Lawgist11Requirement as to minimum paid-up capital and reserves
(1) Notwithstanding anything contained in 1[section 149 of the Companies Act, 1956 (1 of 1956)], no banking company in existence on the commencement of this Act, shall, after the expiry of three years from such commencement or of such further period not exceeding one year as the Reserve Bank, having regard to the interests of the depositors of the company, may think fit in any particular case to allow, carry on business 2[in India], and no other banking company shall after the commencement of this Act, commence or carry on business 2[in India], 3[unless it complies with such of the requirements of this section as are applicable to it].
4[(2) In the case of a banking company incorporated outside India--
(a) the aggregate value of its paid-up capital and reserves shall not be less than fifteen lakhs of rupees and if it has a place or places of business in the city of Bombay or Calcutta or both, twenty lakhs of rupees; and
(b) 5[the banking company shall deposit and keep deposited with the Reserve Bank either in cash or in the form of unencumbered approved securities, or partly in cash and partly in the form of such securities--
(i) an amount which shall not be less than the minimum required by clause (a); and
(ii) as soon as may be after the expiration of each 6*** year, an amount calculated at twenty twenty per cent. of its profit for that year in respect of all business transacted through its branches in India, as disclosed in the profit and loss account prepared with reference to that year under section 29:]
Provided that any such banking company may at any time replace--
(i) any securities so deposited by cash or by any other unencumbered approved securities, or partly by cash and partly by other such securities, so however, that the total amount deposited is not affected;
(ii) any cash so deposited by unencumbered approved securities of an equal value.]
7[(2A) Notwithstanding anything contained in sub-section (2), the Central Government may, on the recommendation of the Reserve Bank, and having regard to the adequacy of the amounts already deposited and kept deposited by a banking company under sub-section (2), in relation to its deposit liabilities in India, declare by order in writing that the provisions of sub-clause (ii) of clause (b) of sub-section (2) shall not apply to such banking company for such period as may be specified in the order.]
(3) In the case of any banking company to which the provisions of sub-section (2) do not apply, the aggregate value of its paid-up capital and reserves shall not be less than--
(i) if it has places of business in more than one State, five lakhs of rupees, and if any such place or places of business is or are situated in the city of Bombay or Calcutta or both, ten lakhs of rupees;
(ii) if it has all its places of business in one State none of which is situated in the city of Bombay or Calcutta, one lakh of rupees in respect of its principal place of business, plus ten thousand rupees in respect of each of its other places of business situated in the same district in which it has its principal place of business, plus twenty-five thousand rupees in respect of each place of business situated elsewhere in the State otherwise than in the same district:
Provided that no banking company to which this clause applies shall be required to have paidup capital and reserves exceeding an aggregated value of five lakhs of rupees:
Provided further that no banking company to which this clause applies and which has only one place of business shall be required to have paid-up capital and reserves exceeding an aggregate value of fifty thousand rupees:
8[Provided further that in the case of every banking company to which this clause applies and which commences banking business for the first time after the commencement of the Banking Companies (Amendment) Act, 1962 (36 of 1962), the value of its paid-up capital shall not be less than five lakhs of rupees;]
(iii) if it has all its places of business in one State, one or more of which is or are situated in the city of Bombay or Calcutta, five lakhs of rupees, plus twenty-five thousand rupees in respect of each place of business situated outside the city of Bombay or Calcutta, as the case may be:
Provided that no banking company to which this clause applies shall be required to have paid-up capital and reserves exceeding an aggregate value of ten lakhs of rupees.
Explanation.--For the purposes of this sub-section, a place of business situated 9[in a State] other than that in which the principal place of business of the banking company is situated shall, if it is not more than twenty-five miles distant from such principal place of business, be deemed to be situated within the same State as such principal place of business.
(4) Any amount deposited and kept deposited with the Reserve Bank under 10*** sub-section (2) by any banking company incorporated 11[outside India] shall, in the event of the company ceasing for any reason to carry on banking business 12[in India], be an asset of the company on which the claims of all the creditors of the company 12[in India] shall be a first charge.
13[(5) For the purposes of this section,--
(a) "place of business" means any office, sub-office, sub- pay office and any place of business at which deposits are received, cheques cashed or moneys lent;
(b) "value" means the real or exchangeable value, and not the nominal value which may be shown in the books of the banking company concerned.]
(6) If any dispute arises in computing the aggregate value of the paid-up capital and reserves of any banking company, a determination thereof by the Reserve Bank shall be final for the purposes of this section.
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1. Subs. by Act 95 of 1956, s. 14 and the Schedule, for "section 103 of the Indian Companies Act, 1913 (7 of 1913)" (w.e.f. 14-1-1957).
2. Subs. by Act 20 of 1950, s. 3, for "in any State" (w.e.f. 18-3-1950).
3. Subs. by Act 33 of 1959, s. 7, for certain words (w.e.f. 1-10- 1959).
4. Subs. by s. 7, ibid., for sub-section (2) (w.e.f. 1-10-1959).
6. The word"calendar" omitted by Act 66 of 1988, s. 7 (w.e.f. 30-12-1988).
7. Ins. by Act 36 of 1962, s. 2 (w.e.f. 16-9-1962).
8. Ins. by Act 36 of 1962, s. 2 (w.e.f. 16-9-1962).
9. Subs. by Act 62 of 1956, s. 2 and Sch., for "in India" (w.e.f. 1- 11-1956).
10. The words "the proviso to" omitted by Act 33 of 1959, s. 7 (w.e.f. 1-10-1959).
11. Subs. by Act 20 of 1950, s. 3, for "elsewhere than in a State" (w.e.f. 18-3-1950).
12. Subs. by s. 3, ibid., for "in the States"(w.e.f. 18-3-1950).
13. Subs. by Act 33 of 1959, s. 7, for sub-section (5) (w.e.f. 1-10- 1959).
- 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
