Why Companies Act Not Apply to SBI & PNB but Applies to HDFC Bank

Applicability of Companies Act  on Banks

1. State Bank of India (SBI)

SBI is not a “banking company” under the Banking Regulation Act because it is constituted under the State Bank of India Act, 1955. However, Section 51 of the Banking Regulation Act, 1949 expressly makes certain provisions of the Act applicable to SBI.

Relevant Law

• Banking Regulation Act, 1949 – Section 51
• State Bank of India Act, 1955

Companies Act, 2013 – Applicability

The Companies Act, 2013 does not apply to SBI. SBI is a statutory corporation created under the State Bank of India Act, 1955, not a company registered under the Companies Act, and therefore has no CIN (Corporate Identification Number). It is governed by its own statute, the Banking Regulation Act (via Section 51), and RBI directions instead.

2. Punjab National Bank (PNB)

PNB is a Corresponding New Bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

Like SBI, it is not governed by the entire Banking Regulation Act. The provisions specified in Section 51 apply to it.

Relevant Law

• Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
• Banking Regulation Act, 1949 – Section 51

 Companies Act, 2013 – Applicability

Like SBI, the Companies Act, 2013 does not apply to PNB. As a Corresponding New Bank, PNB is a statutory body constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and is not incorporated or registered under the Companies Act.

3. HDFC Bank Limited

HDFC Bank is a banking company incorporated under the Companies Act and licensed by RBI.

Relevant Law

• Banking Regulation Act, 1949
• Companies Act, 2013
• RBI Act, 1934

Applicability

• The entire Banking Regulation Act, 1949 applies, unless a specific exemption exists. It is directly governed as a “banking company” under Section 5(c) of the Act.

Companies Act, 2013 – Applicability

HDFC Bank, being incorporated under the Companies Act, is fully subject to it, except where its provisions are inconsistent with the Banking Regulation Act, 1949 (per Section 1(4)(c) of the Companies Act, 2013, which carves out banking companies). Where the two Acts conflict, the Banking Regulation Act prevails, but only on that specific point. Provisions of the Companies Act, 2013 that routinely apply to HDFC Bank include:

• Incorporation & constitutional documents – Sections 3–22 (incorporation, memorandum, articles of association)
• Share capital & securities – Sections 43–72 (share capital, debentures), read with the Banking Regulation Act’s own restrictions on voting rights and share transfers (Sections 12, 12A & 12B)
• Board & management – Sections 149–205 (appointment of directors, board meetings, key managerial personnel), subject to RBI’s “fit and proper” criteria and Banking Regulation Act provisions on management (Sections 10, 10A, 10B, 36AA, 36AB)
• Meetings & corporate governance – Sections 96–122 (annual general meetings, board reports, minutes)
• Accounts & audit – Sections 128–148 (books of account, auditor appointment), though the actual form of the balance sheet and profit & loss account follows the Banking Regulation Act’s Third Schedule (Sections 29–30), not Schedule III of the Companies Act
• Mergers, compromises & winding up – Sections 230–232 and Part II of the winding-up provisions generally apply, but yield to the Banking Regulation Act’s special scheme for amalgamation (Section 44A) and moratorium/winding up of banking companies (Sections 36AE–45ZF)

In short: HDFC Bank operates under a dual framework – the Companies Act for general corporate matters, and the Banking Regulation Act as the overriding special law on anything specifically banking-related.

4. HSBC

HSBC operates in India as a foreign bank through branches.

Relevant Law

• Banking Regulation Act, 1949
• RBI Act, 1934

The Banking Regulation Act applies to HSBC through the provisions relating to banking companies incorporated outside India.

Companies Act, 2013 – Applicability

HSBC operates through Indian branches of a foreign banking company rather than as a company incorporated in India, so it does not fall under the standard incorporation provisions of the Companies Act, 2013. Instead, the foreign company provisions (Sections 379–393, Chapter XXII) apply, covering matters such as filing of accounts of the Indian branch operations and registration of documents with the Registrar of Companies, again subject to the Banking Regulation Act’s overriding provisions for banking companies incorporated outside India (Sections 11, 25, 56-A & related provisions).

Quick Summary:

Conclusion

The applicability of the Companies Act, 2013 to banks in India depends primarily on the legal form of the banking institution, rather than the nature of its banking business. Statutory banks such as State Bank of India (SBI) and Punjab National Bank (PNB) are established under special Parliamentary enactments and are not companies incorporated under the Companies Act. Consequently, the Companies Act does not apply to them, and they are governed principally by their respective constituting statutes, the provisions of the Banking Regulation Act, 1949 made applicable through Section 51, and directions issued by the Reserve Bank of India (RBI).

In contrast, HDFC Bank Limited, being a banking company incorporated under the Companies Act, is subject to both the Companies Act, 2013 and the Banking Regulation Act, 1949. The Companies Act governs its general corporate affairs, while the Banking Regulation Act, as a special legislation, prevails wherever there is any inconsistency relating to banking operations, management, amalgamation, accounts, or regulatory supervision.

HSBC, which operates in India through branches of a foreign banking company, is not incorporated in India and is therefore not governed by the Companies Act as an Indian company. Instead, only the provisions relating to foreign companies under Chapter XXII (Sections 379–393) apply, alongside the Banking Regulation Act and RBI regulations governing foreign banks.

Accordingly, there is no uniform application of the Companies Act to all banks. The governing legal framework depends on whether the bank is (i) a statutory corporation, (ii) an Indian incorporated banking company, or (iii) a foreign bank operating through branches. While the Banking Regulation Act serves as the principal banking legislation across these categories (to varying extents), the Companies Act applies only to the extent permitted by the bank’s legal status and subject to the overriding provisions of the Banking Regulation Act wherever applicable.

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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).