BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980

40 of 1980

11th July, 1980

STATEMENT OF OBJECTS AND REASONS To gain control over the commanding heights of the economy for the attainment of the national, social and economic, objectives fourteen major Indian scheduled banks, each with deposits of Rs. 50 crores or more. were nationalised in July, 1969. It was then visualised that public ownership of these banks would help in more effective mobilisation of savings and their channelisation for productive purposes. Since the nationalisation of such banks, bank services have grown rapidly, particularly, in the hitherto under-banked rural and semi-urban areas. There has also been a progressive increase in the deployment of bank resources for the neglected sectors and weaker sections of society. 2. The Government are committed to implement, the 20-point programme vigorously. In pursuance of this objective the public sector banks have undertaken to increase their credit to priority sectors to 40 percent of their total advances over a period of five years. 3. In order further to control the heights of the economy, to meet progressively, and serve better, the needs of the development of the economy and to promote the welfare of the people, in conformity with the policy of the State towards securing the principles laid down in clauses (b) and (c) of article 39 of the Constitution six Indian private sector banks, each having deposits of Rs. 200 crores or more on 14th March. 1980, were nationalised by (he Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1980, promulgated by the President on the 15th April. 1980. The Ordinance was also considered necessary for providing larger credit to priority sectors, for establishing a more effective and meaningful direction and control over the operations of these banks and also for making these banks an integral part of the national development effort. The Ordinance, apart from providing for the transfer and vesting of the undertakings of the six bank:, in the corresponding new banks, provided for payment of an amount for the acquisition of such undertakings, the management of the corresponding new banks and other necessary and consequential provisions. 4. The Bill seeks to replace the aforesaid Ordinance.- Gaz. of Ind., 12-6-1980, Pt. II. S. 2. Ext., p. 414. An Act to provide for the acquisition and transfer of the undertakings of certain banking companies, having regard to their size, resources, coverage and organisation, in order further to control the heights of the economy, to meet progressively, and serve better, the needs of the development of the economy and to promote the welfare of the people, in conformity with the policy of the State towards securing the principles laid down in clauses (b) and (c) of article 39 of the Constitution and for matters connected therewith or incidental thereto. BE It enacted by Parliament in the Thirty first year of the Republic of India as follows:

CHAPTER 01: PRELIMINARY

SECTION 01: SHORT TITLE AND COMMENCEMENT

(1) This Act may be called The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.

(2) It shall be deemed to have come into force on the 15th day of April, 1980.

SECTION 02: DEFINITIONS

In this Act. unless the context otherwise requires,-

(a) "banking company" does not include a foreign company within the meaning of section 591 of the Companies Act, 1956-;

(b) "corresponding new bank", in relation to an existing bank, means the body corporate specified against such bank in column 2 of the First Schedule;

(c) "Custodian" means the person who becomes, or is appointed, a Custodian under section 7;

(d) "existing bank" means a banking company specified in column 1 of the First Schedule, being a company the total of the demand and time liabilities n India of which, as shown in the return as on the 14th day of March, 1980, furnished to the Reserve Bank under section 42 of the Reserve Bank of India Act, 1934-amounts to not less than rupees two hundred crores;

5(da) "prescribed" means prescribed by regulations made under this Act;';]

(e) words and expressions used therein and not defined but defined in the Banking regulation Act, 1949-, have the meanings respectively assigned to them in that Act.

6(f) words and expressions used herein and not defined either in this Act or in the Banking Regulation Act, 1949 (10 of 1949) but defined in the Companies Act, 1956 (1 of 1956) shall have the meanings respectively assigned to them in the Companies Act, 1956."]

CHAPTER 02:

4[Transfer of the Undertakings of Existing Banks and Share Capitals of the

Corresponding New Banks]

SECTION 03: ESTABLISHMENT OF CORRESPONDING NEW BANKS AND BUSINESS THEREOF

(1) On the commencement of this Act, there shall be constituted such corresponding new banks as are specified in column 2 of the First Schedule.

(2) The paid up capital of every corresponding new bank constituted under sub-section

(1)shall, until any provision is made in this behalf in any scheme made under section 9-, be equal to the paid up capital of the existing bank in relation to which it is the corresponding new bank.

1[(2) Notwithstanding anything contained in sub-section (2), the paid-up capital of every corresponding new bank constituted under sub-section (1) may from time to time be increased by-

(a) such amounts as the Board of Directors of the corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, transfer from the reserve fund established by such bank to such paid-up capital;

(b) such amounts as the Central Government may, in consultation with the Reserve Bank, contribute to such paid-up capital :

Provided that the paid-up capital of any such bank shall in no case be in excess of 24[rupees one thousand five hundred crores]]

8(2A) Subject to the provisions of this Act, the authorised capital of every corresponding new bank shall be one thousand five hundred crores of rupees divided into one hundred and fifty crores fully paid-up shares often rupees each : Provided that the Central Government may, after consultation with the Reserve Bank and by notification in the Official Gazette, increase or reduce the authorised capital as it thinks fit, so however that after such increase or reduction, the authorised capital shall not exceed three thousand crores or be less than one thousand five hundred crores, of rupees.

(2B) Notwithstanding anything contained in sub-section (2), the paid-up capital of every corresponding new bank constituted under sub-section (1) may from time to time be increased by-

(a) such amounts as the Board of Directors of the corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, transfer from the reserve fund established by such bank to such paid-up capital,

(b) such amounts as the Central Government may, after consultation with the Reserve Bank, contribute to such paid-up capital:

(c) such amounts as the Board of Directors of the corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, raise by public issue of shares in such manner as may be prescribed, so however that the Central Government shall, at all times, hold not less than fifty-one per cent of the paid-up capital of each corresponding new bank.

12(2BB). Notwithstanding anything contained in sub-section (2), the paid-up capital of a corresponding new bank constituted under sub-section (1) may, from time to time and before any paid-up capital is raised by public issue under clause (c) of sub- section (2-B), be reduced by-

(a) the Central Government, after consultation with the Reserve Bank, by cancelling any paid-up, capital which is lost, or is unrepresented by available assets;

(b) the Board of Directors, after consultation with the Reserve Bank and with the previous sanction of the Central Government, by paying off any paid- up capital which is in excess of the wants of the corresponding new bank:

Provided that in a case where such capital is lost, or is unrepresented by available assets because of amalgamation of another corresponding new bank or a corresponding new bank as defined in clause (d) of Section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) with the corresponding new bank such reduction may be done either prospectively or retrospectively, but not from a date earlier than the date of such amalgamation.

(2BBA).

(a) A corresponding new bank may from time to time and after any paid-up capital has been raised by public issue under clause (c) of sub-section (2-B), by resolution passed at an annual general meeting of the shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by the shareholders so entitled and voting, reduce its paid-up capital in any way.

(b) Without prejudice to the generality of the foregoing power the paid-up capital may be reduced by-

(i) extinguishing or reducing the liability on any of its shares in respect of share capital not paid-up;

(ii) either with or without extinguishing or reducing liability on any of its paid-up shares, cancelling any paid-up capital which is lost, or is unrepresented by available assets; or

(iii) either with or without extinguishing or reducing liability on any of its paid-up shares, paying off any paid-up share capital which is in excess of the wants of the corresponding new bank.

(2BBB). Notwithstanding anything contained in sub-section (2-BB) or sub- section (2-BBA), the paid-up capital of a corresponding new bank shall not be reduced at any time so as to render it below twenty-five per cent of the paid-up capital of that bank as on the date of commencement of the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995.".]

(2C) The entire paid-up capital of a corresponding new bank, except the paid-up capital raised by public issue under clause (c) of sub-section (2-B), shall stand vested in, and allotted to, the Central Government.

(2D) The shares of every corresponding new bank not held by the Central Government shall be freely transferable : Provided that no individual or company resident outside India or any company incorporated under any law not in force in India or any branch of such company, whether resident outside India or not, shall at any time hold or acquire by transfer or otherwise shares of the corresponding new bank so that such investment in aggregate exceeds the percentage, not being more than twenty per cent of the paid-up capital, as may be specified by the Central Government by notification in the Official Gazette. Explanation.- For the purposes of this clause, "company" means any body corporate and includes a firm or other association of individuals.

(2E) No shareholder of the corresponding new bank, other than the Central Government, shall be entitled to exercise voting rights in respect of any shares held by him in excess of one per cent of the total voting rights of all the shareholders of the corresponding new bank.

(2F) Every corresponding new bank shall keep at its head office a register, in one or more books, of the shareholders (in this Act referred to as the register) and shall enter therein the following particulars :-

(i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number;

(ii) the date on which each person is so entered as a shareholder:

(iii) the date on which any person ceases to be a shareholder: and

(iv) such other particulars as may be prescribed.

10["Provided that nothing in this sub-section shall apply to shares held with a depository.".]

(2G) Notwithstanding anything contained in sub-section (2-F), it shall be lawful for every corresponding new bank to keep the register in computer floppies or diskettes subject to such safeguards as may be prescribed.]

(3) The entire capital of each corresponding new bank shall stand vested in, and allotted to, the Central Government.

(4) Every corresponding new bank shall be a body corporate with perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, and to contract, and may sue and be sued in its name.

(5) Every corresponding new bank shall carry on and transact the business of banking as defined in clause (b) of section 5 of the Banking Regulation Act, 1949-, and may engage in2[one or more of the other forms of business] specified in sub-section (1) of section 6of that Act.

(6) Every corresponding new bank shall establish, a reserve fund to which shall be transferred the share premiums and the balance, if any, standing to the credit of the reserve fund of the existing bank in relation to which it is the corresponding new bank, and such further sums, if any, as may be transferred in accordance with provisions of section 17 of the Banking Regulation Act.1949-.

3[(7)

(i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch, for-

(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India; and .

(b) undertaking and transacting any other business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon.

(ii) The terms and conditions on which any such agency business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon.

(iii) If no guarantee can be reached on any matter referred to in clause

(ii), or if a dispute arises between the corresponding new bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final.

(iv) The corresponding new bank may transact any business or perform any functions- entrusted to it under clause (i). by itself or through any agent approved by the Reserve Bank.]

SECTION 03A: TRUST NOT TO HE ENTERED ON THE REGISTER

9-Notwithstanding anything contained in sub-section (2-F) of Section 3, no notice of any trust, express, implied or constructive, shall be entered on the register, or be receivable by the corresponding new bank,]

SECTION 03B: REGISTER OF BENEFICIAL OWNERS

11-The register of beneficial owners maintained by a depository under Section II of the Depositories Act, 1996 (22 of 1996), shall be deemed to be a register of shareholders for the purposes of this Act.

Explanation.-For the purposes of Section 3, Section 3-A and this section, the expressions "beneficial owner", "depository" and "registered owner" shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (1) of Section 2 of the Depositories Act, 1996 (22 of 1996).".]

SECTION 04: UNDERTAKINGS OF EXISTING BANKS TO VEST IN CORRESPONDING NEW BANKS

On the commencement of this Act, the undertaking of every existing bank shall be transferred to, and shall vest in, the corresponding new bank.

SECTION 05: GENERAL EFFECT OF VESTING

(1) The undertaking of each existing bank. shall be deemed to include all assets, rights, powers, authorities and privileges and all property, movable and immovable, cash balances, reserve funds investments and all other rights and interests in, or arising out of, such property as were immediately before the commencement of this Act in the ownership, possession, power or control of the existing and in relation to the undertaking, whether within or without India, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing bank in relation to the undertaking.

(2) If. according to the laws of any country outside India, the provisions of this Act by themselves are not effective to transfer or vest any asset or liability situated in that country which forms part of the undertaking of an existing bank to or in. the corresponding new bank, the affairs of the existing bank in relation to such asset or liability shall, on and from the commencement of this Act stand entrusted to the chief executive officer for the time being of the corresponding new bank and the chief executive officer may exercise all powers and do all such acts and things as may be exercised or done by the existing bank for the purpose of effectively transferring such assets and discharging such liabilities.

(3) The chief executive officer of the corresponding new bank shall in exercise of the powers conferred on him by sub-section (2), take all such steps as may be required by the laws of any such country outside India for the purpose of effecting such transfer or vesting, and may either himself or through any person authorised by him in this behalf realise any asset and discharge any liability of the existing bank.

(4) Unless otherwise expressly provided by this Act, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the commencement of this Act and to which the existing bank is a party or which are in favour of the existing bank shall be of full force and effect against or in favour of the corresponding new bank, and may be enforced or acted upon as fully and effectually as if in the place of the existing bank the corresponding new bank had been a party thereto or as if they had been issued in favour of the corresponding new bank.

(5) If, immediately before the commencement of this Act, any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under section 4-, is pending by or against the existing bank, the same shall not abate, be discontinued or be in any way, prejudicially affected by reason of the transfer of the undertaking of the existing bank or of anything contained in this Act but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corresponding new bank. (6) Nothing in this Act shall be construed as applying to the assets, rights, power authorities and privileges and property, movable and immovable, cash balances and investment in any country outside India (and other rights and interests in or arising out of such property) and borrowings, liabilities and obligations of whatever kind subsisting immediately before the commencement of this Act of any existing bank operating in that country if, under the laws in force in that country, it is not permissible for a banking company owned or controlled by Government, to carry on the business of banking there.

CHAPTER 03: PAYMENT OF AMOUNT

SECTION 06: PAYMENT OF AMOUNT

(1) Every existing bank shall be given by the Central Government such amount in respect of the transfer, under section 4-, to the corresponding new bank of the undertaking of the existing bank as is specified against each such bank in the Second Schedule.

(2) The amount referred to in sub-section (1) shall be given to every existing bank, at its option,-

(a) in cash (to be paid by cheque drawn on the Reserve Bank) in three equal annual instalments, the amount of each instalment carrying interest at the rate of five and a half per cent per annum from the commencement of this Act; or

(b) in saleable or otherwise transferable promissory notes or stock certificates of the Central Government issued and repayable at par, and maturing at the end of-

(i) ten years from the commencement of this Act and carrying interest from such commencement at the rate of six per cent per annum, or

(ii) thirty years from the commencement of this Act and carrying interest from such commencement at the rate of seven per cent per annum; or

(c) partly in cash (to be paid by cheque drawn on the Reserve Bank) and partly in such number of securities specified in sub-clause (i) or sub-clause (ii), or both, of clause (b), as may be required by the existing bank; or

(d) partly in such number of securities specified in sub-clause (i) of clause (b) and partly in such number of securities specified in sub-clause (ii) of that clause, as may be required by the existing bank.

(3) The first of the three equal annual instalments referred to in clause (a) of sub-section (2) shall be paid, and the securities referred to in clause (b) of that sub-section shall be issued, within sixty days from the date of receipt by the Central Government of the option referred to in that sub-section, or where no such option has been exercised, from the latest date before which such option ought to have been exercised.

(4) The option referred to in sub-section (2) shall be exercised by every existing bank before the expiry of a period of three months from the commencement of this Act (or within such further time, not exceeding three months, as the Central Government may, on the application of the existing bank, allow) and the option so exercised shall be final and shall not be altered or rescinded after it has been exercised.

(5) Any existing bank which omits or fails to exercise the option referred to in sub-section (2), within the time specified in sub-section (4), shall be deemed to have opted for payment in securities specified in sub-clause (i) of clause (b) of sub-section (2).

(6) Notwithstanding anything contained in this section, any existing bank may. before the expiry of three months from the commencement of this Act (or within such further time, not exceeding three months, as the Central Government may, on the application of the existing bank, allow, make an application in writing to the Central Government for an interim payment of an' amount equal to seventy-five per cent of the amount of the paid-up capital of such -bank, immediately before such commencement, indicating therein whether the payment is desired in cash or in securities specified in sub-section (2). or in both.

(7) The Central Government shall, within sixty days from the receipt of the application referred to in subsection (6), make the interim payment to the existing bank in accordance with the option indicated in such application.

(8) The interim payment made to an existing bank under sub-section (7) shall be set off against the total amount payable to such existing bank under this Act and the balance of the amount remaining outstanding after each payment shall be given to the existing bank in accordance with the option exercised, or deemed to have been exercised, under sub-section (4) or sub-section (5), as the case may be: Provided that where any part of the interim payment is obtained by an existing bank in cash, the payment so obtained shall be set off, in the first instance, against the first instalment of the cash payment referred to in sub-section (2), and in case the payment so obtained exceeds the amount of the first instalment, the excess amount shall be adjusted against the second instalment and the balance of such excess amount, if any, against the third instalment of the cash payment.

CHAPTER 04: MANAGEMENT OF CORRESPONDING NEW BANKS

SECTION 07: HEAD OFFICE AND MANAGEMENT

(1) The head office of each corresponding new bank shall be at such place as the Central Government may, by notification in the Official Gazette, specify in this behalf, and, until any such place is so specified, shall be at such place at which the head office of the existing bank, in relation to which it is the corresponding new bank, is on the commencement of this Act, located.

(2) The general superintendence, direction and management of the affairs and business of a corresponding new bank shall vest in a Board of Directors which shall be entitled to exercise all such powers and do all such acts and things as the corresponding new bank is authorised to exercise and do.

(3)

(a) As soon as may be after the commencement of this Act, the Central Government shall, in consultation with the Reserve Bank, constitute the first Board of Directors of a corresponding new bank, consisting of not more than seven persons, to be appointed by the Central Government and every director so appointed shall hold office until the Board of directors of such corresponding new bank is constituted in accordance with the scheme made under section 9-: Provided that the Central Government may, if it is of opinion that is necessary in the interests of the corresponding new bank so to do, remove a person from the membership of the first Board of Directors and appoint any other person in his place.

(b) Every member of the first Board of Directors (not being an officer of the Central Government or of the Reserve Bank) shall receive such remuneration as is equal to the remuneration which a member of the Board of Directors of the existing bank was entitled receive immediately before the commencement of this Act.

(4) Until the first Board of Directors is appointed by the Central Government under sub-section  (3), the general superintendence, direction and management of the affairs and business of a corresponding new bank shall vest in a Custodian, who shall be the chief executive officer of that bank and may exercise all powers and do all acts and things as may be exercised or done by that bank.

(5) The Chairman of an existing bank holding office as such immediately before the commencement of this Act, shall be the Custodian of the corresponding new bank and shall receive the same emoluments as he was receiving immediately before such commencement:

Provided that the Central Government may, if the Chairman of an existing bank declines to become, or to continue to function as, a Custodian of the corresponding new bank, or, if it is of opinion that it is necessary in the interests of the corresponding new bank so to do appoint any other person as the custodian of a corresponding new bank and the Custodian so appointed shall receive such emoluments as the Central Government may specify in this behalf.

(6) Custodian shall hold office during the pleasure of the Central Government.

SECTION 08: CORRESPONDING NEW BANKS TO BE GUIDED BY THE DIRECTIONS OF THE CENTRAL GOVERNMENT

Every corresponding new bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Governor of the Reserve Bank, give.

SECTION 09: POWER OF CENTRAL GOVERNMENT TO MAKE SCHEME

(1) The Central Government may, after consultation with the Reserve Bank, make a scheme for carrying out the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:--

(a) the capital structure of the corresponding new bank,19[***]

(b) the constitution of the Board of Directors by whatever name called, of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient;

(c) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution the transfer of the whole or any part of the undertaking of a16[corresponding new bank to any other corresponding new bank or banking institution] or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank;

(d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act.

20(3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub-section (1), shall include-

(a) not more than two whole-time directors to be appointed by the Central Government after consultation with the Reserve Bank:

(b) one director who is an official of the Central Government to be nominated by the Central Government :

Provided that no such director shall be a director of any other corresponding new bank

Explanation.-For the purposes of this clause, the expression "corresponding new bank" shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970):

(c) one director who is an officer of the Reserve Bank to be nominated by the Central Government on the recommendation of the Reserve Bank.

Explanation.-For the purpose of this clause, "an office of the Reserve Bank" includes an officer of the Reserve Bank who is deputed by that Bank under Section 54-AA of the Reserve Bank of India Act, 1934 (2 of 1934), to any institution referred to therein.

(d) not more than two directors to be nominated by the Central, Government from amongst the Securities and Exchange Board of India established under Section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Nation Bank for Agriculture and Rural Development established under Section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (16 of 1981), public financial. institutions as specified in sub-section (1), or notified from time to time under sub-section (2) of Section 4-A of the Companies Act, 1956 (1 of 1956), and other institutions established or constituted by or under any Central Act or incorporated under the Companies Act, 1956 and having not less than fifty-one per cent of the paid-up share capital held or controlled by the Central Government;

(e) one director, from among such of the employees of the corresponding new bank who are workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947), to be nominated by the Central Government in such manner as may be specified in a scheme made under this section,

(f) one director, from among the employees of the corresponding new bank who are not workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947), to be nominated by the Central Government after consultation with the Reserve Bank,

(g) one director who has been a Chartered Accountant for not less than fifteen years to be nominated by the Central Government after consultation with the Reserve Bank:

(h) subject to the provisions of clause (i) not more than six directors to be nominated by the Central Government;

(i) where the capital issued under clause (c) of sub-section (2-B) of Section 3 is -

(ii) not more than twenty per cent of the total paid-up capital, not more than two directors,

(II) more than twenty per cent but not more than forty per cent of the total paid-up capital, not more than four directors.

(III) more than forty per cent of the total paid-up capital, not more than six directors, to be elected by the shareholders, other than the Central Government, from amongst themselves: Provided that on the assumption of charge after election of any such directors under this clause, equal number of directors nominated under clause (h) shall retire in such manner as may be specified in the scheme.

(3A) The directors to be nominated under clause (h) or to be elected under clause (i) of sub-section (3) shall-

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

(i) agricultural and rural economy,

(ii) banking,

(iii) cooperation,

(iv) economics.

(v) finance,

(vi) law.

(vii) small-scale industry,

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

(B) represent the interests of depositors; or

(C) represent the interests of farmers, workers and artisans.

(3B) Where the Reserve Bank is of the opinion that any director of a corresponding new bank elected under clause (i) of sub-section (3) does not fulfil the requirements of sub-section (3-A), it may, after giving to such director and the bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall co- opt any other person fulfilling the requirements of sub-section (3-A) as a director in place of the person so removed till a director is duly elected by the shareholders of the corresponding new bank in the next annual general meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the corresponding new bank as director.'.]

(4) The Central Government may, after consultation with the Reserve Bank, make a scheme to amend or vary any scheme made under sub-section (1).

14[(5) On and from the date of coming into operation of a scheme made under this section with respect to any of the matters referred to in clause (c) of sub-section (2) or any matters incidental, consequential and supplemental thereto,-

(a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and employees of each of them and on any other person having any right or liability in relation to any of them including the trustees or other persons, managing or in any other manner connected with, any provident fund or other fund maintained by any of them;

(b) the properties and assets of the corresponding new bank, or, as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vested in, and the liabilities of the corresponding new bank or, as the case may be, of the banking institution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of the corporation or corporations brought into existence by reconstitution of the banking institution or the corresponding new bank, as the case may be.

14[(6)] Every scheme made by the Central Government under this Act shall be laid as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the scheme or both Houses agree that the scheme should not be made, the scheme shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that scheme.

CHAPTER 05: MISCELLANEOUS

SECTION 10: CLOSURE OF ACCOUNTS AND DISPOSAL OF PROFITS

( 1 ) Every corresponding new bank shall cause its books to be closed and balanced on the 31^st day of December24[or such other date26in each year as the Central Government may, by notification in the Official Gazette specify] and shall appoint, with the previous approval of the Reserve Bank, auditors for the audit of its accounts.25[Provided that with a view to facilitating the transition from one period of accounting to another period of accounting under this sub-section, the Central Government may, by order published, in the Official Gazette, make such provisions as it considers necessary or expedient for the closing and balancing of, or for other matters relating to, the books in respect of the concerned years.]

(2) Every auditor of a corresponding new bank shall be a person who is qualified to act as an auditor of a company under section 226 of the Companies Act, 1956-and shall receive such remuneration as the Reserve Bank may fix in consultation with the Central Government.

(3) Every auditor shall be supplied with a copy of the annual balance-sheet and profit and loss account and a list of all books kept by the corresponding new bank, and it shall be the duty of the auditor to examine the balance-sheet and profit and loss account with the accounts and vouchers relating thereto, and in the performance of his duties, the auditor-

(a) shall have, at all reasonable times, access to the books, accounts and other documents of the corresponding new bank;

(b) may, at the expense of the corresponding new bank, employ accountants or other persons to assist him in investigating such accounts, and

(c) may; in relation to such accounts, examine the Custodian or any officer or other employee of the corresponding new bank.

(4) Every auditor of a corresponding new bank shall make a report to the Central Government upon the annual balance-sheet and accounts and in every such report shall state-

(a) whether, in his opinion: the balance-sheet is a full and fair balance-sheet containing all the necessary particulars and is properly drawn up so to exhibit a true and fair view of the affairs of the corresponding new bank, and in case he had called for any explanation or information, whether it has been given and whether it is satisfactory;

(b) whether or not the transactions of the corresponding new bank, which have come to his notice, have been within the powers of that bank;

(c) whether or not the returns received from the officers and branches of the corresponding new bank have been found adequate for the purpose of his audit;

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

(e) any other matter which he considers should be brought to the notice of the Central Government. merely by reason of the fact that the balance sheet or, as the case may be, the profit and loss account, does not disclose any matters which are by the provisions of the Banking Regulation Act, 1949-, read with the relevant provisions of this Act or any other Act, not required to be disclosed.

(5) The report of the auditor shall be verified, signed and transmitted to the Central Government.

(6) The auditor shall also forward a copy of the audit report to the corresponding new bank and to the Reserve Bank.

(7) After making provision forbad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is necessary under any law, or which are usually provided for by banking companies, a corresponding new bank27[may, out of its net profits, declare a dividend and retain the surplus, if any].

21[(7A) Every corresponding new bank shall furnish to the Central Government28[and to the Reserve Bank]the annual balance sheet, the profit and loss account, and the auditor's report and a deposit by its Board o director on the working and activities of the bank during the period covered by the accounts.]

(8) The Central Government shall cause every auditor's report and report on the workin and activities of each corresponding new bank to be laid for22[as soon as may be after they as received before each House of Parliament,23[ x x x x .]

21[(9) Without prejudice to the foregoing provisions, the Central Government may, at any time, appoint such number of auditors as it thinks fit to examine and report on the accounts of a corresponding new bank and the auditors so appointed shall have all the rights, privileges and authority in relation to the audit of the accounts of the corresponding new bank which an auditor appointed by the corresponding new bank has under this section.]

SECTION 10A: ANNUAL GENERAL MEETING

29-(1) A general meeting (in this Act referred to as an annual general meeting) of every corresponding new bank which has issued capital under clause (c) of sub-section (2-B) of Section 3 shall be held at the place of the head office of the bank in each year at such time as shall from time to time be specified by the Board of Directors : Provided that such annual general meeting shall be held before the expiry of six weeks from the date on which the balance-sheet, together with the profit and loss account and auditor's report is under sub-section (7-A) of Section 10, forwarded to the Central Government or to the Reserve Bank, whichever date is earlier.

(2) The shareholders present at an annual general meeting shall be entitled to discuss the balance sheet and the profit and loss account of the corresponding new bank made up to the previous 31st day of March, the report of the Board of Directors on the working and activities of the corresponding new bank for the period covered by the accounts and the auditor's report on the balance-sheet and accounts."]

SECTION 11: CORRESPONDING NEW BANK DEEMED TO BE AN INDIAN COMPANY

For the purposes of the Income-tax Act, 1961-, every corresponding new bank shall be deemed to be an Indian company and a company in which the public are substantially interested.

SECTION 12: VOCATION OF OFFICE OF CHAIRMAN, ETC

(1) Every person holding office, immediately before the commencement of this Act, as Chairman of an existing bank shall, if he becomes Custodian of the corresponding new bank, be deemed, on such commencement, to have vacated office as such Chairman.

(2) Save as otherwise provided in sub-section (1), every officer other employee of an existing bank shall become, on the commencement of this Act, an officer or other employee, as the case may be, of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking 'of the existing bank had not been transferred to and vested in the corresponding new bank and continue to do so unless and until his employment in the corresponding new bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new bank.

(3) For the persons who immediately before the commencement of this Act were the trustees for _any pension, provident, gratuity or other like funds constituted for the officers or the employees of an existing bank, there shall be substituted as trustees such persons as the Central Government may, by general or special order, specify.

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947-, or in any other law for the time being in force, the transfer of the services of any officer or other employee from an existing bank to a corresponding new bank shall not entitle such officer or other employee to any: compensation under this Act or any other law for the time being in force and no such claim shall; be entertained by any court, tribunal or other authority.

SECTION 12A: BONUS

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

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

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

SECTION 13: OBLIGATIONS AS TO FIDELITY AND SECRECY

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

(2) Every director, member of a local board or a committee, or auditor, adviser, officer or other employee of a corresponding new bank shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the Third Schedule.

(3) Every Custodian of a corresponding new bank shall, as soon as possible, make a declaration of fidelity and secrecy in the form set out in the Third Schedule.

SECTION 14: CUSTODIAN TO BE PUBLIC SERVANT

Every Custodian of a corresponding new bank shall be deemed to be a public servant for the purposes of Chapter 9 of the Indian Penal Code-

SECTION 15: CERTAIN DEFECTS NOT TO INVALIDATE ACTS OR PROCEEDINGS

(1) All acts done by the Custodian, acting in good faith, shall, notwithstanding any defect in his appointment or in the procedure, be valid.

(2) No act or proceeding of any Board of Directors or a local beard or committee of a

corresponding new bank shall be invalid merely on the ground of the existence of any vacancy in. or defect in the constitution of such board or committee, as the case may be.

(3) All acts done by a person acting in good faith as a director or member of a local board or committee of a corresponding new bank shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in any law for the time being in force.

Provided that nothing in this section shall be deemed to give validity to any act by a director or member of a local board or committee of a corresponding new bank after his appointment has been shown to the corresponding new bank to be invalid or to have terminated.

SECTION 16: INDEMNITY

(1) Every Custodian of a corresponding new bank and every officer of the Central Government or of the Reserve Bank and every officer or other employee of a corresponding new bank shall be indemnified by such bank against all losses and expenses incurred by him in or in relation to the discharge of his duties except such as have been caused by his own wilful act or default.

(2) A director or member of a local board or committee of a corresponding new bank shall not be responsible for any loss or expenses caused to such bank by the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the corresponding new bank, or by the insolvency or wrongful act of any customer or debtor, or by anything done in or in relation to the execution of the duties of his office unless such loss, expenses, insufficiency or deficiency was due to any wilful act or default on the part of director or member.

SECTION 16A: ARRANGEMENT WITH CORRESPONDING NEW BANK ON APPOINTMENT OF DIRECTORS TO PREVAIL

(1) Where any arrangement entered into by a corresponding new bank with a company provides for the appointment by the corresponding new bank of one or more directors of such company, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act. 1956 or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the company, and any provision regarding share qualification. age limit, number of directorships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any Director appointed by the corresponding new bank in pursuance of the arrangement of aforesaid.

(2) Any director appointed as aforesaid shall-

(a) hold office during the pleasure of the corresponding new bank and may be removed or substituted by any person by order in writing of the corresponding new bank;

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

(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement.]

SECTION 17: CONSTRUCTION OF REFERENCES TO EXISTING BANKS

Any reference to any existing bank in any law, other than this Act, or in any contract or other instrument shall, in so far as it relates to the undertaking which has been transferred by section 4-, be construed as a reference to the corresponding new bank.

SECTION 18: DISSOLUTION

No provision of law relating to winding up of corporations shall apply to a corresponding new bank and no corresponding new bank shall be placed in liquidation save by order of the Central Government and in such manner as it may direct.

SECTION 19: POWER TO MAKE REGULATIONS

(1) The Board of Directors of a corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, 33[by notification in the Official Gazette,] make regulations, not inconsistent with the provisions of this Act or any scheme made there under to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, the regulations may provide for all or any of the following matters, namely:-

(a) the powers, functions and duties of local boards and restrictions, conditions or limitations, if any, subject to which they may be exercised or performed, the formation and constitution of local committees and committees of local boards (including the number of members of any such committee), the powers, functions and duties of such committees, the holding of meetings of local committees and committees of local boards and the conduct of business thereat:

(b) the manner in which the. business of the local boards shall be transacted and the procedure in connection therewith;

34(ba) the nature of shares of the corresponding new bank, the manner in which and the conditions subject to which shares may be held and transferred and generally all matters relating to the rights and duties of shareholders:

(bb) the maintenance of register, and the particulars to be entered in the register in addition to those specified in sub-section (2-F) of Section 3, the safeguards to be observed in the maintenance of register on computer floppies or diskettes, inspection and closure of the register and all other matters connected therewith:

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

(bd)the holding of meetings of shareholders and the business to be transacted thereat;

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

(bf) the manner in which the directors nominated under clause (h) of sub- section (3) of Section 9 shall retire."]

(c) the delegation of powers and functions of the Board of Directors of a corresponding new bank to the general manager, director, officer or other employee of that bank;

(d) the conditions or limitations subject to which the corresponding new bank may appoint advisers, officers or other employees and fix their remuneration and other terms and conditions of service.

(e) the duties and conduct of advisers, officers or other employees of the corresponding new" bank;

(f) the establishment and maintenance of superannuation, pension, provident or other funds for the benefit of officers or other employees of the corresponding new bank or of the dependents of such officers or other employees and the granting of superannuation allowances, annuities and pensions payable out of such funds;

(g) the conduct and defence of legal proceedings by or against the corresponding new bank and the manner of signing pleading;

(h) the provision of a seal for the corresponding new bank and the manner and effect of its use;

(i) the form and manner in which contracts binding on the corresponding new bank may be executed;

(j) the conditions and the requirements subject to which loans or advances may be made or bills may be discounted or purchased by the corresponding new bank;

(k) the persons or authorities who shall administer any pension, provident or other fund constituted for the benefit of officers or other employees of the corresponding new bank or their dependants;

(l) the preparation and submission of statements of programmes of activities and financial statements of the corresponding new bank and the period for which and the time within which such statements and estimates are to be prepared and submitted; and

(m) generally for the efficient conduct of the affairs of the corresponding new bank.

(3) Until any regulation is made under sub-section (1), the articles of association of the existing Bank and every regulation, rule, bye-law or order made by the existing bank in force immediately before the commencement of this Act shall be deemed to be the regulations made under subsection (1) and shall have effect accordingly and any reference therein to any authority of the existing bank shall be deemed to be a reference to the corresponding authority of the corresponding new bank and until any such corresponding authority is constituted under this Act shall be deemed to refer to the Custodian.

32[(4) Every regulation shall as soon as may be after it is made under this Act by the Board of Directors of a corresponding new bank be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session . or successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]

SECTION 20: REPEALED BY THE REPEALING AND AMENDING ACT (19 OF 1988), S. 2,SCH. 1 (31-3-1988)

]

SECTION 21: REPEAL AND SAVING

(1) The Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1980, is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken, including any order made, notification issued or direction given, under the said Ordinance shall be deemed to have been done, taken, made, issued or given, as the case may be under the corresponding provisions of this Act.

Footnotes:

1. Inserted by the Banking Laws (Amendment) Act (81 of 1985). S. 13 (30-12-1985).

2. Substituted for the words "one or more forms of business" by the Banking laws (Amendment) Act. 1983(1 ot 1984), S. 71 (15-2-1984).

3. Inserted, by the Banking laws (Amendment) Act. 1983.

4. Substituted for "[rupees five hundred crores]. ", vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1992 (36 Of 1992), Dt. 1st September, 1992 Published in Received the assent of the President on September 1, 1992 and published in the Gazette of India. Extra.,Part II, Section 1, dated 2nd September 1992, pp. 1-2, Sl. No. 58. [C][W]

5. Inserted vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

6. Inserted vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

8. Inserted vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

9. The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

10. Inserted vide the depositories related laws (amendment) act, 1997 (8 Of 1997), Dt. March 19, 1997

11. the depositories related laws (amendment) act, 1997 (8 Of 1997), Dt. March 19, 1997

12. Inserted vide amendments to the banking companies (acquisition and transfer of undertakings) act, 1980 (40 of 1980), dt. march 25, 1995

14. Sub-section (5) re-numbered as sub -section (6) and sub-section (5) inserted by the Banking Laws (Amendment) Act, (1 of 1984), S. 72 (15-2-1984).

16. Substituted for the words "corresponding new bank to any other banking institution" by Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act (66 of 1988), S. 36(a)(ii) (30-12 -1988).

19. Omitted for "so however that the paid-up capital of any such bank shall not be in excess of a 1 [rupees one thousand five hundred crores];", vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

20. Substituted for " (3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub -section (1), shall include- (a) representatives of the employees, and of depositors, of such bank; and (b) such other persons as may represent the interests of each of the following categories, namely, farmers, workers, and artisans, to be elected or nominated in such manner as may be specified in the scheme. ", vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

21. Inserted by the Banking Laws (Amendment) Act, 1983 (1 of 1984), S. 7.1 (15-2-1984).

22. Substituted for the words "for not less than thirty days before each House of Parliament as soon as may be after each such report is received by the Central Government", by the Banking Laws (Amendment) Act, 1983 .

23. Words "while it is in session, for a total period of thirty days which may be comprised in one session or two or more successive sessions "omitted by the Banking Laws (Amendment) Act (81 of 1985), S. 15 (1-5-1986),

24. Substituted for the words "of each year" by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act (66 of 1988), S.37(a) (30-12-1988).

25. Proviso inserted by Act (66 of 1988), S. 37(b) (30-12-1988).

26. 31st day of March in each year specified as the date for the purposes of sub-s. (1) of S. 10 -See Gaz. of India, 30 -12 -1988, Pt. ll-3(ii) Ext., p. 2 (No. 687).

27. Substituted for "shall transfer the balance of profits to the Central Government", vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

28. Inserted vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

29. The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

32. Inserted by the Banking Laws (Amendment) Act (1 of 1984). S. 75 (15-2-1984),

33. Inserted by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act (66 of 1988), S. 38(30-12-1988).

34. Inserted vide The Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1994 (37 Of 1994), Dt. 3 rd June, 1994 Published in Received the assent of the President on June 3.1994

NATIONALIZED BANKS (MANAGEMENT AND MISCELLANEOUS PROVISIONS) SCHEME, 1980

S.O. 875 (E), dated the 4th November, 1980.

1- In exercise of the powers conferred by Sec. 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), the Central Government, after consultation with the Reserve Bank, hereby makes the following Scheme, namely :

CHAPTER 01: INTRODUCTORY

SCHEME 01: SHORT TITLE AND COMMENCEMENT

(1) This Scheme may be called the Nationalized Banks (Management and Miscellaneous

Provisions) Scheme, 1980.

(2) It shall come into force on such date2as the Central Government may, by notification in the Official Gazette, appoint.

SCHEME 02: DEFINITIONS

In this Scheme, unless the context otherwise requires,-

(a) "Act" means the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980):

(b) "Annexure" means a Annexure appended to this Scheme;

(c) "Board" means the Board of Directors constituted under Cl. 3;

(d) "Chairman", in relation to a nationalized bank, means the Chairman of the Board of that bank;

(e) "Director" means a director for the time being of a nationalized bank;

(f) "nationalized bank" means a corresponding new bank constituted under sub- section (1) of Sec. 3of the Act:

(g) "representative union" means a union registered under the Trade Union Act, 1926 (16 of 1926), or a federation of such unions, where such union or federation as the case may be, is certified, after due verification as having the largest number of workmen employed in the nationalized bank as members who have regularly paid their dues to the Union or to any of the unions constituting the federation : Provided that no such union federation, as the case may be, shall be deemed, for the purposes of this Scheme, to be a representative union unless the verified member- ship of such Union or the Unions constituting the federation, as the case may be, is fifteen per cent. or more of the total number of workmen employed by the nationalized bank;

(h) "Schedule" means the Schedule appended to the Scheme;

(i) "verification", with its grammatical variations and cognate expressions, means the verification by the Chief Labour Commissioner (Central) in accordance with the procedure specified in the Schedule ;

(j) "workmen" has the meaning assigned to it in Cl. (s) of Sec. 2of the Industrial Disputes Act, 1947 (14 of 1947);

(k) words and expressions used herein and not defined but defined in the Act have the meanings respectively assigned to them in the Act.

CHAPTER 02: BOARD OF DIRECTORS

SCHEME 03: CONSTITUTION OF THE BOARD

As soon as may be after the commencement of this scheme, the Central Government shall, by notification in the Official Gazette, constitute the Board of nationalized bank consisting of-

(a) not more than two whole-time directors of whom one shall be the Managing Director, to be appointed by the Central Government after consultation with the Reserve Bank;

(b)

(i) one director, from among the employees of the nationalized bank, who are workmen, to be appointed by the Central Government from out of a panel of three such employees furnished to it by the representative union, within a date to be specified by the Central Government, which date shall not be more than six weeks from the date of the, communication made by the Central Government requiring the representative union to furnish the panel of names: Provided that where the Central Government is of opinion that owing to the delay which is likely to occur in the verification and certification of any union or federation as a representative union it is necessary in the interests of the nationalized bank so to do, it may appoint an employee of the nationalized bank who is a workman to be a director of that bank;

(ii)

(A) where there is no representative union to represent the workmen of a nationalized bank,

(B) where such representative union, being in existence, omits or fails to furnish any panel of names within the specified date, or

(C) where all the persons specified in the panel furnished by the representative union are disqualified, whether under item (iii) of this sub-clause or under Cl. 10, the Central Government may, at its discretion, appoint such workman of the nationalized bank as it may think fit to be a director of such bank;

(iii) a workman of a nationalized bank shall be disqualified for being appointed as a Director unless-

(a) he is and has been serving for a continuous period of not less than five years in the nationalized bank or in the existing bank of which the nationalized bank is the corresponding new bank, or partly in one and partly in the other, and

(b) he is of such age that there is no likelihood of his attaining the age of superannuation during his term of office as a director;

(c) one director, from among the employees of the nationalized bank who are not work men, to be appointed by the Central Government after consultation with the Reserve Bank;

(d) one director, who in the opinion of the Central Government is competent to represent the interests of depositors to be appointed by Central Government after consultation with the Reserve Bank, from among the depositors of the bank;

(e) three directors, who in the opinion of the Central Government are competent to represent respectively the interests of farmers, workers and artisans to be appointed by the Central Government after consultation with the Reserve Bank;

(f) not more than five directors, to be appointed by the Central Government, after consultation with the Reserve Bank, from among persons having special knowledge or practical experience in respect of one or more matters which are likely to be useful for the working of the nationalized bank;

(g) one director who is an official of the Reserve Bank to be appointed by the Central Government on the recommendation of the Reserve Bank;

Explanation.- For the purposes of this sub-clause, "an official of the Reserve Bank" includes an officer of the Reserve Bank who is deputed by that Bank under Sec. 54-AA of the Reserve Bank of India Act, 1934 (2 of 1934), to any institution referred to therein.

(h) one director who is an official of the Central Government to be appointed by that Government

SCHEME 04: CUSTODIANS TO CEASE TO HOLD OFFICE ON CONSTITUTION OF THE BOARD

On the constitution of the Board every person holding office immediately preceding such constitution as the custodian of nationalized bank, shall cease to hold such office.

SCHEME 05: CHAIRMAN

(1) The Central Government shall, after consultation with the Reserve Bank, appoint one of the directors to be the Chairman of the Board.

(2) The Chairman shall preside over the meetings of the Board.

SCHEME 06: MANAGING DIRECTOR

The Managing Director shall be the Chief Executive Officer of the nationalized bank and shall exercise powers and discharge such duties as may be delegated to him by the Board : Provided that until such delegation is made, the Managing Director shall exercise all such powers and perform all such acts, deeds, and things as the custodian was authorized to exercise or perform immediately before the date on which the Board was constituted.

SCHEME 07: SAME PERSON MAY HOLD OFFICE AS CHAIRMAN AND MANAGING DIRECTOR

The Central Government may, after consultation with the Reserve Bank appoint the same person to hold, at the same time, both the office of the Chairman and the Managing Director.

SCHEME 08: TERM OF OFFICE AND REMUNERATION OF A WHOLE –TIME DIRECTOR INCLUDING MANAGING DIRECTOR

(1) A whole-time Director, including the Managing Director shall devote his whole-time of the affairs to the nationalized bank and shall hold office for such terms not exceeding five years as the Central Government may, after consultation with the Reserve Bank, specify and shall be eligible for re-appointment.

2. Notwithstanding anything contained in sub-clause (1), the Central Government shall have the right to terminate the term of office of a whole-time Director, including the Managing Director, at any time before the expiry of the term specified under that sub- clause by giving to him a notice of not less than three months in writing or three month's salary and allowances in lieu of notice; and the whole-time Director, including the Managing Director, shall also have the right to relinquish his office at any time before the expiry of the term specified under that sub-clause by giving to the Central Government notice of not less than three months in writing.

(3) A whole-time Director, including the Managing Director shall receive from the nationalized bank such salary, allowance, fees and perquisites and be governed by such terms and conditions as the Central Government may determine, after consultation with the Reserve Bank.

(4) If a whole-time Director including the Managing Director is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his office, the Central Government may, after consultation with the Reserve Bank, appoint another person to act in his place during his absence.

(5) The Central Government may, if it is satisfied that it is expedient in the interests of the nationalized bank so to do, remove a whole-time Director including the Managing Director from office: Provided that no such removal shall be made except after-

(a) consultation with the Board, and

(b) giving a reasonable opportunity to the whole-time Director, including the Managing Director, of showing cause against the proposed action.

SCHEME 09: TERM OF OFFICE OF OTHER DIRECTORS

6[(1)] A Director appointed under sub-clauses (b), (c), (d), (e), (f), (g), of CI. 3 shall hold office during the pleasure of the Central Government.]

7[(2) Subject to the provisions of sub-clause (1), a Director appointed under sub- clauses (b), (c), (d). (e) or (f) of CI. 3 shall hold office for such term, not exceeding three years, as the Central Government may specify at the time of his appointment and thereafter until his successor has been appointed and shall be eligible for re-appointment: Provided that no such director shall hold office continuously for a period exceeding six years].

SCHEME 10: DISQUALIFICATION OF DIRECTORS

A person shall be disqualified for being appointed as, and for being, a Director,-

(a) if he has at any time been adjudicated an insolvent or has suspended payment or has compounded with his creditors; or

(b) if he has been found to be of unsound mind and stands so declared by a competent court' or

(c) if he has been convicted by a criminal court of an offence which involves moral turpitude.

SCHEME 11: VACATION OF OFFICE OF DIRECTOR, ETC

(1) If a Director becomes subject to any of the disqualifications specified in Cl. 10 or is absent without leave of the Board for more than three consecutive meetings thereof he shall be deemed to have vacated his office as such and thereupon his office shall become vacant.

(2) The Chairman or whole-time Director including the Managing Director or a Director appointed under sub-clause (g) or sub-clause (h) of Cl. 3 may resign his office by giving notice thereof in writing to the Central Government and on such resignation being accepted by that Government shall be deemed to have vacated his office; any other Director may resign his office by giving notice thereof in writing to the Central Government and such resignation shall take effect on the receipt of the communication of the resignation by the Central Government.

(3) Without prejudice to the provisions of the foregoing sub-clauses, the office of a director nominated under sub-clause (b) or sub-clause (c) of Cl. 3 shall become vacant as soon as the Director ceases to be a workman or an employee other than a workman, of the nationalized bank of which he is a Director, and the office of a Director nominated, under sub-clause (d) of Cl. 3 shall become vacant on such director ceasing to be a depositor of the nationalized bank of which he is a Director.

8[(4) Where any vacancy occurs in the office of a Director, it shall be filled in accordance with Cl. 3.]

SCHEME 12: MEETING OF THE BOARD

(1) Meetings of the Board shall ordinarily be held at least six times in a year and at least once in each quarter.

(2) A meeting of the Board shall be held at the head office of the nationalized bank or such other place as the Board may decide.

(3) Ordinarily, not less than fifteen days' notice shall be given of any meeting of the Board and such notice shall be sent to every Director at the address specified by him in this behalf.

(4) No business, other than that for which the meeting was convened shall be transacted at a meeting of the Board except with the consent of the Chairman of the meeting and a majority of the directors present, unless one week's notice of such business has been given in writing to the Chairman.

9[(5) The quorum for a meeting of the Board shall be one-third of the number of directors holding office as such directors of the Board on the day of meeting, subject to a minimum of three directors].

(6) If, for any reason, the Chairman is unable to attend a meeting of the Board, the Managing Director shall preside over that meeting and in the absence of the Managing Director or in the event of the Chairman and the Managing Director being the same person, any other director elected by the Directors present at the meeting from among themselves shall preside at the meeting.

(7) All questions at the meeting shall be decided by a majority of the votes of the directors present and voting and in the case of equality of votes, the person presiding shall have a second or a casting vote.

(8) A Director who is directly or indirectly concerned or interested in any contract, loan, arrangement or proposal entered into or proposed to be entered into by or on behalf of the nationalized bank shall, as soon as possible after the relevant circumstances have come to his knowledge, disclose the nature of his interest to the Board and shall not be present at the meeting

CHAPTER 03: COMMITTEES OF THE BOARD

SCHEME 13: MANAGEMENT COMMITTEE

There shall be a Management Committee of the Board.

14(2) The Management Committee shall consist of- (A) The Chairman; (B) The Managing Director; (C) The Executive Director; (D) The directors referred to in clauses (b), (c) and (g) of sub-section (3) of Section 9 of the Act; (E) one director nominated by the Board from amongst the directors referred to in clause (d) of sub-section (3) of Section 9 of the Act; (F) one director nominated by the Board from amongst the directors referred to in clauses (e), (f), (h) and (i) of sub-section (3) of Section 9 of the Act: Provided that the directors nominated by the Board shall hold office for not more than six months at a time".]

(3) The Management Committee shall exercise such powers of the Board including the powers with regard to credit proposals, as may be delegated to it by the Board with the approval of the Central Government and such approval shall be given by the Central Government after consultation with the Reserve Bank of India.

(4) The meetings of the Management Committee may be called by the Chairman of the

Management Committee as often as he feels necessary.

(5)15["Four Members"]shall be the quorum for a meeting of the Management Committee.

(6) The minutes of a meeting of the Management Committee shall be laid before the Board as soon as possible after the meeting.

(7) Save as otherwise provided in sub-clauses (4), (5), and (6), the meetings and proceedings of the Management Committee shall be governed by the provisions contained in this Scheme for regulating the meetings and proceedings of the Board so far as the same are applicable thereto.

(8) Where the Chairman of, the Management Committee is of opinion that in view of urgency in any matter, it should be dealt with expeditiusly, he may circulate a resolution to that effect to the members of the Management Committee, and such resolution shall be deemed to be the resolution passed by the Management Committee when it is approved by a majority of the Members but shall have effect from the day it is signed by the last signatory to the resolution : Provided that any resolution passed as aforesaid shall be placed before the next meeting of the Management Committee: Provided further that if any dissenting member requires in writing that any resolution shall be placed before a meeting of the Management Committee, the resolution shall not be deemed to be valid and effectual as aforesaid unless the same is passed at such meeting.

Explanation.- For the purpose of sub-clause (2), "Executive Director" means the whole-time Director, not being the Managing Director, appointed under sub-clause (a) of Cl. 3 and designated as such.]

SCHEME 14: ADVISORY COMMITTEES

11[(1)] The Board may12[constitute such other Committees] whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons as it deems fit, to render advice to the Board on such matters as may be generally or specially referred to them and shall perform such duties as the Board may entrust to them.

13[(2) Any Committee constituted under sub-clause (1) may be re-constituted by the Board at any time as it thinks fit.]

CHAPTER 04: MISCELLANEOUS

SCHEME 15: DISQUALIFICATION FOR MEMBERSHIP OF A COMMITTEE CONSTITUTED UNDER CL. 14 AND VACATION OF OFFICE BY A MEMBER

(1) A person shall be disqualified for being nominated and for being a member of a committee constituted under Cl. 14 if he is or becomes subject to any of the disqualification specified in Cl. 10.

(2) If a member of a committee constituted under Cl. 14 becomes subject to any of the disqualifications specified in Cl. 10 he shall be deemed to have vacated his office and thereupon such office shall become vacant.

(3) A member of a committee constituted under Cl. 14 may resign his office by giving notice thereof in writing, to the Board and such resignation shall take effect on receipt of communication of the resignation from the Board.16[* * * * * *]

(5) The authority nominating a member for a Regional Consultative Committee may remove from office such member and appoint another person in his place.

SCHEME 16: REMUNERATION AND REIMBURSEMENT OF TRAVELLING EXPENSES

(1) A Director, not being the Chairman or a whole-time Director, including the Managing Director, or an official of the Reserve Bank or the Central Government shall be paid by the nationalised bank of which he is a director, such fees, as may be decided by the Central Government, after consultation with the Reserve Bank, for attending the meetings of the Board or any committee of the Board or for attending to any other work of the nationalized bank.

(2) In addition to the fees to which a Director may be entitled to be paid under sub- clause (1), every such director travelling in connection with the work of the nationalized bank shall be reimbursed his travelling and halting expenses, if any, on such basis as may be fixed from time to time by the Central Government after consultation with the Reserve Bank: Provided that the Chairman or a whole-time Director, including the Managing Director, or an official of the Reserve Bank or the Central Government shall be reimbursed his travelling and halting expenses on such basis, as may be applicable to him under the rules by which he is governed.

(3) A member of a committee constituted under Cl. 14 shall receive such fees and travelling and halting expenses as may be decided by the Board.

SCHEME 17: RESOLUTION WITHOUT MEETING OF THE BOARD VALID

A resolution in writing signed by the majority of the members of the Board shall be valid and effectual and shall be deemed to be the resolution passed by the Board on the date it was signed by the last signatory to the resolution : Provided that any resolution passed as aforesaid shall be placed before the next meeting of the Board: Provided further that if any dissenting member requires in writing that any resolutions passed shall be placed before a meeting of the Board, the resolution shall not be deemed valid and effectual as aforesaid unless the same is passed at such meeting.]

SCHEME 18: MEETING OF ADVISORY COMMITTEES CONSTITUTED UNDER CL. 14

The meetings of an advisory committee constituted under Cl. 14 shall be regulated in such manner as may be decided by the Board.

CHAPTER 05: PAID--UP CAPITAL

SCHEME 19: INCREASE OF PAID --UP CAPITAL

Subject to the condition that the paid-up capital of the nationalized bank does not, in any case, exceed rupees1719["one thousand five hundred crores"] the paid-up capital of any such bank may be increased, from time to time, as in sub- clause (a) or sub-clause (b) below or both ;

(a) the Board of Directors of a nationalized bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, transfer to its capital a specified amount from the reserve fund established by such bank under sub-section (6) of Sec. 3of the Act;

(b) the Central Government may, in consultation with the Reserve Bank, make contribution of any specified amount to the paid-up capital of a nationalized bank.

SCHEDULE 01: SCHEDULE

[See Cl. 2 (h)] Subject.- Procedure for -verification of membership of unions operating in the nationalized banks. The management of the nationalized banks will be requested by the Chief Labour Commissioner (Central) to furnish the names and address of all the registered unions operating in that .respective bank. The particulars of unions received from the managements will be forwarded to the Regional Labour Commissioners concerned for checking up from the records of the Registrar of Trade Unions whether the registration of these unions are still alive and whether there are other registered unions operating in the nationalized banks. The Regional Labour Commissioners will report to the Chief Labour Commissioner (Central) the result of their checking. On receipt of this information, the unions will be requested by the Chief Labour Commissioner (Central) to furnish their membership claims in quintuplicate in the enclosed Performa (Annexure 1) by a specified date. 2. The registered unions will, thereafter, be allotted amongst verification officers for the purposes of physical verification of the membership. The verification officer will ask the unions (as in Annexure II) by registered post acknowledgment due3 [to produce before him at the stipulated place and time within ten days from the date of receipt of the first notice] a list of their members, in triplicate, in different branches/offices (bank wise) who have paid subscription for at least three months during the period of six months preceding the date of reckoning which shall be the first of month just preceding the month in which the Central Government addresses the Chief Labour Commissioner (Central) to undertake the verification along with- (i) membership-cum-subscription register, (ii) counterfoils of receipts,- (iii) cash and account books, (iv) bank books, (v) copy of union's constitution, (vi) registration certificate, (vii) affiliation certificate and payment receipts if the union is affiliated to any all-India/State/Federation/Central Organization. (viii) copy of the latest annual return submitted to the Registrar of trade unions, (ix) list of office-bearers, and (x) minutes book. 3. If a union fails to produce the list of its members and other records a second and final notice will be given by registered post acknowledgement due asking it to1 [produce them at the stipulated place and time within ten days from the date of receipt of the second and final notice]. If the union again fails to produce them on the second occasion also, no further attempt will be made to verify its membership. However, in respect of the unions which have submitted the lists and records, the verification officer will examine them and ascertain the number of members who had paid three months' subscription within the period of six months preceding the date of reckoning. This examination shall be 100 pa- cent and shall be done in the presence of the office-bearers of the unions concerned but not in the presence of the office bearers or representatives of a rival union. While doing the verification of membership, the Verification Officer will give due consideration to any representations which the union officials might make to him. 4, The Verification Officer will thereafter visit the Central/Registered office of the nationalized bank and ensure that the names of members thus verified and included in the list are borne on the rolls of the management on the date of reckoning. All those members whose names are not borne on the rolls of the management on the date of reckoning will be eliminated from the list. The Verification Officer will also obtain the number of persons employed in the respective branches/offices of the bank on the date of reckoning at the time of his visit to the Central/Registered Office of the Bank. 5. The Verification Officer shall thereafter intimate in writing to the unions or federations of unions concerned that the verified lists of their respective members in the bank are ready for inspection by the union representative at an appointed time and place. The union will also at the same time be informed that after inspection of the verified list of members of the rival union(s), they should send, in writing, their specific objections, if any, the entries in these lists, within 10' days (or a longer period if the number of objections is likely to exceed 10,000 on the basis of one additional day for every 2,000 objections over and above 10,000) of the date of inspection. It should be made clear to the unions that general and vague objections like inflated membership, etc. will not be considered, the objections should give names of persons whose membership of a union is objected to and the reasons therefor. The union representative will be allowed to make notes from the verified lists shown to them in the presence of the Verification Officer; they will, however, not be allowed to take any of the lists, nor a copy of the lists will be given to them. 6. The objections received from the unions will then be verified by personal interrogation by the Verification Officer, of the members on the basis of the following systematic sampling system: (i) If the objection list furnished by a union consists of 500 or less names of members, the number of persons to be personally interrogated should be 20 per cent. subject to a minimum of 100; (ii) if the objection lists furnished by a union consists of more than 500 but not more than 1,000 names, the number of persons to be personally interrogated should be 15 per cent. subject to a minimum of 100; (iii) if the objection list furnished by a union consists of more than 1,000 but not more than 2,000 names, the number of persons to be personally interrogated should be 10 per cent. subject to a minimum of 150; (iv) if the objection list furnished by a union consists of more than 2,000 but not more than 5,000 names, the number of persons to be personally interrogated should be 5 per cent. subject to a minimum of 200; and (v) if the objection list furnished by a union consist of more than 5,000 names, the number of persons to be personally interrogated should be 2 per cent. subject to a minimum of 250. The persons selected for personal interrogation should, among other things, be asked whether they are members of a particular union and whether they had paid subscriptions for three months within a period of six months from the date of reckoning and if so, the amount of subscription paid, the months for which it was paid. The Verification Officer will maintain a list of members personally interrogated giving their ticket numbers, names of section where working, the result of personal interrogation. 7. Where the sample check reveals that certain members interrogated deny membership of union, its list of members will be modified proportionately. For example, if on checking records it is found that a union has 2,000 valid members and the rival union objects to say 800 of these members 15 per cent. sample of the latter has to be drawn, i.e., 120 persons have to be interrogated personally. If on personal interrogation it is found that 30 of the 120 persons (i.e. 25 per cent.) deny membership of the union, the strength of the union will be reduced by 25 per cent. of 800 persons whose membership was objected to, i.e., by 200. In other words the final strength of the union will, in this case. be 1,800. (2,000- (25 per cent. of 800)- 1,800] If the persons who, on interrogation deny their membership of the union claiming them as their members, inform the Verification Officer that they are members of rival union, the Verification Officer will check their membership with the list of members and records of that union and adjust its list accordingly, i.e. their names will be added to the list of the rival union if they are not already included in it, and excluded, in the manner mentioned above from the list of the claimant union. 8. While conducting personal verification as mentioned in para. 6 above, the Verification Officer will not allow the representatives of any union or management to be present. 9. On completion of the verification work the Verification Officer will furnish a report to the Chief Labour Commissioner. Total number of persons in the objection list/Number of persons in the sample Thus, for example, if there are 400 workers in the objection list and a sample of 100 workers is to be selected, the Verification Officer should select every (400/100th) or 4th worker in the list. It is, however, not necessary that in all cases the selection should begin from the 4th name in the list, the first sample may either be the first name in the list; or the second or the third or the fourth. Thus, for example, if the first name is selected as the first sample, then subsequent sample will be 5th, 9th, 13th. names: if, however, the second name is taken as the sample, the subsequent samples would be 6th, 10th, 14th names in the list.

NEW BANK OF INDIA (AMALGAMATION AND TRANSFER OF UNDERTAKING) SCHEME, 1993

In exercise of the powers conferred by Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), the Central Government, after consultation with the Reserve Bank of India, hereby makes the following Scheme, namely:-

CHAPTER I

INTRODUCTORY

SCHEME 01: SHORT TITLE AND COMMENCEMENT

(1) This Scheme may be called the New Bank of India (Amalgamation and Transfer of

Undertaking) Scheme, 1993.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

SCHEME 02: DEFINITIONS

-In this Scheme, unless the context otherwise requires:-

(a) "Act" means the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);

(b) "Board" means the Board of Directors constituted under clause (3) of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980;

(c) "Chairman" in relation to a nationalised bank means the Chairman of the Board of that bank;

(d) "transferee bank" means Punjab National Bank;

(e) "transferor bank" means New Bank of India;

(f) words and expressions used herein and not defined but defined in the Act have the meanings respectively assigned to them in the Act.

CHAPTER II

SCHEME 03: UNDERTAKING OF NEW BANK OF INDIA TO VEST IN PUNJAB NATIONAL BANK

-On the commencement of this Scheme, the undertakings of New Bank of India shall be transferred to, and shall vest in, Punjab National Bank.

SCHEME 04: GENERAL EFFECT OF VESTING

(1) The undertakings of the transferor bank shall be deemed to include all assets, rights, powers, authorities and privileges and all property, movable and immovable, cash balances, capital, reserve funds, investments and all other rights and interests in, or arising out of, such property as were immediately before the commencement of this Scheme in the ownership, possession, power or control of the transferor bank in relation to the undertakings, whether within or outside India, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the transferor bank in relation to the undertakings.

(2) Where any property is held by the transferor bank under any lease the transferee bank shall on and from the date of commencement of this Scheme be deemed to have become to lessee in respect of such property as if the lease in relation to such property had been granted to the transferee bank and thereupon all the rights under such lease shall be deemed to have been transferred to, and vested in, the transferee bank: Provided that on the expiry of the term of any lease referred to in this sub-clause such lease shall, if so desired by the transferee bank, be renewed on the same terms and conditions on which the lease was held by the transferor bank immediately before the date of commencement of this Scheme.

(3) If, according to the laws of any country outside India, the provisions of this Scheme by themselves are not effective to transfer or vest any asset or liability situated in that country which forms part of the undertaking of the transferor bank to, or in, the transferee bank, the affairs of the transferor bank in relation to such asset or liability shall, on and from the commencement of this Scheme stand entrusted to the Chief Executive Officer for the time being of the transferee bank, and the Chief Executive Officer may exercise all powers and do all such acts and things as may be exercised or done by the transferor bank for the purpose of effectively transferring such assets and discharging such liabilities.

(4) The Chief Executive Officer of the transferee bank shall, in exercise of the powers conferred on him by sub-clause (2) take all such steps as may be required by the laws of any such country outside India for the purpose of effecting such transfer or vesting, and may either himself or the transferor bank.

(5) Unless otherwise expressly provided by this Scheme, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect, immediately before the commencement of this Scheme and to which the transferor bank is a party or which are in favour of the transferor bank, shall be of full force and effect against or in favour of the transferee bank, and may be enforced or acted upon as fully and effectively as if in the place of the transferor bank the transferee bank had been a party thereto or as if they had been issued in favour of the transferee bank.

(6) If, immediately before the commencement of this Scheme, any suit, appeal or other proceedings of whatever nature in relation to any business of the undertakings which have been transferred under Clause 3, is pending by or against the transferor bank, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertakings of the transferor bank or of anything contained in this Scheme but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the transferee bank.

SCHEME 05: DISSOLUTION OF THE BOARD OF DIRECTORS, ETC

(1) On and from the commencement of this Scheme:-

(a) the Chairman or any other whole time director, including the Managing Director, of the transferor bank shall cease to hold office and shall be entitled to receive three months' salary and allowances in lieu of the notice of three months specified in sub-clause (2) of Clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980;

(b) The Board of Directors of the transferor bank shall stand dissolved.

(2) Save as otherwise provided in this Scheme, every officer or other employee of the transferor bank shall become, on the commencement of this Scheme an officer or other employee, as the case may be, of the transferee bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertakings of the transferor bank had not been transferred to and vested in the transferee bank subject, however, to such facilities being available at the time of the transfer to similarly placed officers and employees of the transferee bank and continue to do so unless and until his employment in the transferee bank is terminated or until his remuneration, terms or conditions are duly altered by the transferee bank.

(3) Any officer or other employee of the transferor bank who does not want to hold his office or service in the transferee bank under sub'-clause (2) shall be entitled to leave his office or service on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the transferor bank had not been transferred to and vested in the transferee bank.

(4) The Central Government shall, as soon as possible after the commencement of this Scheme, make a scheme in consultation with Reserve Bank of India for determining the placement of the employees of the transferor bank including the determination of their inter se seniority vis-a-vis the employee of the transferee bank. While making the scheme the Central Government shall take account of relevant factors such as experience of the employee of the transferor bank.

(5) The trustees or administrators of any Provident Fund, Gratuity and such other funds

constituted for the employees of the transferor bank, shall on, or as soon as possible after, the commencement of this Scheme, transfer to the trustees of the employees Provident Fund, Gratuity and any other fund, constituted for the transferee bank or otherwise as the transferee bank may direct, all monies and investments held in trust for the benefit of the employees of the transferor bank: Provided that such latter trustees shall not be liable for deficiency in the value of investments or in respect of any act, neglect or default done before the commencement of this Scheme.

NEW BANK OF INDIA [DETERMINATION OF PLACEMENT OF EMPLOYEE (OFFICERS AND WORKMEN) OF THE NEW BANK OF INDIA IN PUNJAB NATIONAL BANK] SCHEME, 1993

In exercise of the powers conferred by Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 read with sub-paragraph (4) of the Paragraph 5 of the Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) notification No. 1/2/93-BO.-1 (i), dated September 4, 1993 the Central Government, after consultation with the Reserve Bank of India, hereby makes the following Scheme namely :-

SCHEME 01: SHORT TITLE AND COMMENCEMENT

(1) This Scheme may be called the New Bank of India [Determination of Placement of Employee (Officers and Workmen) of the New Bank of India in Punjab National Bank] Scheme, 1993.

(2) It shall be deemed to have come into force with effect from 4th September, 1993.

SCHEME 02: DEFINITIONS

- In this Scheme unless the context otherwise requires,-

(a) "Workman" has the meaning assigned to it in the Industrial Disputes Act, 1947 (14 of 1947)-;

(b) The words and expressions used herein and not defined but defined in the New Bank of India (Amalgamation and Transfer of Undertakings) Scheme, 1993, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), Punjab National Bank (Officers') Service Regulations, 1979, read with New Bank of India (Officers') Service Regulations, 1982, and various awards/settlements governing service conditions of workmen employees of Punjab National Bank/New Bank of India shall have the meaning respectively assigned to them in the Scheme /Regulations /Acts /Awards /Settlements, as the case may be,

SCHEME 03: REDEPLOYMENT OF OFFICERS/STAFF

The transferee bank may redeploy/transfer the Officers/Award Staff of transferor bank to any of the offices/branches of the transferee bank keeping in view the suitability of the officer/employee, administrative exigencies and manpower requirements of the transferee bank, in accordance with the provisions contained in the Punjab National Bank (Officers') Service Regulations, 1970 or existing Award/Bipartite Settlements. The officers may be transferred to any place in India and the postings/transfers of workmen employees will be made within the same linguistic area.

SCHEME 04: SENIORITY OF OFFICERS/EMPLOYEES OF TRANSFEROR BANK

For the purpose of determining the seniority of employees (Officers of Workmen) of the transferor bank vis-a-vis employees (Officers or Workmen) of transferee bank, the following norms shall be applied:-

Workmen Employees

(a)

(i) Provisions of settlements, understandings and clarifications agreed to by the transferee bank with the workmen unions or associations from time to time in the matter of promotions from the subordinate cadre to clerical cadre and from clerical or Special Assistant Cadre to Officers Cadre (JMG Scale-1) and Promotion of Head Cashier, Cashier-in-charge/Cashiers as Cash Officers shall become automatically applicable to the workmen employees of transferor bank in the same manner as applicable to workmen employees of transferee bank subject to other provisions of the Scheme.

(ii) The settlements, rules and practices as in force in the transferee bank in the matter of posting of Clerks as Special Assistants/Tellers, Head Cashiers, Cashiers-in-charge, and other posts carrying special allowance in the clerical cadre as well as Daftry and Cash Peons and other posts carrying special allowances in the subordinate cadre shall become applicable to the workmen employees of the transferor bank subject to the other provisions of the Scheme.

(iii) The procedure for computation of years of service rendered in the transferor bank for the purpose of determining the minimum length of service for promotion from subordinate cadre to clerical cadre as also from the clerical cadre to officer cadre and also for the purpose of posting in the posts carrying special allowance, shall be computed in the ratio of 2:1, that is, two years of service in transferor bank as equivalent to one year of service in the transferee bank. For this purpose, total service in the respective cadre of the workman employees, that is, clerical or sub-staff in which the official is placed at the time of transfer, shall be reckoned but fractions of a month shall be ignored, for example, if a workman employee has rendered two years and nine months service in the clerical/sub-staff cadre, as the case may be, in the transferor bank at the time of amalgamation with transferee bank, it shall be reckoned as equal to one year and four months service in the clerical or sub-staff cadre, as the case may be, in the transferee bank. Officers

(b)

(i) All Officers of the transferor bank shall be placed in the same grade or scale of pay in the transferee bank as they were holding in the transferor bank, with suitable changes in the designation, if required, on the lines of the prevailing system in the transferee bank.

(ii) For the purpose of seniority or fitment or for promotion to the next grade or scale, the service rendered by an officer in the transferor bank shall be computed, after amalgamation, in the ratio of 2:1, that is, two years of service in the transferor bank as equivalent to one year service in the transferee bank. For this purpose, total service in the scale in which an officer is transferred shall be reckoned but fractions of a month shall be ignored. For example, if an officer has rendered two years nine months service in Scale-11 in the transferor bank at the time of amalgamation with the transferee bank, it shall be reckoned as equal to one year and four months service in Scale-11 in the transferee bank.