Banking Regulation Act Vs. Banking Regulation Ordinance 2020

Section 3

Nothing in this Act shall apply to. –

(a) a primary agricultural credit society;

(b) a co-operative land mortgage bank; and

(c) any other co-operative society, except in the manner and to the extent specified in Part V.]

Section 3

Notwithstanding anything contained in the National Bank for Agriculture and Rural Development Act, 1981, this Act shall not apply to –

(a) a primary agricultural credit society; or

(b) a co-operative society whose primary object and principal business is providing of long term finance for agricultural development, if such society does not use as part of its name, or in connection with its business, the words “bank”, “banker” or “banking” and does not act as drawee of cheques.’.

(2) Now, due to remove the word “Co-operative land mortgage bank”, this act also applied to that.

(3) Structural changes. – Broad exemption to narrow exemption.

In section 45 of the principal Act, – in the marginal heading, for the words “reconstitution”, the word “reconstruction” shall be substituted;

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstruction of amalgamation.-

In section 45 of the principal Act, – in sub-section (3), after the words “other creditor”, the words “or grant any loan or advances or make investments in credit instrument” shall be inserted shall be inserted.

Section 45(3) Except as otherwise provided by any directions given by the Central Government in the order made by it under sub-section (2) or at any time thereafter the banking company shall not during the period of moratorium make any payment to any depositors or discharge any liabilities or obligations to any other creditors.

Section 45(3) Except as otherwise provided by any directions given by the Central Government in the order made by it under sub-section (2) or at any time thereafter the banking company shall not during the period of moratorium make any payment to any depositors or discharge any liabilities or obligations to any other creditors or grant any loan or advances or make investments in credit instrument” shall be inserted (Inserted)

Scope to the section enhance with the word “or grant any loan or advance or make investments in credit instrument” shall be inserted, that means during the moratorium period bank not grant any loan and advance or not make investment in credit instrument, practically RBI exercise this power by way of notification, however now they have endorse by way of Act.

In section 45 of the principal Act, – in sub-section (4), after the words “During the period of moratorium”, the words “or any other time” shall be inserted.

Section 45 (4) During the period of moratorium, if the Reserve Bank is satisfied that-

(a)in the public interest; or

(b)in the interests of the depositors; or

(c)in order to secure the proper management of the banking company; or

(d)in the interests of the banking system of the country as a whole, it is necessary so to do, the Reserve Bank may prepare a scheme-

(i) for the reconstruction of the banking company, or

(ii) for the amalgamation of the banking company with any other banking institution (in this section referred to as “the transferee bank”).

Section 45 (4) During the period of moratorium or any other time, if the Reserve Bank is satisfied that-

(a)in the public interest; or

(b)in the interests of the depositors; or

(c)in order to secure the proper management of the banking company; or

(d)in the interests of the banking system of the country as a whole, it is necessary so to do, the Reserve Bank may prepare a scheme-

(i) for the reconstruction of the banking company, or

(ii) for the amalgamation of the banking company with any other banking institution (in this section referred to as “the transferee bank”). (Inserted)

Principal Act Section 45 – Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Scope of the section enhance by way of word “or any other time”, before that word RBI only during the moratorium period exercise the power, however, now without moratorium they exercise the power.

In section 45 of the principal Act, – in sub-section (5), in clauses (e) for the words “date of the order or moratorium”, the words “reconstruction or amalgamation” shall be substituted.

Section 45(5)(e) – subject to the provisions of the scheme, the continuation by or against the banking company on its reconstruction or, as the case may be, the transferee bank, of any actions or proceedings pending against the banking company immediately before the date of the order of moratorium; (Words Substituted)

Section 45(5)(e) – subject to the provisions of the scheme, the continuation by or against the banking company on its reconstruction or, as the case may be, the transferee bank, of any actions or proceedings pending against the banking company immediately before the reconstruction or amalgamation; (Words Substituted)

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation, now more time specified, which earlier one is.

In section 45 of the principal Act, – in sub-section (5), in clauses (i) for the words “date of the order or moratorium”, the words “reconstruction or amalgamation” shall be substituted.

Section45(5)(i) the continuance of the services of all the employees of the banking company(excepting such of them as not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme) in the banking company itself on its reconstruction or, as the case maybe, in the transferee bank at the same remuneration and on the same terms and conditions of service, which they were getting, or as the case may be, by which they were being governed, immediately before the date of the order of moratorium:

PROVIDED that the scheme shall contain a provision that-

(i) the banking company shall pay or grant not later than the expiry of the period of three years from the date on which the scheme is sanctioned by the Central Government, to the said employees the same remuneration and the same terms and conditions of service 1[as are, at the time of such payment or grant, applicable] to employees of corresponding rank or status of a comparable banking company to be determined for this purpose by the Reserve Bank (whose determination in this respect shall be final);

(ii) the transferee bank shall pay or grant not later than the expiry of the aforesaid period of three years, to the said employees the same remuneration and the same terms and conditions of service [as are, at the time of such payment or grant, applicable] to the other employees corresponding rank or status of the transferee bank subject to the qualifications and experience of the said employees being the same as or equivalent to those of such other employees of the transferee bank:

PROVIDED FURTHER that if in any case under clause (ii) of the first proviso any doubt or difference as to whether the qualification and experience of any of the said employees are the same as or equivalent to the qualifications and experience of the other employees of corresponding rank or status of the transferee bank 1[the doubt or difference shall be referred, before the expiry of a period of three years from the date of the payment or grant mentioned in that clause,] to the Reserve Bank whose decision thereon shall be final; (Words Substituted)

Section45(5)(i) the continuance of the services of all the employees of the banking company(excepting such of them as not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme) in the banking company itself on its reconstruction or, as the case maybe, in the transferee bank at the same remuneration and on the same terms and conditions of service, which they were getting, or as the case may be, by which they were being governed, immediately before the reconstruction or amalgamation:

PROVIDED that the scheme shall contain a provision that-

(i) the banking company shall pay or grant not later than the expiry of the period of three years from the date on which the scheme is sanctioned by the Central Government, to the said employees the same remuneration and the same terms and conditions of service 1[as are, at the time of such payment or grant, applicable] to employees of corresponding rank or status of a comparable banking company to be determined for this purpose by the Reserve Bank (whose determination in this respect shall be final);

(ii) the transferee bank shall pay or grant not later than the expiry of the aforesaid period of three years, to the said employees the same remuneration and the same terms and conditions of service [as are, at the time of such payment or grant, applicable] to the other employees corresponding rank or status of the transferee bank subject to the qualifications and experience of the said employees being the same as or equivalent to those of such other employees of the transferee bank:

PROVIDED FURTHER that if in any case under clause (ii) of the first proviso any doubt or difference as to whether the qualification and experience of any of the said employees are the same as or equivalent to the qualifications and experience of the other employees of corresponding rank or status of the transferee bank 1[the doubt or difference shall be referred, before the expiry of a period of three years from the date of the payment or grant mentioned in that clause,] to the Reserve Bank whose decision thereon shall be final; (Words Substituted)

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Now, employee of the bank at the time of reconstruction of bank, they have on the same terms and condition of service, which they were getting, or as the case may be, by which they were being governed, immediately before the reconstruction or amalgamation, earlier it was “date of the order of moratorium”, due to this amendment employee of the bank benefited.

In section 45 of the principal Act, – in sub-section (5), in clauses (j), for the words “date of the order or moratorium”, the words “reconstruction or amalgamation” shall be substituted.

Section 45(5)(j) notwithstanding anything contained in clause (i) where any of the employees of the banking company not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme under clause(i) or where any employees of the banking company have by notice in writing given to the banking company, or, as the case may be, the transferee bank at any time before the expiry of the one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the banking company on its reconstruction or, as the case may be, of the transferee bank, the payment to such employees of compensation, if any, to which they are entitled under the Industrial Disputes Act, 1947, and such pension, gratuity, provident fund and other retirement benefits ordinarily admissible to them under the rules or authorisations of the banking company immediately before the date of the order of moratorium; (Words Substituted)

Section 45(5)(j) notwithstanding anything contained in clause (i) where any of the employees of the banking company not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), are specifically mentioned in the scheme under clause(i) or where any employees of the banking company have by notice in writing given to the banking company, or, as the case may be, the transferee bank at any time before the expiry of the one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the banking company on its reconstruction or, as the case may be, of the transferee bank, the payment to such employees of compensation, if any, to which they are entitled under the Industrial Disputes Act, 1947, and such pension, gratuity, provident fund and other retirement benefits ordinarily admissible to them under the rules or authorisations of the banking company immediately before the reconstruction or amalgamation; (Words Substituted)

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Now more time specified, which earlier one is.

In section 45 of the principal Act, – in sub-section (6), in clauses (a), for the words “amalgamation”, the words “reconstruction or amalgamation” shall be substituted;

Section 45(6)(a) “A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the banking company and also to the transferee bank and any other banking company concerned in the amalgamation, for suggestions and objections, if any, within such period as the Reserve Bank may specify for this purpose.” (Words Substituted)

Section 45(6)(a) “A copy of the scheme prepared by the Reserve Bank shall be sent in draft to the banking company and also to the transferee bank and any other banking company concerned in the reconstruction or amalgamation, for suggestions and objections, if any, within such period as the Reserve Bank may specify for this purpose.” (Words Substituted)

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Due to word substituted, broad guideline applicable which are specified in earlier one is narrow.

In section 45 of the principal Act, – in sub-section (15), the words “or the subsidiary bank” shall be omitted.

Section 45(15) In this section, “banking institution” means any banking company and includes the Stale Bank of India or a subsidiary bank or a corresponding new bank]. (Words Omitted)

Section 45(15) In this section, “banking institution” means any banking company and includes the Stale Bank of India or a corresponding new bank. (Words Omitted)

Section 45 Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution of amalgamation.-

Due to merger of SBI subsidiary with SBI.

In section 56 of the principal act – in the opening portion, for the words “The provisions of this Act, as in force for the time being,” the words “Notwithstanding anything contained in any other law for the time being in force, the provisions of this Act” shall be substituted;

Section 56 – The provisions of this Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to banking companies subject to the following modifications, namely:– (Words Substituted)

Section 56 – Notwithstanding anything contained in any other law for the time being in force, the provisions of this Act, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to banking companies subject to the following modifications, namely:– (Words Substituted)

Application of the Act to Co-operative Banks

Section 56 Act to apply to co-operative societies subject to modifications.

– Superiority of act over other act, with add word “Notwithstanding anything contained……..”

In section 56 of the principal act – in clause (a), after sub-clause (ii), the following sub-clauses shall be inserted, namely:—

‘(iii) references to “memorandum of association” or “articles of association” shall be construed as references to bye-laws;

(iv) references to the provisions of the Companies Act, 1956, except in Part III and Part IIIA, shall be construed as references to the corresponding provisions, if any, of the law under which a co-operative bank is registered;

(v) references to “Registrar” or “Registrar of Companies” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;’;

Section 56(a) throughout this Act, unless the context otherwise requires, —

(i) references to a “banking company” or “the company” or “such company” shall be construed as references to a co-operative bank;

(ii) references to “commencement of this Act” shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965); (Sub-clauses inserted after 56(a)(iii)/(iv)/(v))

Section 56(a) throughout this Act, unless the context otherwise requires, —

(i) references to a “banking company” or “the company” or “such company” shall be construed as references to a co-operative bank;

(ii) references to “commencement of this Act” shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965);

(iii) references to “memorandum of association” or “articles of association” shall be construed as references to bye-laws;

(iv) references to the provisions of the Companies Act, 1956, except in Part III and Part IIIA, shall be construed as references to the corresponding provisions, if any, of the law under which a co-operative bank is registered;

(v) references to “Registrar” or “Registrar of Companies” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;’

(Sub-clauses inserted after 56(a)(iii))/(iv)/(v)

(2) With reference to word “Registrar” or “Registrar of Companies” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;’

Section 56(d) shall be omitted;

Section 56 (d) – for section 5A, the following section shall be substituted, namely: —

“5A. Act to override bye-laws, etc.-

(1) The provisions of 2[this Act] shall have effect, notwithstanding anything to the contrary contained in the bye-laws of a co-operative society, or in any agreement executed by it, or in any resolution passed by it in general meeting, or by its Board of Directors or other body entrusted with the management of its affairs, whether the same be registered, executed or passed; as the case may be before or after the commencement of the Banking Laws (Application to Co-operative Societies Act, 1965 (23 of 1965).

(2) Any provision contained in the bye-laws, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of 3[this Act,] become or be void, as the case may be.”; (Section 56(d) omitted)

Principal Act Section 5A – Act to override memorandum, articles, etc

Save as otherwise expressly provided in this Act. –

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a banking company, or in any agreement executed by it, or in any resolution passed by the banking company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case maybe, before or after the commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959); and

(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.] (Section 56(d) omitted)

(1) Already mentioned into 56(a)(iii) “references to “memorandum of association” shall be construed as references to by-laws. (Generally remove so no specific removal required, however by way of such removal original section applied)

(2) Act to override byelaws, memorandum or article of a banking company.

Section 56(e), sub-clauses (i) and (iii) shall be omitted;

Section 56(e) in section 6, in sub-section (1),–

(i) in clause (b), the words, “but excluding the business of a Managing agent or secretary and treasurer of company” shall be omitted;

(ii) in clause (d), after the word “company”, the words “co-operative society” shall be inserted;

(iii) in clause (m), after the word “company”, the words “or co-operative society” shall be inserted;

Principal Act Section 6 – Forms of business in which banking companies may engage

(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely:-

(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller’s cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;

(b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a Managing Agent or Secretary and Treasurer of a company;

(c) contracting for public and private loans and negotiating and issuing the same;

(d) the effecting, insuring, guaranteeing, underwriting, participating in Managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, co-operative society, corporation or association and the lending of money for the purpose of any such issue;

(e) carrying on and transacting every kind of guarantee and indemnity business;

(f) Managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims;

(g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security;

(h) undertaking and executing trusts;

(i) undertaking the administration of estates as executor, trustee or otherwise;

(j) establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object;

(k) the acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purposes of the company;

(l) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company;

(m) acquiring and undertaking the whole or any part of the business of any person or company or co-operative society, when such business is of a nature enumerated or described in this sub- section;

(n) doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company;

(o) any other form of business which the Central Government may, by notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage.

(2) No banking company shall engage in any form of business other than those referred to in sub-section (1).

Principal Act Section 6 – Forms of business in which banking companies may engage

(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely:-

(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller’s cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;

(b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a Managing Agent or Secretary and Treasurer of a company;

(c) contracting for public and private loans and negotiating and issuing the same;

(d) the effecting, insuring, guaranteeing, underwriting, participating in Managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, co-operative society, corporation or association and the lending of money for the purpose of any such issue;

(e) carrying on and transacting every kind of guarantee and indemnity business;

(f) Managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims;

(g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security;

(h) undertaking and executing trusts;

(i) undertaking the administration of estates as executor, trustee or otherwise;

(j) establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object;

(k) the acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purposes of the company;

(l) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company;

(m) acquiring and undertaking the whole or any part of the business of any person or company or co-operative society, when such business is of a nature enumerated or described in this sub- section;

(n) doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company;

(o) any other form of business which the Central Government may, by notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage.

(2) No banking company shall engage in any form of business other than those referred to in sub-section (1).

Section 56(f), in section 7 as so substituted, in section sub-section (2), –

Section56(f) for section 7, the following section shall be substituted, namely:–

“7. Use of words “bank”, “banker” or “banking”.–(1) No co-operative society other than a co-operative bank shall use as part of its name or in connection with its business any of the words “bank”, “banker” or “banking”, and no co-operative society shall carry on the business of banking in India unless it uses as part of its name at least of such words.

(2) Nothing in this section apply to—

(a) a primary credit society, or

(b) a co-operative society formed for the protection of the mutual interest of co-operative banks or co-operative land mortgage banks, or

(c) any co-operative society, not being a primary credit society, formed by the employees of–

(i) a banking company or the State Bank of India or a corresponding new bank or a subsidiary bank of such banking company, State Bank of India or a corresponding new bank, or

(ii) a co-operative bank or a primary credit society or a co-operative land mortgage bank, in so far as the word “bank”, “banker” or “banking” appears as part of the name of the employer bank, or as the case may be, of the bank whose subsidiary the employer bank is.”]; (Words Omitted)

Section56(f) for section 7, the following section shall be substituted, namely:–

“7. Use of words “bank”, “banker” or “banking”.–(1) No co-operative society other than a co-operative bank shall use as part of its name or in connection with its business any of the words “bank”, “banker” or “banking”, and no co-operative society shall carry on the business of banking in India unless it uses as part of its name at least of such words.

(2) Nothing in this section apply to—

(a) a primary credit society, or

(b) a co-operative society formed for the protection of the mutual interest of co-operative banks or

(c) any co-operative society, not being a primary credit society, formed by the employees of–

(i) a banking company or the State Bank of India or a corresponding new bank or a subsidiary bank of such banking company, State Bank of India or a corresponding new bank, or

(ii) a co-operative bank or a primary credit society in so far as the word “bank”, “banker” or “banking” appears as part of the name of the employer bank, or as the case may be, of the bank whose subsidiary the employer bank is.”]; (Words Omitted)

Section 56(fi) shall be omitted;

Section 56(fi) in section 8, for the proviso, the following proviso shall be substituted, namely: —

“PROVIDED that this section shall not apply–

(a) to any such business as aforesaid which was in the course of being transacted on the commencement of clause (iii) of section 42 of the Banking Laws (Amendment) Act, 1983, so, however, that the said business shall be completed before the expiry of one year from such commencement; or

(b) to any business as is specified in pursuance of clause (o) of sub-section (1) of section 6;”;

Section 8 of the Principal Act- Prohibition of trading -Notwithstanding anything contained in section 6 or in any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others otherwise than in connection with bills of exchange received for collection or negotiation or with such of its business as is referred to in clause (i) of sub-section (1) of section 6:

“Provided that this section shall not apply—

(a) to any such business as aforesaid which was in the course of being transacted on the commencement of clause (iii) of section 42 of the Banking Laws (Amendment) Act, 1983, so, however, that the said business shall be completed before the expiry of one year from such commencement; or

(b) to any business as is specified in pursuance of clause (o) of sub-section (1) of section 6;”;

Section 8 of the Principal Act – Prohibition of trading – Notwithstanding anything contained in section 6 or in any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others otherwise than in connection with bills of exchange received for collection or negotiation or with such of its business as is referred to in clause (i) of sub-section (1) of section 6:

PROVIDED that this section shall not apply to any such business as is specified in pursuance of clause (o) of sub-section (1) of section 6.]

Explanation.–For the purposes of this section, “goods” means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie, and all instruments referred to in clause (a) of sub-section (1) of section 6.

Proviso (a) of the section 8 remove only, due to time period which are specified in this proviso already expire.

Section 56(fii) shall be omitted;

Section 56(fii) in section 9, for the second proviso, the following provisos shall be substituted, namely: –

“PROVIDED FURTHER that in the case of a primary credit society which becomes a primary co-operative bank after the commencement of clause (iii) of section 42 of the Banking Laws (Amendment) Act, 1983, the period of seven years shall commence from the day it so becomes a primary co-operative bank:

PROVIDED ALSO that the Reserve Bank may, in any particular case, extend the aforesaid period of seven years by such period as it may consider necessary where it is satisfied that such extension would be in the interests of the depositors of the co-operative bank.”]; (Omitted)

Section 9 of the Principal Act – Disposal of non-banking assets

Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such properly shall be disposed of within such period or extended period, as the case may be:

PROVIDED that the banking company may, within the period of seven years as aforesaid deal or trade in any such property for the purpose of facilitating the disposal thereof:

“PROVIDED FURTHER that in the case of a primary credit society which becomes a primary co-operative bank after the commencement of clause (iii) of section 42 of the Banking Laws (Amendment) Act, 1983, the period of seven years shall commence from the day it so becomes a primary co-operative bank:

PROVIDED ALSO that the Reserve Bank may, in any particular case, extend the aforesaid period of seven years by such period as it may consider necessary where it is satisfied that such extension would be in the interests of the depositors of the co-operative bank.”];

Section 9 of the Principal Act – Disposal of non-banking assets

Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such properly shall be disposed of within such period or extended period, as the case may be:

PROVIDED that the banking company may, within the period of seven years as aforesaid deal or trade in any such property for the purpose of facilitating the disposal thereof:

PROVIDED FURTHER that the Reserve Bank may in any particular case extend the aforesaid period of seven years by such period not exceeding five years where it is satisfied that such extension would be in the interests of the depositors of the banking company.

– Second proviso the section 9 remove, due to time period which are specified in this proviso already expire.

– Third proviso of the section 9 (before amendment), regarding disposal of non-banking assets extension of the time period which are not specified, now due to applicability of principal act section 9 second proviso, this extension limited up to five year (i.e. 7+5 year), which are not specified in earlier section.

Section 56(g) shall be omitted;

Section 56(g) – “sections 10, 10A, 10B, 10BB, 10C, and 10D shall be omitted;” (Omitted)

Section 56(g) – “sections 10, 10A, 10B, 10BB, 10C, and 10D shall be omitted;”

Section 10 of the Principal Act – Prohibition of employment of Managing Agents and restrictions on certain forms of employment (Section Heading Only)

Section 10A of the Principal Act – Board of Directors to include persons with professional or other experience (Section Heading Only)

Section 10B of the Principal Act – Banking company to be managed by whole time Chairman (Section Heading Only)

Section 10BB of the Principal Act – Power of Reserve Bank to appoint 3[Chairman of the Board of Directors appointed on a whole-time basis or a Managing Director] of a banking company (Section Heading Only)

Section 10C of the Principal Act – Chairman and certain Directors not to be required to hold qualification shares (Section Heading Only)

Section 10D of the Principal Act – Provisions of sections 10A and 10B to override all other laws, contracts, etc (Section Heading Only)

Generally, all this power RBI exercise by way of Master circular/ Notification, now they have endorse by way of Act.

From the bank side, BOD (Board of Director) has such power, now due to applicability of principal section RBI taken all the power from the BOD.

Scope the power of the RBI enhance, with endorsement of Act.

Section 56(i), the following clause shall be substituted, namely:-

Section 12 (1) A co-operative bank may, with the prior approval of the Reserve Bank, issue, by way of public issue or private placement,—

(i) equity shares or preference shares or special shares, on face value or at premium; and

(ii) unsecured debentures or bonds or other like securities with initial or original maturity of not less than ten years,

to any member of such co-operative bank or any other person residing within its area of operation, subject to such conditions and ceiling, limit or restriction on its issue or subscription or transfer, as may be specified by the Reserve Bank in this behalf.

(2) Save as otherwise provided in this Act,—

(i) no person shall be entitled to demand payment towards surrender of shares issued to him by a co-operative bank; and

(ii) a co-operative bank shall not withdraw or reduce its share capital, except to the extent and subject to such conditions as the Reserve Bank may specify in this behalf.”;

Section 56(i) – Sections 12, 12A, 13 and 15 to 17 shall be omitted; (Substituted)

Section 56(i), the following clause shall be substituted, namely: —

‘Section 12, the following section shall be substituted, namely: —

“12. (1) A co-operative bank may, with the prior approval of the Reserve Bank, issue, by way of public issue or private placement, —

(i) equity shares or preference shares or special shares, on face value or at premium; and

(ii) unsecured debentures or bonds or other like securities with initial or original maturity of not less than ten years,

to any member of such co-operative bank or any other person residing within its area of operation, subject to such conditions and ceiling, limit or restriction on its issue or subscription or transfer, as may be specified by the Reserve Bank in this behalf.

(2) Save as otherwise provided in this Act, —

(i) no person shall be entitled to demand payment

towards surrender of shares issued to him by a co-operative bank; and

(ii) a co-operative bank shall not withdraw or reduce its share capital, except to the extent and subject to such conditions as the Reserve Bank may specify in this behalf.”; (Substituted)

(3) Limitation of surrender of share and reduce its share capital applicable. RBI issue notification/circular on this regard for more clarity.

Section 56(l) shall be omitted;

Section 56(l) for section 20 of the principal Act, the following section shall be substituted, namely: —

“20. Restrictions on loans and advances. –

(1) No co-operative bank shall–

(a) make any loans or advances on the security of its own shares; or

(b) grant unsecured loans or advances–

(i) to any of its Directors; or

(ii) to firms or private companies in which any of its Directors is interested as partner of Managing agent or guarantor or to individuals in cases where any of its Directors is a guarantor; or

(iii) to any company in which the Chairman of the Board of Directors of the co-operative bank (where the appointment of a Chairman is for a fixed term) is interested as its Managing agent, or where there is no Managing agent, as its Chairman or Managing Director:

PROVIDED that nothing in clause (b) shall apply to the grant of unsecured loans or advances–

(a) made by a co-operative bank–

(i) against bills for supplies or services made or rendered to government or bills of exchange arising out of bona fide commercial or trade transactions; or

(ii) in respect whereof trust-receipts are furnished to the co-operative bank;

(b) made by a primary co-operative bank to any of its Directors or to any other person within such limits and on such terms and conditions as may be approved by the Reserve Bank in this behalf.

(2) Every co-operative bank shall, before the close of the month succeeding that to which the return relates, submit to the Reserve Bank a return in the prescribed form and manner showing all unsecured loans and advances granted by it to companies in cases [other than those in which the co-operative bank is prohibited under sub-section (1) to make unsecured loans and advances] in which any of its Directors is interested as Director or Managing agent or guarantor.

(3) If, on examination of any return submitted under sub-section (2), it appears to the Reserve Bank that any loans or advances referred to in that sub-section are being granted to the detriment of the interests of the depositors of the co-operative bank, the Reserve Bank may, by order in writing prohibit the co-operative bank from granting any such further loans or advances or impose such restrictions on the grant thereof as it thinks fit, and may by like order direct the co-operative bank to secure the re-payment of such loans or advance within such time as may be specified in the order.”; (Omitted)

Section 20 – Restrictions on loans and advances

(1) Notwithstanding anything to the contrary contained in section 77 of the Companies Act, 1956 (1 of 1956), no banking company shall,-

(a) grant any loans or advances on the security of its own shares, or-

(b) enter into any commitment for granting any loan or advance to or on behalf of-

(i) any of its Directors,

(ii) any firm in which any of its Directors is interested as partner, manager, employee or guarantor, or

(iii) any company [not being a subsidiary of the banking company or a company registered under section 25 of the Companies Act, 1956 (1 of 1956), or a Government company] of which 2[or the subsidiary or the holding company of which] any of the Directors of the banking company is a Director, Managing agent, manager, employee or guarantor or in which he holds substantial interest, or

(iv) any individual in respect of whom any of its Directors is a partner or guarantor.

(2) Where any loan or advance granted by a banking company is such that a commitment for granting it could not have been made if clause (b) of sub-section (1) had been in force on the date on which the loan or advance was made, or is granted by a banking company after the commencement of section 5 of the Banking Laws (Amendment) Act, 1968(58 of 1968), but in pursuance of a commitment entered into before such commencement, steps shall be taken to recover the amounts due to the banking company on account of the loan, or advance together with interest, if any, due thereon within the period stipulated at the time of the grant of the loan or advance, or where no such period has been stipulated, before the expiry of one year from the commencement of the said section 5:

PROVIDED that the Reserve Bank may, in any case, on an application in writing made to it by the banking company in this behalf, extend the period for the recovery of the loan or advance until such date, not being a date beyond the period of three years from the commencement of the said section 5, and subject to such terms and conditions, as the Reserve Bank may deem fit:

PROVIDED FURTHER that this sub-section shall not apply if and when the Director concerned vacates the office of the Director of the banking company, whether by death, retirement, resignation or otherwise.

(3) No loan or advance, referred to in sub-section (2), or any part thereof shall be remitted without the previous approval of the Reserve Bank, and any remission without such approval shall be void and of no effect.

(4) Where any loan or advance referred to in sub-section (2), payable by any person, has not been repaid to the banking company within the period specified in that subsection, then, such person shall, if he is a Director of such banking company on the date of the expiry of the said period, be deemed to have vacated his office as such on the said date.

Explanation. –In this section-

(a) “loans or advance” shall not include any transaction which the Reserve Bank may, having regard to the nature of the transaction, the period within which, and the manner and circumstances in which, any amount due on account of the transaction is likely to be realised, the interest of the depositors and other relevant considerations, specify by general or special order as not being a loan or advance for the purpose of this section;

(b) “Director” include a member of any board or committee in India constituted by a banking company for the purpose of Managing, or for the purpose of advising it in regard to the management of, all or any of its affairs.

(5) If any question arises whether any transaction is a loan or advance for the purposes of this section, it shall be referred to the Reserve Bank, whose decision thereon shall be final.

(1) Definition of Director become wider they included “committee in India constituted by a banking company for the purpose of Managing, or for the purpose of advising it in regard to the management of, all or any of its affairs.” (previous act no such provision – Definition of Director not specify as per my view)

– If any question arises whether any transaction is a loan or advance for the purposes of this section, it shall be referred to the Reserve Bank, whose decision thereon shall be final. (previous act have no such right)

– Before amendment of act bank grant such loan “interests of the depositors of the co-operative bank”, no such exemption in new revised act.

– Word “manager and employee” not included in before amendment of act which are include into principal act section 20.

Section 56(n) shall be omitted;

Section 56(n) – in section 21, in sub-section (2), in clauses (c) and (d), for the words “any one company, firm, association of persons or individuals”, the words “any one party” shall be substituted; (Omitted)

Section 21 – Power of Reserve Bank to control advances by banking companies

(1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest 1[or in the interests of depositors] 2[ or banking policy] so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular, and when the policy has been so determined, all banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined.

(2) Without prejudice to the generality of the power vested in the Reserve Bank under sub-section (1) the Reserve Bank may give directions to banking companies, either generally or to any banking company or group of banking companies in particular, 3[as to-

(a) the purposes for which advances may or may not be made,

(b) the margins to be maintained in respect of secured advances,

(c) the maximum amount of advances or other financial accommodation which, having regard to the paid-up capital, reserves and deposits of a banking company and other relevant considerations, may be made by that banking company to any one party,

(d) the maximum amount up to which, having regard to the considerations referred to in clause (c),guarantees may be given by a banking company on behalf of any one party, and

(e) the rate of interest and other terms and conditions on which advances or other financial accommodation may be made or guarantees may be given.]

(3) Every banking company shall be bound to comply with any directions given to it under this section.]

Section 21 – Power of Reserve Bank to control advances by banking companies

(1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest 1[or in the interests of depositors] 2[ or banking policy] so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular, and when the policy has been so determined, all banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined.

(2) Without prejudice to the generality of the power vested in the Reserve Bank under sub-section (1) the Reserve Bank may give directions to banking companies, either generally or to any banking company or group of banking companies in particular, 3[as to-

(a) the purposes for which advances may or may not be made,

(b) the margins to be maintained in respect of secured advances,

(c) the maximum amount of advances or other financial accommodation which, having regard to the paid-up capital, reserves and deposits of a banking company and

other relevant considerations, may be made by that banking company to any one company, firm, association of persons or individual,

(d) the maximum amount up to which, having regard to the considerations referred to in clause (c),guarantees may be given by a banking company on behalf of any one company, firm, association of persons or individual, and

(e) the rate of interest and other terms and conditions on which advances or other financial accommodation may be made or guarantees may be given.]

(3) Every banking company shall be bound to comply with any directions given to it under this section.] (Omitted)

Scope of the section 56(n), become wider due to principal act section 21 applicability and word which are substituted by “any one party”, with “any one company, firm, association of persons or individuals”.

Section 56(p) shall be omitted;

Section 56(p) – in section 23,–

(i) for sub-section (1), the following sub-section shall be substituted, namely:–]

“(1) Without obtaining the prior permission of the Reserve Bank, no co-operative bank shall open a new place of business or change otherwise than within the same city, town or village, the location of an existing place of business:

PROVIDED that nothing in this sub-section shall apply to–

(a) the opening for a period not exceeding one month of temporary place of business within a city, town or village or the environs thereof within which the co-operative bank already has a place of business, for the purpose of affording banking facilities to the public on the occasion of an exhibition, a conference or a mela or any like occasion;

(b) the 1[opening or changing the location of branches] by a Central co-operative bank within the area of its operation”;

2[(ii) after sub-section (4), the following sub-section shall be inserted, namely:–

“(4A) Any co-operative bank other than a primary cooperative bank requiring the permission of the Reserve Bank under this section shall forward its application to the Reserve Bank through the National Bank which shall give its comments on the merits of the application and sent it to the Reserve Bank:

PROVIDED that the co-operative bank shall also send an advance copy of the application directly to the Reserve Bank.”; (Omitted)

Principal Act Section 23 Restrictions on opening of new, and transfer of existing, places of business

(1) Without obtaining the prior permission of the Reserve Bank-

(a) no banking company shall open a new place of business in India or change otherwise than within the same city, town or village, the location of an existing place of business situated in India; and

(b) no banking company incorporated in India shall open a new place of business outside India or change, otherwise than within the same city, town or village in any country or area outside India, the location of an existing place of business situated in that country or area:

PROVIDED that nothing in this sub-section shall apply to the opening for a period not exceeding one month of a temporary place of business within a city, town or village or the environs thereof within which the banking company already has a place of business, for the purpose of affording banking facilities to the public on the occasion of an exhibition, a conference or a mela or any other like occasion.

(2) Before granting any permission under this section, the Reserve Bank may require to be satisfied by an inspection under section 35 or otherwise as to the financial condition and history of the company, the general character of its management, the adequacy of its capital structure and earning prospects and that public interest will be served by the opening or, as the case may be, change of location, of the place of business.

(3) The Reserve Bank may grant permission under sub-section (1) subject to such conditions as it may think fit to impose either generally or with reference to any particular case.

(4) Where, in the opinion of the Reserve Bank, a banking company has, at any time, failed to comply with any of the conditions imposed on it under this section, the Reserve Bank may, by order in writing and after affording reasonable opportunity to the banking company for showing cause against the action proposed to be taken against it, revoke any permission granted under this section.

(4A) Any regional rural bank requiring the permission of the Reserve Bank under this section shall forward its application to the Reserve Bank through the National Bank which shall give its comments on the merits of the application and send it to the Reserve Bank:

PROVIDED that the regional rural bank shall also send an advance copy of the application directly to the Reserve Bank.

(5) For the purpose of this section “place of business” includes any sub-office, pay office, sub pay office and any place of business at which deposits are received, cheques cashed or moneys lent. (Omitted)

– Due to applicability of principal act section 23 applicability, scope of section become wider with limitation of before granting any permission under this section, RBI may require to be satisfied by inspection under section 35 or otherwise as to the financial condition and history of the company, the general character of its management, the adequacy of its capital structure and earning prospects and that public interest will be served by the opening or, as the case may be, change of location, of the place of business.

– Practically, RBI already consider all this para meter and only after give permission on this regard, now they endorse by act.

Section 56(q) sub-clause (ii) and (iv) shall be omitted:-

Section 56(q) in section 24, –

(ii) for sub-section (2A), the following sub-section shall be substituted, namely: –

“(2A) A scheduled co-operative bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) and every other co-operative bank, in addition to the cash reserve which it is required to maintain under section 18, shall maintain in India, assets, the value of which shall not be less than such percentage not exceeding forty per cent, of the total of its demand and time liabilities in India as on last Friday of the second preceding fortnight as the Reserve Bank may, by notification in the Official Gazette, specify from time to time and such assets shall be maintained in such form and manner, as may be specified in such notification.”]

(iii) in sub-section (3) for the proviso, the following proviso shall be substituted, namely:-

“PROVIDED that every co-operative bank, other than a primary co-operative bank, shall also furnish within the said period, a copy of the said return to the National Bank.”;

(iv) in sub-section (6), in clause (a), for the words “fourteen days”, the words “thirty days” shall be substituted;]

Section 56(q) in section 24, –

(ii) for sub-section (2A), the following sub-section shall be substituted, namely: –

“(2A) A scheduled co-operative bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) and every other co-operative bank, in addition to the cash reserve which it is required to maintain under section 18, shall maintain in India, assets, the value of which shall not be less than such percentage not exceeding forty per cent, of the total of its demand and time liabilities in India as on last Friday of the second preceding fortnight as the Reserve Bank may, by notification in the Official Gazette, specify from time to time and such assets shall be maintained in such form and manner, as may be specified in such notification.”]

(3) For the purpose of ensuring compliance with the provisions of this section, every banking company shall, not later than twenty days after the end of the month to which it relates, furnish to the Reserve Bank in the prescribed form and manner a monthly return showing particulars of its assets maintained in accordance with this section, and its demand and time liabilities in India at the close of business on each alternate Friday during the month, or if any such Friday is a public holiday, at the close of business on the preceding working day:

PROVIDED that every Regional Rural Bank shall also furnish a copy of the said return to the National Bank.]

(4)(a) If on any alternate Friday or, if such Friday is a public holiday, on the preceding working day, the amount maintained by a banking company at the close of business on that day falls below the minimum prescribed by or under [***] sub-section (2A) such banking company shall be liable to pay to the Reserve Bank in respect of that day’s default, penal interest for that day at the rate of three per cent per annum above the bank rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day; and

(b) If the default occurs again on the next succeeding alternate Friday, or, if such Friday is a public holiday, on the preceding working day, and continues on succeeding alternate Fridays or preceding working days, as the case may be, the rate of penal interest shall be increased to a rate of five per cent per annum above the bank rate on each such shortfall in respect of that alternate Friday and each succeeding alternate Friday or preceding working day, if such Friday is a public holiday, in which the default continues.

(5)(a)Without prejudice to the provisions of sub-section (3), the Reserve Bank may require a banking company to furnish to it are turn in the form and manner specified by it showing particulars of its assets maintained in accordance with this section and its demand and time liabilities in India, as at the close of business on each day of a month; and

(b) Without prejudice to the provisions of sub-section (4), on the failure of a banking company to maintain as on any day, the amount so required to be maintained by or under [***] sub-section (2A) the Reserve Bank may, in respect of such default, require the banking company to pay penal interest for that day as PROVIDED in clause (a) of sub-section (4) and if the default continues on the next succeeding working day, the penal interest may be increased as PROVIDED in clause (b) of sub-section (4) for the concerned days.

(6)(a) The penalty payable under sub-section (4) and sub-section (5) shall be paid within a period of thirty days from the date on which a notice issued by the Reserve Bank demanding payment of the same is served on the banking company and in the event of failure of the banking company to pay the same within such period, the penalty may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting banking company is situated, such direction to be made only upon an application made by the Reserve Bank in this behalf to the court; and

(b) When the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the banking company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit.

(7) When under the provisions of clause (b) of sub-section (4), penal interest at the increased rate of five per cent, above the bank rate has become payable by a banking company, if thereafter the amount required to be maintained on the next succeeding alternate Friday, or if such Friday is a public holiday, the next preceding working day, is still below the prescribed minimum, every Director, manager or secretary of the banking company, who is knowingly and willfully a party to the default, shall be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each subsequent alternate Friday or the preceding working day, as the case may be, on which the default continues.

(8) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an application in writing by the defaulting banking company, that the banking company had sufficient cause for its failure to comply with the provisions of [***] sub-section (2A), the Reserve Bank may not demand the payment of the penal interest.

Explanation.–In this section, the expression “public holiday” means a day which is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881)].

Principal Act Section 24 – Maintenance of a percentage of assets

(1) 2[***]

(2) 3[***]

(2A) A scheduled bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) and every other banking company, in addition to the cash reserve which it is required to maintain under section 18, shall maintain in India, assets, the value of which shall not be less than such percentage not exceeding forty per cent, of the total of its demand and time liabilities in India is on the last Friday of the second preceding fortnight as the Reserve Bank may, by notification in the Official Gazette, specify from time to time and such assets shall to maintained, in such form and manner, as may be specified in such notification.]

(2B) 5[***]

(3) For the purpose of ensuring compliance with the provisions of this section, every banking company shall, not later than twenty days after the end of the month to which it relates, furnish to the Reserve Bank in the prescribed form and manner a monthly return showing particulars of its assets maintained in accordance with this section, and its demand and time liabilities in India at the close of business on each alternate Friday during the month, or if any such Friday is a public holiday, at the close of business on the preceding working day:

PROVIDED that every Regional Rural Bank shall also furnish a copy of the said return to the National Bank.]

(4)(a) If on any alternate Friday or, if such Friday is a public holiday, on the preceding working day, the amount maintained by a banking company at the close of business on that day falls below the minimum prescribed by or under [***] sub-section (2A) such banking company shall be liable to pay to the Reserve Bank in respect of that day’s default, penal interest for that day at the rate of three per cent per annum above the bank rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day; and

(b) If the default occurs again on the next succeeding alternate Friday, or, if such Friday is a public holiday, on the preceding working day, and continues on succeeding alternate Fridays or preceding working days, as the case may be, the rate of penal interest shall be increased to a rate of five per cent per annum above the bank rate on each such shortfall in respect of that alternate Friday and each succeeding alternate Friday or preceding working day, if such Friday is a public holiday, in which the default continues.

(5)(a)Without prejudice to the provisions of sub-section (3), the Reserve Bank may require a banking company to furnish to it are turn in the form and manner specified by it showing particulars of its assets maintained in accordance with this section and its demand and time liabilities in India, as at the close of business on each day of a month; and

(b) Without prejudice to the provisions of sub-section (4), on the failure of a banking company to maintain as on any day, the amount so required to be maintained by or under [***] sub-section (2A) the Reserve Bank may, in respect of such default, require the banking company to pay penal interest for that day as PROVIDED in clause (a) of sub-section (4) and if the default continues on the next succeeding working day, the penal interest may be increased as PROVIDED in clause (b) of sub-section (4) for the concerned days.

(6)(a) The penalty payable under sub-section (4) and sub-section (5) shall be paid within a period of fourteen days from the date on which a notice issued by the Reserve Bank demanding payment of the same is served on the banking company and in the event of failure of the banking company to pay the same within such period, the penalty may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting banking company is situated, such direction to be made only upon an application made by the Reserve Bank in this behalf to the court; and

(b) When the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the banking company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit.

(7) When under the provisions of clause (b) of sub-section (4), penal interest at the increased rate of five per cent, above the bank rate has become payable by a banking company, if thereafter the amount required to be maintained on the next succeeding alternate Friday, or if such Friday is a public holiday, the next preceding working day, is still below the prescribed minimum, every Director, manager or secretary of the banking company, who is knowingly and willfully a party to the default, shall be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each subsequent alternate Friday or the preceding working day, as the case may be, on which the default continues.

(8) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an application in writing by the defaulting banking company, that the banking company had sufficient cause for its failure to comply with the provisions of [***] sub-section (2A), the Reserve Bank may not demand the payment of the penal interest.

Explanation.–In this section, the expression “public holiday” means a day which is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881)].

Section 56(q) in section 24, –

(iii) in sub-section (3) for the proviso, the following proviso shall be substituted, namely: –

“PROVIDED that every co-operative bank, other than a primary co-operative bank, shall also furnish within the said period, a copy of the said return to the National Bank.”; (No Change in this para)

– Due to removal of 56(q) in section 24 removal of (2A) & 6(a), original para of section 24(2A)/24(6)(a) applied.

– No major change in Section 24(2A), word “scheduled co-operative bank” replace by “scheduled bank” and “co-operative bank” replace by “banking company”

– Payment of penalty reduce from thirty days to fourteen days as per sub-section(6)(a). “The penalty payable under sub-section (4) and sub-section (5) shall be paid within a period of fourteen days from the date on which a notice issued by the Reserve Bank demanding payment of the same is served on the banking company and in the event of failure of the banking company to pay the same within such period, the penalty may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting banking company is situated, such direction to be made only upon an application made by the Reserve Bank in this behalf to the court”

Section 56(r) shall be omitted

Section 56(r) – section 25 shall be omitted;

Section 25 of the Principal Act – Assets in India

(1) The assets in India of every banking company at the close of business on the last Friday of every quarter or, if that Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at the close of the business on the preceding working day, shall not be less than seventy-five percent of its demand and time liabilities in India.

(2) Every banking company shall, within one month from the end of every quarter, submit to the Reserve Bank a return in the prescribed form and manner of the assets and liabilities referred to in sub-section (1) as at the close of business on the last Friday of the previous quarter, or, if that Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881) at the close of business on the preceding working day:]

PROVIDED that every regional rural bank shall also furnish a copy of the said return to the National Bank.]

(3) For the purposes of this section,-

(a) “assets in India” shall be deemed to include export bills drawn in, and import bills drawn on and payable in India and expressed in such currencies as the Reserve Bank may from time to time approve in this behalf and also such securities as the Reserve Bank may approve in this behalf notwithstanding that all or any of the said bills or securities are held outside India;]

(b) “liabilities in India” shall not include the paid-up capital or the reserves or any credit balance in the profit and loss account of the banking company;]

(c)] “quarter” means the period of three months ending on the last day of March, June, September or December.

– Prior to ordinance section 25 not applied to co-operative bank, now due to removal of section 56(r), principal section 25 applied to co-operative bank.

– As per section 25 of the principal act, The assets in India of every banking company at the close of business on the last Friday of every quarter or, if that Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), at the close of the business on the preceding working day, shall not be less than seventy-five percent of its demand and time liabilities in India and related return also submitted to RBI on this regard from the end of every quarter.

– Normally this section applied which have business of export bill/import bill/ foreign currency business.

Section 56(ri) shall be omitted

Section 56(ria) in section 26A, for the words “banking companies”, the words “cooperative bank” shall be substituted;

26A. Establishment of Depositor Education and Awareness Fund

(1) The Reserve Bank shall establish a Fund to be called the “Depositor Education and Awareness Fund” (hereafter in this section referred to as the “Fund”).

(2) There shall be credited to the Fund the amount to the credit of any account in India with a cooperative bank which has not been operated upon for a period of ten years or any deposit or any amount remaining unclaimed for more than ten years, within a period of three months from the expiry of the said period of ten years:

PROVIDED that nothing contained in this sub-section shall prevent a depositor or any other claimant to claim his deposit or unclaimed amount or operate his account or deposit account from or with the cooperative bank after the expiry of said period of ten years and such banking company shall be liable to repay such deposit or amount at such rate of interest as may be specified by the Reserve Bank in this behalf.

(3) Where the cooperative bank has paid outstanding amount referred to in subsection (2) or allowed operation of such account or deposit, such cooperative bank may apply for refund of such amount in such manner as may be specified by the authority or committee referred to in sub-section (5).

(4) The Fund shall be utilised for promotion of depositors’ interests and for such other purposes which may be necessary for the promotion of depositors’ interests as may be specified by the Reserve Bank from time to time.

(5) The Reserve Bank shall, by notification in the Official Gazette, specify an authority or committee, with such members as the Reserve Bank may appoint, to administer the Fund, and to maintain separate accounts and other relevant records in relation to the Fund in such forms as may be specified by the Reserve Bank.

(6) It shall be competent for the authority or committee appointed under subsection (5) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.]

26A. Establishment of Depositor Education and Awareness Fund

(1) The Reserve Bank shall establish a Fund to be called the “Depositor Education and Awareness Fund” (hereafter in this section referred to as the “Fund”).

(2) There shall be credited to the Fund the amount to the credit of any account in India with a banking company which has not been operated upon for a period of ten years or any deposit or any amount remaining unclaimed for more than ten years, within a period of three months from the expiry of the said period of ten years:

PROVIDED that nothing contained in this sub-section shall prevent a depositor or any other claimant to claim his deposit or unclaimed amount or operate his account or deposit account from or with the banking company after the expiry of said period of ten years and such banking company shall be liable to repay such deposit or amount at such rate of interest as may be specified by the Reserve Bank in this behalf.

(3) Where the banking company has paid outstanding amount referred to in subsection (2) or allowed operation of such account or deposit, such banking company may apply for refund of such amount in such manner as may be specified by the authority or committee referred to in sub-section (5).

(4) The Fund shall be utilised for promotion of depositors’ interests and for such other purposes which may be necessary for the promotion of depositors’ interests as may be specified by the Reserve Bank from time to time.

(5) The Reserve Bank shall, by notification in the Official Gazette, specify an authority or committee, with such members as the Reserve Bank may appoint, to administer the Fund, and to maintain separate accounts and other relevant records in relation to the Fund in such forms as may be specified by the Reserve Bank.

(6) It shall be competent for the authority or committee appointed under subsection (5) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.]

Now, original Section 26A applied without co-operative word, “banking companies” applied.

– Normally this section already applied to all bank (including co-operative bank) and all bank already follow DEAF compliance, by way of ordinance, principal act section 26A originally applied.

– Word co-operative bank substituted by banking company only.

Section 56 (sa) shall be omitted.

Section 56(sa) for section 30, the following section shall be substituted, namely:–

“30. Audit.—

(1) Without prejudice to anything contained in any other law for the time being inforce, where the Reserve Bank is satisfied that it is necessary in the public interest or in the interest of the co-operative bank or its depositors so to do, it may at any time by general or special order direct that an additional audit of the cooperative bank accounts, for any such transactions or class of transactions or for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoint a person duly qualified under any law for the time being in force to be an auditor of companies to conduct such audit, and the auditor shall comply with such directions and make a report of such audit to the Reserve Bank and forward a copy thereof to the cooperative bank.

(2) The expenses of, or incidental to, the additional audit specified in the order made by the Reserve Bank shall be borne by the cooperative bank.

(3) The auditor referred to in sub-section (1) shall have such powers, exercise such functions vested in and discharge the duties and be subject to the liabilities and penalties imposed on auditors of companies by section 227 of the Companies Act, 1956 (1 of 1956) and also that of the auditors, if any, appointed by the law establishing, constituting or forming the co-operative bank to the extent the provisions of the Companies Act, 1956 are not inconsistent with the provisions of such law.

(4) In addition to the matters referred to in the order under subsection (1) the auditor shall state in his report–

(a) whether or not the information and explanation required by him have been found to be satisfactory;

(b) whether or not the transactions of the co-operative bank which came to his notice have been within the powers of the cooperative bank;

(c) whether or not the returns received from branch offices of the co-operative bank have been found adequate for the purpose of his audit;

(d) whether the profit and loss accounts, shows a true balance or profit or loss for the period covered by such account;

(e) any other matter which he considers should be brought to the notice of the Reserve Bank and the shareholders of the cooperative bank.”]

Section 30 – Audit –

(1) The balance-sheet and profit and loss account prepared in accordance with section 29 shall be audited by a person duly qualified under any law for the time being in force to be an auditor of companies.

(1A) Notwithstanding anything contained in any law for the time being in force or in any contractrary, every banking shall, before appointing or, re-appointing or removing any auditor or auditors, obtain the previous approval of the Reserve Bank.

(1B)Without prejudice to anything contained in the Companies Act, 1956 (1 of 1956), or any other law for the time being in force, where the Reserve Bank is of opinion that it is necessary in the public interest or in the interest of the banking company or its depositors so to do, it may at any time by order direct that a special audit of the banking company’s accounts, for any such transaction or class of transactions or for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order either appoint a person duly qualified under any law for the time being in force to be an auditor of companies or direct the auditor of the banking company himself to conduct such special audit] and auditor shall comply with such direction and make a report of such audit to the Reserve Bank and forward a copy thereof to the company.

(1C) The expenses of, or incidental to the special audit specified in the order made by the Reserve Bank shall be borne by the banking company.

(2) The auditor shall have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 227 of the companies act 1956 (1 of 1956), and auditor, if any, appointed by the law establishing, constituting or forming the banking company concerned.

(3) In addition to the matters which under the aforesaid Act the auditor is required to state in his report, he sell, in the case of a banking company incorporated in India, state in his report.

(a) whether or not the information and explanation required by him have been found to be satisfactory;

(b) whether or not the transaction of the company which have come to his notice have been within the powers of the company;

(c) whether or not the return received from branch office of the company have been found adequate for the purposes of his audit;

(d) whether the profit and loss account shows a true balance of the profit and loss for the period covered by such account;

(e) any other matter which he consider should be brought to the notice of the shareholder of the company.

– Now, auditor appointment/re-appointing/removing is carried out by every bank before obtain the previous approval of the Reserve Bank (i.e. Nationalize Bank)

– As per Section 30(1C) which are not include into before amendment of act, now thy are consider into principal act “The expenses of, or incidental to the special audit specified in the order made by the Reserve Bank shall be borne by the banking company.”

– The auditor shall have the powers of, exercise the functions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 227 of the companies act 1956

Section 56(t)(i) shall be omitted;

Section 56(t) in section 31,–

(i) for the words “within three months” and “of three months”, the words “within six months” and “of six months” shall, respectively, be substituted;

(ii) for the second proviso, the following proviso shall be substituted, namely:–

“PROVIDED FURTHER that a co-operative bank, other than a primary co-operative bank, shall furnish such returns also to the National Bank.”;]

Section 31 of Principal Act – Submission of returns – The accounts and balance-sheet referred to in section 29 together with the auditor’s report shall be published in the prescribed manner and three copies thereof shall be furnished as returns to Reserve Bank within six months from the end of the period to which they refer:

PROVIDED that the Reserve Bank may in any case extend the said period of six months for the furnishing of such return by a further period not exceeding three months:

PROVIDED FURTHER that regional rural bank shall furnish such returns also to the National Bank.

Section 31 of Principal Act – Submission of returns – The accounts and balance-sheet referred to in section 29 together with the auditor’s report shall be published in the prescribed manner and three copies thereof shall be furnished as returns to Reserve Bank within three months from the end of the period to which they refer:

PROVIDED that the Reserve Bank may in any case extend the said period of three months for the furnishing of such return by a further period not exceeding three months:

PROVIDED FURTHER that regional rural bank shall furnish such returns also to the National Bank.

– Annual audited account submitted within three month in place of six month to RBI, however RBI extend the time of additional three month maximum. (i.e. 3+3=6), prior to change law it has (i. e 6+3=9).

– RBI already exercise the power by way of notification date August 06, 2020, RBI/2020-21/28

DoR (PCB).BPD.Cir.No.2/12.05.001/2020-21.

Section 56(u) shall be omitted;

Section 56(u) sections 32 to 34 shall be omitted;

Principal Act Section 32 Copies of balance-sheets and accounts to be sent to registrar (1) Where a banking company in any year furnishes its accounts and balance-sheet in accordance with the provisions of section 31, its hall at the same time send to the registrar three copies of such accounts and balance-sheet and of the auditor’s report, and where such copies are so sent, it shall not be necessary to file with the registrar, in the case of a public company, copies of the accounts and balance-sheet and of the auditor’s report, and, in the case of a private company, copies of the balance-sheet and of the auditor’s report as required by sub-section (1) of section 220 of the Companies Act, 1956 (1 of 1956); and the copies so sent shall be chargeable with the same fee and shall be dealt with in all respects as if they were filed in accordance with that section.] (2) When in pursuance of sub-section (2) of section 27 the Reserve Bank requires any additional statement or information in connection with the balance-sheet and accounts furnished under section 31, the banking company shall, when supplying such statement or information, send a copy thereof to the registrar.

Section 33 Display of audited balance-sheet by companies incorporated outside India – Every banking company incorporated 3[outside India] shall, not later than the first Monday in August of any year in which it carries on business, display in a conspicuous place in its principal office and in every branch office in India a copy of its last audited balance-sheet and profit and loss account prepared under section 29, and shall keep the copy so displayed until replaced by a copy of the subsequent balance-sheet and profit and loss account so prepared, and every such banking company shall display in like manner copies of its complete audited balance-sheet and profit and loss account relating to its banking business as soon as they are available and shall keep the copies so displayed until copies of such subsequent accounts are available.

Section 34 Accounting provisions of this Act not retrospective – Nothing in this Act shall apply to the preparation of accounts by a banking company and the audit and submission thereof in respect of any accounting year which has expired prior to the commencement of this Act, and notwithstanding the other provisions of this Act, such account shall be prepared, audited and submitted in accordance with the law in force immediately before the commencement of this Act.

– Three Copies of balance-sheet and accounts with audit report sent to respective registrar.

– Display of audited balance-sheet by companies incorporated outside India.

Section 56(v) shall be omitted;

Section 56(v) in section 34A, sub-section (3) shall be omitted;

Section 34A – Production of documents of confidential nature

(1) Notwithstanding anything contained in section 11 of the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force, no banking company shall, in any proceeding under the said Act or in any appeal or other proceeding arising there from or connected therewith, be compelled by any authority before which such proceeding is pending to produce, or give inspection of, any of its books of account or other document or furnish or disclose any statement or information, when the banking company claims that such document, statement or information is of a confidential nature and that the production or inspection of such document or the disclosure of such statement or information would involve disclosure of information relating to –

(a) any reserves not shown as such in its published balance-sheet; or

(b) any particulars not shown therein in respect of provisions made for bad and doubtful debts and other usual or necessary provisions. (2) If, in any such proceeding in relation to any banking company other than the Reserve Bank of India, any question arises as to whether any amount out of the reserves or provisions referred to in sub-section (1) should be taken into account by the authority before which such proceeding is pending, the authority may, if it so thinks fit, refer the question to the Reserve Bank and the Reserve Bank shall, after taking into account principles of sound banking and all relevant circumstances concerning the banking company, furnish to the authority a certificate stating that the authority shall not take into account any amount as such reserves and provisions of the banking company or may take them into account only to the extent of the amount specified by it in the certificate, and the certificate of the Reserve Bank on such question shall be final and shall not be called in question in any such proceeding.

(3) For the purposes of this section “banking company” includes the Reserve Bank, 2(***), the Exim Bank, 3[the Reconstruction Bank], 4[the National Housing Bank], the National Bank, the Small Industries Bank the State Bank of India, a Corresponding new bank, a regional rural bank and subsidiary bank.

Section 34A – Production of documents of confidential nature

(1) Notwithstanding anything contained in section 11 of the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force, no banking company shall, in any proceeding under the said Act or in any appeal or other proceeding arising there from or connected therewith, be compelled by any authority before which such proceeding is pending to produce, or give inspection of, any of its books of account or other document or furnish or disclose any statement or information, when the banking company claims that such document, statement or information is of a confidential nature and that the production or inspection of such document or the disclosure of such statement or information would involve disclosure of information relating to –

(a) any reserves not shown as such in its published balance-sheet; or

(b) any particulars not shown therein in respect of provisions made for bad and doubtful debts and other usual or necessary provisions. (2) If, in any such proceeding in relation to any banking company other than the Reserve Bank of India, any question arises as to whether any amount out of the reserves or provisions referred to in sub-section (1) should be taken into account by the authority before which such proceeding is pending, the authority may, if it so thinks fit, refer the question to the Reserve Bank and the Reserve Bank shall, after taking into account principles of sound banking and all relevant circumstances concerning the banking company, furnish to the authority a certificate stating that the authority shall not take into account any amount as such reserves and provisions of the banking company or may take them into account only to the extent of the amount specified by it in the certificate, and the certificate of the Reserve Bank on such question shall be final and shall not be called in question in any such proceeding.

(3) For the purposes of this section “banking company” includes the Reserve Bank, 2(***), the Exim Bank, 3[the Reconstruction Bank], 4[the National Housing Bank], the National Bank, the Small Industries Bank the State Bank of India, a Corresponding new bank, a regional rural bank and subsidiary bank.

Section 56(x) shall be omitted;

Section 56(x) in section 35A, in sub-section (1), in clause (c), for the words “any banking company”, the words “the banking business of any cooperative bank” shall be substituted;

Principal Act Section 35A. Power of the Reserve Bank to give directions

(1) Where the Reserve Bank is satisfied that-

(a) in the 4[public interest]; or

5[(aa) in the interest of banking policy; or]

(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or

(c) to secure the proper management of the banking business of any cooperative bank company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.

(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.

Principal Act Section 35A. Power of the Reserve Bank to give directions

(1) Where the Reserve Bank is satisfied that-

(a) in the 4[public interest]; or

5[(aa) in the interest of banking policy; or]

(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or

(c) to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.

(2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.

– Only structural change from “any cooperative bank” to “any banking company”.

Section 56(y) shall be omitted;

Section 56(y) section 35B shall be omitted;

Section 56(y) section 35B shall be omitted;

Principal Act – Section 35B – Amendments of provisions relating to appointments of Managing Directors, etc., to be subject to previous approval of the Reserve Bank

(1) In the case of a banking company-

(a) no amendment of any provision relating to the maximum permissible number of Directors or the appointment or re-appointment or termination of appointment or remuneration of a Chairman, a Managing Director or any other Director, whole-time or otherwise or of a manager or a chief executive officer by whatever name called, whether that provision be contained in the company’s memorandum or articles of association, or in an agreement entered into by it, or in any resolution passed by the company in general meeting or by its Board of Directors shall have effect unless approved by the Reserve Bank;

(b) no appointment or re-appointment or termination of appointment of a Chairman, a Managing or whole-time Director, manager or chief executive officer by whatever name called, shall have effect unless such appointment, re-appointment or termination of appointment is made with the previous approval of the Reserve Bank.

Explanation.–For the purpose of this sub-section, any provision conferring any benefit or providing any amenity or perquisite, in whatever form, whether during or after the termination of the term of office 6[of the Chairman or the manager] or the chief executive officer by whatever name called or the Managing Director, or any other Director, whole-time or otherwise, shall be deemed to be a provision relating to his remuneration.

(2) Nothing contained in sections 268 and 269, the proviso to sub-section (3) of section 309, sections 310 and 311,the proviso to section 387, and section 388 (in so far as section 388 makes the provisions of sections 269, 310 and 311 apply in relation to the manager of a company) of the Companies Act, 1956 (1 of 1956), shall apply to any matter in respect of which the approval of the Reserve Bank has to be obtained under sub-section (1).

(2A) Nothing contained in section 198 of the Companies Act, 1956 (1 of 1956) shall apply to a banking company and the provisions of sub-section (1) of section 309 and of section 387 of that Act shall, in so far as they are applicable to a banking company, have effect as if no reference had been made in the said provisions to section 198 of that Act.

(3) No act done by a person as Chairman or a Managing or whole-time Director or a Director not liable to retire by rotation or a manager or a chief executive officer by whatever name called, shall be deemed to be invalid on the ground that it is subsequently discovered that his appointment or reappointment] had not taken effect by reason of any of the provisions of this Act; but nothing in this sub-section shall be construed as rendering valid any act done by such person after his appointment or reappointment has been shown to the banking company not to have had effect.

– Generally, Board of Director of the co-operative has all the power, with approval of RCS (Registrar of Co-operative Society) whenever required.

-Appointment/Reappointment/Termination/Removal of MD/any Director/CEO of the bank done with prior approval of the RBI, however as per RBI notification date December 31, 2019 regarding BOM, now appointment of CEO already required prior approval of the RBI, now they also included MD and director of the bank.

– BOD appoint by way of election as per process define in RCS Act, till the date prior approval of the RBI not required, however now onwards it has to be required.

Section 56(z) shall be omitted;

Section 56(z) in section 36, in sub-section (1),–

(a) clause (b) shall be omitted;

(b) for clause (d), the following clause shall be substituted, namely:–

(d) at any time, if it is satisfied that for the reorganisation or expansion of co-operative credit on sound lines it is necessary so to do by an order in writing and on such terms and conditions as may be specified therein,–

(i) depute one or more of its officers to watch the proceedings at any meeting of the Board of Directors of the co-operative bank or of any other body constituted by it and require the co-operative bank to give an opportunity to the officer so deputed to be heard at such meetings and to offer such advice on such matters as the officer may consider necessary or proper for the reorganisation and expansion of co- operative credit on sound lines, and also require such officer to send a report of such proceedings to the Reserve Bank;

(ii) appoint one or more of its officers to observe the manner in which the affairs of the co-operative bank or its offices or branches are being conducted and make a report thereon;”];

Principal Act Section 36 – Further powers and functions of Reserve Banks

(1) The Reserve Bank may-

(a) caution or prohibit banking companies or any banking company in particular against entering into any particular transaction or class of transactions, and generally give advice to any banking company;

(b) on a request by the companies concerned and subject to the provision of section 1[44A], assist, as intermediary or otherwise, in proposals for the amalgamation of such banking companies;

(c) give assistance to any banking company by means of the grant of a loan or advance to it under clause(3) of sub-section (1) of section 18 of the Reserve Bank of India Act, 1934 (2of 1934);

2[(d) 3[at any time, if it is satisfied that for the reorganisation or expansion of co-operative credit on sound lines it is necessary so to do by an order in writing and on such terms and conditions as may be specified therein,–

(i) depute one or more of its officers to watch the proceedings at any meeting of the Board of Directors of the co-operative bank or of any other body constituted by it and require the co-operative bank to give an opportunity to the officer so deputed to be heard at such meetings and to offer such advice on such matters as the officer may consider necessary or proper for the reorganisation and expansion of co- operative credit on sound lines, and also require such officer to send a report of such proceedings to the Reserve Bank;

(ii) appoint one or more of its officers to observe the manner in which the affairs of the co-operative bank or its offices or branches are being conducted and make a report thereon;

(iii) require the Board of Directors of the banking company or any committee or any other body constituted by it to give in writing to any officer specified by the Reserve 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 constituted by it;

(iv) appoint one or more of its officers to observe the manner in which the affairs of the banking company or of its offices or branches are being conducted and make a report thereon;

(v) require the banking company to make, within such time as may be specified in the order, such changes in the management as the Reserve Bank may consider necessary 1[***].]

(2) The Reserve Bank shall make an annual report to the Central Government on the trend and progress of banking in the country, with particular reference to its activities under clause(2) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in such report its suggestions, if any, for the strengthening of banking business throughout the country.

(3) The Reserve Bank may appoint such staff at such places as it considers necessary for the scrutiny of the returns, statements and information furnished by banking companies under this Act, and generally to ensure the efficient performance of its functions under this Act.

Principal Act Section 36 – Further powers and functions of Reserve Banks

(1) The Reserve Bank may-

(a) caution or prohibit banking companies or any banking company in particular against entering into any particular transaction or class of transactions, and generally give advice to any banking company;

(b) on a request by the companies concerned and subject to the provision of section 1[44A], assist, as intermediary or otherwise, in proposals for the amalgamation of such banking companies;

(c) give assistance to any banking company by means of the grant of a loan or advance to it under clause(3) of sub-section (1) of section 18 of the Reserve Bank of India Act, 1934 (2of 1934);

2[(d) 3[at any time, if it is satisfied that in the public interest or in me interest of banking policy or for preventing the affairs of the banking company being conducted in a manner detrimental to the interests of the banking company or its depositors it is necessary so to do,] by order in writing and on such terms and conditions as may be specified therein-

(i) require the banking company to call a meeting of its Directors for the purpose of considering any matter relating to or arising out of the affairs of the banking company; or require an officer of the banking company to discuss any such matter with an officer of the Reserve Bank;

(ii) depute one or more of its officers to which the proceedings at any meeting of the Board of Directors of the banking company or of any committee or of any other body constituted by it; require the banking company to give an opportunity to the officers so deputed to be heard at such meetings and also require such officers to send a report of such proceedings to the Reserve Bank;

(iii) require the Board of Directors of the banking company or any committee or any other body constituted by it to give in writing to any officer specified by the Reserve 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 constituted by it;

(iv) appoint one or more of its officers to observe the manner in which the affairs of the banking company or of its offices or branches are being conducted and make a report thereon;

(v) require the banking company to make, within such time as may be specified in the order, such changes in the management as the Reserve Bank may consider necessary 1[***].]

(2) The Reserve Bank shall make an annual report to the Central Government on the trend and progress of banking in the country, with particular reference to its activities under clause(2) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in such report its suggestions, if any, for the strengthening of banking business throughout the country.

(3) The Reserve Bank may appoint such staff at such places as it considers necessary for the scrutiny of the returns, statements and information furnished by banking companies under this Act, and generally to ensure the efficient performance of its functions under this Act.

Power of RBI enhance which are not applicable old provision.

– Prohibition of bank for particular against entering into any particular transaction and generally give advice to any bank, which are before amendment by way of notification/circular implemented, now they endorse by Act.

– On a request by the bank concerned and subject to provision of section 44A, assist as in intermediary or otherwise, in proposal for the amalgamation of such bank.

– If RBI satisfied that in the public interest or in me interest of banking policy or for preventing the affairs of the bank being conducted in manner detrimental to interest of the bank or it depositors it is necessary so to do, by order in writing and such terms and condition as may be specified, before amendment of act RBI depute on or more of its officers appointed in BOD the carried out all the procedure, now due this amendment RBI only giving writing order, applied all the terms and condition.

– Now, RBI give direction regarding amalgamation if interest of the banking company or depositors it is necessary to do.

Section 56(za) shall be omitted;

Section(za) in section – 36A,– (i) for sub-section (1), the following sub-section shall be substituted, namely:–

“(1) The provisions of section 11, section 18 and section 24 shall not apply to a co-operative bank which has been refused a licence under section 22 of whose licence has been cancelled under that section or which is or has been prohibited or precluded from accepting deposits by virtue of any order made under this Act or of any alteration made in its bye-laws.”;

(ii) after sub-section (2), the following sub-section shall be inserted, namely:–

“(3) Subject to the provisions of sub-sections (1) and (2), a cooperative society carrying on business as a primary co-operative bank at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), or a co-operative society which becomes a primary co-operative bank after such commencement shall, notwithstanding that it does not at any time thereafter satisfy the requirements of the definition of primary co-operative bank 1[in clause (ccv) of section 5], continue to be a primary co-operative bank within the meaning of this Act, and may, with the approval of the Reserve Bank and subject to such terms and conditions as the Reserve Bank may specify in that behalf, continue to carry on the business of banking.”;

Principal Act Section 36A. Certain provisions of the Act not to apply to certain banking companies

“(1) The provisions of section 11, section 18 and section 24 shall not apply to a co-operative bank which has been refused a licence under section 22 of whose licence has been cancelled under that section or which is or has been prohibited or precluded from accepting deposits by virtue of any order made under this Act or of any alteration made in its bye-laws.

(2) Where the Reserve Bank is satisfied that any such banking company as is referred to in sub-section (1) has repaid, or has made adequate provision for repaying all deposits accepted by the banking company, either in full or to the maximum extent possible, the Reserve Bank may, by notice published in the Official Gazette, notify that the banking company has ceased to be a banking company within the meaning of this Act, and thereupon all the provisions of this Act applicable to such banking company shall cease to apply to it, except as respects things done or omitted to be done before such notice.]

“(3) Subject to the provisions of sub-sections (1) and (2), a cooperative society carrying on business as a primary co-operative bank at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), or a co-operative society which becomes a primary co-operative bank after such commencement shall, notwithstanding that it does not at any time thereafter satisfy the requirements of the definition of primary co-operative bank 1[in clause (ccv) of section 5], continue to be a primary co-operative bank within the meaning of this Act, and may, with the approval of the Reserve Bank and subject to such terms and conditions as the Reserve Bank may specify in that behalf, continue to carry on the business of banking.”;

Principal Act Section 36A. Certain provisions of the Act not to apply to certain banking companies

(1) The provisions of section 11, sub-section (1) of section 12, and sections 17, 18, 24 and 25 shall not apply to a banking company-

(a) which, whether before or after the commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959), has been refused a licence under section 22, or prohibited from accepting fresh deposits by a compromise, arrangement or scheme sanctioned by a court or by any order made in any proceeding relating to such compromise, arrangement or scheme, or prohibited from accepting deposits by virtue of any alteration made in its memorandum; or

(b) whose licence has been cancelled under section 22, whether before or after the commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959).

(2) Where the Reserve Bank is satisfied that any such banking company as is referred to in sub-section (1) has repaid, or has made adequate provision for repaying all deposits accepted by the banking company, either in full or to the maximum extent possible, the Reserve Bank may, by notice published in the Official Gazette, notify that the banking company has ceased to be a banking company within the meaning of this Act, and thereupon all the provisions of this Act applicable to such banking company shall cease to apply to it, except as respects things done or omitted to be done before such notice.]

Section 11 Requirement as to minimum paid-up capital and reserves

Section 12 Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders.—

Section 17 Reserve Fund

Section 18 Cash reserve.

Section 24 Maintenance of a percentage of assets

Section 25 Assets in India

During the specific case (i.e. refused licence u/s 22, prohibit from accepting fresh deposit or scheme sanctioned by court or any order mad in proceeding relating to such compromise or prohibited from accepting deposit by virtue of any alteration mad in its memorandum), the provision of section 11, sub section (1) of section 12, section 17, 18, 24 and 25 shall not applied. Earlier provision sub-section (1) of section 12 and section 17, 25 applied to co-operative bank, now due ordinance now they are not applied.

Section 56 in clause (zaa),—

(i) for the words “multi-State co-operative bank” wherever they occur, the words “co-operative bank” shall be substituted;

(ii) after the portion beginning with ‘‘36AAA. (i)Where the Reserve Bank is satisfy’’ and ending with ‘‘shall not exceed five years.’’, the following proviso shall be inserted, namely:—

‘‘Provided that in case of a co-operative bank registered with the Registrar of Co-operative Societies of a State, the Reserve Bank shall issue such order in consultation with the concerned State Government seeking its comments, if any, within such period as the Reserve Bank may specify.’’;

(iii) for the portion beginning with “36AAB. Where a Multi-State Cooperative bank” and ending with “(c) shall not be liable to be called in question in any manner.”, the following shall be substituted, namely:—

“(10) The provisions of section 36ACA shall not apply to a co-operative bank.”;

Section 56(zaa) after section 36AA of the principal Act, the following sections shall be inserted, namely:–

“36AAA. Supersession of Board of Directors of a multi-State co-operative bank.—

(1) Where the Reserve Bank is satisfied in the public interest or for preventing the affairs of a multi-State co-operative bank being conducted in a manner detrimental to the interest of the depositors or of the multi-State co-operative bank or for securing the proper management of the multi-State co-operative bank, it is necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order, supersede the Board of Directors of such multi-State cooperative bank for a period not exceeding five years as may be specified in the order, which may be extended from time to time, so, however, that total period shall not exceed five years.

(2) The Reserve Bank may, on supersession of the Board of Directors of the multi-State co-operative bank under sub-section (1) appoint an Administrator for such period as it may determine.

(3) The Reserve Bank may issue 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 supersession of the Board of Directors of a multi-State co-operative bank,–

(a) the Chairman, Managing Director and other Directors as from the date of supersession of the Board shall vacate their offices as such;

(b) all the powers, functions and duties, which may, by or under the provisions of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) or 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 a multi-State co-operative bank or by a resolution passed in general meeting of such co-operative bank, shall, until the Board of Directors of such co-operative 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 such multi-State cooperative bank.

(5)(a) The Reserve Bank may constitute a committee of three or more persons who have experience in law, finance, banking, administration or accountancy to assist the Administrator in discharge of his duties.

(b) The committee shall meet at such times and places and observe such rules of procedure as may be specified by the Reserve Bank.

(6) The salary and allowances to the Administrator and the members of the committee constituted by the Reserve Bank shall be such as may be specified by the Reserve Bank and be payable by the concerned multi-State co-operative bank.

(7) On and before expiration of period of supersession of the Board of Directors as specified in the order issued under subsection (1), the Administrator of the multi-State co-operative bank shall call the general meeting of the society to elect new Directors.

(8) Notwithstanding anything, contained in any other law or in any contract, or bye-laws of a multi-State co-operative bank, no person shall be entitled to claim any compensation for the loss or termination of his office.

(9) The Administrator appointed under sub-section (2) shall vacate office immediately after the Board of Directors of the multi-State co-operative society has been constituted.

36AAB. Order of winding up multi-State co-operative bank to be final in certain cases.—Where a multi-State co-operative bank, being an eligible co-operative bank, has been registered under section 13A of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961) as an insured bank, and subsequently–

(a) in pursuance of a scheme prepared with the previous approval of the Reserve Bank under section 18 of the Multi-State Cooperative Societies Act, 2002 (39 of 2002) an order sanctioning a scheme of compromise and arrangement or reorganisation or reconstruction has been made; or

(b) on requisition by the Reserve Bank, an order for winding up of the multi-State co-operative bank has been made under section 87 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002); or

(c) an order for the supersession of the Board and the appointment of an Administrator therefor has been made under section 36AAA, such order for sanctioning the scheme of compromise and arrangement or reorganisation or reconstruction under clause (a) or the winding up of the multi-State co-operative bank under clause (b) or an order for the supersession of the Board and the appointment of an Administrator under clause (c) shall not be liable to be called in question in any manner.

Section 56(zaa) after section 36AA of the principal Act, the following sections shall be inserted, namely:–

“36AAA. Supersession of Board of Directors of a co-operative bank.—

(1) Where the Reserve Bank is satisfied in the public interest or for preventing the affairs of a co-operative bank being conducted in a manner detrimental to the interest of the depositors or of the co-operative or for securing the proper management of the co-operative bank, it is necessary so to do, the Reserve Bank may, for reasons to be recorded in writing, by order, supersede the Board of Directors of such co-operative bank for a period not exceeding five years as may be specified in the order, which may be extended from time to time, so, however, that total period shall not exceed five years.

‘‘Provided that in case of a co-operative bank registered with the Registrar of Co-operative Societies of a State, the Reserve Bank shall issue such order in consultation with the concerned State Government seeking its comments, if any, within such period as the Reserve Bank may specify.’’;

(2) The Reserve Bank may, on supersession of the Board of Directors of co-operative bank under sub-section (1) appoint an Administrator for such period as it may determine.

(3) The Reserve Bank may issue 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 supersession of the Board of Directors of a co-operative bank,–

(a) the Chairman, Managing Director and other Directors as from the date of supersession of the Board shall vacate their offices as such;

(b) all the powers, functions and duties, which may, by or under the provisions of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) or 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 a co-operative bank or by a resolution passed in general meeting of such co-operative bank, shall, until the Board of Directors of such co-operative 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 such co-operative bank.

(5)(a) The Reserve Bank may constitute a committee of three or more persons who have experience in law, finance, banking, administration or accountancy to assist the Administrator in discharge of his duties.

(b) The committee shall meet at such times and places and observe such rules of procedure as may be specified by the Reserve Bank.

(6) The salary and allowances to the Administrator and the members of the committee constituted by the Reserve Bank shall be such as may be specified by the Reserve Bank and be payable by the concerned co-operative bank.

(7) On and before expiration of period of supersession of the Board of Directors as specified in the order issued under subsection (1), the Administrator of the co-operative bank shall call the general meeting of the society to elect new Directors.

(8) Notwithstanding anything, contained in any other law or in any contract, or bye-laws of a co-operative bank, no person shall be entitled to claim any compensation for the loss or termination of his office.

(9) The Administrator appointed under sub-section (2) shall vacate office immediately after the Board of Directors of the multi-State co-operative society has been constituted.

(10) The provisions of section 36ACA shall not apply to a co.operative bank.

36AAB. Order of winding up multi-State co-operative bank to be final in certain cases.—Where a multi-State co-operative bank, being an eligible co-operative bank, has been registered under section 13A of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961) as an insured bank, and subsequently–

(a) in pursuance of a scheme prepared with the previous approval of the Reserve Bank under section 18 of the Multi-State Cooperative Societies Act, 2002 (39 of 2002) an order sanctioning a scheme of compromise and arrangement or reorganisation or reconstruction has been made; or

(b) on requisition by the Reserve Bank, an order for winding up of the multi-State co-operative bank has been made under section 87 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002); or

(c) an order for the supersession of the Board and the appointment of an Administrator therefor has been made under section 36AAA, such order for sanctioning the scheme of compromise and arrangement or reorganisation or reconstruction under clause (a) or the winding up of the multi-State co-operative bank under clause (b) or an order for the supersession of the Board and the appointment of an Administrator under clause (c) shall not be liable to be called in question in any manner.

(i) for the words “multi-State co-operative bank” wherever they occur, the

words “co-operative bank” shall be substituted;

(ii) after the portion beginning with ‘‘36AAA. (i)Where the Reserve Bank is satisfy’’ and ending with ‘‘shall not exceed five years.’’, the following proviso shall be inserted, namely:—

‘‘Provided that in case of a co-operative bank registered with the Registrar of Co-operative Societies of a State, the Reserve Bank shall issue such order in consultation with the concerned State Government seeking its comments, if any, within such period as the Reserve Bank may specify.’’;

(iii) for the portion beginning with “36AAB. Where a Multi-State Cooperative bank” and ending with “(c) shall not be liable to be called in question

in any manner.”, the following shall be substituted, namely:—

“(10) The provisions of section 36ACA shall not apply to a co-operative bank.”;

The Act states that RBI may supersede the Board of Directors of a multi-state cooperative bank for up to five years under certain conditions. These conditions include cases where it is in the public interest for RBI to supersede the Board, and to protect depositors. The Ordinance adds that in case of a co-operative bank registered with the Registrar of Co-operative Societies of a state, the RBI will supersede the Board of Directors after consultation with the concerned state government, and within such period as specified by it.

The provisions of section 36ACA shall not apply to a co-operative bank.

Section 36AAB Order of winding up multi-State co-operative bank to be final in certain cases.

Power of the RBI enhance on Supersession of Board of Directors of a co-operative bank, which are applied to multi-state co-operative bank before amendment of act, which are substituted by word “co-operative bank” in place of “muti-state co-operative bank”

Section 36ACA – Supersession of Board of Directors in certain cases not applicable to co-operative bank as per 36AAA(10).

Section 36AAB – Order of winding up multi-State co-operative bank to be final in certain cases – which are applicable to co-operative before amendment of act, now due to ordinance section 36AAB remove, and principal section 36AAA applied.

Section 56(zb), the following clause shall be substituted, namely:—

“(zb) Part IIC shall be omitted;”;

Section 56(zb) Part IIA except Sections 36AAA, 36AAB and 36AAC, Part IIC, Part III, except sub-sections (1), (2) and (3) of section 45, and Part IIIA except section 45W shall be omitted;

Section 56(zb) Part IIA except Sections 36AAA, 36AAB and 36AAC, Part IIC, Part III, except sub-sections (1), (2) and (3) of section 45, and Part IIIA except section 45W shall be omitted;

Section 36AE – Power of Central Government to acquire undertakings of banking companies in certain cases

Section 36AF – Power of the Central Government to make scheme

Section 36AG – Compensation to be given to shareholders of the acquired bank

Section 36AH – Constitution of the Tribunal

Section 36AI – Tribunal to have powers of a civil court

Section 36AJ – Procedure of the Tribunal

Now, RBI has all the power which are specified in Part IIC of the principal act. 

Kindly compare with RCS with new guideline.

Section 56(zc)(i) shall be omitted;

Section 56(zc) in section 46,-

(i) in sub-section (4) the word “or” occurring at the end of clause (i) and clause (ii) shall be omitted;

(ii) in clause (a) of the Explanation, after the words “includes a”, the words “co-operative society” shall be inserted;]

46. Penalties

(1) Whoever in any return, balance-sheet or other document 1[or in any information required or furnished] by or under or for the purposes of any provision of this Act, wilfully makes a statement which is false in any material particular, knowing it to be false, or wilfully omits to make a material statement, shall be punishable with imprisonment for a term which may extend to three years 2[or with fine, which may extend to one crore rupees or with both].

(2) If any person fails to produce any book, account or other document or to furnish any statement or information which under sub-section (2) of section 35 it is his duty to produce or furnish, or to answer any question relating to the business of a banking company which is asked by 3[an officer making an inspection or scrutiny under that section.] he shall be punishable with a fine which may extend to 4[twenty lakh rupees] in respect of each offence, and if he persists in such refusal, to a further fine which may extend to 1[fifty thousand rupees] for every day during which the offence continues.

(3) If any deposits are received by a banking company in contravention of an order under clause (a) of sub-section (4) of section 35, every Director or other officer of the banking company, unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent it shall be deemed to be guilty of such contravention and shall be punishable with a fine which may extend to twice the amount of the deposits so received.

(4) If any other provision of this Act is contravened or if any default is made in-

(i) complying with any requirement of this Act or of any order, rule or direction made or condition imposed there under, or

(ii) carrying out the terms of, or the obligations under, a scheme sanctioned under sub-section (7) of section 45,

by any person, such person shall be punishable with fine which may extend to 4[one crore rupees] or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where a contravention or default is a continuing one, with a further fine which may extend to 5[one lakh rupees] for every day, during which the contravention or default continues.]

(5) Where a contravention or default has been committed by a company, every person who, at the time the contravention or default was committed, was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention or default and shall be liable to be proceeded against and punished accordingly:

PROVIDED that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the contravention or default was committed without his knowledge or that he exercised all due diligence to prevent the contravention or default.

(6) Notwithstanding anything contained in sub-section (5),where a contravention or default has been committed by a company, and it is proved that the same was committed with the consent or connivance of, or is attributable to any gross negligence on the part of, any Director, manager, secretary or other officer of the company, such Director, manager, secretary or other officer shall also be deemed to be guilty of that contravention or default and shall be liable to be proceeded against and punished accordingly.

Explanation.–For the purposes of this section, –

(a) “company” means anybody corporate and includes a “co-operative society” firm or other association of individuals, and

(b) “Director”, in relation to a firm, means a partner in the firm.]

46. Penalties

(1) Whoever in any return, balance-sheet or other document 1[or in any information required or furnished] by or under or for the purposes of any provision of this Act, wilfully makes a statement which is false in any material particular, knowing it to be false, or wilfully omits to make a material statement, shall be punishable with imprisonment for a term which may extend to three years 2[or with fine, which may extend to one crore rupees or with both].

(2) If any person fails to produce any book, account or other document or to furnish any statement or information which under sub-section (2) of section 35 it is his duty to produce or furnish, or to answer any question relating to the business of a banking company which is asked by 3[an officer making an inspection or scrutiny under that section.] he shall be punishable with a fine which may extend to 4[twenty lakh rupees] in respect of each offence, and if he persists in such refusal, to a further fine which may extend to 1[fifty thousand rupees] for every day during which the offence continues.

(3) If any deposits are received by a banking company in contravention of an order under clause (a) of sub-section (4) of section 35, every Director or other officer of the banking company, unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent it shall be deemed to be guilty of such contravention and shall be punishable with a fine which may extend to twice the amount of the deposits so received.

(4) If any other provision of this Act is contravened or if any default is made in-

(i) complying with any requirement of this Act or of any order, rule or direction made or condition imposed there under, or

(ii) carrying out the terms of, or the obligations under, a scheme sanctioned under sub-section (7) of section 45,

by any person, such person shall be punishable with fine which may extend to 4[one crore rupees] or twice the amount involved in such contravention or default where such amount is quantifiable, whichever is more, and where a contravention or default is a continuing one, with a further fine which may extend to 5[one lakh rupees] for every day, during which the contravention or default continues.]

(5) Where a contravention or default has been committed by a company, every person who, at the time the contravention or default was committed, was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention or default and shall be liable to be proceeded against and punished accordingly:

PROVIDED that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the contravention or default was committed without his knowledge or that he exercised all due diligence to prevent the contravention or default.

(6) Notwithstanding anything contained in sub-section (5),where a contravention or default has been committed by a company, and it is proved that the same was committed with the consent or connivance of, or is attributable to any gross negligence on the part of, any Director, manager, secretary or other officer of the company, such Director, manager, secretary or other officer shall also be deemed to be guilty of that contravention or default and shall be liable to be proceeded against and punished accordingly.

Explanation.–For the purposes of this section, –

(a) “company” means anybody corporate and includes a “co-operative society” firm or other association of individuals, and

(b) “Director”, in relation to a firm, means a partner in the firm.]

By way of word removal “or”, define this clause more specific.

Section 56(zd) shall be omitted;

Section 56(zd) in section 47, the words, brackets, figures and letters “sub-section (5) of section 36AA or” shall be omitted;

Principal Act – Section -47. Cognizance of offences –

No court shall take a cognizance of any offence punishable under sub-section (5)of section 36AA or section 46 except upon complaint in writing made by an officer of [the Reserve Bank or, as the case may be, the National Bank] generally or specially authorised in writing in this behalf by [the Reserve Bank, or as the case may be, the National Bank] and [no court other than that of a Metropolitan Magistrate or a Judicial Magistrate of the first class or any court superior thereto] shall try any such offence.

Principal Act – Section -47. Cognizance of offences –

No court shall take a cognizance of any offence punishable under sub-section (5)of section 36AA or section 46 except upon complaint in writing made by an officer of [the Reserve Bank or, as the case may be, the National Bank] generally or specially authorised in writing in this behalf by [the Reserve Bank, or as the case may be, the National Bank] and [no court other than that of a Metropolitan Magistrate or a Judicial Magistrate of the first class or any court superior thereto] shall try any such offence.

Now Section 36AA(5) also consider while cognizance of offence u/s 47.

Section 36AA – Power of Reserve Bank to remove managerial and other persons from office.

Section 56(zf) shall be omitted;

Section 56 (zf) in section 49A, for the proviso, the following proviso shall be substituted, namely:–

“PROVIDED that nothing contained in this section shall apply to–

(a) a primary credit society–

(b) any other co-operative society accepting such deposits at the commencement of the Banking Laws (Application to Cooperative Societies) Act, 1965 (23 of 1965), for a period of one year from the date of such commencement; and

(c) any savings bank scheme run by the Government”;

Principal Section 49A- Restriction on acceptance of deposits withdrawable by cheque –

No person other than a banking company, the Reserve Bank, the State Bank of India or any other 3[banking institution, firm or other person notified by the Central Government in this behalf on the recommendation of the Reserve Bank] shall accept from the public deposits of money withdrawable by cheque:

“PROVIDED that nothing contained in this section shall apply to–

(a) a primary credit society–

(b) any other co-operative society accepting such deposits at the commencement of the Banking Laws (Application to Cooperative Societies) Act, 1965 (23 of 1965), for a period of one year from the date of such commencement; and

(c) any savings bank scheme run by the Government”;

Principal Section 49A- Restriction on acceptance of deposits withdrawable by cheque –

No person other than a banking company, the Reserve Bank, the State Bank of India or any other 3[banking institution, firm or other person notified by the Central Government in this behalf on the recommendation of the Reserve Bank] shall accept from the public deposits of money withdrawable by cheque:

PROVIDED that nothing contained in this section shall apply to any savings bank scheme run by the Government.

By way removal of proviso, define this clause more specific.

Section 56 (zg), the following clause shall be substituted, namely:—

‘(zg) in section 49B, references to “Central Government” shall be construed as references to “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered;’;

(zg) sections 49B and 49C shall be omitted;

Notwithstanding anything contained in section 21 of the Companies Act, 1956 (1 of 1956), the Central Government shall not signify its approval to the change of name of any banking company unless the Reserve Bank certifies in writing that it has no objection to such change.

Principal Act Section 49B – Change of name by a banking company –

Notwithstanding anything contained in section 21 of the Companies Act, 1956 (1 of 1956), the “Central Registrar” or “Registrar of Co-operative Societies”, as the case may be, under the law under which a co-operative bank is registered shall not signify its approval to the change of name of any banking company unless the Reserve Bank certifies in writing that it has no objection to such change.

Section 49C – Alteration of memorandum of a banking company

Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), no application for the confirmation of the alteration of the memorandum of a banking company shall be maintainable unless the Reserve Bank certifies that there is no objection to such alteration.]

– More specifically define the clause by way of word “Central Registrar or Registrar of co-operative societies, as the case may be, under the law under which a co-operative bank is registered” with removeal of word “central government”.

– Section 49C – Alteration of memorandum of a banking company – already remove before amendment of act and after amendment of only section 49B change with specific words.

Section 56Z(h) shall be omitted;

Section 56 (zh) in section 50, the figures and letters “10, 12A, 16”, “35B”, and “43A” shall be omitted;

Principal Section 50- Certain claims for compensation barred –

No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of the provisions contained in sections 10, 12A, 16, 35A, 35B,36, 43A and 45 or by reason of the compliance by a banking company with any order or direction given to it under this Act].

Principal Section 50– Certain claims for compensation barred –

No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of the provisions contained in sections 10, 12A, 16, 35A, 35B,36, 43A and 45 or by reason of the compliance by a banking company with any order or direction given to it under this Act].

– No person shall claim for compensation for any loss incurred by reason of the operation of any of the provisions contained in section 10, 12A, 16, 35A, 35B, 36, 43A and 45, out of some section remove before amendment which are section 10, 12A, 35A, 35B, now due to applicability of principal act section 50 all the section which are remove earlier now included.

Section 10 – Prohibition of employment of Managing Agents and restrictions on certain forms of employment

Section 12A – Election of new Directors

Section 35A – Power of the Reserve Bank to give directions

Section 35B – Amendments of provisions relating to appointments of Managing Directors, etc., to be subject to previous approval of the Reserve Bank

Section 56 (zj), the following clause shall be substituted, namely:—

‘(zj) after section 53, the following section shall be inserted, namely:

“53A. Notwithstanding anything contained in any other provision of this Act, the Reserve Bank may, from time to time, on being satisfied that it is necessary so to do, declare by notification in the Official Gazette, that the provisions of item (iii) of clause (b) of sub-section (1) and sub-section (2) of section 10, clause (a) of sub-section (2) of section 10A, sub-section (1A) of section 10B and clause (b) of sub-section (1) of section 35B of this Act shall not apply to a co-operative bank or class of co-operative banks, either generally or for such period as may be specified therein, subject to such conditions, limitations or restrictions as it may think fit to impose.”;’.

Section 53(zj) after section 53, the following section shall be inserted, namely:

“53A. Notwithstanding anything contained in any other provision of this Act, the Reserve Bank may, from time to time, on being satisfied that it is necessary so to do, declare by notification in the Official Gazette, that the provisions of item (iii) of clause (b) of sub-section (1) and sub-section (2) of section 10, clause (a) of sub-section (2) of section 10A, sub-section (1A) of section 10B and clause (b) of sub-section (1) of section 35B of this Act shall not apply to a co-operative bank or class of co-operative banks, either generally or for such period as may be specified therein, subject to such conditions, limitations or restrictions as it may think fit to impose.” (Inserted)

– Due to this amendment RBI take all the power of the applicability of all this section by way of notification in official gazette now.

– Principal Act section 10 – Prohibition of employment of Managing Agents and restrictions on certain forms of employment

– Section 10(1)(b)(iii), “whose remuneration is, in the opinion of the Reserve Bank, excessive;”

– Section 10(2), “In forming its opinion under sub-clause (iii) of clause (b) of sub-section (1), the Reserve Bank may have regard among other matters to the following:-

(i) the financial condition and history of the banking company, its size and area of operation, its resources, the volume of its business, and the trend of its earning capacity;

(ii) the number of its branches or offices;

(iii) the qualifications, age and experience of the person concerned;

(iv) the remuneration paid to other persons employed by the banking company or to any person occupying a similar position in any other banking company similarly situated; and

(v) the interests of its depositors.”

– Section 10A(2)(a), “Not less than fifty-one per cent, of the total number of members of the Board of Directors of a banking company shall consist of persons, who-

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

(i) accountancy,

(ii) agriculture and rural economy,

(iii) banking,

(iv) co-operation,

(v) economics,

(vi) finance,

(vii) law,

(viii) small-scale industry,

(ix) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the banking company:

PROVIDED that out of the aforesaid number of Directors, not less than two shall be persons having special knowledge or practical experience in respect of agriculture and rural economy, co-operation or small-scale industry; and”

– Section 10B(1A), “Where a Chairman is appointed on a part-time basis,-

(i) such appointment shall be with the previous approval of the Reserve Bank and be subject to such conditions as the Reserve Bank may specify while giving such approval;

(ii) the management of the whole of the affairs of such banking company shall be entrusted to a Managing Director who shall exercise his powers subject to the superintendence, control and direction of the board of Directors.]”

– Section 35B(1)(b), “A copy of the report of the scrutiny shall be furnished to the banking company if the banking company makes a request for the same or if any adverse action is contemplated against the banking company on the basis of the scrutiny.”