NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT ACT, 1981

61 of 1981

30th December, 1981

This Bill is intended to provide for the establishment of a national level institution for providing credit for the promotion of agriculture small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing, prosperity rural areas. 2. It has its genesis in the recommendations of the National Commission on Agriculture. The Commission had suggested that to overcome difficulties being faced by farmers in obtaining credit and other inputs an integrated approach should be adopted for the supply of services and inputs, including credit. The Commission had recommended that all types of credit needs should be met through a single integrated agency leading up to an Agricultural Development Bank at the apex. It was suggested that such a Bank could consolidate expertise and experience of various national level agencies into a single national organisation directing the flow of agricultural credit according to the needs. The Government had requested the Reserve Bank of India in March 1979 to arrange for a review of the institutional arrangements for rural credit with a view to streamlining them. In pursuance of the above, the Reserve Bank had appointed a Committee to review arrangements for Institutional Credit for agriculture and rural development. The Committee gave an interim report recommending the setting up of a National Bank for Agricultural and Rural Development and also gave broad outline for it. The recommendations of the interim report of the Committee were examined by the Government and it was decided to set up such a Bank, . 3. The National Bank shall be the apex organisation with respect to all matters relating to policy, planning and operational aspects in the field of credit for the promotion of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas. The Bank will nerve as a refinancing institution for extending short term credit for the promotion of activities in the said field. Similarly the Bank will provide refinance to various banks for their term lending operations for the purposes of agriculture and rural development, A provision has also been made for direct lending to any institution as may be approved by the Central Government. The proposed Bank is to have organic links with the Reserve Bank. It is the intention that the Reserve Bank's close link with rural credit should be returned and its authority as the Central Bank, over monetary and credit accretion should not be diluted in any manner. The entire undertaking ofN the Agricultural Refinance and Development Corporation shall be transferred to and vest in the new Bank and the Corporation shall stand dissolved. The Bill also provides for changes of a supplemental, incidental or consequential nature in the Reserve Bank of India Act, 1934,the Banking Regulation Act, 1949the Industrial Disputes Act. 1947andthe Payment of Bonus Act, 1965. 4. The Notes on clauses appended to the Bill explain the provisions of the Bill.-See Gaz, of India, 18-9-1981, Pt. II.S.2,Ext.p.683.

1An Act to establish a development bank to be known as the National Bank for Agriculture and Rural Development for providing and regulating credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Thirty-second Year of the Republic of India as follows :-

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEPIENT 

(1)This Act may be called the National Bank for Agriculture and Rural Development Act, 1981 . 

(2) It extends to the whole of India. 

(3) It shall come into force on such date 2 as the Central Government may, by notification in the Official Gazettee, appoint, and different dates may be appointed for different provisions of this Act, and any reference in any provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. 

SECTION 02: DEFINITIONS 

In this Act, unless the context otherwise requires,-

(a) "agriculture" includes horticulture, animal husbandry, forestry, dairy and poultry farming pisciculture, and other allied activities, whether or not undertaken jointly with agriculture and the expression "agricultural operations" shall be construed accordingly. 

(b) "Agricultural Refinance and Development Corporation" means the Corporation established under section 3 of the Agricultural Refinance and Development Corporation Act, 1963 , and renamed under section 3A of that Act as the Agricultural Refinance and Development Corporation; 

(c) "Board" means the Board of Directors of the National Bank; 

(d) "Central co-operative bank" means the principal co-operative society in a district in a State, the primary object of which is the financing of other co-operative societies in that district: Provided that in addition to such principal society in a district, or where there is no such principal society in a district, .the State Government may declare any one or more co-operative societies carrying on the business of financing other cooperative societies in that district to be also or to be a central co-operative bank or central co-operative banks within the meaning of this definition : 

(e) "Chairman" means the Chairman 3 appointed under section 6 ;

(f) "co-operative society" means a society registered, or deemed to be registered, under the Co-operative Societies Act, 1912 or any other law relating to co-operative societies for the time being in forceiin any State; 

(g) "crops", includes products of agricultural operations; 

(h) "director" means a director appointed under section 6 ; 

(i) "industry in the tiny and decentralised sector" means industrial concerns in the tiny and decentralised sector and "industrial concern in the tiny and decentralised sector" means an industrial concern in which the investment in machinery and plant is not in excess of rupees two lakhs or such higher amount as the Central Government may specify by notification in this behalf having regard to trends in industrial development and other relevant factors; 

(j) "Managing Director" means the Managing Director appointed under section 6 ; 

(k) "marketing of crops" includes the processing of, crops prior to marketing by any agricultural producers for any organisation of such producers; 

(1) "National Bank" means the National Bank for Agricultural and Rural Development established under section 3 ; 

(m) "notification" means a notification published in the Official Gazette; 

(n) "primary rural credit society" means a co-operative society, by whatever name called,- 

(1) which has as its object or business the provision of financial accommodation to its members for agriculture or agricultural operations or for the marketing of crops, or for rural development: and 

(2) the bye-laws of which do not permit admission of any other co-operative society as member; Provided that this sub-clause shall not apply to the admission, as a member, of a co-operative society, which is a State co-operative bank or a central co-operative bank by reason of such bank subscribing to the share capital of the co-operative society out of funds provided by the State Government for the purpose; 

(o) "prescribed" means prescribed by regulations made under this Act; 

(p) "regional rural bank" means a regional rural bank established under section 3 of the 'Regional Rural Banks Act, 1976 ; 

(q) "rural development" means development of rural areas through any activities conducive to such development. 

(r) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 : 

(s) "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 ; 

(t) "small-scale industry" means industrial concerns in the small scale sector and "industrial concern in the small scale sector" means an industrial concern- 

(i) in which the investment in machinery and plant is not in excess of rupees twenty lakhs or such higher amounts as the Central Government may specify by notification in this behalf having regard to trends in industrial deveopment and other relevant factors and 

(ii) which is not an industrial concern in the tiny and decentralised sector;

(u) "State co-operative bank" means the principal co-operative society in a State, the primary object of which is the financing of other co –operative societies in the State : Provided that in addition to such principal society in a State, or where there is no such principal society in a State, the State Government may declare any one or more co-operative societies carrying on business in that State to be also or to be a State co-operative bank or State co-operative banks within the meaning of this definition; 

(v) "State land development bank" means the co-operative society which is the principal land development bank (by whatever name called) in a State and which has as its primary object the providing of long-term finance for agricultural development : Provided that, in addition to such principal land development bank in a State, or where there is no such bank in a State, the State Government may declare any co-operative society carrying on business in that State and authorised by the bye-laws of such co-operative society to provide long- term finance for agricultural development to be also or to be a State land development bank within the meaning of this definition; 

(w) words and expressions used herein and not defined but defined in the Reserve Bank of India Act, 1934 , shall have the meanings respectively assigned to them in that Act; 

(x) words and expressions used herein and not defined either in this Act or in the Reserve bank of India Act, 1934 , but defined in the Banking Regulation Act, 1949 , shall have the meanings respectively assigned to them in the Banking Regulation Act, 1949 . 

SECTION 03: ESTABLISHMENT AND INCORPORATION OF NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT 

( 1) With effect from such date 4 as the Central Government may, by notification in the Official Gazette, appoint, there shall be established for the purposes of this Act,a bank to be known as the National Bank for Agriculture and Rural Development. 

(2) The Bank shall be a body corporate with the name aforesaid having 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 by that name sue and be sued. 

(3) The head office of the National Bank shall be at Bombay or at such other place as the Central Government may, by notification, specify. 

(4) The National Bank may establish offices, branches or agencies at any place in India, and with the previous approval of the Central Government and in consultation with the Reserve Bank, at any place outside India. 

SECTION 04: CAPITAL 

(1) The capital of the National Bank shall be one hundred crores of rupees: Provided that the Central Government may, in consultation with

the Reserve Bank and by notification, increase the said capital up to 5 five thousand crores of rupees. 

6 (2)The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank to such extent and in such proportion as may be notified by the Central Government in consultation with the Reserve Bank, from time to time : Provided that the National Bank may issue capital to such institutions and persons in such manner as may be notified by the Central Government: Provided further that the combined shareholding of the Central Government and the Reserve Bank shall not at any time be less than fifty-one per cent of the total subscribed capital. 

SECTION 05: MANAGEMENT 

( 1 ) The general superintendence, direction and management of the affairs and business of the National Bank shall vest in a Board of Directors, which shall exercise all powers and do all acts and things which may be exercised or done by the National Bank. 

(2) Subject to the provisions of this Act the Board in discharging its functions, shall act on business principles with due regard to public interest. 

(3) Subject to the provisions of sub-section ( 1 ) and save as otherwise provided in the regulations made under this Act, the Managing Director shall also have powers of general superintendence, direction and management of the affairs and business of the National Bank and may also exercise all powers and do all acts and things which may be

exercised or done by the National Bank. 7 [Provided that during the period of any casual vacancy of the nature referred to in section 11 in the office of the Managing Director, the Chairman may also exercise the powers and discharge the functions of the Managing Director until the person appointed by the Central Government under section 11 to act as Managing Director enters upon his office.] 

(4) Any whole-time director appointed under sub-section (3) of section 6 shall assist the Managing Director in the discharge of his functions under sub-section (3) and, perform such duties as the Board may entrust or delegate to him. 

(5) In the discharge of his powers and functions under sub-section (3), the Managing Director shall follow such directions as the Chairman may give. 

(6) In the discharge of its functions under this Act, the National Bank shall be guided by such directions in matters of policy involving public interest as the Central Government, in consultation with the Reserve Bank, or the Reserve Bank may give in writing. 

SECTION 06: BOARD OF DIRECTORS 

8 (1) The Board of Directors of the National Bank shall consist of the following, namely:- 

(a) a Chairman; 

(b) three directors from amongst experts in rural economics, rural development, village and cottage industries, small-scale industries or persons having experience in the working of co-operative banks, regional rural banks or commercial banks or any other matter the special knowledge or professional experience in which is considered by the Central Government as useful to the National Bank; 

(c) three directors from out of the director s of the Reserve Bank;  (d) three directors from amongst the officials of the Central Government;  (e) four directors from amongst the officials of the State Governments; 

(f) such number of directors elected in the prescribed manner, by shareholders other than the Reserve Bank, the Central Government and other institutions owned or controlled by the Central Government whose names are entered on the register of shareholders of the National Bank ninety days before the date of the meeting in which such election takes place on the following basis, namely:- 

(i) where the total amount of equity  two directors; share capital issued to such shareholders is ten per cent or less of the total issued equity capital 

(ii) where the total amount of equity three directors; and share capital issued to such shareholders is more than ten per cent but less than twenty-five per cent of the total issued equity capital 

(iii) where the total equity share capital four directors: issued to such share holder is twenty-five per cent or more of the total issued equity capital 

Provided that until the assumption of charge by the elected directors under this clause, the Central Government may at any time nominate such number of directors not exceeding four from amongst persons having special knowledge of, and professional experience in, agricultural science, technology, economics, banking, co-operatives, Jaw, rural finance, investment, accountancy, marketing or any other matter, the special knowledge of, and professional experience in, which would, in the opinion of the Central Government, be useful to the National Bank for carrying out its functions; and (g) a Managing Director.

(2) The Chairman and other directors, excluding the directors referred to in clause (f), shall be appointed by the Central Government in consultation with the Reserve Bank : Provided that no such consultation shall be necessary in the case of directors appointed under clause (d) of sub-section (1). 

(3) Where the Central Government is satisfied, in consultation with the Reserve

Bank 10 [x x x], that it is necessary so to do, it may appoint one or more whole -time directors with such designations as may be deemed appropriate by that Government

and any whole-time director so appointed shall also be a member of the Board : 10 [x x x] 

SECTION 07: TERM OF OFFICE OF CHAIRMAN AND OTHER DIRECTORS, RETIREMENT AND PAYMENT OF FEES 

(1) The Chairman shall hold office for such lean not exceeding five years and shall receive such salary and allowances as the Central Government may, at the time of appointment, specify 14 and shall be eligible for reappointment : 9 [x x x]

10 [(1 A) Notwithstanding anything contained in sub-section (1), the Central Government shall have the right to terminate the term of office of the Chairman at any rime before the expiry of the term specified under that sub-section by giving him a notice of not less than three months in writing or three months' salary and allowances in lieu of such notice.] 

15 (1B) In the case of a vacancy in the office of the Chairman, the Managing Director shall perform the functions and duties of the Chairman during such vacancy. 

11 [(2) Subject to the provisions contained in sub-section (5), a director appointed under clause (b) or clause (c) of sub-section (1) of section 6, shall hold office for such term, not exceeding three years, as the Central Government may specify in this behalf 16 and shall be eligible for reappointment: Provided that no such director shall hold office continuously for a period exceeding six years. 

(3) The Central Government may, in consultation with the Reserve Bank remove the Chairman 12 [x x x x] at any time before the expiry of his term of office after giving him a reasonable opportunity of showing cause against the proposed removal. 

17XXXX

13 [(5). The directors appointed under clauses (b) to (f) of sub-section ( 1 ) of section 6 shall hold office during the pleasure of the Central Government.] 

SECTION 08: TERM OF OFFICE OF MANAGING DIRECTOR AND WHOLE-TIME DIRECTORS, CONDITIONS OF SERVICE, ETC 

(1) The Managing Director and any whole-time; director appointed under sub-section (3) of section 6 shall,- 

(a) hold office for such term not exceeding five years as the Central Government may, at the time of appointment 18 and shall be eligible for reappointment specify ; 

(b) receive such salary and allowances and be governed by such terms and conditions of service as the Board may, with the previous approval of Central Government and in consultation with the Reserve Bank determine; Provided that the Managing Director and any such whole-time director appointed to the first Board shall receive such salary and allowances and be governed by such terms and conditions of service as the Central Government may, in consultation with Reserve Bank, determine 

(2) The Central Government may, in consultation with the Reserve Bank, remove the Managing Director or any whole-time director appointed under sub-section (3) of section 6 at any time before the expiry of his term of office, after giving him a reasonable opportunity of showing cause against the proposed removal. 

(3) Notwithstanding anything contained in sub-section (1) or sub-sec. (2), the Central Government shall have the right to terminate the term of office of the managing Director or of any whole-time director appointed under sub-section (3) of section 6 at any time before the expiry of the term fixed under sub-section (1) by giving him notice of not less than three months in writing or three months' salary and allowances in lieu of such notice: Provided that the Central Government shall, before terminating the term of office of the Managing Director or any whole-time director appointed under sub-section (3) of section 6 , consult the Reserve Bank. 

SECTION 09: DISQUALIFICATIONS 

(1) No person shall be a director who- 

(a) is of unsound mind and stands so declared by a competent court; or 

(b) is or has been convicted of any offence which, in the opinion of the Central Government, involves moral turpitude; or 

(c) is, or at any time has been adjudicated insolvent or has suspended payment of his debts or has compounded with his creditors. 

(2) The appointment as director of any person who is a Member of Parliament or the Legislature of any State shall, unless within two months of the date of his appointment he ceases to be such member, be void on the expiry of the said period of two months and if any director is elected or nominated as a member of Parliament or of any State Legislature he shall cease to be a director as from the date of such election or nomination, as the case may be. 

SECTION 10: VACATION AND RESIGNATION OF OFFICE BY DIRECTORS 

( 1 ) If a director-- 

(a) becomes subject to any of the disqualifications mentioned in section 9 ; or 

(b) is absent without leave of the Board for more than three consecutive meetings thereof. his seat shall thereupon become vacant. 

(2) Any director may resign his office by giving notice thereof in writing to the Central Government, and on his resignation being accepted by the Central Government or if his resignation is not sooner accepted on the expiry of three months from the receipt thereof by the Central Government, he shall be deemed to have vacated his office. 

SECTION 11: CASUAL VACANCY IN THE OFFICE OF MANAGING DIRECTOR

If 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 appointment, the Central Government may, after consultation with the Reserve Bank and the Board, appoint another person to act in his place as Managing Director during his absence.

SECTION 12: MEETINGS OF BOARD 

(1) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed. 

(2) The Chairman of the Board, or, if for any reason he is unable to attend

any meeting, 19 the Managing Director and in the absence of both, the Chairman and the Managing Director any other director nominated by the Chairman in this behalf, and in the absence of such nomination, any other director elected by the directors present at the meeting, shall preside at the meeting of the Board. 

(3) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the Chairman, or, in his absence, the person presiding, shall have a second or casting vote. 

SECTION 13: COMMITTEES OF NATIONAL BANK 

(1) The Board may constitute an Executive Committee consisting of such number of directors as may be prescribed. 

(2) The executive Committee shall discharge such functions as may be prescribed or may be delegated to it by the Board. 

(3) The Board may 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 thinks fit and for such purposes as it may decide and every committee so constituted shall discharge such functions as may be delegated to it by the Board. 

(4) The Executive Committee shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings, as may be prescribed. 

(5) The times and places at which any committee constituted under subsection (3) shall meet, the rules of procedure which such committee shall observe in regard to the transaction of business at its meetings, and the fees and allowances which may be paid to the members of such committee for attending the meetings of the committee and for attending to any other work of the National Bank shall be such as may be specified by that Bank. 

SECTION 14: ADVISORY COUNCIL

(4) The Advisory Council shall meet at such times and place and shall observe such rules of procedure in regard to transaction of business at its meetings as may be prescribed.

SECTION 15: MEMBER OF BOARD OR COMMITTEE THEREOF NOT TO PARTICIPATE IN MEETINGS IN CERTAIN CASES

A director of the Board or a member of a Committee, who has any direct 'or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board or a Committee thereof shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting, and the disclosure shall be recorded in the minutes of the Board, or the Committee as the case may be, and the director or member shall not take any part in any deliberation or decision of the Board or the Committee with respect to that matter. '

SECTION 16: TRANSFER OF ASSETS AND LIABILITIES OF AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION 

(3) The amount of compensation payable under sub-section (2) to the shareholders of the Corporation shall be apportioned among the shareholders in proportion to their contributions to the paid up capital of the Corporation as on the date immediately preceding the appointed date. 

(4) The National Bank shall also pay to the shareholders of the Corporation referred to in sub - section (2) an amount calculated at the rate at which the shares of the Corporation were guaranteed as to the payment of minimum dividend under section 6 of the Agricultural Refinance and Development Corporation Act, 1963 , for the period, if any, that has expired in the accounting year of the Corporation before the appointed date and the amount the National Bank shall distribute to the shareholders of the Corporation referred to in sub-section (2) in proportion to the shares held by such shareholders on the date immediately preceding the appointed date and at the rate at which such shares were guaranteed as to the payment of minimum dividend. 

(5) 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 appointed date and to which the Corporation is a party, or which are in favour of the Corporation, shall be of as full force and effect against or in favour of the National Bank, as the case may be, and may be enforced or acted upon as fully and effectually as if instead of the Corporation the National Bank had been a party thereto, or as if they had been in favour of the National Bank. 

(6) If, immediately before the appointed date, any suit, appeal or other legal proceeding of whatever nature, is pending, by or against the Corporation, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the National Bank of the undertaking of the Corporation, or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced, by or against the National Bank.. 

SECTION 17: DISSOLUTION OF THE CORPORATION AND REPEAL OF ACT 10 OF 1968  

,0n the date appointee under sub-section (1) of section 16 -

(a) the Corporation shall stand dissolved; and 

(b) the Agricultural Refinance and Development Corporation Act, 1963 , shall stand repealed. 

SECTION 18: TRANSFER OF BUSINESS FROM RESERVE BANK 

( 1 ) On such date a as the Central Government may, in consultation with the Reserve Bank, by notification, appoint, the assets and liabilities with the Reserve Bank relating to- 

(a) the National Agricultural Credit (Long Term Operations) Fund established

and maintained under section 46A of the Reserve Bank of India Act, 1934 ;' and 

(b) the National Agricultural Credit (Stabilisation) Fund established and maintained under section 46B of the Reserve Bank of India Act, 1934 , shall stand transferred to the National Bank and form part of the National Rural

Credit (Long Term Operations) Fund referred to in section 42 and the National Rural Credit (Stabilisation) Fund referred to in section 43 , respectively. 

(2) With effect from such date as the Central Government may, in consultation with the Reserve Bank, by notification appoint, the loans and advances which the Reserve Bank has granted to State, co -operative banks and regional rural banks under section 17 (except sub-clause (a) of clause, (4)) of the Reserve Bank of India Act,. 1934 , and which the Reserve Bank may specify by a general or special order, shall, as far as may be, become and be deemed to be loans and advances granted by the National Bank under section 21 , and the National Bank shall repay to the Reserve Bank, the amount of such loans and advances on such terms and conditions as the Central Government may specify, in consultation with the Reserve Bank. 

(3) All rights, liabilities, interests, privilege and obligations of whatever nature (including the rights and obligations arising by way of purchase, sale and rediscount of any bills of exchange and promissory notes) of the Reserve Bank in relation to any asset or liability referred to in sub-section (1) or any loan or advance referred to in sub-section (2) shall stand' transferred to and vest in the National Bank on the date on which such asset or liability stands transferred to the National Bank under sub-section (1) or, as the case may be., such loan or advance becomes under subsection (2) a loan or advance granted by the National Bank. 

(4) All contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature relating to any asset or liability referred to in sub-section' ( 1 ) and subsisting or having effect immediately before the date appointed under that subsection or relating to any loan or advance referred to in sub-section (2) and subsisting or having effect immediately before the date appointed under that sub-section shall be of as full force and effect against, or in favour of, the National Bank. as the case may be, and may be enforced or acted upon as fully and effectually as if instead of the Reserve Bank, the National Bank had been a party thereto, or as if they had been in favour of the National Bank. 

(5) If, immediately before the date appointed under sub-section (1) or sub-section (2), as the case may be, any suit, appeal or other legal proceedings of whatever nature relating to any asset or liability referred to in sub-section ( 1 ) or any loan or advance referred to in sub-section (2) is pending, by or against the Reserve Bank, the same shall not abate, be discontinued, or be in any way prejudicially affected by reason of the transfer to the National Bank of such asset or liability under sub-section (1), or as the case may be, such loan or advance becoming under subsection (2) a loan or advance granted by the National Bank, or of anything contained in this Act, but the suit. appeal or other proceedings may be continued, prosecuted and enforced, by or against the National Bank. 

SECTION 19: BORROWING BY THE NATIONAL BANK 

(1)The National Bank may, for the purpose of carrying out its functions under this Act,- 

23 (a) issue and sell bonds, debentures and other financial instruments with or without guarantee of the Central Government on such terms and conditions as may be approved by the Board. 

(b) borrow money from the Reserve Bank repayable on demand or otherwise on such terms and conditions including the terms relating to security and purposes as may be specified by the Reserve Bank; 

(c) borrow money from the Central Government and from any other authority or organisation or institution approved by the Board, on such terms and conditions as may be agreed upon. 

(d) accept from the Central Government, a State Government, a local authority, a State land development bank, a State co-operative bank or a scheduled bank or any person or body, whether incorporated or not, deposits repayable on such terms as the National Bank may, with the approval of the Reserve Bank, fix; and 

(e) receive gifts, grants, donations or benefactions from the Central Government or any State Government or any other source.". 

(2) The Central Government may guarantee loans taken by the National Bank under sub- section (1) as to the repayment of principal and the payment of interest thereon and other incidental charges. 

SECTION 20:. BORROWINGS IN FOREIGN CURRENCY

-Notwithstanding anything contained in the Foreign Exchange Management Act, 1999 (42 of 1999), or in any other law for the time being in force, relating to foreign exchange, the National Bank may borrow, with the previous approval of the Central Government and in consultation with the Reserve Bank, foreign currency from any bank or financial institution in India or elsewhere, for granting loans and advances or for utilising such currency for any other purpose specified under the provisions of this Act.

SECTION 21: PRODUCTION AND MARKETING CREDIT 

(1) The National Bank may provide by way of refinance, loans and advances, repayable on demand or on the expiry of fid periods not exceeding eighteen months, 25 [to State co-operative banks, central cooperative banks, regional rural banks], or to any financial institution or to any class of financial institutions, which are approved by the Reserve Bank in this behalf, for financing - 

(i) agricultural operations or the marketing of crops, or 

(ii) the marketing and distribution of inputs necessary for agriculture or rural development, or 

(iii) any other activity for the promotion of or in the field of agriculture or rural development, or 

(iv) bonafide commercial or trade transactions, or 

(v) the production or marketing activities of artisans or of small-scale industries, industries in the tiny and decentralised sector, village and cottage industries or of those engaged in the field of handicrafts and other rural crafts. 

(2) The National Bank may make loans and advances under sub-section 

(1) against the security of- 

(i) scks, funds and securities other than immovable property, in which a trustee is authorised to invest trust money by any law for the time being in force: 

(ii) promissory notes supported by documents of title to goods, such documents having been transferred, assigned or pledged to the borrowing institution as security for a loan or advance made for any of the purposes specified in sub-section (1) : Provided that the National Bank may, whenever it considers it necessary so to do, accept, in lieu of the actual assignment of any such security in favour of the national Bank, a declaration in writing from the borrowing institution,- 

(a) slating that it holds such documents of title to goods as may be set out in the declaration; and 

(b) containing such other particulars as may be required by the National Bank. 

(3) Notwithstanding anything contained in sub-section (2), the National Bank may in its discretion grant a loan or advance- 

(a) 26 [to any State co-operative bank or central co-operative bank] if the loan or advance is fully guaranteed for repayment of principal and -interest by Government; 

(b) to any State co-operative bank which is a scheduled bank, if the loan or advance is secured either by a bill of exchange or promissory note executed by the central co- ' -operative bank and assigned in favour of the State cooperative bank. 

(4) Notwithstanding anything contained in sub-sections (2) and (3), the National Bank may also make loans and advances repayable on demand or on the expiry of fixed periods not exceeding eighteen months against promissory notes of a State cooperative bank or a regional rural bank or an institution approved under sub-section (1) : Provided that the borrowing institution furnishes a declaration in writing, setting out the purpose for which it has made loans and advances and such other particulars as may be required by the National Bank. 

SECTION 22: CONVERSION LOAN FOR PRODUCTION CREDIT 

27 Where the National Bank is satisfied that owing to drought, famine or other natural calamities, military operations or enemy action, any State cooperative bank, central co-operative bank, regional rural bank or any such financial institution or any financial institution falling under any such class of financial institutions, as may be approved by the Reserve Bank in this behalf, requires assistance under this section, it may provide to such bank or institution such financial assistance as it may deem fit by way of making loans and advances repayable on the expiry of fixed periods not exceeding seven years and on such terms and conditions as may be specified in this behalf by the National Bank

Provided that loans and advances may be made under this section only for the purpose of enabling the borrowing bank or institution,— 

(a) to pay any dues to the National Bank for credit extended for financing agricultural operations or the marketing of crops under clause (i) of sub-sec. (1) of Sec. 21, or 

(b)  (i) to make loans or advances to central co-operative banks or primary rural credit societies in cases where the borrowing bank is a State co-operative bank, and 

(ii) to make loans and advances to primary rural credit societies in cases where the borrowing bank is a central co-operative bank, and such loans or advances in both the cases being repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years, by way of reimbursement of loans and advances made by such co-operative banks or societies for agriculture or agricultural operations or for reimbursement of such loans or advances which have been converted into loans or advances repayable on expiry of fixed periods not being less than eighteen months and not exceeding seven years from the date of conversion : 

Provided further that no loan or advance shall be made under this section to a State co-operative bank or a central co-operative bank unless such loan or advance is fully guaranteed as to the repayment of the principal and payment of interest, by the State Government.". 

SECTION 23: RESCHEDULING OF LOANS TO ARTISANS, SMALL-SCALE INDUSTRIES, ETC

Where the National Bank is satisfied that 'owing to unforeseen circumstances the rescheduling of any loans and advices made to artisans, small-scale industries, industries in the tiny and decentralised sector, village and cottage industries-and those engaged in the field of handicrafts and other rural crafts, by any State co-operative bank, regional rural bank or any such financial institution or any financial institution falling under such class of financial institutions as may be approved by the Reserve Bank in this behalf, has become necessary, it may provide to such bank or institution such financial assistance as it may deem fit by way of loans and advances repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years against such securities as may be specified in this behalf, by the National Bank : Provided that no loan or advance shall be made under this section to a State co-operative bank unless such loan or advance is fully guaranteed as to the repayment of the principal and payment of interest, by the State Government but such guarantee may be waived by the National Bank if other' security to the satisfaction of the National Bank is furnished, or if, for reasons to be recorded by it in writing, the National Bank is satisfied that the guarantee or other security's not necessary.

SECTION 24: INVESTMENT CREDIT - MEDIUM TERM

The National Bank shall provide such financial assistance as it may consider necessary by way of making to State co-operative banks, regional rural banks, loans and advances repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years against such securities as may be specified, in this behalf, by the National Bank and such loans or advances may be. made for agriculture, rural development or such other purposes as the National Bank may, from time to time, determine : Provided that no loan or advance shall be made under this section to a State co-operative bank unless such loan or advance is fully guaranteed as to the repayment of the principal and payment of interest, by the State Government but such guarantee may be waived by the National Bank, if other security to the satisfaction of the National Bank is furnished, 'or if, for reasons to be recorded by it in writing the National Bank is satisfied that the guarantee or other security is not necessary.

SECTION 25: OTHER INVESTMENT CREDIT 

( 1 ) The National Bank may provide such financial assistance as it may consider necessary for promoting agriculture and rural development by- 

(a) making loans and advances, by way of refinance, on such terms and conditions as the National Bank may think fit to impose, in a State land development bank or a State co- operative bank or a scheduled bank or any other financial institution approved by the Reserve Bank in this behalf, and also rescheduling the payment of such loans and advances: Provided that the maximum period for which any such loan or advance may be granted, whether originally or by rescheduling the payment thereof, shall not exceed twenty-five years; 

(b) purchasing or selling, or subscribing to the bonds or debentures issued by any bank or institution referred to in clause (a) and repayable within a period not exceeding twenty- five years from the dates on which they are issued; 

(c) making loans and advances on such terms and conditions as the National Bank may think fit to impose, to a State co-operative bank or a scheduled bank for the purpose of enabling such bank to make loans or advances to artisans, small-scale industries, industries in the tiny and decentralised sector, village and cottage industries and those engaged in the field of handicrafts and other rural crafts and also rescheduling the payment of such loans and advances: Provided that the maximum period for which any such loan or advance may be granted whether originally or by rescheduling the payment thereof shall not exceed twenty-five years; 

(d) making, where it is considered necessary so to do in connection with any financial assistance under clause (a) or clause (b) or clause (c) to a State land development bank or a State co-operative bank or a scheduled bank.-loans and advances repayable on demand or on the expiry of a Fixed period not exceeding eighteen months, by way of refinance 28 or otherwise to such bank and also rescheduling the payment of such loans and advances for such period as the National Bank may deem fit. 

(2) The provisions of this section shall be in addition to, and not in derogation of, the provisions of section 21 and section 24 . 

SECTION 26:. PURCHASE AND SALE OF SHARES

-The National Bank may subscribe to, or purchase or sell stocks, shares, bonds or debentures of, or invest in the securities of, any institution or class of institutions concerned with agriculture and rural development which the Board may approve subject to such terms and conditions as it may deem fit.

SECTION 27: LOANS TO STATE GOVERNMENTS FOR SHARE CAPITAL CONTRIBUTION

The National Bank may make loans and advances to State Governments, repayable on the expiry of fixed periods not exceeding twenty years from the date of making such loans and advances from the National Rural Credit (Long Term Operations) Fund established under section 42 for enabling them to subscribe directly or indirectly to the share capital of a co-operative credit society.

SECTION 27A:. LOANS TO STATE GOVERNMENT, UNDERTAKINGS, ETC

-The National Bank may make loans and advances to any State Government or a corporation owned or controlled by the State Government or to any other person or class of persons, as may be approved by the Board, repayable on the expiry of a fixed period not exceeding twenty-five years from the date of making of such loans and advances and subject to such terms and conditions, as may be approved by the Board, for the purpose of development of infrastructure facilities for promotion of agriculture and rural development.

SECTION 28: SECURITY FOR CREDIT 

(1) No accommodation shall be granted by the National Bank under clause (a) or clause (c) of sub -section (1) of section 25 or section 30 or section 32 to an institution other than a scheduled bank unless it is fully and unconditionally guaranteed by the Government as to the repayment of principal and payment of interest: Provided that no such guarantee shall be required in cases in which security to the satisfaction of the Board is furnished by the borrowing institution. 

(2) No accommodation shall be granted by the National Bank under clause (a) or clause (c) of sub-section (1) of section 25 or section 32 to any scheduled bank unless security to the satisfaction of the Board is furnished by such scheduled bank. 

31 (3) Notwithstanding anything contained in sub-section (1) or sub-section (2), no guarantee or security referred to therein shall be required in cases in which the Board, for reasons to be recorded in writing, decides that no such security or guarantee is necessary in respect of a scheduled bank, a State co-operative bank or any person or class of persons, specifically approved by the Board or in respect of any scheme or class of schemes, having regard to the nature and scope of the scheme or schemes for which accommodation is proposed to be granted by the National Bank. 

SECTION 29: AMOUNTS AND SECURITIES TO BE HELD IN TRUST 

(1) Any sums received by a borrowing institution in repayment or realisation of loans and advances refinanced either wholly or partly by the National Bank shall, to the extent of the accommodation granted by the National Bank and remaining outstanding, be deemed to have been received by the borrowing institution in trust for the National Bank, and shall accordingly be paid by such institution to the National Bank, as per the repayment schedule fixed by the National Bank. 

(2) Where an accommodation has been granted to a borrowing institution, all securities held, or which may be held, by such borrowing institution, on account of any transaction in respect of which such accommodation has been granted by the National Bank, shall be held by such institution in trust for the National Bank. 

32 (3) Notwithstanding anything to the contrary contained in any law for the time being in force, where a liquidator is appointed for winding up a borrowing institution, it shall be the duty of the liquidator to forthwith pass on to the National Bank the sums recovered by the borrowing institution or the liquidator, as the case may be, in repayment or realisation of the loans and advances refinanced either wholly or partly by the National Bank to the extent the refinance is outstanding and the National Bank shall be entitled to enforce the securities held by the borrowing institution in trust for the National Bank as it every reference to the borrowing institution in any contract, security or other document obtained by borrowing institution is a reference to the National Bank and accordingly, the National Bank shall be entitled to recover the balance sums due under such loans and advances from the constituents of borrowing institution and any discharge given by the National Bank to such constituent shall be a valid discharge and the liquidator shall, on demand made by the National Bank, deliver to it all such contracts, securities and other documents, for due enforcement thereof by the National Bank. Explanation.-For the purposes of this sub-section, the word "liquidator" shall include liquidator or a provisional liquidator or any person or authority entrusted with the duty of liquidating the borrowing institution. 

SECTION 30:. DIRECT LOANS

-The National Bank may, in exceptional circumstances to be recorded in writing by the Board, by itself or in association with other financial institutions or scheduled banks, make loans and advances, otherwise than by way of refinance to any person or class of persons or body corporate, on such terms and conditions, including security and repayable within such period not exceeding twenty- five years, as the National Bank may deem fit.

SECTION 30A:. BILLS REDISCOUNTING

-The National Bank may rediscount bills of exchange and promissory notes made, drawn, accepted or endorsed by any company or body corporate concerned with agriculture and rural development presented by a scheduled bank, a State co-operative bank, State land development bank, regional rural bank or any other institution or class of institutions approved by the Board.

SECTION 31: COMMISSION

The National bank may receive, for the rendering of any of the services mentioned in this Chapter or Chapter VII. such commission or other consideration as may be agreed upon.

SECTION 32:. ISSUE OF GUARANTEES

-The National Bank may guarantee, subject to such directions as may be issued by the Board, from time to time, deferred payments in connection with the purchase of capital goods or for any other purpose for giving effect to the provisions of this Act, due from any person or class of persons, whether incorporated or not.

SECTION 33: POWER TO IMPOSE CONDITIONS FOR ACCOMMODATION

In entering into any transaction 36 under this Act with a borrower, the National Bank may impose such conditions as it may think necessary or expedient for protecting the interests of the National Bank.

SECTION 34:. POWER TO CALL FOR REPAYMENT BEFORE AGREED PERIOD 

-Notwithstanding anything to the contrary contained in any agreement or arrangement, the National Bank may, by notice in writing, require any borrower or assisted person to whom it has granted any loan or other financial assistance including grants, to discharge forthwith in full, the loan or other financial assistance, including grants, as the case may be,-

(a) if it appears to the National Bank that false or misleading information in any material particulars was given in the application for the loan or other financial assistance; or 

(b) if the borrower or the person has failed to comply with any of the terms of the contract or arrangement with the National Bank in the matter of loan or other financial assistance, including grants; or 

(c) if there is a reasonable apprehension that the borrower is unable to pay its debts or that proceedings for liquidation may be commenced in respect thereof; or 

(d) if for any reason it is necessary so to do, to protect the interests of the National Bank.". 

SECTION 35: NATIONAL BANK TO HAVE ACCESS TO RECORDS 

38 (1) The National Bank shall have free access to all such records of a borrower seeking to avail of any credit or other facilities from the National Bank under this Act and also to all such records of any person seeking to avail of any credit or other facilities from such borrower, perusal whereof may appear to the National Bank to be necessary in connection with the providing of finance or other assistance to such borrower or the refinancing of any loan or advance made to such person by the borrower. 

(2) The National Bank may require any institution or person referred to in sub-section (D to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition. 

SECTION 36: VALIDITY OF LOAN OR ADVANCE NOT TO BE QUESTIONED

Notwithstanding anything to the contrary contained in any other law for the time being in force, the validity of any loan or advance granted by the National Bank in pursuance of the provisions of this Act shall not be called in question merely on the ground of non-compliance with the requirements of such other law as aforesaid or of any resolution, contract, memorandum, articles of association or other instrument : Provided that nothing in this section render valid any loan or advance obtained by any company or co-operative society where such company or co-operative society is not empowered by its memorandum to obtain loans or advances

SECTION 37: NATIONAL BANK NOT TO GRANT LOANS OR ADVANCES AGAINST ITS OWN BONDS OR DEBENTURES

The National Bank shall not grant any loan or advance on the security of its own bonds or debentures.

SECTION 37A: PROHIBITED BUSINESS. 

(1) The National Bank shall not make any loans or advances under Section 30 or make any grants under this Act to any person or body of persons of which any of the directors of the National Bank is a proprietor, partner, director, manager, agent, employee or guarantor or in which one or more directors of the National Bank together hold substantial interest: Provided that this sub-section shall not apply to any borrower if any director of the National Bank- 

(a) is nominated as Director of the Board of such borrower by the Government or a Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956) or by a corporation established by any other law; 

(b) is elected on the Board of such borrower by virtue of shares held in the borrower organisation by the Government, or a Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956) or by a corporation established by any other law, by reason only of such nomination or election, as the case may be. Explanation.-For the purposes of this sub-section, "substantial interest", in relation to a borrower, means the beneficial interest held by one or more of the directors of the National Bank or by any relative of such director as defined in clause (41) of Section 2 of the Companies Act, 1956 (1 of 1956), whether singly or taken together, in the shares of the borrower, the aggregate amount paid-up on which either exceeds five lakhs of rupees or five per cent of the paid-up share capital of the borrower, whichever is lesser. 

(2) The provisions of sub-section (1)- 

(a) shall not apply to any borrower, if the National Bank is satisfied that it is necessary in the public interest to enter into business with that borrower and entering into any kind of business with such borrower shall be in accordance with and subject to such conditions and limitations, as may be approved by the Board; 

(b) shall not apply to any transaction relating to the business entered into prior to the commencement of the National Bank for Agriculture and Rural Development (Amendment) Act, 2000, and all such business and any transaction in relation thereto may be implemented or continued as if that Act had not come into force; 

(c) shall apply only so long as the conditions precedent to such disability as set out in the said sub-section continue. 

SECTION 38: OTHER FUNCTIONS OF NATIONAL BANK 

- The National Bank-

(i) shall co-ordinate its operations and the operations of various institutions engaged in the field of rural credit and maintain expert staff to study all problems relating to agriculture and rural development and be available for consultation to the Central Government, the Reserve Bank, the State Governments and the other institutions engaged in the field of rural development; 

(ii) may act as the agent for the Central Government or a State Government or the Reserve Bank in the transaction of any business, in respect of loans and advances granted or to be granted, or bonds or debentures purchased or subscribed for. or to be purchased or subscribed for: 

(iii) may provide facilities for training, for dissemination of information and the promotion of research including the undertaking of studies, researches, techno-economic and other surveys in the field of rural banking, agricultural and rural development and it may for the said purposes 40 make loans or advances or grants including grants by way of provision for fellowships and chairs to any institution. 

41 (iv) may provide technical, legal, financial, marketing and administrative assistance to any person engaged in agriculture and rural development activities; 

41(v) may provide consultancy services in the field of agriculture and rural development and other related matters in or outside India, on such terms and against such remuneration, as may be agreed upon; 

41 (vi) may perform the functions entrusted to or required of the National Bank by any other law for the time being in force; and 

41 (vii) do any other kind of business or undertake any other kind of activity which the Central Government or the Reserve Bank may authorise. 

SECTION 38A:. PROMOTION OF SUBSIDIARIES

-The National Bank may, in consultation with the Reserve Bank, promote, form or manage or associate itself in promotion, formation or management of companies, subsidiaries, affiliates, societies, trusts or such other association of persons, as it may deem fit, for the purpose of carrying out its functions under this Act.

SECTION 38B:. SECURITISATION OF DEBT 

-Notwithstanding anything contained in this Act, the National Bank may-

(a) create one or more trusts and transfer loans and advances granted by it, with or without the securities, to such trusts, for consideration; 

(b) set aside loans or advances held by the National Bank and issue and sell securities based upon such loans or advances so set aside in the form of debt obligations, trust certificates of beneficial interest or other instruments, by whatever name called, and act as a trustee for the holders of such securities. 

SECTION 38C:. EXEMPTION FROM COMPULSORY REGISTRATION 

-Notwithstanding anything contained in sub -section (1) of Section 17 of the Registration Act, 1908 (16 of 1908),-

(a) any instrument in the form of debt obligations or trust certificate of beneficial interest or any other instrument, by whatsoever name called, issued by the National Bank or the trust created by it to securitise the loans granted by it and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immovable property; or 

(b) any transfer of such instruments referred to in clause (a), shall not require compulsory registration.". 

SECTION 39: INCIDENTAL POWERS

The National Bank may also do all such things as may be necessary or incidental to or consequential upon the exercise of its powers, discharge of its functions and the performance of its duties, under this Act, or under any other law for the time being in force.

SECTION 40: DEPOSITS AND INVESTMENTS 

(1) The National Bank may invest its funds in promissory notes, stocks or securities of the Central Government or keep the moneys deposited with the Reserve Bank or with any agency of the Reserve Bank or with a State co-operative bank or a scheduled bank. 

(2) Notwithstanding anything contained in sub-section (1) or Section 30-A, the National Bank may, for beneficial investment of its surplus funds, rediscount bills of exchange or promissory notes arising out of bona fide trade and commercial transactions and also lend repayable at call or short notice to a scheduled bank or any financial institution approved by the Reserve Bank, or invest in certificates of deposit and other instruments or schemes as may be approved by the Board. 

SECTION 41: CREDIT INFORMATION

The National Bank may, for the purpose of the efficient discharge of its functions under this Act, collect from or furnish to the Central Government, the Reserve Bank or any banking company or such other financial institution as may be notified by the Central Government in this behalf, credit information or other information. Explanation.- For the purposes of this section, the expressions "banking company" and "credit information" shall have the same meanings as in section 45A of the Reserve Bank of India Act, 1934

SECTION 42: NATIONAL RURAL CREDIT (LONG TERM OPERATIONS) FUND 

(1) The National Bank shall establish and maintain a Fund to be known as the National Rural Credit (Long Term Operations) Fund. 

(2) The Fund shall (in addition to assets and liabilities transferred under section 18 ) include,- 

(a) such sums of money as the Central Government and the Slate Governments may contribute from time to time; 

(b) such sums of money as the Reserve Bank may contribute every year: and 

(c) such further sums of money as the Board may contribute every year. 

(3) The amount in the said Fund shall be applied by the National Bank only to provide financial assistance by way of loans and advances under section 23 , section 24 , sub-section (1) of section 25 or section 27 or for the purposes of section 26 . 

SECTION 43: NATIONAL RURAL CREDIT (STABILISATION) FUND 

(1) The National Bank shall establish and maintain a Fund to be known as the National Rural Credit (Stabilisation) Fund. 

(2) The Fund shall (in addition to assets and liabilities transferred under section 18 ) include,- 

(a) such sums of money as the Central Government and the State Governments may contribute from time to time; 

(b) such sums of money as the Reserve Bank may contribute every year: and 

(c) such further sums of money as the Board may contribute every year. 

(3) The amounts in the said Fund shall be applied by the National Bank only to provide loans and advances under section 22 . 

SECTION 44: RESEARCH AND DEVELOPMENT FUND 

(1) The National Bank shall establish and maintain a Fund to be known as the Research and Development Fund, to which shall be credited- 

(a) such sums of money as are transferable to this Fund in accordance with section 47 ; 

(b) such sums of money as the Board may contribute every year to this Fund from out of its annual profits; and 

(c) such gifts, grants, donations or benefactions which the National Bank may receive and which the Board may earmark for this purpose. 

(2) The Research and Development Fund shall be expended on matters of importance to agriculture, agricultural operations and rural development, including the provision of training and research facilities and 44 making of loans or advances or grants under clause (iii) of section 38 . 

SECTION 45: RESERVE FUND AND OTHER FUNDS

The National Bank shall establish a Reserve Fund 45 and other funds as the Board may consider necessary by transferring such sums as it may deem fit, out of its annual profits and out of receipts from gifts, grants, donations or benefactions, which it may receive.

SECTION 46: PREPARATION OF BALANCE-SHEET, ETC., OF NATIONAL BANK 

- ( 1 ) The balance-sheet and accounts of the National Bank shall be prepared and maintained in such form and manner as may be prescribed. 

(2) The Board shall cause the books and accounts of the National Bank to be balanced and closed as on the thirtieth day of June, 46 [or such other date 48 in each year as the Central Government may, by notification in the Official Gazette, specify.] 47 [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 balancing and closing of, or for other matters relating to, the books or accounts in respect of the concerned years.] 

SECTION 47: DISPOSAL OF SURPLUS 

(1) After making provision for bad and doubtful debts, depreciation of assets and all other matters for which provision is necessary or expedient or which is usually provided for by bankers, and for the Funds referred to in sections 42 , 43 and 45 , the National Bank shall transfer- 

(i) for a period of fifteen years, following the accounting year during which the

National Bank is established, the amount remaining (hereafter in this section referred to as surplus) to the Research and Development Fund under section 44; and 

50 (ii) after the expiry of the said period of fifteen years, the Board shall, after making provision for the Fund referred to in clause (i), disburse or spend the balance of the surplus in such manner as may be approved by the Board. 

SECTION 48: AUDIT 

(1) The accounts of the National Bank shall be audited by auditors duly qualified to act as auditors under sub-section (1) of section 226 of the Companies Act, 1956 , who shall be appointed by the Central Government in consultation with the Reserve Bank, for such term and on such remuneration as the Central Government may fix. 

(2) The auditors shall be supplied with a copy of the annual balance-sheet of the National Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and they shall have a list delivered to them of all books kept by the National Bank and shall at all reasonable times have access to the books, accounts, vouchers and other documents of the National Bank. 

(3) The auditors may, in relation to the accounts of the National Bank, examine any director of the Board or any officer or other employee of the National Bank and shall be .entitled to require from the Board or officers or employees of the National Bank such information and explanation as they may think necessary for the performance of their duties. 

(4) The auditors shall make a report to the National Bank upon the annual balance-sheet and accounts examined by them and in every such report, they shall state whether in their opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the National Bank and in case they had called for any explanation or information from the Board or any officer or other employee of the National Bank, whether it has been given and whether it is satisfactory. 

(5) The National Bank shall furnish to the Central Government and the Reserve Bank within four months from the date on which the annual accounts of the National Bank are closed and balanced a copy of its balance-sheet; as on the close of that year together with a copy of the profit and loss account for the year and a copy of the auditors' report and a report of the working of the National Bank during the relevant year, and the Central Government shall, as soon as may be, after they are received by it, cause the same to be laid before each House of Parliament and cause the copies of the said balance-sheet, profit and loss account and auditors' report to be published in the Official Gazette. 

(6) Without prejudice to anything contained in the preceding subsections, the Central Government may, at any time, appoint the Comptroller and Auditor General of India to examine and report upon the accounts of the National Bank and any expenditure incurred by him in connection with such examination and report shall be payable by the National Bank to the Comptroller and Auditor General of India. 

SECTION 49: RETURNS

The National Bank shall furnish from time to time, to the Central Government and to the Reserve Bank such returns as the Central Government or the Reserve Bank may require.

SECTION 50: STAFF OF NATIONAL BANK 

(1) The National Bank may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service. 

(2) Without prejudice to the provisions of sub-section (1), it shall be lawful for the National Bank to utilise, and for the Reserve Bank to make available, the services of such staff of the Reserve Bank on such terms and conditions as may be agreed upon between the National Bank and the Reserve Bank. 

(3) Subject to the provisions of sub-section (6), at any time before the expiry of six months from the appointed day, the Reserve Bank may, in public interest, transfer to the National Bank, such member of the staff of Reserve Bank whom the Reserve Bank considers as engaged, or as suitable to be engaged, in attending to the work of a nature which is same or similar to that which the National Bank may require for its efficient functioning, and upon such transfer they shall be deemed to be appointed by the National Bank under sub-section (1) with effect from the date of such transfer: Provided that every person so transferred may, before the expiry of a period of six months from the appointed day, or before the expiry of a period of thirty days from such transfer, whichever period expires later, elect to go back to the Reserve Bank by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option the Reserve Bank shall, before the expiration of a period of eighteen months from the appointed day, take back such member of the staff and he shall be deemed to have been on deputation to the National Bank during the period he was a member of the staff of the National Bank. 

(4)  (a) Any member of the staff of the Reserve Bank who is not appointed under

sub-section (3), may, if he so desires, make an application to the Reserve Bank

within six months from the appointed day, to be considered for appointment as a member of the staff of the National Bank. 

(b) The Reserve Bank may, in consultation with the National Bank consider such application having regard to the suitability of the person so applying, the availability of vacancies in the National Bank, the exigencies of service in the Reserve Bank and the National Bank and such other factors as may be considered relevant in this regard, and, if the Reserve Bank is satisfied having regard to these factors, that such applicant is suitable for being so appointed, recommend his appointment to the National Bank. 

(c) The National Bank may thereupon, within eighteen months from the appointed day, appoint such a person applying under this sub-section, as a member of the staff of the National Bank, and on such appointment, such a person shall be deemed to have been appointed in the National Bank under sub-section (3). Provided that the proviso to sub-section (3) and the proviso to sub-section (5) shall not apply in respect of such a person. 

(5) Notwithstanding anything contained elsewhere in this Act or in any other law or in any contract, for the time being in force, at any time before the expiry of six months from the appointed day, the Reserve Bank may, if it considers it necessary in consultation with the National Bank so to do in the interest of the National Bank, transfer on promotion any member of the staff of the National Bank to the Reserve Bank and on such transfer to the Reserve Bank, each such member of the staff shall be deemed to be a member of the staff of the Reserve Bank and shall be entitled to the same salary, emoluments and other conditions of service to which he was entitled immediately before the date of such transfer, including benefits, if any, arising directly out of such promotion : Provided that every member of the staff who is transferred as aforesaid may, before the expiry of a period of six months from the appointed day or within thirty days from such transfer, whichever period expires later, elect to go back to the National Bank by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, the National Bank shall before the expiration of a period of eighteen months from the appointed day, take back such member of the staff and he shall be deemed to have been on deputation to the Reserve Bank during the period he was a member of the staff of the Reserve Bank. 

(6) Every person,- 

(a) who, immediately before the date appointed under sub-section ( 1 ) of  section 16 , is a member of the staff of the Agricultural Refinance and Development Corporation: or 

(b) who is a member of the staff of the Reserve Bank but whose services are being utilised immediately before the date by the said Corporation, shall be deemed to be appointed by the National Bank under sub-section (1) on the said date : Provided that every member of the staff of the Reserve Bank, who is so deemed to be appointed, and who was not recruited specifically for utilization in the Agricultural Refinance and Development Corporation, may, before the expiry of a period of six months from the appointed day or within a period of thirty days from the date appointed under sub-section ( 1 ) of section 16 , whichever period expires later, elect to go back to the Reserve Bank by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, the Reserve Bank shall, before the expiration of a period of eighteen months from the appointed day, take back such member of the staff and he shall be deemed to have been on deputation to the National Bank during the period he was a member of the staff of the National Bank. 

(7) Notwithstanding anything contained in any other law or in any agreement, for the time being in force, no member of the staff shall be entitled to claim any compensation for, or in relation to any matter concerning, his transfer, appointment or as the case may be, return, under sub-sections (3) to (6) and no claim in respect thereof shall be entertained by any court, tribunal or other authority. 

(8) Subject to the provisions of sub-section (10) and sub-section (II), every member of the staff of the Agricultural Refinance and Development Corporation or of the Reserve Bank who is deemed to be appointed as a member of the National Bank under this section, shall be deemed to have been appointed by the National Bank on the same salary, emoluments and other terms and conditions of service to which He was entitled immediately before his appointment in the National Bank. 

(9) The provisions relating to superannuation benefits, namely, the regulations relating to provident fund and the rules relating to payment of gratuity and compassionate gratuity and any other provision relating to superannuation as are applicable to the staff of the Reserve Bank on the appointed day shall, so far as may be, apply to the staff of the National Bank, unless and until the National Bank alters or amends the same : Provided that after the appointed day, any such alteration or amendment may be effected by the National Bank as regards provident fund regulations in accordance with section 60 , and as regards the other rules in the manner they would have been altered or amended but for this subsection : Provided further that after the expiry of six months from the appointed day, the balances held in the Reserve Bank of India Employees' Provident Fund to the credit of any member of the staff of the Reserve Bank whose services are transferred under this section to the National Bank and who does not opt to go back to the Reserve Bank, shall be transferred to. and held in. the Provident Fund of the National Bank on same or similar terms subject to which those balances were held earlier in the Reserve Bank of India Employees' Provident Fund. 

(10) Notwithstanding anything contained in any other law, settlement, or agreement, every person employed by the National Bank or whose services have been transferred to the National Bank under this Act, shall be liable to serve anywhere in India. 

(11) Notwithstanding anything contained in the Industrial Disputes Act, 1947 , or any others law for the time being in force, or in any award, judgment, decree, decision or order of any Industrial Tribunal, Court or other authority, or any settlement or agreement, made or entered into before the date of transfer to the National Bank of the services of any person under this section, the National Bank shall be free to alter, amend or repeal in such manner and to such extent it may consider necessary, any of the terms and conditions of service applicable to such persons whose services are so transferred to the National Bank and who are appointed in the National Bank under this section except that the National Bank shall not alter to their prejudice the terms relating to payment of salary and other emoluments, retirement benefits and eligibility for leave. Explanation.- For the purposes of this section, "appointed day" means the date of establishment of the National Bank under section 3 . 

SECTION 51: OBLIGATION AS TO FIDELITY AND SECRECY 

(1) The National Bank shall not, except as otherwise required by this Act or any other law, divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for the National Bank to divulge such information. 

(2) Every director, member of a committee, auditor, officer or other employee of the National Bank or of the Reserve Bank, whose services are utilised by the National Bank under the provisions of this Act, shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act. 

SECTION 52: DEFECTS IN APPOINTMENT NOT TO INVALIDATE ACTS ETC 

(1) No act or proceeding of the Board or of any committee of the National Bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee; as the case may be. 

(2) No act done by any person acting in good faith as a director of the Board or as a member of a committee of the National Bank shall become invalid merely on the ground that he was disqualified to be a director or that there was any other defect in his appointment. 

SECTION 52A:. AGREEMENT WITH NATIONAL BANK ON APPOINTMENT OF DIRECTORS TO PREVAIL 

(1) Where any agreement entered into by the National Bank with a company or a body corporate while granting loans and advances, provides for the appointment by the National Bank of one or more directors of such company or body corporate, such provisions 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 (1 of 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 or body corporate, 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 National Bank in pursuance of the agreement as aforesaid. 

(2) Any director appointed as aforesaid shall,- 

(a) hold office during the pleasure of the National Bank and may be removed or substituted by any person by order in writing of the National 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 53: PROTECTION OF ACTION TAKEN UNDER THE ACT

No suit or other legal proceeding shall lie against the National Bank or any director or any officer or other employee of the National Bank or any other person authorised by the National Bank to discharge any functions under this Act for any loss or damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or of any other law or provision having the force of law.

SECTION 54: INDEMNITY OF DIRECTORS 

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

(2) A director shall not be responsible for any other director or for any officer or other employee of the National Bank or for any loss or expenses resulting to the National Bank from the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the National Bank or the insolvency or wrongful act of any debtor or any person under obligation to the National Bank or anything done in good faith in the execution of the duties of his office in relation thereto. 

SECTION 55: EXEMPTION FROM INCOME-TAX, ETC

Notwithstanding anything contained in the Income- tax Act, 1961 , or the Companies (Profits) Sur-tax Act, 1964 , or any other enactment for the time being in force relating to tax on income, profits or gains, the National Bank shall not be liable to pay income-tax, sur-tax or any other tax in respect of any income, profits or gains derived or any amount received by the National Bank.

SECTION 56: PENALTIES 

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

(2) If any person fails to produce any book, account or other document, or to furnish any statement or information which under the provisions of this Act, it is his duty to produce or furnish, he shall be punishable with a fine which may extend to two thousand rupees in respect of each offence and in the case of a continuing failure, with an additional fine which may extend to one hundred rupees for every day during which the failure continues after conviction for the first such failure. 

SECTION 57: OFFENCES BY COMPANIES 

(1) Where an offence has been committed by a company, every person who, at the time to offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act. if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence '.as been committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 

(a) "company" means any body corporate and includes a firm or other association of individuals; and 

(b) "director", in relation to a firm, means a partner in the firm. 

SECTION 58: BANKERS' BOOKS EVIDENCE ACT, 1891, TO APPLY IN RELATION TO NATIONAL BANK

The Bankers' Books Evidence Act, 1891 , shall apply in relation to the National Bank as if it were a bank as defined in section 2 of that Act.

SECTION 59: LIQUIDATION OF NATIONAL BANK

No provision of law relating to the winding up of companies shall apply to the National Bank and the National Bank shall not be placed in liquidation save by order of Central Government and in such manner as it may direct.

SECTION 60: POWER OF BOARD TO MAKE REGULATIONS 

( 1 ) The Board may, with the previous approval of the Central Government and in consultation with the Reserve Bank, by notification, make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act. 

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

(a) the fees or allowances that may be paid to the directors or members of the Advisory Council; 

(b) the times and places of the meetings of the Board or the Executive

Committee or the Advisory Council and the procedure to be followed at such meetings including the quorum necessary for the transaction of business; 

(c) the number of directors constituting the Executive Committee and the functions that such Committee shall discharge; 

(d) the manner and terms of issue and redemption of bonds and debentures by the National Bank; 

52 (e) the manner of election of directors under clause (f) of sub-section (1) of Section 6 

R36 (f)xxxx

(g) the form and manner in which the balance-sheets and the accounts of the National Bank shall be prepared or maintained. 

R36 (h)xxxx

(i) the duties and conduct, salaries, allowances and conditions of servce of officers and other employees; 

(j) the establishment and maintenance of provident or other benefit funds for employees of the National Bank; and 

(k) such other matters for which the Board may consider it expedient or necessary to provide for by way of regulations. 

(3) Any regulation which may be made by the Board under this Act may be made by the Reserve Bank, in consultation with the Central Government, before the expiry of three months from the date of establishment of the National Bank, and any regulation so made may be altered and rescinded by the Board in the exercise of its powers under this Act. 

(4) The power to make regulations conferred by this section shall include the power to give retrospective effect to the regulations or any of them from a date not earlier than the date of commencement of- this Act, but no retrospective effect shall be given to any regulation so as to prejudicially affect the interests of any person to whom such regulation may be applicable. 

(5) The Centra] Government shall cause every regulation made under this Act to 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 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 61: AMENDMENT OF CERTAIN ENACTMENTS

[Omitted by Repealing and Amending Act (19 of 1988), S. 2, 1st Sch. (31-4-88).]

SECTION 62: POWER TO REMOVE DIFFICULTY

If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty: Provided that no such order shall be made after the expiry of a period of three years from the commencement of this Act.

Footnotes:

2. Act came into force on 1 -5-1982 except sections 3, 16 and 18-See S. 0.278 (E), dtd. 21 - 4-82 published in Gaz. of India, 21-4-1982, Pt. II, S. 3 (ii), Ext., p. 468.

3. the words "of the Board" omitted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000. (55 of 2000)

4. This section came into force on 12-7-1982-See S.O. 484(E) did. 6-7-1982, Published in Gaz. of India, 12-7- 1982 ,Pt. II, S.3 (ii), Ext., p.I.

5. In sub-section (1), in the proviso, for the words "five hundred crores", the words "five thousand crores" substituted by The National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

6. In Section 4, Sub-section (2), the following shall be substituted, "(2)The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank in equal proportions". by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

7. Inserted by Banking. Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 of 1988)..S. 43(30-12-88).

8. In Section 6 of the principal Act, for sub-sections (1) and (2), the following sub-sections substituted," (1) The Board of 'Directors of the National Bank shall consist of the following, namely:- (a) a Chairman; (b) two directors from amongst experts in rural economics, rural development, handicrafts and other rural crafts, village and cottage industries and small-scale industries or in any other matter, the special knowledge or professional experience in which is considered by the Central Government as useful to the National Bank: (c) three directors out of whom two shall be persons with experience in the working of co- operative banks and one shall be a person with experience in the working of commercial banks; (d) three directors from out of the directors of the Reserve Bank; (e) three directors from amongst the officials of the Central Government; (f) two directors from amongst the officials of the State Governments; and (g) a Managing Director. (2) The Chairman and other directors shall be appointed by the Central Government in consultation with the Reserve Bank : [Provided that no such consultation shall be necessary in the case of directors appointed under clause (e) of sub-section ( 1 ).]" by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

9. Proviso omitted by Banking Laws (Amendment) Act (81 of 1985), S. 18(1-5-86).

10. Inserted, Banking Laws (Amendment) Act (81 of 1985).

11. Substituted by Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 0f 1988) S. 45 (30-12-88).

12. Words "or any other director referred to in sub-section (2)", omitted, Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 0f 1988).

13. Inserted, Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 0f 1988).

14. In Section 7, sub-section (1), the words "and shall be eligible for re-appointment" shall be added at the end by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

15. In Section 7 After sub-section (1-A), the following sub-section shall be inserted, namely:- "(1B) In the case of a vacancy in the office of the Chairman, the Managing Director shall perform the functions and duties of the Chairman during such vacancy." by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

16. In Section 7, sub-section (2), the words "and thereafter until his successor enters upon his office" omitted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

17. In Section 7, sub-section (4), the following sub-section shall be substituted "(4) The Chairman and the directors referred to in sub-section (2) shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any of its committees and for attending to any other work of the National Bank : Provided that no such fee shall be payable to the Chairman or any other director, who is an officer of the Government or an officer of the Reserve Bank." by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

18. In Section 8, sub-section (1), clause (a), the words "and shall be eligible for re-appointment" shall be added at the end by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000.(55 of 2000)

19. In Section 12, sub-section (2), after the words "unable to attend any meeting,", the words "the Managing Director and in the absence of both, the Chairman and the Managing Director," inserted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000

23. In Section 19(i) the following clause shall be substituted and shall be deemed to have been substituted with effect from the 26th day of September, 2000, "(a) issue and sell bonds and debentures carrying interest, which bonds and debentures shall be guaranteed by the Central Government as to the repayment of principal and payment of interest at such rates as may be fixed by the Central Government in consultation with the Reserve Bank at the time the bonds or debentures are issued. (b) borrow money from the Reserve Bank repayable on demand or on the expiry of fixed periods not exceeding eighteen months from the date of the making of the loan or advance, on such terms and conditions including the terms relating to security and purpose as may be specified by the Reserve Bank. (c) borrow money from the Central Government and from any other authority or organisation or institution approved by that Government, on such terms and conditions as may be agreed upon. (d) accept from the Central Government, a State Government, a local authority, a State land development bank, a State co-operative bank or a scheduled bank or any person approved by the Central Government in this behalf, deposits repayable after the expiry of a period which shall not in any case be less than twelve months from the making of such deposit and on such other terms as the National Bank may, with the prior approval of the Reserve Bank fix; and (e) receive gifts, grants, donations or benefactions from Government or any other source." by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

25. SUBSTITUED FOR THE WORDS "to State co-operative banks" BY THE NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (AMENDMENT) ACT, 2003 [ACT 48 OF 2003] W.E.F.[19th September, 2003]

26. SUBSTITUED FOR THE WORDS "to any State co-operative bank" BY THE NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (AMENDMENT) ACT, 2003 [ACT 48 OF 2003] W.E.F.[19th September, 2003]

27. INSERTED BY THE NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (AMENDMENT) ACT, 2003 [ACT 48 OF 2003] W.E.F.[19th September, 2003]

28. In Section 25, sub-section (1),clause (d), after the words "by way of refinance", the words "or otherwise" shall be inserted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

31. In Section 28, sub-section (3), substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000) "(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), no guarantee or security referred to therein shall be required in any case in which the Board, for reasons to be recorded by it in writing decides having regard to the nature and scope ,of the schemes or schemes for which accommodation is granted by the National Bank that such security or guarantee is not necessary."

32. In Section 29, after Sub-section (2). This sub-section shall be inserted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

36. In Section 33 of the principal Act, for the words "under this Chapter with a borrowing institution", the words "under this Act with a borrower" shall be substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

38. In the Principal Act, This Sub-Section is New Sub-section who is substiuted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)The following Sub-section is old Sub-section "(1) The National Bank shall have free access to all such records of any institution which seeks to avail of any credit facilities from the National Bank and to all such records of any such person who seeks to avail of any credit facilities from such institution, perusal whereof-may appear to the National Bank to be necessary in connection with the providing of finance or other assistance to such institution or the refinancing of any loan or advance made to such person by the borrowing institution."

40. In the Principal Act, In Section 38, clause (iii), for the words "make grants", the words "make loans or advances or grants" substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

41. In the Section 38, clause (iv),(v),(vi),(vii),inserted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

44. In Section 44 of the principal Act, in sub-section (2), for the words "making of grants", the words "making of loans or advances or grants" substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

45. In Section 45 of the principal Act, for the words "and such other Funds", the words "and other Funds" substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)

46. Substituted for the words "each year" by Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 of 1988), S. 46 (30-12-88).

47. Inserted, Banking, Public Financial Institutions and Negotiable Instruments (Amendment) Act (66 0f 1988).

48. 31st day of March in each year specified as date for purposes of S.>

50. In Section 47 of the principal Act, for clause (ii) substituted by the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000)the following clause (ii) is old clause "(ii) after the expiry of the said period of fifteen years the National Bank shall, after making provision for the Fund referred to in clause (i), transfer half of the balance of surplus to the Central Government and the other half to the Reserve Bank."

52. In the principal act, section 60, sub-section (2), Clause(e) substituted by The National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000) "(e)the conditions which the National Bank may impose in granting loans and advances"

SCHEDULE 1 DECLARATION OF FIDELITY AND SECRECY

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

SCHEDULE 2 THE SECOND SCHEDULE

(See section 61 ) a [Omitted by Repealing and Amending Act (19 of 1986). S. 2, 1st Sch. (31-4-88).]

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT GENERAL REGULATIONS, 1982

DATED AUGUST 10, 1982

In exercise of the powers conferred by sub-section (3) of

section 60 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981), the Reserve Bank of India, in consultation with the Central Government, hereby makes the following regulations for the National Bank for Agriculture and Rural Development, namely:

REGULATION 1 SHORT TITLE AND COMMENCEMENT 

(i) These regulations may be called the National Bank for Agriculture and Rural Development General Regulations 1982. 

(ii) They shall come into force on the 12th July, 1982. 

REGULATION 2 DEFINITIONS 

-In these regulations, unless there is anything repugnant in the subject or context-

(a) 'Act' means the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981)- ; 

(b) 'section' means asection of the Act; 

(c) other expressions used and not defined in these regulations but used in the Act have the meanings respectively assigned to them in the Act. 

REGULATION 3 MEETINGS OF THE BOARD 

 (i) The Board shall ordinarily meet once a quarter in each year. 

(ii) Meetings'of the Board shall be convened by the Chairman, and in his absence, by the Managing Director and shall be ordinarily held at Bombay but if so directed by the Board, may be held at any other place in India. 

(iii) Any five directors may, for the purpose of the consideration of the business to be specified in their requisition, require the Chairman to convene a meeting of the Board and the Chairman shall, on receipt of such requisition, convene a meeting of the Board giving sufficient notice:

provided that the date of the meeting so convened shall not be later than 21 days from the date of the requisition.

(iv) Except in respect of the first meeting of the Board, ordinarily notless than one clear fortnight's notice shall be given of each meeting of the Board and such notice shall be sent to every director to his registered address. Should it befound necessary to convene an emergency meeting, a notice of not less than seven days shall be given to every director who is at that time in India, to enable him to attend. 

(v) No business other than that for which the meeting was convened shall be discussed 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 clear week's notice has been given of the same in writing to the Chairman. 

(vi) Six directors shall form a quorum for the transaction of the business at a meeting of the Board. 

(vii) A copy of the proceedings of each meeting of the Board shall be circulated for the information of the directors as soon as possible after the minutes of that meeting are signed by the Chairman. 

REGULATION 4 FEES FOR DIRECTOR 

-The director not being a Managing Director or a whole-time director, or an officer of Government or of the Reserve Bank of India shall be paid fees by the National Bank as follows:

(a) For attending meetings of the Board.-Rs. 200 for each meeting. 

(b) For attending to any other work for the National Bank.-Such sum as the Board may fix from time to time having regard to the nature and amount of work involved. 

REGULATION 5 PAYMENT OF TRAVELLING AND HALTING ALLOWANCES TO DIRECTORS

-In addition to the fees to which a Director may be entitled under regulation 4 - , every such direc- tor travelling in connection with the work of the National Bank shall be reimbur- sed 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.

REGULATION 6 RESOLUTION WITHOUT MEETING VALID

-A resolution in writing circulated to all the directors in India and approved and signed by a majority of such directors who are then in India, one of whom shall be the Chairman, shall be valid and effectual and shall be deemed to be the resolution passed by the Board on the date on which it is approved and 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.

REGULATION 7 MANNER AND FORM IN WHICH CONTRACTS BINDING ON THE NATIONAL BANK MAY BE EXECUTED 

(1) Contracts on behalf of the National Bank may be made as follows: 

(i) Any contract which, if made between private persons, would by law be required to be in writing and signed by the parties to be charged therewith, may be made on behalf of the National Bank in writing and signed by any person act- ing under its authority, express or implied, and may in the same manner be varied or discharged. 

(ii) Any contract, which, if made between private persons, would by law be valid although made by parol only and not reduced in writing may be made by parol on behalf of the National Bank by any person acting under its authority, express or implied, and may in the same manner be varied or discharged. 

(2) All contracts made according to the provisions of this regulation shall be effectual in law ard shall bind the National Bank and all other parties thereto and their legal representatives. 

REGULATION 8 ACCOUNTS, RECEIPTS AND DOCUMENTS OF THE NATIONAL BANK BY WHOM TO BE SIGNED

-The Chairman, the Managing Director any whole-time director and such officers of the National Bank or such other persons as the Board may authorise in this behalf bynotification in the Gazette of India are hereby severaly em- powered for and on behalf of the National Bank to execute lease deeds, transfer, conveyances, charges and other deeds relating to or affecting rights to or in im- movable property, to endorse and transfer promissory notes, stock receipt, stocks, debenture, shares, securities and documents of title to goods, standing in the name of or held by the National Bank, and to draw, accept and endorse bills of exchange and other instruments in the current and authorised business of the National Bank and to sign all other accounts, receipts and documents connected with such business.

REGULATION 9 PLAINTS, ETC. BY WHOM TO BE SIGNED

-Plaints, written statement, affidavits and other documents connected with legal proceedings may be signed and verified on behalf of the National Bank by the officer empowered by or under regulation 8 - to sign documents for and on behalf of the National Bank and such officer may appear in or before any court, tribunal or other body as the recognised agent of the National Bank for the purpose of the proceedings in that court, tribunal or other body.

REGULATION 10 NO ADVANCE TO BE MADE TO THE OFFICERS OF THE NATIONAL BANK WITHOUT SANCTION OF THE BOARD 

-An advance may be made to the Chairman, Managing Director, whole-time director, officer or other employee of the National Bank with the sanction of the authority specified in the relative regulations, rules, or schemes made or approved by the Board in terms of which the advance is to be made and where no authority is specified in the relative regulations, rules or schemes, as the case may be, the advance may sanctioned;

(a) to the Chairman, by the Board; 

(b) to the Managing Director or the whole-time director, by the Chairman; 

(c) to officers and other employees, by the Managing Director or a whole- time director, and subject to such general or special directions as may be issued by the Chirman or the Managing Director, by any other officer specified by the Chairman in this behalf. 

REGULATION 11 POWERS ON BEHALF OF THE NATIONAL BANK BY WHOM TO BE EXERCISED 

(1) Subject to the provisions of the Act, any regulations made by the Board in regard to expenditure to be incurred by or on behalf of the National Bank and any directions, which may be given by the Chairman either generally or in any particular case in regard to the conduct of the business of the National Bank, the Managing director and whole-time directors are hereby severally empowered to exercise any or all the powers and do any or all acts and things which may be exercised or done by the National Bank. 

(2) Any other officer may, if authorised and to the extent that he is so authorised by the Chairman in this behalf, exercise all the powers in relation to matters pertaining to the department or office in which ne is employed, and in relation to such matters, do all acts and things which may be exercised or done by the National Bank, subject however to the conditions hereinafter specified, namely: 

(a) the power to sanction or incur any expenditure on behalf of the National Bank shall be subject to regulations made by the Board ; 

(b) any other power exercised or action taken shall be exercised or taken subject to such directions, if any, as may be given by any higher offices or authority in this behalf. 

(3) No power exercised, functions performed or act or thing done shall be deemed to be invalid or ineffective only on the ground that it is not a power exercised, functions performed, or act or thing done, by or on behalf of the National Bank, or that in the exercise of such power, performance of such function or the doing of any such act or thing, effect has not been given to any rule or direction referred to in sub-regulation (1) or in sub-regulation (2), or that any such rule or direction has been wrongly acted upon. 

REGULATION 12 ISSUE OF BONDS 

(i) The bonds or debentures of the National Bank shall be issued ovei the signature of the Chairman, or the Managing Director, or any whole-time director which may be printed, engraved, lithographed or impressed by such other mechanical process as the National Bank may direct. 

(ii) A signature so printed, engraved, lithographed or otherwise impressed shall be valid as if it had been inscribed in the proper handwriting of the signatory himself. 

REGULATION 13 COMMON SEAL OF THE NATIONAL BANK

-The common seal of the National Bank shall be affixed to any instrument only in the presence of at least two director who shall sign their names in the instrument in taken of their presence, and such signing shall be independent of their signing of any person who may sign the instrument as a witness. Unless so signed as aforesaid, such instrument shall be of no validity.

REGULATION 14 SERVICE OF NOTICE TO NATIONAL BANK

-A notice may be served on the tiaNonal Bank by delivering it to the Managing Director, any whole-time direc- tor, or an officer authorised by the Managing director in this behalf at, or by sending it by registered post to, the Head Office of the National Bank.

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (ADDITIONAL) GENERAL REGULATIONS, 1984

In exercise of the powers conferred by sub-section (1) of section 60 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981), the board of directors of the National Bank for Agriculture and Rural Develop- ment, with the previous approval of the Central Government and in consulta- tion with the Reserve Bank of India, hereby make the following regulations, namely:-

REGULATION 1 SHORT TITLE AND COMMENCEMENT 

(1) These regulations may be called the National Bank for Agriculture and Rural Development (Additional) General Regulations, 1984. 

(2) They shall come into force on the date of their publication in the Official Gazette. 

REGULATION 2 DEFINITIONS 

-In these regulations, unless the context otherwise requires,-

(a) "Act" means the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981)- ; 

(b) "Advisory Council" means the Advisory Council constituted under sub-section (1) of section 14- ; 

(c) '-Executive Committee" means the Executive Committee constituted under sub-section (1) of section 13- ; 

(d) ''section" means a section of the Act ; 

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

REGULATION 3 NUMBER OF DIRECTORS OF THE EXECUTIVE COMMITTEE AND ITS FUNCTIONS 

(1) The Executive Committee shall consist of the chairman, the managing director and the following other directors to be nominated by the chairman,- 

(a) one each from amongst the directors appointed under clauses (b), (c), (d) and (e) of sub-section (1) of section 6- ; and 

(b) one of the whole time directors, if any, appointed under sub-section (3) of section 6- . 

(2) Subject to the provisions of these regulations and such special or general directions as the Board may give from time to time, the Executive Com- mittee shall have all the powers of the Board to transact the usual business of the National Bank except powers in relation to matters which are specifically reserved by the Act to the Board. 

REGULATION 4 MEETINGS OF THE EXECUTIVE COMMITTEE 

(1) The Chairman may call meeting of the Executive Committee ordinarily once in two months at Bombay on such date and at such time as he may specify and a notice of not less than ten clear days shall be given to the members of the Executive Committee to enable them to attend the meeting: Provided that if the chairman considers it necessary so to do, ameeting of the Executive Committee may be held at any other place in India. 

(2) Where the chairman considers it necessary to call an emergency meeting the Executive Committee, notice of not less than five clear days shall be given to the members of the Executive Committee to enable them to attend the meeting. 

(3) President of the meeting.-The chairman, or if for any reason he is unable to attend any meeting, any other member of the Executive Committee nominated by the chairman in this behalf and in the absence of such nomination any other member of the Executive Committee elected by the members present at the meeting, shall preside at the meeting of the said Committee, 

(4) Quorum.-Three members of the Executive Committee, of whom one should be a director appointed under clause (b) or clause (c) or clause (d) or clause (e) of sub-section (1) of section 6- , shall form the quorum at its meetings. 

(5) Save as otherwise provided in these regulations, the provisions of the Act and the National Bank for Agriculture and Development General Regula- tions, 1982, so far as may be, shall apply to the meetings of the Executive Committee as they apply to the meetings of lhe Board. 

(6) Proceedings of the meetings.-Copy of the proceedings of each meeting of the Executive Committee shall be circulated for information to the direc- tors of the Board as soon as possible after the same are signed by the member presiding at that meeting or the next succeeding meeting. 

REGULATION 5 MEETINGS OF THE ADVISORY COUNCIL 

(1) The chairman in his absence the managing director may convene a meeting of the Advisory Council, ordinarily once in six months at the head office of the National Bank such date and at such time as he may specify and notice of not less than one clear fortnight shall be given to the members of the Advisory Council to enable them to attend the meeting. 

(2) President of the meeting.-The chairman, or if for any reasons he is unable to attend any meeting, any other member of the Advisory Council nomination, any other member of the Advisory Council elected by the members present at the meeting, shall preside at the meeting of the Advisory Council. 

(3) Quorum.- One-third of lhe members of the Advisory Council (any fraction being ignored) or five members thereof whichever is less shall from the quorum at its meetings. 

REGULATION 6 SITTING FEES AND ALLOWANCE FOR THE MEMBERS OF THE ADVISORY COUNCIL 

(1) Each member of the Advisory Council other than adirector or officer of the Government or of the Reserve Bank of India shall receive fee of Rs. 200 for ever meeting of the Advisory Council attended by him and shall be reimbursed travelling and halting expenses, if any, at such rates as the Board may, with the previous approval of the Central Government and in consultation with the Re- serve Bank of the India, specify from time to time. 

(2) A member of the Advisory Council who is a director (other than the managing director or a whole time director) shall receive such fees and allowances as are admissible to him for attending a meeting of the Board.

(3) A member of the Advisory Council who is anofficer of the Reserve Bank of India shall receive such allowances as are admissible to him for attending a meeting of the Board. 

REGULATION 7 ACCOUNTS

-Ths Board shall cause account to be kept of all the assets and liabilities and receipts and payments of the National Bank.

REGULATION 8 ANNUAL ACCOUNTS 

-The annual accounts of she National Bank shall be prepared and set out in,-

(1) a Balance sheet as on 30th June of the year in the form specified in Sche- dule A annexed hereto or as near thereto as circumstances admit : 

(2) a Profit and Loss account for the year ended 30th June in the form spe- cified in Schedule B annexed hereto or as near thereto as circumstances admit ;