THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959
Search Chronologically :
THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959
Title : THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959
Year : 1959
A subsidiary bank shall cause its books to be closed and balanced 1*[as] on the thirty-first day of 4*[March] 2*[or such other date in each year as the Central Government may, by notification in the official Gazette, specify].
3*[Provided that with a view to facilitating the transaction 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.]
(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, a subsidiary bank may, out of its net profits, declare a dividend.
(2) The rate of dividend shall be determined by the Board of Directors of the subsidiary bank concerned.
(3) Nothing in this section shall be deemed to preclude the payment of interim dividends in such manner and to such extent as may be prescribed.
40A -1* Transfer of unpaid or unclaimed dividend to unpaid dividend account
(1) Where, after the commencement of the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007, a dividend has been declared by the subsidiary bank but has not been paid, or claimed, within thirty days from the date of declaration, to or by any shareholder entitled to the payment of the dividend, the subsidiary bank shall, within seven days from the date of the expiry of such period of thirty days, transfer the total amount of dividend which remains unpaid, or unclaimed within the said period of thirty days, to a special account to be called "unpaid dividend account of...................................... (Name of the subsidiary bank)".
Explanation.- In this sub-section, the expression "dividend which remains unpaid" means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.
(2) Where the whole or any part of any dividend, declared by the subsidiary bank before the commencement of the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007, remains unpaid at such commencement, the subsidiary bank shall, within a period of six months from such commencement, transfer such unpaid amount to the account referred to in sub-section (1).
(3) Any money transferred to the unpaid dividend account of the subsidiary bank in pursuance of this section, which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred by the subsidiary bank to the Investor Education and Protection Fund established under sub-section (1) of section 205 C of the Companies Act, 1956(1 of 1956).
(4) The money transferred under sub-section (3) to the Investor Education and Protection Fund shall be utilised for the purposes and in the manner specified in section 205C of the Companies Act, 1956(1 of 1956).]
(1) Subject to the provisions of section 42, the accounts of a subsidiary bank shall be audited by an auditor duly qualified to act as an auditor of companies under sub-section (1) of section 226 of the Companies Act, 1956, who shall be appointed by the State Bank, with the approval of the Reserve Bank.
(2) The auditor shall receive such remuneration as the State Bank may fix.
(3) No director or officer of a subsidiary bank shall be eligible to be its auditor during his continuance in office as such director or officer.
(4) The 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 subsidiary 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 that subsidiary bank;
(b) May, at the expense of that subsidiary bank, employ accountants and other persons to assist him in investigating such accounts: and
(c) May, in relation to such accounts, examine any director or any officer of that subsidiary bank.
(5) The auditor shall hold office for such term not exceeding one year as the State Bank may fix at the time of its appointment; and if any vacancy arises before the expiry of the term of an auditor, the vacancy may be filled by the State Bank, with the approval of the Reserve Bank.
(6) The auditor shall on relinquishing office be eligible for reappointment.
(7) The auditor shall make a report to the State Bank upon the annual balance-sheet and accounts of the subsidiary bank and in every such report, be shall state-
(a) Whether in his opinion, the balance sheet is a full and fair balance sheet containing all the necessary particulars and is properly drawn up so as to 1*[exhibit a true and fair view] of the affairs of that subsidiary bank, and in case be has called for any explanation or information, whether it has been given and whether it is satisfactory;
(b) Whether or not the transactions of that subsidiary bank which have come to his notice have been within the competence of the bank;
(c) Whether or not the returns received from the offices and branches of that subsidiary bank have been found adequate for the purpose of his audit;
(d) Whether the profit and loss account shows a true balance of profit or loss for the period covered by such account; and
(c) Any other matter which be considers should be brought to the notice of the State Bank,
2*[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 subsidiary 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, 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 subsidiary 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 subsidiary bank is, by virtue of any provision contained in the Banking Regulation Act, 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 subsidiary bank or in the auditor's report.]
(8) The auditor shall forward a copy of the audit report to the subsidiary bank and to the Central Government.
(9) Without prejudice to the foregoing provisions, the Central Government may, at any time, appoint such number of auditors as it thinks fit to examine and report on the accounts of a subsidiary bank, and the auditors so appointed shall have all the rights, privileges and authority in relation to the audit of the accounts of the subsidiary bank which an auditor appointed by the State Bank has under this section.
If, on the appointed day, any appointment of an auditor made by, or in respect of, an existing bank, 1*[or the Hyderabad Bank], as the case may be, is subsisting, the State Bank may, on or after such day, cither confirm the appointment in accordance with the provisions of this Act, subject to such modifications of the terms and conditions of the appointment, as if may deem necessary, or terminate the appointment, and may, if it so terminates the appointment, fix such remuneration as appears to it to be reasonable having regard to the wink already done, functions discharged, or duties performed by the auditor concerned.
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 or the Saurashtra Bank"
(1) A subsidiary bank shall furnish to the State Bank1*[the Reserve Bank and the Central Government)-
(a) 2*[within three months from the 31st day of 7*[March] [or the date notified under section 39. as the case may be.] as on which its books are closed and balanced], its balance sheet, together with the profit and loss account and the auditor's report, and a report by the Board of Directors on the working 3*[and activities] of the subsidiary bank during the period covered by the accounts; and
(b) Any other information relating to the affairs and business of the subsidiary bank which the State Bank or the Reserve Bank may require.
4*[Provided that the Reserve Bank may, after consultation with the State Bank, extend the said period of three months by such further period, not exceeding three months, as it may think fit.]
8*[(2) The balance-sheet and profit and loss account of the subsidiary bank shall be signed by persons holding the office of the chairman, managing director, and a majority of the other directors of the subsidiary bank in office.]
6*[(3) The Central Government shall cause the auditor's report and the report by the Board of Directors on the working and activities of the subsidiary bank to be laid, as soon as may be after they are received, before each House of Parliament, 5[* * * * *].
1. Substituted for the words "and the Reserve Bank by the Banking Laws (Amendment) Act, 1983 (1 of 1984) Section 51 w.e.f. 15-12-1984.
2. Substituted for the words "within three months from the date on which its accounts are closed and balanced" by the State Bank Laws (Amendment) Act, 1973 (48 of 1971). Section 32 w.e.f. 31-12-1973.
3. Inserted by Act 1 of 1984, Section 51 w.e.f. 15-12-1984.
4. Inserted by Act 48 of 1973 Section 32 w.e.f. 31-12-1973.
5. Words "while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions" omitted by Banking Laws (Amendment) Act (81 of 1985), Section 3 w.e.f. 1-5-86,
6. Inserted by Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act 166 of 1988) Section 21 w.e.f. 30-1-88.
7. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the word "December"
8. Substituted for the following by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007)
"(2) The balance sheet and the profit and loss account of a subsidiary bank shall be signed by the general manager and a majority of the directors of the subsidiary bank."
(1) A general meeting (Hereinafter referred to as an annual general meeting) of a subsidiary bank shall be held 1*[in each year] at the place where the head office of the subsidiary bank is situate, and any other general meeting may be convened by the Board of Directors at any time.
2*[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's report, is under sub-section (1) of Section 43, forwarded to 3*[the State Bank, the Reserve Bank or the Central Government ], whichever date is earlier. ]
(2) The shareholders present at an annual general meeting shall be emitted to 6*[discuss and adopt the balance sheet] and profit and loss account of the bank concerned, made up to the previous 31st day of 7*[March] 14*[or the date notified under section 39, as the case may be,] the report of the Board of Directors on the working 4*[and activities] of that bank for the period covered by the accounts and the auditors report on the balance sheet and accounts.
(3) Nothing contained in this section relating to an annual general meeting shall apply in relation to a subsidiary bank if, as on the previous 31st day of 7*[March] 5*[or the date notified under section 39. as the case may be.] all the shares in the issued capital of that bank arc held by the State Bank.
This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Persons accessing this site are encouraged to seek independent counsel for advice in India abroad regarding their individual legal, civil criminal issues or consult one of the experts online.