directors of the subsidiary bank, any additional director appointed under this section shall not be taken into account.]

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1. Inserted by the State Bank Laws (Amendment) Act, 1973 (48 of 1973). Section 22 w.e.f.1-7-1974.

2. Inserted by Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act (66 of 1988), Section 18 w.e.f. 30-12-88.

3. Words "in consultation with the State Bank" Omitted, by Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act(66 of 1988), Section 18 w.e.f 30-12-88.

4. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

"(a) the chairman for the time being of the State Bank, ex officio;"

5. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)
"(b) an officer of the Reserve Bank, to be nominated by that Bank;"

6. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

"(d) two directors to be elected in the prescribed manner by the shareholders, other than the State Bank:

Provided that if the total amount of the holdings of all such shareholders registered in the books of the subsidiary bank three months before the date fixed for election is below five per cent of the total issued capital, or if there are no shareholders other than the State Bank registered on the bonks of the subsidiary bank, the directors to be elected by the shareholders shall be nominated by the State Bank and such directors shall, for the purposes of this Act, be deemed to be directors elected under this clause;"

7. Omitted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007). Prior to omission the text was as follows:

"(3) If, for any reason, a director of a subsidiary bank nominated under clause (b) of sub-section (1) is unable to exercise his functions or to discharge his duties as such director, the Reserve Bank may nominate any of its officers to exercise all the functions and to discharge all the duties of such director whenever be is so unable 10 exercise his functions or discharge his duties, and the officer so nominated shall for all purposes of this Act be deemed to be a director of the subsidiary bank."

8. Omitted the words "the Reserve Bank or" by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007).

9. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : -" with the approval of the Reserve Bank"

10. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - " to be nominated by the Reserve Bank"

11. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - " in consultation with the Reserve Bank"

12. Inserted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

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(1) A director of a subsidiary bank 1*[nominated under clause (b) or clause (c) or clause (e) of sub-section (1) of section 25 or appointed under clause (ca) or clause (cb) of that sub-section], shall hold office during the pleasure of the authority 2*[nominating or appointing] him.

3*[(2) Subject to the provisions contained in section 25 a director elected under clause (d) of subsection (1) of that section shall hold office for three years and 5[***], and shall be eligible for re-election:

Provided that no such director shall hold office continuously for a period exceeding six years.

(2A) Subject to the provisions contained in section 25 and in sub-section (1), a director nominated under clause (c) and not being an officer of the State Bank or a director appointed under clause (ca) or clause (cb) or a director, not being an officer of the Central Government, nominated under clause (e) of sub-section (1) of section 25 shall hold office for such term not exceeding three years, as the Central Government may specify 7[***] and shall be eligible for re-nomination or reappointment, as the case may be:

Provided
that no such director shall hold office continuously for a period exceeding six years.]

4[(3)***]
 
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1. Substituted for portion beginning with words "if nominated "and ending with "that sub-section" by Banking Public Financial Instructions and Negotiable Instruments Laws (Amendment) Act (66 of 1988) Section 19 w.e.f. 30-12-88.

2. Substituted for "nominating", by Banking Public Financial 6.Instructions and Negotiable Instruments Laws (Amendment) Act (66 of 1988) Section 19 w.e.f. 30-12-88.

3. Substituted, by Banking Public Financial 6.Instructions and Negotiable Instruments Laws (Amendment) Act (66 of 1988) Section 19 w.e.f. 30-12-88.

4. Sub-section (3) omitted, by Banking Public Financial 6.Instructions and Negotiable Instruments Laws (Amendment) Act (66 of 1988) Section 19 w.e.f. 30-12-88..

5.   The following words "and thereafter until his successor is duly elected" are omitted by the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Act, 2006, w.e.f. 16.10.2006.

6.Substituted for the words "and thereafter until his successor shall have been duly nominated or appointed" by the  Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Act, 2006, w.e.f. 16.10.2006.

7. Omitted by the State Bank of India (Amendment) Act, 2010 (Act No. 27 of 2010) w.e.f. 15.09.2010 for the following : -"6[and thereafter until his successor shall have been duly appointed],"

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(1) A person shall be disqualified to be a director of a subsidiary bank, if-

(a) He holds the office of director, provisional director, promoter, agent, or manager of any banking company or a banking company for the formation of which a prospectus has been issued; or

(b) He is a salaried officer of Government; or

(c) He has been removed or dismissed from the service of Government or a local authority or a corporation or a company in which not less than fifty-one per cent, of the paid-up share capital is held by Government; or

(d) He holds any office of profit under the subsidiary banks 1 [other than the office of the managing director]; or

1*[(da) In the case of a director appointed under clause (ca) or clause (cb) of sub-section (1) of section 25,-

(i) He is not serving in the subsidiary bank or has not been serving in it for a continuous period of at least five years; and

(ii) He is of such age that there is a likelihood of his attaining the age of superannuation during his term of office as a director; or]

(e) He is, or at any time has been, adjudicated an insolvent or has suspended payment of his debts or has compounded with his creditors; or

(f) He is of unsound mind and stands so declared by a competent Court; or

(g) He is, or has been, convicted of any offence which, in the opinion of the Central Government involves moral turpitude; or

(h) In the case of an elected director, be is not registered as a holder of unencumbered shares in the subsidiary bank of a nominal value of all east one thousand rupees:

Provided that the disqualification mentioned in clause (b) shall not apply to an officer of the Central Government, nominated as a director under clause (e) of sub-section (1) of section 25;

2*[Provided further that in the case of a director appointed under clause (ca) or Clause (cb) of subsection (1) of section 25 the disqualification mentioned in clause (d) shall not operate:

Provided also that] in the case of a director deemed to have been elected on the first constitution of the Board of Director, the disqualification mentioned in clause (h) shall not operate for a period of six months from his becoming such director.

(2) No two persons who are partners of the same firm or are directors of the same private company or one of whom is an agent of the other or holds a power of attorney from a firm of which the other is a partner may be directors of a subsidiary bank at the same time.

(3) The nomination or election, as a director of any person who is a member of either House of Parliament or the Legislature of a State shall be void unless within two months of the date of nomination or election as such director, be ceases to be a member of Parliament or the Legislature of the State, and if any director is elected or nominated as a member of Parliament or the Legislature of a State, be shall cease to be a director as from the date of such election or nomination, as the case may be.

(4) Nothing contained in clause (d) of sub-section (1) shall be deemed to preclude any person from being a director of a subsidiary bank by reason only of his being a legal or technical adviser of that bank.

(5) In this section,-

(a) "Banking company" has the same meaning as in the 3[Banking Regulation Act, 1949](10 of 1949);

(b) "Manager" means the chief executive officer, by whatever name called of a banking company:

(c) "Private company" has the same meaning as in the Companies Act, 1956.

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1. Inserted by the State Bank Laws (Amendment) Act, 1973 (48 of 1973). Section 24 (1-7-1974).

2. Substituted for the words "provided further that," by the State Bank Laws (Amendment) Act, 1973 (48 of 1973). Section 24 w.e.f.1-7-1974.

3. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the words and figures "Banking Companies Act, 1949"

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If a director of a subsidiary bank-

(a) Is, or has become, subject to any of the disqualification mentioned in section 27; or

(b) Resigns his office by giving notice in writing under his hand, in the case of a nominated director to the State Bank, and in the case of an elected director to the Board of Directors of the subsidiary bank, and his resignation is accepted, or

(c) Is absent without leave of the Board of Directors for more than three consecutive meetings thereof:his seat on the Board of Directors shall thereupon become vacant:

Provided
that nothing in Clause (b) or Clause (c) shall apply to a director referred to in clause (b) of sub-section (1) of section 25 or to a director, being an officer of the State Bank, nominated under clause (c) or to a director, being an officer of the Central Government nominated under clause (e) of that sub-section.



(1) The State Bank shall, after consulting the Board of Directors of a subsidiary bank, 2*[and the Reserve Bank, and with the approval of the Central Government], appoint a 1*[managing director] for that subsidiary bank;

Provided that in the case of the first appointment of the 1*[managing director] no such consultation with the Board of Directors of the subsidiary bank shall be necessary.

(2) Subject to the general control of the Board of Directors, the day-to-day administration and management of the affairs of a subsidiary bank shall vest in the [managing director] and the 1*[managing director] shall exercise such other powers and perform such other duties as may be delegated to him by the Board of Directors.

(3) The 1*[managing director] of a subsidiary bank-

(a) Shall devote his whole time to the affairs of that bank:

Provided that 1*[managing director] of the subsidiary bank may, 3*[with the approval of the State Bank and the Central Government in consultation with the Reserve Bank], be a director of any other institution;

(b) Shall hold office for such term not exceeding four years and subject to such conditions as the State Bank may, 4*[in consultation with the Reserve Bank and with the approval of the Central Government], specify at the time of his appointment:

(c) Shall receive such salary and allowances as may be determined by the State Bank with the approval of the Reserve Bank.

(4) The 1*[managing director] vacating his office shall be eligible for reappointment.

(5) The State Bank may, 4*[in consultation with the Reserve Bank and with the approval of the Central Government], for any sufficient reason, remove from office the [managing director] of a subsidiary bank :

Provided that no 1*[managing director] shall be removed from office unless be has been given an opportunity of showing cause against such removal.
 
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1. Substituted for the words "general manager" by the State Bank Laws (Amendment) Act, 1973(48 of 1973), Section 21 w.e.f. 1-7-1974.

2. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - "and with the approval of the Reserve Bank"

3. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - "with the approval of the State Bank and the Reserve Bank"

4. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - "with the approval of the Reserve Bank"

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A director of a subsidiary bank shall be paid for unending the meetings of the Board of Directors or of any of its committees and for attending to any other business of the subsidiary bank such fees and allowances as may be prescribed;

Provided that no fee shall be payable to the chairman of the State Bank 1*[or the managing director of the subsidiary bank] or any other director who is a whole time officer of the Central Government or the Reserve Bank or the State Bank.

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1. Inserted by the State Bank Laws (Amendment) Act, 1973 (48 of 1973), Section 25 w.e.f.1-7-1974.

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(1) The State Bank may, 2*[in consultation with the Reserve Bank and with the approval of the Central Government], for any sufficient reason, remove from office a director nominated under clause (c) of sub-section (1) of section 25 and not being an officer of the State Bank.

(2) The Central Government may, in consultation with the State Bank, for any sufficient reason, remove from office a director 1*[appointed under clause (ca) or clause (cb) or nominated under clause (e)] of sub-section (1) of section 25 and not being an officer of the Central Government.

(3) Any director elected under clause (d) of sub-section (1) of section 25 may be removed from office-

(a) By the State Bank, 2*[in consultation with the Reserve Bank and with the approval of the Central Government], if at the time of the removal there are no shareholders other than the State Bank registered in the books, of the subsidiary bank concerned;

(b) By a resolution passed by a majority of the votes of such shareholders holding in the aggregate not less than one-half of the share capital held by all such shareholders;

Provided that if the total amount of the holdings of all shareholders, other than the State Bank, registered in the books of the subsidiary bank, on the date of the resolution, is below five per cent of the total issued capital, the resolution shall not have effect unless confirmed by the State Bank.

(4) No director shall be removed from office under sub-section (1) or sub-section (2) unless be has been given an opportunity of showing cause against such removal.

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1. Substituted for the words, brackets and letter "nominated under clause (e)" by the State Bank Laws (Amendment) Act. 1973 (48 of 1973), Section 26 w.e.f.1-7-1974.

2. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - "with the approval of the Reserve Bank"
 
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If the1*[managing director] of a subsidiary bank is rendered incapable of discharing his duties by reason of infirmity or otherwise or is absent on leave or otherwise in circumstances not involving the vacation of his office, the State Bank may appoint another person to officiate for the1*[managing director] until the date on which the1*[managing director] resumes duty.

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1. Substituted for the words "general manager" by the State Bank Laws (Amendment) Act, 1973(48 of 1973), Section 21 w.e.f. 1-7-1974.

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(1) Where any vacancy occurs before the expiry of the term of office of a director of a subsidiary bank1*[other than the managing director or a director appointed under clause (ca) or clause (cb) of sub-section (1) of section 25 the vacancy shall be filled-

(a) In the case of a director nominated under clause (c) of sub-section (1) of section 25 not being an officer of the State Bank, by nomination by the State Bank;

(b) In the case of a director elected under clause (d) of sub-section (1) of section 25 by election or where the proviso to that clause is applicable, by nomination by the State Bank.

Provided that where the duration of the vacancy in the office of an elected director is likely to be less than six months, the vacancy may be filled by the remaining directors by co-opting a person from amongst the shareholders entitled to elect a director under clause (d) of sub-section (1) of section 25 who is not disqualified under section 27;

(c) In the case of a director nominated under clause (e) of sub-section (1) of section 25 not being an officer of the Central Government, by nomination by the Government in consultation with the State Bank.

(2) A person nominated or elected or co-opted, as the case may be 2*[under sub-section (1)] shall hold office for the unexpired portion of the term of his predecessor.

2*[(3) Where any vacancy occurs before the expiry of the term of office of a director appointed under clause (ca) or clause (ab) of sub-section (1) of section 25, such vacancy shall be filled in accordance with the said clause (ca) or, as the case may be, clause (cb), and the director so appointed shall hold office for the period specified under sub-section (2 A) of section 26.]

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1. Inserted by the State Bank Lows (Amendment) Act, 1973 (48 of 1971), Section 27 w.e.f.1-7-1974.

2. Substituted for the words "under this section," by the State Bank Lows (Amendment) Act, 1973 (48 of 1971), Section 27 w.e.f.1-7-1974.

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3*[(1) The Board of Directors of a subsidiary bank shall meet at such time and place and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed; and the meeting of the Board of Directors may be held by participation of the directors of the Board through video-conferencing or such other electronic means, as may be presented, which are capable of recording and recognising the participation of the directors and the proceedings of such meetings are capable of being recorded and stored:

Provided that the Central Government may in consultation with the Reserve Bank, by a notification in the Official Gazette, specify the powers which shall not be exercised in a meeting of the Board of Directors held through videoconferencing or such other electronic means.]

(2) 4*[The Chairman of the Board of Directors of a subsidiary bank] shall preside at every meeting of the Board of Directors of a subsidiary bank and in his absence such one of the directors as may generally or in relation to any particular meeting be authorised by the chairman in this behalf shall preside; and in the absence of the chairman and also failing such authorisation, the directors of the subsidiary bank present at the meeting shall elect one from among themselves to preside at the meeting.

Explanation.- For the purposes of this sub-section, "absence from a meeting" means non-attendance for any reason whatsoever at the meeting or any pan of the meeting during which any business is transacted.

5*[(3) All questions at the meeting of the Board of Directors of a subsidiary bank shall be decided by a majority of the votes of the directors present in the meeting or through video-conferencing or such other electronic means and in the case of equality of votes, the Chairman of Board of Directors of a, subsidiary bank or, in his absence, the person presiding at the meeting shall have a second or casting vote.";

(4) Where any of the directors specified in clauses (a) and (b) of sub-section (1) of section 25 or any of the directors, being an officer of the State Bank specified in clause (c) of that sub-section is unable to attend any meeting of the Board of Directors of a subsidiary bank, and the State Bank or any other such director as may be present at the meeting considers that the State Bank would not be adequately or effectively represented at such meeting by reason of the absence of any such, director, the State Bank or the director present may give notice in writing to that subsidiary bank-

(i) That the meeting should be adjourned to such date as may be indicated in the notice; or

(ii) That any matter, action, step or proceeding proposed to be considered taken or carried out at that meeting, should not be so considered, taken or carried out; or

(iii) That no decision should be taken at that meeting on any such matter, action, step or proceeding;and that subsidiary bank and its Board of Directors shall be bound to comply with such notice and act accordingly.

(5) A director of a subsidiary bank who is directly or indirectly concerned or interested in any contract, loan, arrangement or proposal, entered into or proposed to be entered into or made by or on behalf of the subsidiary bank shall, at the earliest possible opportunity, disclose the nature of his interest to the Board of Directors of that bank, and any such director shall not be present at any meeting of the Board of Directors when any such contract, loan, arrangement or proposal is discussed, unless his presence is required by the other directors for the purpose of eliciting information and where any director is so required to be present, be shall not vote on any such contract, loan, arrangement or proposal:

1*[Provided that nothing contained in this sub-section shall apply to such director by reason only of his being-

(i) A shareholder (other than a director) holding not more than two per cent of the paid-up capital in any public company as defined in the Companies Act, 1956, or any corporation established by or under any law for the time being in force in India or any co-operative society, with which or to which the subsidiary bank has entered into or made, or proposes to enter into or make, a contract, loan, arrangement or proposal; or

(ii) A director of the State Bank or of any other subsidiary bank being a director under clause (a) or clause (e) of sub-section (1) of section 25 or being an officer 6*[of the State Bank nominated under clause (c)] of that sub-section];2[or]

2*[(iii) An officer or other employee of the State Bank, or any other institution, if be is the managing director appointed under sub-section (1) of section 29 or under section 32; or

(iv) An officer or other employee of the subsidiary bank if be is a director appointed under clause (ca) or clause (cb) of sub-section (1) of the section 25.]

(6) A copy of the minutes of every meeting of the Board of Directors of a subsidiary bank, together with copies of all connected papers, shall be forwarded to the State Bank 7(* * *) as soon as possible.

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1. Substituted for former proviso by the State Associated Banks (Miscellaneous Provisions) Act, 1962 (56 of 1962), S. 3(vii) 14-l2-1962.

2. Inserted by the State Bank Laws (Amendment) Act, 1973 (48 of 1973), Section 28 w.e.f.1-7-1974.

3. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

"(1)The Board of Directors of a subsidiary bank shall meet at such time and place and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed."

4. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the words "The chairman of the State Bank".

5. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

"(3) All questions at a meeting of the Board of Directors of a subsidiary bank shall be decided by a majority of the votes of the directors present, and in case of equality of votes, the person presiding at the meeting shall have a second or casting vote."

6. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the the words, brackets and letter "of the Reserve Bank or the State Bank nominated under clause (b) or clause (c)"

7. Omitted the words "and the Reserve Bank" by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)

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(1) There shall be an executive committee in respect of a subsidiary bank consisting of such directors as may be prescribed :

Provided that if any such director being an officer of the State Bank and nominated by that bank under clause (e) of sub-section (1) of section 25, is for any reason unable to exercise his functions or to discharge his duties in relation to the executive committee, the State Bank may depute any of its officers to exercise all the functions and to discharge all the duties of such director in relation to the executive committee whenever such director is so unable to exercise his functions or discharge his duties and the officer so deputed shall, for all purposes of this Act, in so far as it applies to the executive committee, be deemed to be a director of the subsidiary bank.

(2) Subject to any regulations made under this Act, the executive committee may deal with any matter within the competence of the Board of Directors.

(3) A copy of the minutes of every meeting of the executive committee of a subsidiary bank shall be forwarded to the State Bank and be laid before the Board of Directors of the subsidiary bank as soon as possible after the meeting.

(4) Without prejudice to the powers of the executive committee, and subject to any regulations made under this Act, the Board of Directors of a subsidiary bank may constitute such and so many other committees, whether consisting wholly of the directors or wholly of other persons, or partly of the directors and partly of other persons, as it deems fit, to exercise such powers and perform such duties as may, subject to such conditions, it any, as the Board of Directors may impose, be delegated to them by the Board of Directors.

35A - 1* Super session of Board of Directors in certain cases

(1) 2*[Where the Central Government, on the recommendation of the Reserve Bank and in consultation with the State Bank] is satisfied that in the public interest or for preventing the affairs of a subsidiary bank being conducted in a manner detrimental to the interest, of the depositors or the subsidiary bank or for securing the proper management of the subsidiary bank, it is necessary so to do, 3*[the Central Government may], for reasons to be recorded in writing, by order, supersede the Board of Directors of the subsidiary bank for a period not exceeding six months as may be specified in the order:

Provided that the period of super session of the Board of Directors may be extended from time to time, so, however, that the total period shall not exceed twelve months.

(2) 3*[The Central Government in consultation with the Reserve Bank may], on super session of the Board of Directors of the subsidiary bank under sub-section (1), appoint, for such period as it may determine, an Administrator (not being an officer of the Central Government or a State Government) who has experience in law, finance, banking, economics or accountancy.

(3) The Reserve Bank may issue such directions to the Administrator as it may deem appropriate and the Administrator shall be bound to follow such directions.

(4) Upon making the order of super session of the Board of Directors of the subsidiary bank, notwithstanding anything contained in this Act,-

(a) The chairman, managing director and other directors shall, as from the date of super session, vacate their offices as such;

(b) All the powers, functions and duties which may, by or under this Act, or any other law for the time being in force, be exercised and discharged by or on behalf of the Board of Directors of such subsidiary bank, or by a resolution passed in general meeting of the subsidiary bank, shall, until the Board of Directors of the subsidiary bank is reconstituted, be exercised and discharged by the Administrator appointed by the Reserve Bank under sub-section (2):

Provided that the power exercised by the Administrator shall be valid notwithstanding that such power is exercisable by a resolution passed in the general meeting of the subsidiary bank.

(5) 3*[The Central Government in consultation with the Reserve Bank may] constitute a committee of three or more persons who have experience in law, finance, banking, economics or accountancy to assist the Administrator in the discharge of his duties.

(6) The committee referred to in sub-section (5) shall meet at such times and places and observe such rules of procedure as may be specified by the Reserve Bank.

(7) The salary and allowances payable to the Administrator and the members of the Committee constituted under sub-section (5) by the Reserve Bank shall be such as may be specified by the Reserve Bank and be payable by the concerned subsidiary bank.

(8) On and before the expiration of two months before expiry of the period of super session of the Board of Directors as specified in the order issued under sub-section (1), the Administrator of the subsidiary bank, shall call the general meeting of the subsidiary bank to elect new directors and reconstitute its Board of Directors.

(9) Notwithstanding anything contained in any other law or in any contract, the memorandum or articles of association, no person shall be entitled to claim any compensation for the loss or termination of his office.

(10) The Administrator appointed under sub-section (2) shall vacate office immediately after the Board of Directors of the subsidiary bank has been reconstituted.
  
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1. Inserted by State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007).

2. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - " Where the Reserve Bank, on the recommendation of the State Bank"

3. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following : - " the Reserve Bank may"

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Last updated on September, 2016

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