THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF OF

UNDERTAKING) ACT, 1969

NO.22 OF 1969
An act to provide for the acquisition and transfer of the undertakings of certain banking
companies in order to serve better the needs of development of the econom in conformit !ith
national polic and ob"ectives and for matters connected there !ith or incidental there to.
#$ it enacted b %arliament in the &!entieth 'ear of the (epublic of )ndia as follo!s * ++++
CHAPTER I PRELIMINARY
1.,hort title and commencement.+-1. &his Act ma be called the #anking /ompanies -Acquisition
and &ransfer of 0ndertakings. Act1 1969.
-2. )t shall be deemed to have come into force on the 19th da of 2ul1 1969.
2.3efinitions.+ )n this Act1 unless the conte4t other!ise requires1 +++++++
-a. 5banking compan5 does not include a foreign compan !ithin the meaning of section 691 of
the /ompanies Act1 19667 -1 of 1966.
-b. 5corresponding ne! bank15 in relation to an e4isting bank1 means the bod corporate specified
against such bank in column 2 of the First ,chedule7
-c. 5/ustodian5 means the person !ho becomes1 or in appointed1 a custodian under section 187
-d. 5e4isting bank5 means a banking compan specified in column 1 of the First ,chedule1 being a
compan the deposits of !hich1 as sho!n in the return as on the last Frida of 2une1 19691
furnished to the (eserve #ank under section 29 of the #anking (egulation Act1 !ere not less
than rupees fift crores7 - 18 of 19:9..
-e. 5prescribed5 means prescribed b rules made under this Act7
-f. 5&ribunal5 means a &ribunal constituted under section 9 7
-g. !ords and e4pressions used herein and not defined but defined in the #anking (egulation
Act.19:9-18 of 19:9.1 have the meaning respectivel assigned to them in that Act.
CHAPTER II TRANSFER OF THE UNDERTAKINGS OF EXISTING BANKS
;.$stablishment of corresponding ne! banks and business thereof.+ -1. On the commencement
of this Act1 there shall be constituted such corresponding ne! banks as are specified in the First
,chedule.
-2. &he paid+up capital of ever corresponding ne! bank constituted under sub+section -1. shall1
until an provision is made in this behalf in an scheme made under section 1;1 be equal to the
paid+up capital of the e4isting bank in relation to !hich it is the corresponding ne! bank.
-;. &he entire capital of each corresponding ne! bank shall stand vested in and allotted to the
/entral <overnment.
-:. $ver corresponding ne! bank shall be a bod corporate !ith perpetual succession and a
common seal and shall sue and be sued in its name.
-6. $ver corresponding ne! bank shall carr on and transact the business of banking as defined
in clause -b. of section 6 of the #anking (egulation Act1 19:9 -18 of 19:9..1 and ma engage in
one or more forms of business specified in sub+section -1. of section 6 of that Act1 and shall have
po!er to acquire and hold propert1 !hether movable or immovable1 for the purposes of its
business and to dispose of the same.
-6. $ver corresponding ne! bank shall establish a reserve fund to !hich shall be transferred the
share premiums and the balance1 if an1 standing to the credit of the e4isting bank in relation to
!hich it is the corresponding ne! bank1 and such further sums1 if an1 as ma be transferred in
accordance !ith the provisions of section 19 of the #anking (egulation Act1 19:9 -18 of 19:9.
:.0nder taking of e4isting banks to vest in corresponding ne! #anks.+On the commencement of
this Act1 the undertaking of ever e4isting bank shall be transferred to1 and shall vest in1 the
corresponding ne! bank.
6.<eneral affect of vesting.+ -1. &he undertaking of each e4isting bank shall be deemed to include
all assets1 rights1 po!ers1 authorities and privileges and all propert1 movable and immovable1
cash balances1 reserve funds1 investments and all other rights and interests arising out of such
propert as !ere immediatel before the commencement of this Act in the o!nership1
possession1 po!er or control of the e4isting bank in relation to the undertaking1 !hether !ithin or
!ithout )ndia1 and all books of accounts1 registers1 records and all other documents of !hatever
nature relating thereto and shall also be deemed to include all borro!ings1 liabilities -including
contingent liabilities. and obligations of !hatever kind then subsisting of the e4isting bank in
relation to the undertaking.
-2. )f1 according to the la!s of an countr outside )ndia1 the provisions of this Act b themselves
are not effective to transfer or vest an asset or liabilit situated in that countr !hich forms part
of the undertaking of an e4isting bank to1 or in1 the corresponding ne! bank1 the affairs of the
e4isting bank in relation to such asset or liabilit shall1 on and from the commencement of this
Act1 stand entrusted to the chief e4ecutive officer for the time being of the corresponding ne!
bank1 and the chief e4ecutive officer ma e4ercise all po!ers and do all such acts and things as
ma be e4ercised or done b the e4isting bank for the purpose of effectivel transferring such
assets and discharging such liabilities.
-;. &he chief e4ecutive officer of the corresponding ne! bank shall in e4ercise of the po!ers
conferred on him b sub+section -28.1 take all such steps as ma be required b the la!s of an
such countr outside )ndia for the purpose of effecting such transfer or vesting1 and ma either
himself or through an person authori=ed b him in this behalf reali=e an asset1 and discharge
an liabilit of the e4isting bank.
-:. Not!ithstanding anthing contained in sub+section -2.1 on the commencement of this act1 no
person shall make an claim or demand or take an proceeding in )ndia against1 an e4isting
bank or an person1 acting in its name or on its behalf e4cept in so far as ma be necessar for
enforcing the provisions of this section provisions e4cept in so far as it relates to an offence
committed b such person.
-6. 0nless other!ise e4pressl provided b this Act1 all contracts1 deeds1 bonds1 agreements1
po!ers of attorne1 grants of legal representation and other instruments of !hatever nature
subsisting r having effect immediatel before the commencement of this act and to !hich the
e4isting bank is a part or !hich are in favour of the e4isting bank shall be of as full force and
effect against or in favour of the corresponding ne! bank 1 and ma be enforced or acted upon as
full and effectual as if in the place of the e4isting bank the corresponding ne! bank had been a
part thereto or as if the had been issued in favour of the corresponding ne! bank.
-6. )f1 on the date of commencement of this Act1 an suit1 appeal or other proceeding of !hatever
nature is pending b or against the e4isting bank1 the same shall not abate1 be discontinued or
be1 in an !a1 pre"udicial affected b reason of the transfer of the undertaking of the e4ist in
bank or of anthing contained in this Act1 but the suit1 appeal or other proceeding ma be
continued1 prosecuted and enforced b or against the corresponding ne! bank.
-9. Nothing in this Act shall be constructed as appling to the assets1 rights po!ers1 authorities
and privileges and propert1 movable and immovable1 cash balances and investments in an
countr outside )ndia - and other rights and interests arising out of such properties. of an e4isting
bank operating in that countr if1 under the la!s in force in that countr1 it is not permissible for a
banking compan o!ned or controlled b <overnment1 to carr on the business of banking there.

CHAPTER III PAYMENT AND DETERMINATION OF COMPENSATION
6.%ament of compensation.+-1. &he /entral <overnment shall give compensation to such
e4isting bank for the acquisition of its undertaking and such compensation shall be determined in
accordance !ith the principles specified in the ,econd ,chedule and in the manner hereinafter
set out1 that is to sa1+
-a. !here the amount of compensation can be fi4ed b agreement1 it shall be determined in
accordance !ith such agreement7
-b. !here no such agreement can be reached1 the /entral <overnment shall refer the matter to
the &ribunal !ithin a period of three months from the date on !hich the /entral <overnment and
the e4isting bank fail to reach an agreement regarding the amount of compensation.
-2. Not!ithstanding that separate valuations are calculated under the principles specified in the
,econd ,chedule in respect of the several matters referred to therein1 the amount of
compensation to be given shall be deemed to be a single compensation to be given for the
undertaking as a !hole.
-;. &he amount of compensation determined in accordance !ith the foregoing provisions shall be
paid to each e4isting bank1 at its option1+
-a. in saleable or other!ise transferable promissor notes or stock certificates of the /entral
<overnment1 issued and repaable at par1 and maturing at the end of ten ears from the date of
commencement of this Act and carring interest at the rate of four and a half per cent1 per annum7
or
-b. in saleable or other!ise transferable promissor notes or stock certificates of the /entral
<overnment1 issued and repaable at %arliament1 and maturing at the end of thirt ears from the
date of commencement of this Act and carring interest at the rate of five and a half per cent.%er
annum7 or
-c. partl in such number of securities specified in clause -a. and partl in such number of
securities specified in clause -b.1 as ma be required b the e4isting bank.
-:. &he option referred to in sub+section -;. shall be e4ercised b ever e4isting bank !ithin three
months from the commencement of this Act - or !ithin such further time1 not e4ceeding three
months1 as the /entral <overnment ma1 b notification in the Official <a=ette1 specif. and the
option so e4ercised shall be final and shall not be altered or rescinded after it has been e4ercised.
-6. An e4isting bank !hich omits or fails to e4ercise the option referred to in sub+section -;.1
!ithin the time specified in sub+section -:. shall be deemed to have e4ercised its option in favour
of the securities specified in clause -a. of sub+section-;..
-6. Not!ithstanding anthing contained in this ,ection1 an e4isting bank ma1 before the e4pir
of three months from the commencement of this Act - or !ithin such further time1 not e4ceeding
three months1 as the /entral <overnment ma1 b notification in the Official <a=ette1 specif.
appl to the /entral <overnment for an interim pament of one+half of the amount of its paid+up
share capital and thereupon the /entral <overnment shall1 if the e4isting bank agrees in !riting to
distribute the amount so paid to its shareholders in accordance !ith their rights and interests1 pa
the same to the e4isting bank in securities specified in sub+section -;. in accordance !ith the
option e4ercised1 or deemed to have been e4ercised1 under sub+section -:. or subsection -6.1 as
the case ma be*
%rovided that !here the /entral <overnment makes an interim pament under this section1 it
shall pa to the e4isting bank b a cheese dra!n on the (eserve #ank such sum as !ould enable
the e4isting bank to distribute+++++
-a. in cash one+half of the amount paid+up on the shares held b a person if one+half of the
amount paid+up on the shares held b such a person does not e4ceed five thousand rupees7 and
-b. !here one+half of the amount paid+up on the shares held b a person e4ceeds five thousand
rupees1 such as !ould enable the e4isting bank to pa to the holder of such shares a sum of five
thousand rupees in cash and the balance of one+half of the amount paid+up on the shares held b
such person in securities specified in sub+section -;..
-9. &he interim pament made to an e4isting bank shall be set off against the total amount of the
compensation paable to it under this Act and the balance of the compensation remaining
outstanding after such pament shall be given to the e4isting bank in securities specified in sub+
section -;. in accordance !ith the option e4ercised1 or deemed to have been e4ercised1 under
sub+section -:. or sub+section -6.1 as the case ma be.
->. ?here the amount of compensation1 paable in the form of securities under this section is not
a multiple of one hundred rupees1 an e4cess over the highest such multiple shall be paid b a
cheese dra!n on the (eserve #ank.
-9. Nothing contained in sub+section -;. shall affect the rights inter se bet!een an e4isting bank
and an other person !ho ma have an interest in such bank and such other person shall be
entitled to enforce his interest against the compensation a!arded to the e4isting bank but not
against the /entral <overnment or the corresponding ne! bank.
9./onstitution of the &ribunal.+ -1. &he /entral <overnment ma1 for the purposes of this Act1
constitute one or more &ribunals each of !hich shall consist of a /hairman and t!o other
members.
-2. &he /hairman of a &ribunal shall be a person !ho is1 or has been1 a 2udge of a @igh /ourt or
of the ,upreme /ourt1 and 1 of the t!o other shall be a person !ho is /hartered Accountant
!ithin the meaning of the /hartered Accountants Act1 19:9.
-;. )f1 for an reason1 a vacanc occurs in the office of the /hairman1 or an other member of a
&ribunal1 the /entral <overnment ma fill the vacanc b appointing another person there to in
accordance !ith the provisions of sub+section -2. and an proceeding ma be continued before
such &ribunal so constituted from the stage at !hich the vacanc had occurred.
-:. A &ribunal ma for the purpose of determining an compensation paable under this Act1
choose one or more persons having special kno!ledge or e4perience of an relevant matter to
assist it in the determination of such compensation.
>.&ribunal to have po!ers of a /ivil /ourt.+ $ver &ribunal shall have the po!ers of a /ivil /ourt1
!hile tring a suit under the /ode of /ivil %rocedure1 198>-6 of 198>..1 in respect of the follo!ing
matters1 namel * +++++
-a. summoning and enforcing the attendance of an person and e4amining him or oath7
-b. requiring the discover and production of documents 7
-c. receiving evidence on affidavits 7
-d. issuing commissions for the e4amination of !itnesses or documents.
9.%rocedure of the &ribunal.+ -1. $ver &ribunal shall have po!er to regulate its o!n procedure.
-2. $ver &ribunal ma hold the !hole or an part of its inquir in camera.
-;. An arithmetical or clerical error in an order of a &ribunal or an error arising three in from an
accidental slip or omission ma1 at an time1 be corrected b such &ribunal either of its o!n
motion or on the application of an of the parties.

CHAPTER IV MANAGEMENT OF CORRESPONDING NEW BANKS
18.@ead office and branches.+ -1. &he head office of each corresponding ne! bank shall be at
such place as the /entral <overnment ma1 b notification in the Official <a=ette1 specif in this
behalf1 and1 until an such place is so specified1 shall be at the place at !hich the head office of
the e4isting bank1 in relation to !hich it is the corresponding ne! bank1 is on the date of the
commencement of this Act1 located.
-2. &he general superintendence and direction of the affairs and business of a corresponding ne!
bank shall1 until an provision to the contrar is made under an scheme made under section 1;1
vest in a /ustodian1 !ho shall be the chief e4ecutive officer of that bank and ma e4ercise all
po!ers and do all acts and things as ma be e4ercised or done b that bank.
-;. &he /hairman of the e4isting bank holding office as such immediatel before the
commencement of this Act1 shall be the /ustodian of the corresponding ne! bank and shall
receive the same emoluments as he !as receiving immediatel before such commencement*
%rovided that the /entral <overnment ma1 if the /hairman of an e4isting bank declines to
become1 or to continue to function as1 a /ustodian of the corresponding ne! bank 1 or1 if it is of
opinion that it is necessar so to do1 appoint an other person as the /ustodian of a
corresponding ne! bank and the /ustodian so appointed shall receive such emoluments as the
/entral <overnment ma specif in this behalf.
-:. &he /ustodian shall hold office during the pleasure of the /entral <overnment.
11./orresponding ne! bank to be guided b the direction of the /entral <overnment.+ -1. $ver
corresponding ne! bank shall1 in the discharge of its functions1 be guided b such directions in
regard to matters of polic involving public interest as the /entral <overnment ma1 after
consultation !ith the <overnor of the (eserve #ank1 give.
-2. )f an question arises !hether a direction relates to a matter of polic involving public interest1
it shall be referred to the /entral <overnment and the decision of the /entral <overnment
thereon shall be final.
12.Advisor #oard to aid and advise the /ustodian.+ -1. &here shall be an Advisor #oard to aid
and advise the /ustodian in the discharge of his duties *
%rovided that the Advisor #oard shall be dissolved on the constitution of a #oard of 3irectors in
pursuance of a scheme made under clause -b. of sub+section -2. of section 1; *
%rovided further that the /entral <overnment ma1 if it is of opinion that it is necessar so to do1
dissolve the Advisor #oard at an other time.
-2. &he Advisor #oard shall consists of representatives of the follo!ing1 namel1 the depositors
of the corresponding ne! bank1 emploees of such bank1 farmers1 !orkers and artisans1 to be
elected in such manner and b such authorit as ma be prescribed1 and shall also consist of
such other persons as the /entral <overnment ma1 b notification in the Official <a=ette1
appoint.
1;.%o!er of /entral <overnment to make scheme.+-1. &he /entral <overnment ma1 after
consultation !ith the (eserve #ank1 make a scheme for carring out the provisions of this Act.
-2. )n particular1 and !ithout pre"udice to the generalit of the foregoing po!er1 the said scheme
ma provide for all or an of the follo!ing matters1 namel * ++++
-a. the capital structure of the corresponding ne! bank.,o ho!ever that the paid+up capital of an
such bank shall not be in e4cess of rupees fifteen crores7
-b. the constitution of the #oard of 3irectors1 b !hatever name called1 of the corresponding ne!
bank and all such matters in connection there !ith or incidental there to as the /entral
<overnment ma consider to be necessar or e4pedient 7
-c. the reconstitution of an corresponding ne! bank or !ith another banking institution1 the
transfer of the !hole or an part of the undertaking of a corresponding ne! bank to an other
banking institution or the transfer of the !hole or an part of the undertaking of an other banking
institution to a corresponding ne! bank 7
-d. such incidental1 consequential and supplemental matters as ma be necessar to carr out
the provisions of this Act.
-;. $ver #oard of 3irectors of a corresponding ne! bank shall include representatives of the
follo!ing1 namel1 the depositors of such bank1 emploees thereof1 farmers1 !orkers and
artisans1 to be elected or nominated in such manner as ma be specified in the scheme made
under sub+section -1..
-:. &he central <overnment ma1 after consultation !ith the (eserve #ank1 make a scheme to
amend or var an scheme made under sub+section -1..

CHAPTER V MISCELLANEOUS
1:./losure of accounts and disposal of profits.+ -1. $ver corresponding ne! bank shall cause its
books to be closed and balanced on the ;1st da of 3ecember of each ear and shall appoint1
!ith the previous approval of the (eserve #ank1 auditors for the audit of its accounts.
-2. $ver auditor of a corresponding ne! bank shall be a person !ho is qualified to act as an
auditor of a compan under section 226 of the /ompanies Act1 1966 -1 of 1966.1 and shall
receive such remuneration as the (eserve #ank ma fi4 in consultation !ith the /entral
<overnment.
-;. $ver auditor shall be supplied !ith a cop of the annual balance sheet and profit and loss
account and a list of all books kept b the corresponding ne! bank1 and it shall be the dut of the
auditor to e4amine the balance+sheet and profit and loss account !ith the accounts and vouchers
relating thereto1 and in the performance of his duties1 the auditor +++
-a. shall have1 at all reasonable times1 access to the books1 accounts and other documents of the
corresponding ne! bank1
-b. ma1 at the e4pense of the corresponding ne! bank emplo accountants or others persons to
assist him in investigating such accounts1 and
-c. ma1 in relation to such accounts1 e4amine the /ustodian or an member of the Advisor
#oard or an officer or emploee of the corresponding ne! bank.
-:. $ver auditor of a corresponding ne! bank shall make a report to the /entral <overnment
upon the annual balance+sheet and accounts and in ever such report shall state+++
-a. !hether1 in his opinion1 the balance+sheet is a full and fair balance+sheet containing all the
necessar particulars and is properl dra!n up so as to e4hibit a true and fair vie! of the affairs
of the corresponding ne! bank1 and in case he had called for an e4planation or information1
!hether it has been given and !hether it is satisfactor 7
-b. !hether or not the transactions of the corresponding ne! bank1 !hich have come to his
notice1 have been !ithin the po!ers of that bank 7
-c. !hether or not the returns received from the offices and branches of the corresponding ne!
bank have been found adequate for the purpose of his audit 7
-d. !hether the profit and loss account sho!s a true balance of profit or loss for the period
covered b such account 7 and
-e. an other matter !hich he considers should be brought to the notice of the /entral
<overnment.
-6. &he report of the auditor shall be verified1 signed and transmitted to the /entral <overnment
in such manner as ma be prescribed.
-6. &he auditor shall also for!ard a cop of the audit report to the corresponding ne! bank and to
the (eserve #ank.
-9. After making provision for bad and doubtful debts1 depreciation in assets1 contribution to staff
and superannuating funds and all other matters for !hich provision is necessar under an la!1
other !hich are usuall provided for b banking companies1 a corresponding ne! bank shall
transfer the balance of profits to the /entral <overnment.
16.(emoval from office of directors1 etc.+-1. $ver person holding office as /hairman1 managing
or !hole+time director of an e4isting bank shall1 on the commencement of this Act1 be deemed to
have vacated office and ever other director of such bank -herein after referred to as the
Acontinuing directorsA. shall1 until directors are dul elected b such e4isting bank1 be deemed to
continue to hold such office.
-2. 0ntil the #oard of 3irectors of an e4isting bank is dul constituted b it1 the continuing
directors shall be deemed to constitute its #oard of 3irectors or the continuing #oard1 as the case
be1 ma transact all or an of the follo!ing business1 namel * ++++
-a. registration of the transfer or transmission of shares 7
-b. arriving at an agreement about the amount of compensation paable under this Act or
appearing before the &ribunal for obtaining a determination as to the amount of compensation 7
-c. distribution to each share holder of the amount of compensation received b it under this Act for
the acquisition of its undertaking 7
-d. carring on the business of banking in an countr outside )ndia if under the la! in force in
that countr an bank1 o!ned or controlled b <overnment1 is prohibited from carring on the
business of banking there 7
-e. carring on an business other than the business of banking.
-;. &he #oard of 3irectors of an e4isting bank1 or its continuing #oard1 as the case ma be1 ma
authorise all such e4penditure as its ma think fit for discharging an of the functions referred to
in sub+section.-2. and the /entral <overnment ma authorise the corresponding ne! bank to
make an advance of the amount required b the e4isting bank in connection there!ith and an
amount so advanced shall be recouped from out of compensation paable to the e4isting bank
under this Act.
-:. ,ave as other!ise provided in sub+section -1.1 all officers and other emploees of an e4isting
bank shall become.on the commencement of this Act1 officers and emploees of the
corresponding ne! bank and shall hold their offices or services in that bank on the same terms
and conditions and !ith the same rights to pension1 gratuit and other matters as !ould have
been admissible to them if the undertaking of the e4isting bank had not been transferred to and
vested in the corresponding ne! bank and continue to do so unless and until their emploment in
the corresponding ne! bank is terminated or until their remuneration1 terms or conditions are dul
altered b the corresponding ne! bank.
-6. For the persons !ho immediatel before the commencement of this Act !ere the trustees for
na pension1 provident1 gravit or other like fund constituted for the officers or other emploees of
an e4isting bank1 there shall be substituted as trustees such persons as the /entral <overnment
ma 1 b general or special order1 specif.
-6. Not !ithstanding anthing contained in the )ndustrial 3isputes Act1 19:9 -1: of 19:9.1 or in
an other la! for the time being in force1 the transfer of the services of an officer or other
emploee form an e4isting bank to a corresponding ne! bank shall not entitle such officer or an
other emploee to an compensation under this Act or an other la! for the time being in force
and no such claim shall be entertained b an court1 tribunal or other authorit.
16.Obligations as to fidelit and secrec.+ -1. $ver corresponding ne! bank shall observe1
e4cept as other!ise required b la!1 the practices and usages customar among bankers1 and1 in
particular1 it shall not divulge an information relating to or to the affairs of its constituents e4cept
in circumstances in !hich bankers1 necessar or appropriate for the corresponding ne! bank to
divulge such information.
-2. $ver director1 member of a local board or a committee1 or auditor1 adviser1 officer or other
emploee of a corresponding ne! bank shall1 before entering upon his duties1 make a declaration
of fidelit and secrec in the form set out in the &hird ,chedule.
-;. $ver /ustodian of a corresponding ne! bank shall1 as soon as possible1 make a declaration
of fidelit and secrec in the form set out in the &hird ,chedule.
19./ustodian to be public secrec.+$ver /ustodian of a corresponding ne! bank shall be
deemed be a public servant for the purposes of /hapter )B of the )ndian %enal /ode -:6 of
1>68...
1>./ertain defects not to invalidate act or proceedings.+ -1. All acts done b the /ustodian1 acting
in good faith1 shall1 not!ithstanding an defect in his appointment or in the procedure1 be valid.
-2. No act or proceeding of an #oard of 3irectors on a local board or committee of a
corresponding ne! bank shall be invalid merel on the ground of the e4istence of an vacanc1 or
defect in the constitution of1 such board or committee1 as the case ma be.
-;. All acts done b a person acting in good faith as a director or member of local board or
committee of a corresponding ne! bank shall be valid1 not!ithstanding that it ma after!ards be
discovered that his appointment !as invalid b reason of an defect or disqualification or had
terminated b virtue of an provision contained in an la! for the time being in force*
%rovided that nothing in this section shall be deemed to give validit to an act done b director or
member of a local board or committee of a corresponding ne! bank after his appointment has
been sho!n to the corresponding ne! bank to be invalid or to have terminated.
19.)ndemnit.+ -1. $ver /ustodian of a corresponding ne! bank and ever officer of the /entral
<overnment and of the (eserve and ever officer or other emploee of a corresponding ne!
bank1 shall be indemnified b such bank against all losses and e4penses incurred b him or in
relation to the discharge of his duties e4cept such as have been caused b his o!n !ilful act or
default.
-2. A director or member of a local board or committee of a corresponding ne! bank shall not be
responsible for an loss or e4penses caused to such bank b the insufficienc or deficienc of the
value of1 or title to1 an propert or securit acquired or taken on behalf of the corresponding ne!
bank 1 or b the insolvenc or !rongful act of an customer or debtor1 or b anthing done in or in
relation to the e4ecution of the duties of his office1 unless such loss1 e4pense1 insufficienc or
deficienc !as due to an !ilful act or default on the part of such director or member.
28.(eferences to e4isting banks from the commencement of this Act.+ An reference to an
e4isting bank in an la!1 other than this Act1 or in an contract or other instrument shall be
construed as a reference to the corresponding ne! bank in relation to it *
%rovided that nothing in this section shall appl to an e4isting bank in relation to an business
!hich it ma1 not!ithstanding the provisions of section :1 carr on.
21.3issolution.+ No provision of la! relating to !inding up of corporation shall appl to a
corresponding ne! bank and no corresponding ne! bank shall be placed in liquidation save b
order of the /entral <overnment and in such manner as it ma direct.
22.%o!er to make rules.+ -1. &he /entral <overnment1 ma1 b notification in the Official <a=ette1
make such rules as it ma think fit to carr out the provisions of this Act.
-2. )n particular1 and !ithout pre"udice to the generalit of the fore+going po!ers1 such rules ma
provide for all or an of the follo!ing matters1 namel *+++
-a. the manner in !hich the business of the Advisor #oard shall be transacted and the
procedure to be follo!ed at the meetings thereof* ++++
-b. fees and allo!ances !hich ma be paid to members of the Advisor #oard for attending
/ommittee that ma be constituted b the #oard.
-c. the formation of an /ommittee !hether of the Advisor #oard or of the corresponding ne!
bank and the delegation of po!ers and functions to such /ommittees 7
-d. an other matter !hich is required to be1 or ma be1 prescribed.
2;.(ules and schemes to be laid before %arliament.+ $ver rule and ever scheme made b the
/entral <overnment under this Act shall be laid1 as soon as ma be1 after it is made1 before each
@ouse of %arliament !hile it is in session for a total period of thirt das !hich ma be comprised
in one session or in t!o successive sessions1 and if1 before the e4pir of the session in !hich it is
so laid or the session immediatel follo!ing1 both @ouse agree in making an modification in the
rule or scheme or both @ouse agree that the rule or scheme should not be made1 the rule or
scheme shall thereafter have effect onl in such modified form or be no effect1 as the case ma
be7 so 1 ho!ever1 that an such modification or annulment shall be !ithout pre"udice to the validit
of anthing previousl done under that rule or scheme1 as the case ma be.
2:.%o!er to make regulations.+ -1. &he #oard of 3irectors of a corresponding ne! bank ma1
after consultation !ith the (eserve #ank and !ith the previous sanction of the /entral
<overnment1 make regulations1 not in consistent !ith the provisions of this Act and an rule or
scheme made thereunder1 to provide for all matters for !hich provision is e4pedient for the
purpose of giving effect to the provisions of this Act.
-2. )n particular and !ithout pre"udice to the generalit of the foregoing po!er1 the regulations
ma provide for all or an of the follo!ing matters1 namel * +++++
-a. the po!ers1 functions and duties of local boards and restrictions1 conditions or limitations1 if
an1 sub"ect to !hich the ma be e4ercised or performed1 the formation and constitution of local
committees and committees of local board -including the number of members of an such
committee.1 the po!ers1 functions and duties of such committees1 the holding of meetings of local
committees and committees of local boards and the conduct of business thereat 7
-b. the manner in !hich the business of the local boards shall be transacted and the procedure in
connection there!ith 7
-c. the delegation of po!ers and functions of the board of directors of a corresponding ne! bank
to the general manager1 director1 officer or other emploee of that bank 7
-d. the conditions or limitations sub"ect to !hich the corresponding ne! bank ma appoint
officers1 advisers and other emploees fi4 their remuneration and other terms and conditions of
service 7
-e. the duties and conduct of officers1 advisers and other emploees of the corresponding ne!
bank7
-f. the establishment and maintenance of superannuating1 pension1 provident or other funds for
the benefit of officers or emploees of the corresponding ne! bank or of the dependants of such
officers or emploees and the granting of superannuating allo!ances1 annuities and pension
paable out of such funds7
-g. the conduct and 3efence of legal proceedings b or against the corresponding ne! bank and
the manner of signing pleadings7
-h. the provision of seal for the corresponding ne! bank and the manner and effect of its use 7
-i. the form and manner in !hich contracts binding on the corresponding ne! bank ma be
e4ecuted 7
-". the conditions and the requirements sub"ect to !hich loans or advances ma be made or bills
ma be discounted or purchased b the corresponding ne! bank 7
-k. the persons or authorities !ho shall administer an pension1 provident or other fund
constituted for the benefit of officers or emploees of the corresponding ne! bank or their
dependants 7
-l. the preparation and submission of statements of programmes of activities and financial
statements of the corresponding ne! bank and the period for !hich and the time !ithin !hich
such statements and estimates are to be prepared and submitted7 and
-m. generall for the efficient conduct of the affairs of the corresponding ne! bank.
26.Amendment of certain enactments.+ -1. )n the #anking (egulation Act1 19:9 - 18 of 19:9.1 +
-a. in section ;:A1 in sub+section -;.1 for the !ords 5and an subsidiar bank51 the !ords1 figures
and brackets 5a corresponding ne! bank constituted under section ; of the #anking /ompanies
-Acquisition and &ransfer of 0ndertakings. Act1 19691 and an subsidiar bank5 shall be
substituted 7
-b. in section ;6 A31 in sub+section -;.1 for the !ords 5and an subsidiar bank51 the !ords1
figures and brackets 5 a corresponding ne! bank constituted under section ; of the #anking
/ompanies -Acquisition and &ransfer of 0ndertakings. Act1 19691 and an subsidiar bank5 shall
be substituted 7
-c. in section 611 for the !ords 5 or an banking institution notified b the /entral <overnment in
this behalf15 the !ords1 figures and brackets 5or an corresponding ne! bank constituted under
section ; of the #anking /ompanies -Acquisition and &ransfer of 0ndertakings. Act1 19691 or an
other banking institution notified b the /entral <overnment in this behalf5 shall be substituted7
-d. in the Fifth ,chedule1 in %art ) of the paragraph 11 after clause -e.1 the follo!ing $4planations
shall be inserted1 namel * ++++
$4planation 1.+++++ For the purpose of this clause1 5value5 shall be deemed to be the market value
of the land or buildings1 but !here such market value e4ceeds the ascertained value1 determined
in the manner specified in $4planation 21 shall be deemed to mean such ascertained value.
$4planation 2.++++ Ascertained value shall be equal to1 +++++
-A. in the case of an building -including the land on !hich it is elected or !hich is appurtenant
thereto. !hich is !holl occupied on the appointed da1 t!elve times the amount of the annual
rent or the rent for !hich the building ma reasonabl be e4pected to be let out from ear to ear1
after deducting from such rent1 +++++
-i. one+si4th of the amount thereof on account of maintenance and repairs1
-ii. the amount of an annual premium paid to insure the building against an risk of damage or
destruction1
-iii. !here the building is sub"ect to an annual charge1 the amount of such charge1
-iv. !here the building is sub"ect to a ground rent1 the amount of such ground rent1
-v. !here the building is sub"ect to a mortgage or other capital charge1 the amount of interest on
such mortgage or charge1
-vi. !here the building has been acquired1 constructed1 repaired1 rene!ed or re+constructed !ith
borro!ed capital1 the amount of an interest paable on such capital1 and
-vii. an sums paid on account of land revenue or other ta4es in respect of such building 7
-#. in the case of an building -including the land on !hich it is erected or !hich is appurtenant
thereto. !hich is partiall occupied on the appointed da1 the value of the portion !hich is
occupied ascertained in accordance !ith the provisions of sub++clause -A. C the deductions under
sub+clause -ii. to -vii. being made on a proportionate basisD and multiplied thereafter b the ratio
!hich the entire plinth area of the building bears to the plinth area of the portion of the building
!hich has been occupied or let out 7
-/. in case of an land !hich has no building erected thereon or !hich is not appurtenant to an
building1 the value1 determined !ith reference to the prices at !hich sales or purchases of similar
or comparable properties have been made during the period of three ears immediatel
preceding the appointed da1 b instruments registered under the )ndian (egistration Act1 198>
-16 of 198>.1 in the cit1 to!n or village !here such land is situatedA..
-2. )n the )ndustrial 3isputes Act1 19:9 -1: of 19:9.. 1 in section 21 in clause -bb.1 for the !ords
5and an subsidiar bank51 the !ords1 figures and brackets 5a corresponding ne! bank
constituted under section ; of the #anking /ompanies -Acquisition and &ransfer of 0ndertakings.
Act1 19691 and an subsidiar bank5 shall be substituted.
-;. )n the #anking /ompanies -Eegal %ractitionersA /lientsA Accounts. Act1 19:9 -:6 of 19:9. in
section 21 in clause -a.1 for the !ords 5and an subsidiar bank51 the !ords1 figures and brackets
5a corresponding ne! bank constituted under section ; of the #anking /ompanies -Acquisition
and &ransfer of 0ndertakings. Act1 19691 and an subsidiar bank5 shall be substituted.
-:. )n the 3eposit )nsurance /orporation Act1 1961 -:9 of 1961..1 +++++++
-a. in section 21 +++++
-i. after clause -e. 1 the follo!ing clause shall be inserted1 namel *++++
A-ee. 5corresponding ne! bank5 means a corresponding ne! bank constituted under section ; of
the #anking /ompanies -Acquisition and &ransfer of 0ndertakings. Act1 19697A7
-ii. in clause -i.1 after the !ords 5banking compan51 the !ords 5or a corresponding ne! bank5
shall be inserted 7
-b. section 1; shall be re+numbered as sub+section -1. thereof and after sub+section -1. as so re+
numbered1 the follo!ing sub+section shall be inserted1 namel * ++++
5-2. &he provisions of clauses -a.1 -b.1 -c.1 -d.1 and -h. of sub+section -1. shall appl to a
corresponding ne! bank as the appl to a banking compan.5.
-6. )n the ,tate Agricultural /redit /orporations Act1 196>-68 of 196>.1 +++++++
-a. in section 21 after clause -i.1 the follo!ing clause shall be inserted namel *+++++
A-ii. 5corresponding ne! bank5 means a corresponding ne! bank constituted under section ; of
the #anking /ompanies -Acquisition and &ransfer of 0ndertakings. Act1 19697A 7
-b. after the !ords 5subsidiar banks5 or subsidiar bank51 as the case ma be1 shall be inserted.
26.(emoval of difficulties.+ )f an difficult arises in giving effect to the provisions of this Act1 the
/entral <overnment ma make such order1 not inconsistent !ith the provisions of this Act1 as
ma appear to it to be necessar for the purpose of removing the difficult*
%rovided that no such po!er shall be e4ercised after the e4pir of a period of t!o ears from the
commencement of this Act.
29.(epeal and saving.+ -1. &he #anking /ompanies -Acquisition and &ransfer of 0ndertakings.
Ordinance1 1969 -> of 1969.1 is hereb repealed.
-2. Not!ithstanding such repeal1 anthing or an action taken1 including an order made1
notification issued or direction given1 under the said Ordinance shall be deemed to have been
done1 taken1 made1 issued or given1 as the case ma be1 under the corresponding provision of
this Act.
-;. No action taken or thing done under the said Ordinance shall1 if it is inconsistent !ith the
provisions of this Act1 be of an force or effect.
-:. Not !ithstanding anthing contained in the #anking /ompanies -Acquisition and &ransfer of
0ndertakings. Ordinance1 19691 no right privilege1 obligation or liabilit shall be deemed to have
been acquired1 accrued or incurred thereunder.
++++++++++++++++++++++++++++++++++++++++++++

THE FIRST SCHEDULE
-,ee sections 21 ;1 and : .
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
/olumn 1 /olumn 2
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
$4isting bank /orresponding ne! bank
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
&he /entral #ank of )ndia Eimited. /entral #ank of )ndia.
&he #ank of )ndia Eimited. #ank of )ndia.
&he %un"ab National #ank Eimited. %un"ab National #ank.
&he #ank of #aroda Eimited. #ank of #aroda.
&he 0nited /ommercial #ank Eimited. 0nited /ommercial #ank.
/anara #ank Eimited. /anara #ank.
0nited #ank of )ndia Eimited. 0nited #ank of )ndia.
3ena #ank Eimited. 3eena #ank.
,ndicate #ank Eimited. ,ndicate #ank.
&he 0nion #ank of )ndia Eimited. 0nion #ank of )ndia.
Allahabad #ank Eimited. Allahabad #ank.
&he )ndian #ank Eimited. )ndian #ank.
&he #ank of Faharashtra Eimited. #ank of Faharashtra.
&he )ndian Overseas #ank Eimited. )ndian Overseas #ank.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
THE SECOND SCHEDULE
-,ee section 6 .
%()N/)%E$, OF /OF%$N,A&)ON
1.&he compensation to be paid b the /entral <overnment to each e4isting bank in respect of the
acquisition of the undertaking thereof shall be an amount equal to the sum+total of the value of
the assets of the e4isting bank as on the commencement of this Act1 calculated in accordance
!ith the provisions of %art )1 less the sum +total of the liabilities computed and obligations of the
e4isting bank calculated in accordance !ith the provisions of %art )).
%art )+++++Assets
For the purpose of this %art1 5assets5 means the total of the follo!ing *++++
-a. the amount of cash in hand and !ith the (eserve #ank and the ,tate #ank of )ndia -including
foreign currenc notes !hich shall be converted at the markets rate of e4change.7
-b. the amount of balances !ith an bank1 !hether on deposit or current account1 and mone at
call and short notice1 balances held outside )ndia being converted at the market rate of
e4change *
%rovided that an balances !hich are not releasable in full shall be deemed to be debts and
valued accordingl 7
-c. the market value1 as on the da immediatel before the commencement of this Act1 of an
securities1 shares1 debentures1 bonds and other investments1 held b the bank concerned.
$4planation ++++For the purposes of this clause ++++++
-i. securities of the /entral and ,tate <overnment Cother than the securities specified in clauses
-ii. and -iii. of this $4planationD maturing for redemption !ithin five ears from the commencement
of this Act shall be valued at the face value or the market value1 !hich ever is higher7 sale
-ii. securities of the /entral and ,tate <overnment such as %ost Office /ertificates and &reasur
,avings 3eposit /ertificates and an other securities or certificates issued or to be issued under
the ,mall ,avings ,cheme of the /entral <overnment1 shall be valued at their face value or the
encashable value as on the da immediatel before the commencement of this Act1 !hich ever is
higher7
-iii. !here the market value of an <overnment securit such as the =amindari abolition bond or
other similar securities in respect of !hich the principal is paable in instalments1 is not
ascertainable or is1 for an reason1 not considered as reflecting the fair value thereof or as
other!ise appropriate1 the securities shall be valued at such an amount as is considered
reasonable having regard to the instalments of principal and interest remaining to be paid1 the
period during !hich such instalments are paable 1 the ield of an securit1 issued b the
<overnment to !hich the securit pertains and having the same or appro4imatel the same
maturit1 and other relevant factors7
-iv. !here the market value of an securit1 share1 debenture1 bond or other investment is not
ascertainable1 onl such value1 if an1 shall be taken into account as is considered reasonable b
reasons of its having been affected b abnormal factors1 the investment ma be valued on the
basis of its average market value over an reasonable period 7
-v. !here the market value of an securit1 share1 debenture1 bond or other investment is not
ascertainable1 onl such value1 if an1 shall be taken into account as is considered reasonable
having regard to the financial position of the issuing concern1 the dividend paid b it during the
preceding five ears and other relevant factors 7
-d. the amount of advances -including loans1 cash1 credits1 overdrafts1 bills purchased and
discounted . and other debts1 !hether secured or unsecured1 to the e4tent to !hich the are
reasonabl considered recoverable1 having regard to the value of the securit1 if an1 the
operation on the account1 the reported !orth and respectabilit of the borro!er1 the prospects of
reali=ation and other relevant considerations 7
-e. the value of an land or buildings.
$4planation 1.+++++++ For the purpose of this clause1 5value5 shall be deemed to be the market
value of the land or buildings1 but !here such market value e4ceeds the ascertained value1
determined in the manner specified in $4planation 21 shall be deemed to mean such ascertained
value.
$4planation 2.++++++++ Ascertained value shall be equal to1 ++++++++
-1. in the case of an building -including the land on !hich it is erected or !hich is appurtenant
thereto. !hich is !holl occupied on the date of the commencement of this Act1 t!elve times the
amount of the annual rent or the rent for !hich the building ma reasonabl be e4pected to be let
out from ear to ear1 after deducting from such rent1 +++++++
-i. one+si4th of the amount thereof on account of maintenance and repairs1
-ii. the amount of an annual premium paid to insure the building against an risk of damage or
destruction1
-iii. !here the building is sub"ect to an annual charge1 not being a capital charge1 the amount of
such charge1
-iv. !here the building is sub"ect to a mortgage or other capital charge1 the amount of interest on
such mortgage or charge1
-vi.!here the building has been acquired1 constructed1 repaired1 rene!ed or re+constructed !ith
borro!ed capital1 the amount of an interest paable on such capital1 and
-vii. an sums paid on account of land revenue or other ta4es in respect of such building 7
-2. in the case of an building -including the land on !hich it is erected or !hich is appurtenant
thereto. !hich is partiall occupied on the date of the commencement of this Act1 the value of the
portion !hich is occupied1 ascertained in accordance !ith the provisions of sub+clause -1. Cthe
deductions under sub+clauses -ii. to -vii. being made on a proportionate basisD and multiplied
thereafter b the ratio !hich the entire plinth area of the building bears to the plinth area of the
portion of the building !hich has been occupied or let out 7
-;. in the case of an land !hich has no building erected thereon or !hich is not appurtenant to
an building1 the value1 determined !ith reference to the prices at !hich sales or purchases of
similar or comparable lands have been made during the period of three ears immediatel
preceding the date of the commencement of this Act1 b instruments registered under the )ndian
(egistration Act1 198>-16 of 198>..1 in the cit1 to!n or village !here such land is situated7
-f. the total amount of the premia paid1 in respect of all leasehold properties1 reduced in the case
of each such premium b an amount !hich bears to such premium the same proportion as the
e4pired term of the lease in respect of !hich such premium shall have been paid bears to the
total term of the lease 7
-g. the !ritten do!n value as per books1 or the reali=able value1 as ma be considered
reasonable1 of all furniture1 fi4tures and fittings7
-h. the market or reali=able value1 as mabe appropriate of other assets appearing on the books
of the bank1 no value being allo!ed for capitalised offences1 such as share selling commission1
organisational e4penses1 such as share selling commission1 and brokerage1 losses incurred and
similar other items.
%art )) ++ Eiabilities
For the purposes of this %art1 5liabilities5 means the total amount of all outside liabilities e4isting at
the commencement of this Act1 and all contingent liabilities !hich the corresponding ne! bank
ma reasonabl be e4cept to be required to meet out of the its o!n resources on or after the date
of commencement of this Act.
/$(&A)N 3)G)3$N3, NO& &O #$ &AH$N )N&O A//O0N&
2.No separate compensation shall be paable for an dividend in respect of an period
immediatel preceding the commencement of this Act7
%rovided that nothing in this %aragraph shall precluded the pament of an dividend !hich !as
declared before the commencement.

THE THIRD SCHEDULE
C,ee sections -2. and -;. of section 16D
3$/EA(A&)ON OF F)3$E)&' AN3 ,$/($/'
)1......................................................1 do hear b declare that ) !ill faithfull1 trul1 and to the best
of a m skill and abilit e4ecute and perform the duties required of me as /ustodian1 3irector1
member of Eocal #oard1 member of Eocal /ommittee1 auditor1 adviser1 officer or other emploee
-as the case ma be. of the I
and !hich propert related to the office or position in the aid5.
) further declare that ) !ill no communicate or allo! to be communicated to an person not legall
entitled thereto an information relating to the affairs of the I or to the affairs of an person having
an dealing !ith the I 7 nor !ill ) allo! an such person to inspect or have access to an books or
documents belonging to or in the possession of the I and relating to the business of the I or to the
business of an person having an dealing !ith the I
I Name of corresponding ne! bank to be field in.