Lawgist10BBanking company to be managed by whole time chairman
1[10B. Banking company to be managed by whole time chairman.--2[(1) Notwithstanding anything contained in any law for the time being in force or in any contract to the contrary, every banking company in existence on the commencement of the Banking Regulation (Amendment) Act, 1994 (20 of 1994), or which comes into existence thereafter shall have one of its directors, who may be appointed on a whole-time or a part-time basis as chairman of its Board of directors, and where he is appointed on a whole-time basis, as chairman of its Board of directors, he shall be entrusted with the management of the whole of the affairs of the banking company:
Provided that the chairman shall exercise his powers subject to the superintendence, control and direction of the Board of directors.
(1A) Where a chairman is appointed on a part-time basis,--
(i) such appointment shall be with the previous approval of the Reserve Bank and be subject to such conditions as the Reserve Bank may specify while giving such approval;
(ii) the management of the whole of the affairs of such banking company shall be entrusted to a managing director who shall exercise his powers subject to the superintendence, control and direction of the Board of directors.]
(2) 3[Every chairman of the Board of directors who is appointed on a whole-time basis and every managing director] of a banking company shall be in the whole time employment of such company and shall hold office for such period, not exceeding five years, as the Board of directors may fix, but shall, subject to the provisions of this section, be eligible for re-election or re-appointment:
Provided that nothing in this sub-section shall be construed as prohibiting a chairman from being a director of a subsidiary of the banking company or a director of a company registered under section 25 of the Companies Act, 1956 (1 of 1956).
(3) Every person holding office on the commencement of section 3 of the Banking Laws (Amendment) Act, 1968 (58 of 1968), as managing director of a banking company shall--
(a) if there is a chairman of its Board of directors, vacate office on such commencement, or
(b) if there is no chairman of its Board of directors, vacate office on the date on which the chairman of its Board of directors is elected or appointed in accordance with the provisions of this section.
(4) 4[Every chairman who is appointed on a whole-time basis and every managing director of a banking company appointed under sub-section (1A)] shall be a person who has special knowledge and practical experience of--
(a) the working of a banking company, or of the State Bank of India or any subsidiary bank or a financial institution, or
(b) financial, economic or business administration:
Provided that a person shall be disqualified for being a 5[chairman who is appointed on a whole-time basis or a managing director] if he--
(a) is a director of any company other than a company referred to in the proviso to sub-section (2), or
(b) is a partner of any firm which carries on any trade, business or industry, or
(c) has substantial interest in any other company or firm, or
(d) is a director, manager, managing agent, partner or proprietor of any trading, commercial or industrial concern, or
(e) is engaged in any other business or vocation.
(5) 6[A chairman of the Board of directors appointed on a whole-time basis or a managing director] of a banking company may, by writing, under his hand addressed to the company, resign his office, 7***
8[(5A) 6[A chairman of the Board of directors appoint on a whole-time basis or a managing director] whose term of office has come to an end, either by reason of his resignation or by reason of expiry of the period of his office, shall, subject to the approval of the Reserve Bank, continue in office until his successor assumes office.]
(6) Without prejudice to the provisions of section 36AA, where the Reserve Bank is of opinion that any person who is, or has been elected to be, the 9[chairman of the Board of directors who is appointed on a whole-time basis or the managing director] of a banking company is not a fit and proper person to hold such office, it may, after giving to such person and to the banking company a reasonable opportunity of being heard, by order in writing, require the banking company to elect or appoint any other person as the 10[chairman of the Board of directors who is appointed on a whole-time basis or the managing director] and if, within a period of two months from the date of receipt of such order, the banking company fails to elect or appoint a suitable person as the 10[chairman of the Board of directors who is appointed on a whole-time basis or the managing director] the Reserve Bank may, by order, remove the first-mentioned person from the office of the 9[chairman of the Board of directors who is appointed on a whole-time basis or the managing director] of the banking company and appoint a suitable person in his place whereupon the person so appointed shall be deemed to have been duly elected or appointed, as the case may be, as the 9[chairman of the Board of directors who is appointed on a whole-time basis or the managing director] of such banking company and any persons elected or 11[appointed as chairman on a whole-time basis or managing director] under this sub-section shall hold office for the residue of the period of office of the person is whose place he has been so elected or appointed.
(7) The banking company and any person against whom an order of removal is made under sub-section (6) may, within thirty days from the date of communication to it or to him of the order, prefer an appeal to the Central Government and the decision of the Central Government thereon, and subject thereto, the order made by the Reserve Bank under sub-section (6), shall be final and shall not be called into question in any court.
(8) Notwithstanding anything contained in this section, the Reserve Bank may, if in its opinion it is necessary in the public interest so to do, permit 12[the chairman of the Board of directors who is appointed on a whole-time basis or the managing director] to undertake such part-time honorary work as is not likely to interfere with his duties as 13[such chairman or managing director].
(9) Notwithstanding anything contained in this section, where a person 14 [appointed on a whole-time basis, as chairman of the Board of directors or managing director] dies or resigns or is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his office, the banking company may, with the approval of the Reserve Bank, make suitable arrangements for carrying out the 15[duties of chairman or managing director] for a total period not exceeding four months.]
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1. Ins. by Act 58 of 1968, s. 3 (w.e.f. 1-2-1969).
2. Subs. by Act 20 of 1994, s. 2, for sub-section (1) (w.e.f. 31-1-1994).
3. Subs. by s. 2, ibid., for "Every chairman of the Board of directors" (w.e.f. 31-1-1984).
4. Subs. by s. 2, ibid., for "Every chairman of the Board of directors of a banking company" (w.e.f. 31-1-1994).
5. Subs. by Act 20 of 1994, s. 2, for "chairman" (w.e.f. 31-1-1994).
6. Subs. by s. 2, ibid., for "A chairman of the Board of directors" (w.e.f. 31-1-1994).
7. The words "but shall continue in office until his successor assumes office" omitted by Act 1 of 1984, s. 17 (w.e.f. 15-2-1984).
8. Ins. by s. 17, ibid. (w.e.f. 15-2-1984).
9. Subs. by Act 20 of 1994, s. 2, for "chairman of the Board of directors" (w.e.f. 31-1-1994).
10. Subs. by s. 2, ibid., for "chairman of its Board of directors" (w.e.f. 31-1-1994).
11. Subs. by s. 2, ibid., for "appointed as chairman" (w.e.f. 31-1-1994).
12. Subs. by Act 20 of 1994, s. 2, for "the chairman" (w.e.f. 31-1-1994).
13. Subs. by s. 2, ibid., for "such chairman" (w.e.f. 31-1-1994).
14. Subs. by s. 2, ibid., for "appointed as chairman" (w.e.f. 31-1-1994).
15. Subs. by s. 2, ibid., for "duties as chairman" (w.e.f. 31-1-1994).
- 6 Form of business in which banking companies may engage
- 7 Use of words "bank", "banker", "banking" or "banking company"
- 8 Prohibition of trading
- 9 Disposal of non-banking assets
- 10 Prohibition of employment of managing agents and restrictions on certain forms of employment
- 10A Board of directors to include persons with professional or other experience
- 10B Banking company to be managed by whole time chairman
- 10BB Power of Reserve Bank to appoint chairman of the Board of directors appointed on a whole-time basis or a managing director of a banking company
- 10C Chairman and certain directors not to be required to hold qualification shares
- 10D Provisions of sections 10A and 10B to override all other laws, contracts, etc
- 11 Requirement as to minimum paid-up capital and reserves
- 12 Regulation of paid-up capital, subscribed capital and authorised capital and voting rights of shareholders
- 12A Election of new directors
- 12B Regulation of acquisition of shares or voting rights
- 13 Restriction on commission, brokerage, discount, etc., on sale of shares
- 14 Prohibition of charge on unpaid capital
- 14A Prohibition of floating charge on assets
- 15 Restrictions as to payment of dividend
- 16 Prohibition of common directors
- 17 Reserve Fund
- 18 Cash reserve
- 19 Restriction on nature of subsidiary companies
- 20 Restrictions on loans and advances
- 20A Restrictions on power to remit debts
- 21 Power of Reserve Bank to control advances by banking companies
- 21A Rates of interest charged by banking companies not to be subject to scrutiny by courts
- 22 Licensing of banking companies
- 23 Restrictions on opening of new, and transfer of existing, places of business
- 24 Maintenance of a percentage of assets
- 25 Assets in India
- 26 Return of unclaimed deposits
- 26A Establishment of Depositor Education and Awareness Fund
- 27 Monthly returns and power to call for other returns and information
- 28 Power to publish information
- 29 Accounts and balance-sheet
- 29A Power in respect of associate enterprises
- 30 Audit
- 31 Submission of returns
- 32 Copies of balance-sheets and accounts to be sent to registrar
- 33 Display of audited balance-sheet by companies incorporated outside India
- 34 Accounting provision of this Act not retrospective
- 34A Production of documents of confidential nature
- 35 Inspection
- 35A Power of the Reserve Bank to give directions
- 35AA Power of the Central Government to authorize Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process
- 35AB Power of Reserve Bank to issue directions in respect of stressed assets
- 35B Amendments of provisions relating to appointments of managing directors, etc., to be subject to previous approval of the Reserve Bank
- 36 Further powers and functions of Reserve Bank
- 36A Certain provisions of the Act not to apply to certain banking companies
