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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



For the purpose of facilitating the full and effective transfer of the under taking of an existing bank in accordance with the provisions of this Act or in order to remove any difficulty which in the opinion of the Central Government has arisen or is likely to arise in connection with such transfer, the Central Government may, in consultation with the Reserve Bank, give such directions to any existing bank or the State Bank us appear to it to be necessary and the said bank or the State Bank, as the case may be, shall comply with such directions.



(1) The State Bank may, in relation to any existing bank 1[***], at any time before the appointed day,-

(a) Depute one or more persons to watch the proceedings at any meeting of the Board of Directors, any committee or other body of the bank; require the bank to give an opportunity to the person or persons so deputed to be heard at such meetings and also require such person or persons to send a report of such proceedings to the State Bank;

(b) Require the Board of Directors, any committee or other body of the bank to give in writing to any person specified by the State Bank in this behalf, at his usual address, all notices of, and other communications relating to, any meeting of the Board committee or other body, as the case may be;

(c) Appoint one or more persons to observe the manner in which the affairs of the bank or of its offices or branches are being conducted and make a report thereon; and

(d) Require the bank to furnish the State Bank, within such time as may be specified by the State Bank with any statement or information relating to the business or affairs of the bank including copies of the proceedings of any meeting of the Board of Directors any committee or other body, of the bank.

(2) If a person deputed by the State Bank to watch the proceedings of any meeting of the Board of Directors, any committee or other body, as the case may be, gives notice in writing to the bank that such person considers that any action, step or proceeding proposed to be taken or curried out by the bank will be detrimental to the State Bank or to the bank itself, such action, step or proceeding shall not be taken or carried out by the bank unless and until the Suite Bank approves in writing of such action step or proceeding.

2[***]
  
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1. 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 Saurashtra Bank"

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 :-

"Explanation.--For the purposes of this section, "Board of Directors' in relation to the Saurashtra Bank, means its Board of Management."
 
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(1) Without prejudice to the other provisions contained in this Act, the State Bank may, at any time, cause an inspection to be made by one or more of its officers of any existing bank, 1[or the Hyderabad Bank.]

(2) It shall be the duty of every person who is or has at any time been a director, officer or other employee of a bank which is inspected under sub-section (1), to produce to any officer making the inspection, all such balances, books, accounts, securities and other documents in his custody or power and to furnish the said officer with any statements and information relating to the affairs of the bank as the said officer may require of him within such time as the said officer may specify.

(3) If any person-

(a) Fails, within the stipulated time, to produce any balance, book, account,security or other document or to furnish any statement or information which under sub-section (2) it is his duly to produce or furnish, or to answer any question relating to the business of the bank under inspection which is asked by an officer making the inspection, or

(b) In any document or information required or furnished or while answering any question put to him, willfully makes a statement which is false in any material particular, knowing it to be false, or willfully omits to make a material statement. he shall be punishable with imprisonment for term which may extend to three years and shall also be liable to fine.
 
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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 or the Saurashtra Bank"
 
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(1) A subsidiary bank may accept any subsidies offered by the State Bank to meet-

(a) The cost of the whole or any part of any specific programme of development undertaken by that subsidiary bank with the approval of the State Bank; and

(b) Such losses or expenditure as may be approved by the State Bank, with the consent of the Reserve Bank.

(2) For the purposes of the 1*[Income tax-Act, 1961], any subsidy received by a subsidiary bank under sub-section (1) shall not be treated us income, profits or gains of the subsidiary bank.

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1. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the words and figures "Indian Income-tax Act, 1922"

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(1) Notwithstanding anything contained in any of the other provisions of this Act, or in any other law or in any contractor service or other document, no appointment made or promotion, increment in salary, pension or allowance or any other benefit granted to any person by an existing bank 1[***] after the 10th day of Feb., 1958, and before the appointed day, which would not ordinarily have been made or granted or which would not ordinarily have been admissible under the rules or authorisations of the said banks or of any provident, pension or other fund in force before the 10th day of February, 1958, shall have effect or be payable or claimable from the subsidiary bank concerned, or from any provident, pension or other fund or from any authority administering any such fund, unless the State Bank has, with the approval of the Reserve Bank, by a general or special order, confirmed the appointment, promotion or increment or has directed the grant of the pension, allowance or other benefit, as the case may be.

(2) Where any officer or other employee of an existing bank 2[***] has received any amount by reason of such appointment, promotion or increment or any such pension, allowance or other benefit-as is referred to in sub-section (1). which has not been confirmed or sanctioned by the State Bank under that sub-section, such officer or other employee shall be bound to refund such amount to the subsidiary bank concerned, and that bank shall be entitled to take all such steps as may be necessary for recovering such amount.

(3) Where any managing director, general manager or manager, deputy managing director or deputy general manager or other employee of an existing banker 1[***] has, after the 10th day of February, 1958, and before the appointed day, been paid any sum by way of compensation or gratuity. the subsidiary bank concerned shall be entitled to claim a refund of any sum so paid if the payment is not confirmed by the State Bank by a general or special order.

(4) Nothing in this section shall apply to, or in relation to, any officer or other employee of the Bank of Patiala, who does not become an officer or other employee of the State Bank of Patiala under the provisions of section 11.
  
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1. 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 Saurashtra Bank"

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 :- "or of the Saurashtra Bank"
 
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(1) A subsidiary bank may, subject to such limitations and conditions as may be prescribed, appoint such number of officers, advisers and employees as it considers necessary or desirable, for the efficient performance of its functions and on such terms and conditions us it may deem fit.

1*[(1A) The officers, advisers and employees of the subsidiary bank concerned shall individually or jointly, or with other officers, advisers and employees in a committee exercise such powers and perform such duties as may, by general or special order, be entrusted or delegated to them by the Board of Directors or its Executive Committee.]

(2) For the removal of doubts, it is hereby declared that the officers, advisers and employees of a subsidiary bank, in whatever capacity engaged, shall not be deemed to be officers, advisers or employees of the State Bank for any purpose, unless otherwise provided in the contract or agreement of service of any such officer, adviser or employee.

50A - 2* Bonus

(1) No officer, adviser or other employee other than an employee within the meaning of clause (13) of section 2 of the Payment of Bonus Act. 1965] of a subsidiary bank shall be entitled to be paid any bonus.

(2) No employee of a subsidiary bank, being an employee within the meaning of clause (13) of section 2 of the Payment of Bonus Act, 1965, shall be entitled to be paid any bonus except in accordance with the provisions of that Act.

(3) The provisions of this section shall have effect notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in any other provision of this Act or in the Industrial Disputes Act, 1947, or any other law for the time being in force or any practice, usage or custom or any contract, agreement, settlement, award or other instrument.]

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

2. Inserted by Baking Laws (Amendment) Act (64 of 1984), Section 3 w.e.f. 11-9-84.

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Notwithstanding any thing to the contrary contained in any other law for the time being in force, a subsidiary bank may establish and maintain super annuation pension,provident or other funds for the benefit of its officers or employees or the dependents of such officers or employees or for the purposes of the subsidiary bank, and grant super annuation allowances, annuities and pensions payable out of any such fund.



(1) A subsidiary bank shall observe, except as otherwise required by law, the practices and usages customary among bankers, and in particular, it shall not divulge any information relating to, or to the affairs of its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for that bank to divulge such information.

(2) Every director, auditor, adviser officer or other employee of a subsidiary bank shall, before entering upon his duties, make a declaration of fidelity and secrecy as in the form set out in the Second Schedule:

1*(3)Nothing contained in this section shall apply to the credit information disclosed under the Credit Information Companies (Regulation) Act, 2005.

Provided
that any declaration made under sub-section (2) of section 35 of the State Bank of Hyderabad Act shall be deemed to be declaration made to the Hyderabad Bank under this sub-section.

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1. Inserted vide Credit Information Companies (Regulation) Act, 2005

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(1) Every director of a subsidiary bank shall be indemnified by that bank against all losses and expenses incurred by him in, or in relation to, the discharge of his duties except such us are caused by his own willful act or default.

(2) A director of a subsidiary bank shall not be responsible for any loss or expense caused to the bank by the insufficiency or deficiency of the value of, or title to, any properly or security acquired or taken on behalf of the bank or by the insolvency or wrongful act of any customer or debtor or by anything done in, or in relation to, the execution of the duties of his office or otherwise than for his willful act or default.

(3) Where the State Bank nominates any of its officers as director of a subsidiary Bank, such director shall 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 discharge of his duties as director or anything in relation thereto.



(1) No actor proceeding of the Board of Directors of a subsidiary bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board.

(2) All acts done by any person acting in good faith as a director of a subsidiary bank shall, notwithstanding that be was disqualified to be a director or that there was any other defect in his appointment, be deemed to be valid.



Subject to the provisions of this Act and unless the Central Government by notification in the Official Gazette, otherwise, directs, on and from the appointed day, the provisions of the Companies Act 1956, and the 1*[Banking Regulation Act], 1949, shall not apply to an existing bank in so far as the said provisions impose any obligation on, or require anything to be done by, any such bank.

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

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The State Bank of Patiala 1[***] shall be entitled to recover in the same manner as an arrear of land revenue any moneys due in respect of loans or advances made before the appointed day by the Bank of Patiala 2[***] and. the provisions of any law relating to such recovery as were applicable to that bank before the appointed day shall continue to apply to the State Bank of Patiala 2[***], in respect of such recovery after the appointed day.
   
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1. 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 :- "and the Saurashtra Bank"

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 :-"or the Saurashtra Bank, as the case may be"

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No provision of law relating to the winding up of companies shall apply to a subsidiary bank nor shall it be placed in liquidation, save as provided in this Act or by order of the Central Government and in such manner as the Central Government may direct.



Notwithstanding anything contained in this Act or in any other law for the time being in force or in any contract or other instrument an existing bank shall, on such date as the Central Government may, by notification in the Official Gazette, specify in this behalf, stand dissolved.



(1) For the purposes of sections 45, 49.55, 58 and the First Schedule, the expression 'existing bank' shall include the Bank of Jaipur Limited.

(2) Except as otherwise provided in any general or special order made by the Central Government any reference in any law, other than this Act, or in any contract or other instrument-

(a) To an existing bank, shall be construed as a reference to the corresponding new bank;

(b) To the Bank of Jaipur Limited, shall be construed as a reference to the State Bank of Bikaner.]
 
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1. Substituted for former Section 59 by the State Associated Banks (Miscellaneous Provisions) Act, 1962(56 of 1962). Section 3(ix) w.e.f. 1-1-1963.
 
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Any powers, duties or functions conferred, imposed or entrusted by this Act on, or to, the Reserve Bank, shall be exercised, or performed by the Governor of the Reserve Bank or, in his absence, by a Deputy Governor nominated under sub-section (3) of section 7 of the Reserve Bank of India Act, 1934, or by such officer or officers of the Reserve Bank in respect of such matters and subject to such conditions and limitations as the Governor of the Reserve Bank may specify.



(1) No suit or other legal proceeding shall lie against the Central Government, the Reserve Bank or the State Bank or any officer of the Central Government, the Reserve Bank or the State Bank for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act.

(2) No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred or any damage caused by reason of the operation of, or anything done in pursuance of, the provisions contained in sections 46 and 47.



(1) The Central Government may, by notification in the Official Gazette. [make rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act]

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for-

(a) The terms and conditions of service of the Chairman, members and staff of the Tribunal;

(b) The manner of and the procedure for payment of compensation (including allotment of shares in lieu of compensation under this Act, including the requirements subject to which the payment shall be made:

(c) The determination of the persons to whom compensation shall be payable in all cases including cases where shares have been held by more than one person, or where they have been transferred before the appointed day, bill the transfer has not been registered or where the share holder is dead;

(d) The circumstances under which claims for payment of the said compensation from persons claiming through or under a shareholder may be entertained; (c) the requirements to be complied with before receipt of the said compensation by a shareholder, whose share certificate has been lost, destroyed, mutilated or stolen.

(f) The requirements subject to which information regarding the payment of the said compensation may be granted or refused and the conditions subject to which such information may be given.

[(g) The manner of appointment of a director under clause (ca) or clause (cb) of sub-section (1) of section 25, and all other matters connected therewith or incidental thereto.]

[(3) Every rule made under this section shall be laid, as soon as may be after it is made, before each House of Parliament, 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, and if, before the expiry of the session immediately following the session or the successive session aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such medication or annulment shall be without prejudice to the validity of anything previously done under that rule.]



(1) The Board of Directors of a subsidiary bank may, after consultation with the State Bank and the Reserve Bank and with the previous approval of the Central Government, by notification in the official Gazette, make regulations not inconsistent with this Act and the rules made there under, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act or any other law for the time being in force.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for-

(a) The powers and duties of the managing director of the subsidiary bank;

(b) The fees and allowances which may be paid to directors or others for attending any meetings of the Board of Directors or of its committees (including the executive committee) or other committees or for attending to any other work of the subsidiary bank;

(c) The time and place at which, and the manner in which the business of the Board of Directors of the subsidiary bank shall be transacted and the procedure to be followed at the meetings thereof;

(d) The constitution of the executive committee of the subsidiary bank and the conditions and limitations subject to which the executive committee may exercise its powers and the procedure to be followed at the meetings thereof;

(e) The formation of any other committees, whether of the Board of Directors of the subsidiary bank or otherwise, and the delegation of powers and functions of the Board to such committees and the conduct of business in such committees;

(f) The nature of shares of the subsidiary bank, the manner in which, and the conditions subject to which, shares may be held and transferred and generally all matters relating to the rights and duties of shareholders;

(g) The procedure for issuing the certificates of shares;

(h) The procedure with respect to increase, whether by public issue or rights issue or by preferential allotment or private placement, the issued capital by issue of equity or preference shares;

(i) The manner of acceptance of share money in installments, the manner of making calls and the manner of forfeiture of unpaid shares and their re-issue;

(j) The maintenance of share registers, and the particulars to be entered in such registers in addition to those specified in sub- section (1) of section 21, the safeguards to be observed in the maintenance of the register of shareholders on computer floppies or diskettes or any other electronic form, the inspection and closure of the registers and all other matters connected therewith;

(k) The manner in which every individual registered shareholder nominate, an individual to whom all his rights in the shares shall vest in the event of his death under sub-section (1) of section 18A;

(l) The manner in which, the joint holders may nominate an individual to whom all their rights in the shares shall vest in the event of the death of all the joint holders under sub-section (2) of section 18A;

(m) The manner in which nomination is varied or cancelled under sub- section (3) of section 18A;

(n) The manner in which every individual registered as the holder of the shares to make nomination where nominee is a minor to appoint, any person to become entitled to the shares in the event of his death during the minority of the nominee under sub-section (4) of section 18A;

(o) The holding and conduct of elections under this Act and the final determination of doubts or disputes regarding the qualifications of candidates for election or regarding the validity of elections;

(p) The manner in which general meeting shall be convened, the procedure to be followed thereat and the manner in which voting rights may be exercised;

(q) The manner in which notices may be served on behalf of the subsidiary bank upon shareholders or other persons;

(r) The payment of dividends including interim dividends;

(s) The delegation of powers and functions of the Board of Directors of the subsidiary bank to the managing director or directors or officers or other employees of that bank;

(t) The conditions and limitations subject to which the subsidiary bank may appoint officers, advisers and other employees and fix their remuneration and other terms and conditions of service;

(u) The duties and conduct of officers, advisers and other employees of the subsidiary bank;

(v) The establishment and maintenance of superannuation, pension, provident or other funds for the benefit of the officers or employees of the subsidiary bank or of the dependants of such officers or employees or for the purposes of the subsidiary bank, and the granting of superannuation allowances, annuities and pensions payable out of any such fund;

(w) The conduct and defence of legal proceedings by or against the subsidiary bank and the manner of signing pleadings;

(x) The provision of a seal for the subsidiary bank and the manner and effect of its use;

(y) The form and manner in which contracts binding on the subsidiary bank may be executed;

(z) The conditions and requirements subject to which loans or advances may be made or bills may be discounted or purchased by the subsidiary bank;

(za) The conditions subject to which loans or advances may be made by the subsidiary bank to its directors or officers or the relatives of such directors or officers or to companies, firms or individuals with which or with whom such directors or officers or relatives are connected as partners, directors, managers, servants, shareholders or otherwise;

(zb) The persons or authorities who shall administer any pension,provident or other fund constituted for the benefit of the officers or employees of the subsidiary bank or their dependants or for the purposes of that bank;

(zc) The circumstances in which the specific approval of the State Bank shall be required to the grant of loans and advances or investment of funds by the subsidiary bank or to any contract, arrangement or proposal entered into or proposed to be entered into by the subsidiary bank;

(zd) The preparation and submission to the State Bank and the Reserve Bank of statements of programmes of activities and financial statements of the subsidiary bank and the periods for which, and the time within which such statements and estimates are to be prepared and submitted;

(ze) Generally, for the efficient conduct of the affairs of the subsidiary bank.

(3) All regulations made under this section shall have effect from such earlier or later date as may be specified in the regulations.

(4) Every regulation shall, as soon as may be after it is made under this section by the Board of Directors of a subsidiary bank, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, 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, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]
 
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1. Inserted by Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act (66 of 1988), Section 23 w.e.f. 30-12-88.

2. Inserted by the State Bank Laws (Amendment) Act, 1971 (48 of 1973). Section 35 w.e.f .31- 12-1973.

3. Inserted by the Banking Laws (Amendment) Act, 1983 (1 of 1984), Section 55 w.e.f.15-2-1984.

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

"(1) The State Bank may, with the approval of the Reserve Bank
1[by notification in the official Gazette] make in respect of a subsidiary bank regulations, not inconsistent with this Act and the rules made there under, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act."

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

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

"(g) the maintenance of share register, and the particulars to be entered in such registers in addition to those specified in section 21, the inspection and closure of the registers and all other matters connected therewith;"

7. Substituted by the State Bank of India (Subsidiary Banks Laws) Amendment Act, 2007 (Act No. 30 of 2007) for the words "made under this Act".

8. Substituted by the The State Bank of India (Subsidiary Banks Laws) Amendment Act, 2011 (Act No. 17 of 2011) for the following :
 
"63. Power of The State Bank to Make Regulations.-

4*[(1) The Board of Directors of a subsidiary bank may, after consultation with the State Bank and with the previous approval of the Reserve Bank, by notification in the Official Gazette, make regulations not inconsistent with this Act and the rules made there under, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act or any other law for the time being in force;

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for-

(a) The powers and duties of the general manager of the subsidiary bank;

(b) The fees and allowances which may be paid to directors or others for attending any meetings of the Board of Directors or of its committees (including the executive committee) or other committees or for attending to any other work of the subsidiary bank;

(c) The time and place at which and the manner in which the business of the Board of Directors of the subsidiary bank shall be transacted and the procedure to be followed at the meeting thereof:

(d) The constitution of the executive committee of the subsidiary bank and the conditions and limitations subject to which the executive committee may exercise its powers and the procedure to be followed at the meetings thereof;

(e) The formation of any other committees, whether of the Board of Directors of the subsidiary bank or otherwise, and the delegation of powers and functions of the Board to such committees and the conduct of business in such committees;

(f) The nature of shares of the subsidiary bank, the manner in which and the conditions subject to which shares may be held and transferred and generally all matters relating to the rights and duties of shareholders;

5*[(fa) The procedure for issuing the certificates of shares;

(fb) The procedure with respect to increase, whether by public issue or by preferential allotment or private placement, the issued capital by issue of equity or preference shares;

(fc) The manner of acceptance of share money in installments the manner of making calls and the manner of forfeiture of unpaid shares and their reissue;]

6*[(g) The maintenance of share registers, and the particulars to be entered in such registers in addition to those specified in sub-section (1) of section 21, the safeguards to be observed in the maintenance of the register of shareholders on computer floppies or diskettes or any other electronic form, the inspection and closure of the registers and all other matters connected therewith;

(ga) The manner in which every individual registered shareholder nominate, an individual to whom ail his rights in the shares shall vest in the event of his death under sub-section (1) of section 18A;

(gb) The manner in which, the joint holders may nominate an individual to whom all their rights in the shares shall vest in the event of the death of all the joint holders under sub-section (2) of section 18A;

(gc) The manner in which nomination is varied or cancelled under sub-section (3) of section 18A;

(gd) The manner in which every individual registered as the holder of the shares to make nomination where nominee is a minor to appoint, any person to become entitled to the shares in the event of his death during the minority of the nominee under sub-section (4) of section 18A;]

(h) The holding and conduct of elections under this Act and the final determination of doubts or disputes regarding the qualifications of candidates for election or regarding the validity of elections;

(i) The manner in which general meeting shall be convened, the procedure to be followed thereat and the manner in which voting rights may be exercised;

(j) The manner in which notices may be served on behalf of the subsidiary bank upon shareholders or other persons;

(k) The payment of dividends including interim dividends;

(l) The delegation of powers and functions of the Board of Directors of the subsidiary bank to the general manager or directors or officers or other employees of that bank;

(m) The conditions and limitations subject to which the subsidiary bank may appoint officers, advisers and other employees and fix their remuneration and other terms and conditions of service;

(n) The duties and conduct of officers, advisers and other employees of the subsidiary bank;

(o) The establishment and maintenance of superannuation, pension, provident or other funds for the benefit of the officers or employees of the subsidiary bank or of the dependants of such officers or employees or for the purposes of the subsidiary bank, and the granting of superannuation allowances, annuities and pensions payable out of any such fund;

(p) The conduct and defence of legal proceedings by or against the subsidiary bank and the manner of signing pleadings;

(q) The provision of a seal for the subsidiary bank and the manner and effect of its use;

(r) The form and manner in which contracts binding on the subsidiary bank may be executed;

(s) The conditions and requirements subject to which loans or advances may be made or bills may be discounted or purchased by the subsidiary bank;

(t) The conditions subject to which loans or advances may be made by the subsidiary bank to its directors or officers or the relatives of such directors or officers or to companies, firms or individuals with which or with whom such directors or officers or relatives are connected as partners, directors, managers, servants, shareholders or otherwise;

(u) The persons or authorities who shall administer any pension, provident or other fund constituted for the benefit of the officers or employees of the subsidiary bank or their dependants or for the purposes of that bank;

(v) The circumstances in which the specific approval of the State Bank shall be required to the grant of loans and advances or investment of funds by the subsidiary bank or to any contract, arrangement or proposal entered into or proposed to be entered into by the subsidiary bank:

(w) The preparation and submission to the State Bank and the Reserve Bank of statements of programmes of activities and financial statements of the subsidiary bank and the periods for which, and the time within which such statements and estimates are to be prepared and submitted;

(x) The person or persons in the State Bank by whom any powers, duties or functions conferred, imposed or entrusted on or to the State Bank under this Act may be exercised or performed;

(y) Generally, for the efficient conduct of the affairs of the subsidiary bank.

2*[(2A) All regulations made under this section shall have effect from such earlier or later date as may be specified in the regulations.]

(3) All regulations under this section, except the first regulations, shall be made in consultation with the Board of Directors of the subsidiary bank concerned.

3*[(4) Every regulation shall, as soon as may be after it is 7* [made under this section] by the State Bank, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, 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, and, if before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of any¬thing previously done under that regulation.]"

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[Repeated by Repealing and Amendment Act, 1964 (52 of 1964), Section 2 and Sch. 1 (29-12-1964.)]



Nothing in this Act shall be deemed to affect the provisions of section 35 of the State Bank of India Act, 1955.

THE FIRST SCHEDULE
(Sec sections 13 and 14)

PRINCIPLES OF COMPENSATION

1. A. The compensation to be given by the State Bank shall in the case of the Hyderabad Bank, 1*[or the Bank of Patiala], be an amount equal to the value of the assets of that bank as on the day immediately before the appointed day, computed in accordance with the provisions of Part 1 of this paragraph less the total amount of liabilities thereof computed in accordance with the provisions of Part II of this paragraph.

B. The total compensation to be given by the State Bank in respect of the transfer of the shares in the capital of the existing banks, other than the Bank of Patiala to the persons (including any State Government) who, immediately before the appointed day, are registered as holders of shares in the books of each of these banks shall, in each case, be an amount equal to the value of the assets of that bank as on the day immediately preceding the appointed day in relation to the corresponding new bank, computed in accordance with the provisions of Part 1 of this paragraph less the total amount of liabilities thereof computed in accordance with the provisions of Part II of this paragraph.

PART I
Assets

For the purposes of this paragraph, assets means the total of the following:-

(a) The amount of cash in hand and with the Reserve Bank and the State Bank (including foreign currency notes which shall be converted at the market rate of exchange).

(b) The amount of balances with any other bank, not being the Reserve Bank or the State Bank, whether on deposit or current account, and money at call and short notice, balances held outside India being converted at the market rule of exchange :

Provided that any balances which arc not realisable in full shall be deemed to be debts and valued accordingly.

(c) The market value us on the appointed day of any securities, shares, debentures, bonds and other investments, held by the bank concerned:

Explanation.- For the purposes of this clause,-

(i) Securities of the Central and State Governments (other than the securities specified in sub-clauses (ii) and (iii) of this Explanation) maturing tor redemption within five years from the appointed day shall be valued at the face value or the market value whichever is higher;

(ii) Securities of the Central Government, such as Post Office Certificates and Treasury Savings Deposit Certificates and any other securities or certificates issued or to be issued under the Small Savings Scheme of the Central Government, shall be valued at their face value or the encashable value as on the appointed day. whichever is higher;

(iii) Where the market value of any Government security such as the zamindari abolition bonds or other similar security in respect of which the principal is payable in installments, is not ascertainable or is, for any reason, not considered as reflecting the fair value thereof or as otherwise appropriate, the security shall be valued of such an amount as is considered reasonable having regard to the installments of principal and interest remaining to be paid, the period during which such Installments are payable, the yield of any security ,issued by the Government to which the security pertains and having the same or approximately the same maturity, and other relevant factors;

(iv) Where the market value of any security, share, debenture, bond or other investment is not considered reasonable by reason of its having been affected by abnormal factors, the investment may be valued on the basis of its average market value over any reasonable period;

(v) Where the market value of any security, share, debenture, bond or other investment is not ascertainable, only such value, if any, shall be taken into account as is considered reasonable having regard to the financial position of the issuing concern, the dividend paid by it during the preceding five years and other relevant factors:

(d) The amount of advances (including loans, cash credits, overdrafts, bills purchased and discounted), and other debts, whether secured or unsecured, to the extent to which they are reasonably considered recoverable, having regard to the value of the security, if any, the operations on the account, the reported worth and respectability of the borrower, the prospects of realisation and other relevant considerations;

(e) The market value of any land or buildings;

(f) The total amount of the premia paid, in respect of all leasehold properties, reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid hours to the total term of the lease;

(g) The written down value us per hooks, or the realisable value, as may be considered reasonable, of all furniture, fixtures and fittings;

(h) The market or realisable value, us may be appropriate, of other assets appearing on the books of the bank, no value being allowed for capitalised expenses, such us share selling commission, organisational expenses and brokerage, losses incurred and similar other items.

PART II
Liabilities

1. For the purposes of this paragraph, "liabilities" means the total amount, of all outside liabilities existing on the appointed day and all contingent liabilities which the subsidiary bank concerned may reasonably be expected to be required to meet out of its own resources on or after the appointed day.

COMPENSATION PAYABLE TO SHAREHOLDERS

2. Every shareholder of an existing bank other than the Bank of Patiala shall be given such amount as compensation as bears to the total compensation, in respect of each of the said banks calculated in accordance with the provisions of paragraph 1, the same proportion as the amount of the paid-up capital of the share held by the shareholder hears to the total paid-up capital of that bank.

CERTAIN DIVIDENDS NOT TO BE TAKEN INTO ACCOUNT

3. So separate compensation shall be payable for any profits or any dividend anrespect of any period immediately preceding the appointed day for which, in the ordinary course, profits would have been transferred or dividend declared after the appointed day.
 

THE SECOND SCHEDULE
(See section 52).

DECLARATION OF FIDELITY AND SECRECY

I………………………………………........ do hereby declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as…………………………...... (director, auditor, adviser, officer or employee, us the cast may be) of the State Bank of …………………………...... and which properly relate to the office or position held by me in, or in relation to the said Bank, I further declare that I will not communicate, or allow to be communicated, to any person not legally entitled thereto any information relating to the affairs of the State Bank of …………………………...... or to the affairs of any person having any dealing with the said bank nor will I allow any such person to inspect or have any access to any books or documents belonging to, or in the possession of the State Bank of…………………………..... and relating to the business of the said bank or to the business of any person having any dealing with the said Bank.

*Here enter the name of the subsidiary bank concerned.


THE THIRD SCHEDULE
(See section 64)

Amendments to certain enactments.-

[Repealed by the Repealing and Amending Act, 1964 (52 of 1964). section 2 and Schedule. I (29-2-1964).]

Note.-Amendments made by the Schedule to the various Banking Laws have been incorporated in the respective Acts.

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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 Bank of Patiala or the Saurashtra Bank"

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Last updated on September, 2016

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