Banking Regulation Act,1949
Act No : 10
Section :
Board of directors to include persons with professional or otherexperience.
3*[10A. Board of directors to include persons with professional or other experience.- (1) Notwithstanding anything contained in any other law for the time being in force, every banking company,-- (a) in existence on the commencement of section 3 of the Banking Laws (Amendment) Act, 1968, or (b) which comes into existence thereafter, shall comply with the requirements of this section: Provided that nothing contained in this sub-section shall apply to a banking company referred to in clause (a) for a period of three months from such commencement. (2) Not less than fifty-one per cent. of the total number of members of the Board of directors of a banking company shall consist of persons, who-- (a) shall have special knowledge or practical experience in respect of one or more of the following matters, namely:-- (i) accountancy, (ii) agriculture and rural economy, (iii) banking, (iv) co-operation, (v) economics, (vi) finance, (vii) law, (viii) small-scale industry, (ix) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the banking company: Provided that out of the aforesaid number of directors, not less than two shall be persons having special knowledge or practical experience in respect of agriculture and rural economy, co-operation or small-scale industry; and (b) shall not-- (1) have substantial interest in, or be connected with, whether as employee, manager or managing agent,-- ---------------------------------------------------------------------- 1. Subs. by Act 33 of 1959, s. 6, for the former sub-section (3) (w.e.f. 1-10-1959). 2. Sub-sections (3), (4) and (5) omitted by Act 55 of 1963, s. 8 (w.e.f. 1-2-1964). 3. Ins. by Act 58 of 1968, s. 3 (w.e.f. 1-2-1969). 58A (i) any company, not being a company registered under section 25 of the Companies Act, 1956 (1 of 1956.), or (ii) any firm, which carries on any trade, commerce or industry and which, in either case, is not a small-scale industrial concern, or (2) be proprietors of any trading, commercial or industrial concern, not being a small-scale industrial concern. 1*[(2A) 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,-- (i) no director of a banking company, other than its chairman or whole-time director, by whatever name called, shall hold office continuously for a period exceeding eight years; (ii) a chairman or other whole-time director of a banking company who has been removed from office as such chairman, or whole-time director, as the case may be, under the provisions of this Act shall also cease to be a director of the banking company and shall also not be eligible to be appointed as a director of such banking company, whether by election or co-option or otherwise, for a period of four years from the date of his ceasing to be the chairman or whole-time director, as the case may be.] (3) If, in respect of any banking company, the requirements, as laid down in sub-section (2), are not fulfilled at any time, the Board of directors of such banking company shall re-constitute such Board so as to ensure that the said requirements are fulfilled. (4) If, for the purpose of re-constituting the Board under sub- section (3), it is necessary to retire any director or directors, the Board may, by lots drawn in such manner as may be prescribed, decide which director or directors shall cease to hold office and such decision shall be binding on every director of the Board. (5) Where the Reserve Bank is of opinion that the composition of the Board of directors of a banking company is such that it does not fulfil the requirements of sub-section (2), it may, after giving to such banking company a reasonable opportunity of being heard, by an order in writing, direct the banking company to so re-constitute its Board of directors as to ensure that the said requirements are fulfilled and, if within two months from the date of receipt of that order, the banking company does not comply with the directions made by the Reserve Bank, that Bank may, after determining, by lots drawn in such manner as may be prescribed, the person who ought to be removed from the membership of the Board of directors, remove such person from the office of the director of such banking company and with a view to complying with the provisions of sub-section (2), appoint a suitable person as a member of the Board of directors in the place of the person so removed whereupon the person so appointed shall be deemed to have been duly elected by the banking company as its director. (6) Every appointment, removal or reconstitution duly made, and every election duly held, under this section shall be final and shall not be called into question in any court. (7) Every director elected or, as the case may be, appointed under this section shall hold office until the date up to which his predecessor would have held office, if the election had not been held, or, as the case may be, the appointment had not been made. ---------------------------------------------------------------------- 1. Ins. by Act 1 of 1984, s. 16 (w.e.f. 15-2-1984). 58B (8) No act or proceeding of the Board of directors of a banking company shall be invalid by reason only of any defect in the composition thereof or on the ground that it is subsequently discovered that any of its members did not fulfil the requirements of this section. 10B. 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, 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) 2*[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 (1 of 1956), 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) 2*[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; ---------------------------------------------------------------------- 1. Subs. by Act 20 of 1994, s. 2, for sub-section (1) (w.e.f. 31-1-1994). 2. Subs. by s. 2, ibid., for certain words (w.e.f. 31-1-1984). 58C Provided that a person shall be disqualified for being a 1*[chairman who is appointed on a whole-time basis or 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) 1*[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 2* * * * * 3*[(5A) 1*[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 1*[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 1*[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 1*[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 2*[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 1*[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 1*[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 1*[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 1*[such chairman or managing director] ---------------------------------------------------------------------- 1. Subs. by Act, 20 of 1994, s. 2 (w.e.f. 31-1-1994). 2. Certain words omitted by Act 1 of 1984, s. 17 (w.e.f. 15-2-84). 3. Ins. by s. 17, ibid, (w.e.f. 15-1-1984). 58D (9) Notwithstanding anything contained in this section, where a person 1*[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 1*[duties of chairman or managing director] for a total period not exceeding four months.
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