The State Bank of India (Subsidiary Banks) Act, 1959

 
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THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959 1*

ACT NO. 38 OF 1959

[10th September, 1959.]

An Act to provide for the formation of certain Government or Government associated banks as subsidiary of the State Bank of India and for the constitution, management and control of the subsidiary banks so formed, and for matters connected therewith, or incidental thereto.

CHAP

PRELIMINARY

CHAPTER I

PRELIMINARY

1.

Short title.

1. Short title.- This Act may be called the State Bank of India (Subsidiary Banks) Act, 1959.

2.

Definitions.

2. Definitions.- In this Act, unless the context otherwise requires,--

(a) "appointed day" means,--

(i) in relation to an existing bank, the date on which the corresponding new bank is constituted under section 3;

(ii) in relation to a new bank, the date on which that new bank is constituted under section 3;

(iii) in relation to the Hyderabad Bank, the date on which the amendments to the State Bank of Hyderabad Act, 1956, (79 of 1956.) take effect under Part VII of the Third Schedule;

(iv) in relation to the Saurashtra Bank, the date on which the amendments to the Saurashtra State Banks (Amalgamation) Ordinance, 1950, (10 of 1950.) take effect under Part V of the Third Schedule;

[See footnote 1 for this section]

(b) "corresponding bank" means,--

(i) in relation to the State Bank of Bikaner, the Bank of Bikaner, Limited;

(ii) in relation to the State Bank of Indore, the Bank of Indore, Limited;

1* * * * *

(iv) in relation to the State Bank of Mysore, the Bank of Mysore, Limited;

(v) in relation to the State Bank of Patiala, the Bank of Patiala;

the Travancore Bank, Limited;

(vi) in relation to the State Bank of Travancore.

(c) "corresponding new bank" means,--

(i) in relation to the Bank of Bikaner, Limited, the State Bank of Bikaner;

(ii) in relation to the Bank of Indore, Limited, the State Bank of Indore;

1* * * * *

(iv) in relation to the Bank of Mysore, Limited, the State Bank of Mysore;

(v) in relation to the Bank of Patiala, the State Bank of Patiala;

(vi) in relation to the Travancore Bank, Limited, the State Bank of Travancore;

(d) "existing bank" means any of the following banks, namely:--

(i) Bank of Bikaner, Limited;

(ii) Bank of Indore, Limited;

1* * * * *

(iv) Bank of Mysore, Limited;

(v) Bank of Patiala;

(vi) Travancore Bank, Limited;

(e) "Hyderabad Bank" means the Hyderabad State Bank constituted under the Hyderabad State Bank Act, 1350F

(19 of 1350F), and renamed the State Bank of Hyderabad under

[See footnote 2 for this section]

sub-section (1) of section 3 of the State Bank of Hyderabad Act 1956 (79 of 1956), (f) "new bank" means any of the banks constituted under section 3;

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

(h) "Reserve Bank" means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934 (2 of 1904);

(i) "Saurashtra Bank" means the State Bank of Saurashtra constituted under the Saurashtra State Banks (Amalgamation) Ordinance, 1950 (10 of 1950);

(j) "State Bank" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955);

(k) "subsidiary bank" means any new bank and includes the Hyderabad Bank and the Saurashtra Bank;

(l) "Tribunal" means the Tribunal constituted under section 15;

1*[(m) "workman" has the meaning assigned to it in the Industrial Disputes Act, 1947 (14 of 1947).]

CHAP

2*[CONSTITUTION OF NEW BANKS AND CHANGE OF NAME OF ANY SUBSIDIARYBANK]

CHAPTER II

2*[CONSTITUTION OF NEW BANKS AND CHANGE OF NAME OF ANY

SUBSIDIARY BANK]

3.

Establishment of new banks.

3. Establishment of new banks.- With effect from such date as the Central Government may, by notification in the Official Gazette, specify in this behalf, there shall be constituted the following new banks, namely:--

(a) the State Bank of Bikaner;

(b) the State Bank of Indore;

3* * * * *

(d) the State Bank of Mysore;

(e) the State Bank of Patiala;

[See footnote 3 for this section]

(f) the State Bank of Travancore;

and different dates may be specified for different new banks.

3A.

Change of name of a subsidiary bank.

1*[3A. Change of name of a subsidiary bank.- (1) The Central Government after consulting the State Bank and the Reserve Bank may, by notification in the Official Gazette, direct that the name of any subsidiary bank shall, with effect from such date as may be specified in this behalf, be changed to any other name and thereupon any reference to that subsidiary bank in this Act or any other law for the time being in force or in any contract, instrument or document shall be construed as a reference to that bank by its new name.

(2) The change in the name of a subsidiary bank under sub-section (1) shall not affect any rights or obligations of that bank or render defective any legal proceedings by or against it, and any legal proceedings which might have been continued or commenced by or against that bank by its former name may be continued by or against it by its new name.]

4.

New banks to be bodies corporate.

4. New banks to be bodies corporate.- (1) Every new bank shall be a body corporate with perpetual succession and a common seal and shall sue and be sued in its name.

(2) The body corporate constituting each of the new banks shall consist of the State Bank and other shareholders, if any, for the time being of the new bank.

(3) Every new bank shall carry on the business of banking and other business in accordance with the provisions of this Act, and shall have power to acquire and hold property, whether movable or immovable, for the purposes of its business and to dispose of the same.

5.

Head office and branches of new banks.

5. Head office and branches of new banks.-(1) The head office of each of the new banks shall be at such place as the Central Government may, by notification in the Official Gazette, from time to time, specify.

(2) Every new bank shall maintain as its branches all branches of the corresponding bank in existence immediately before the appointed day, and shall not establish any new branch or discontinue any branch except in consultation with the State Bank and with the approval of the Reserve Bank.

[See footnote 4 for this section]

6.

Authorised capital of new banks.

6. Authorised capital of new banks.-(1) Subject to the provisions of this Act, the authorised capital of the State Bank of Mysore and the State Bank of Travancore shall be rupees two crores each, and the authorised capital of every other new bank shall be rupees one crore.

(2) The authorised capital of every new bank shall be divided into shares of one hundred rupees each.

(3) Notwithstanding anything contained in this section, the State Bank may, with the approval of the Reserve Bank, authorise a new bank to increase or reduce its authorised capital:

Provided that where the authorised capital is so increased, the shares issued shall be of the denomination specified in sub-section (2).

7.

Issued Capital of new Banks.

7. Issued Capital of new Banks.- (1) On the appointed day, the issued capital of a new bank shall consist of such amount, divided into fully paid-up shares of hundred rupees each, as the State Bank may, with the approval of the Reserve Bank, fix.

(2) All shares in the issued capital of a new bank shall, on the appointed day, stand allotted to the State Bank.

(3) The State Bank shall, as soon as may be, after the determination, if any, by the Tribunal, of the amount of compensation payable in respect of an existing bank, consider whether any increase in, or reduction of, the issued capital of the corresponding new bank as fixed under sub-section (1), by way of adjustment, or transfer from, or to, the reserves of such bank, or in any other manner, is necessary or expedient and may, thereafter with the approval of the Reserve Bank, direct that bank to increase or reduce its issued capital.

(4) Without prejudice to the provisions contained in sub-section (3), a new bank may, with the approval of the State Bank and the Reserve Bank, increase from time to time, its issued capital and the capital so increased shall consist of fully paid-up shares to be issued in such manner as the State Bank may, with the approval of the Reserve Bank, direct.

(5) No increase or reduction in the issued capital of a new bank shall be made in such a manner that the State Bank holds at any time less than fifty-five per cent. of the issued capital of that bank.

176 8.

Reserve fund of the new banks.

8. Reserve fund of the new banks.- (1) Every new bank shall establish a reserve fund which, subject to the provisions of sub-

section (3) of section 7 and of sub-section (2) of this section, shall--

(a) on the appointed day, consist of such sum as the State Bank, with the approval of the Reserve Bank, may determine; and (b) after the appointed day, consist of the sum aforesaid together with such further sums as may be transferred to the reserve fund by the new bank out of its annual net profits before declaring a dividend.

(2) The State Bank shall, as soon as may be after the determination, if any, of the amount of compensation by the Tribunal, in respect of an existing bank, consider whether any increase in, or reduction of, the reserve fund of the corresponding new bank, by way of adjustment, by transfer from, or to, any account, or towards provision for bad and doubtful debts, depreciation of any assets or contingencies, or for any other purpose, is necessary, and may, thereafter, with the approval of the Reserve Bank, direct that bank to so increase or reduce its reserve fund.

9.

Transfer of shares of existing banks to State Bank.

9. Transfer of shares of existing banks to State Bank.- On the constitution of a new bank, all shares in the capital of the corresponding bank, where such corresponding bank has a share capital, shall stand transferred to, and shall vest in, the State Bank, free of all trusts, liabilities and encumbrances.

10.

Transfer of undertaking of existing banks to new banks.

10. Transfer of undertaking of existing banks to new banks.- (1)

Subject to the other provisions contained in this Act, when a new bank is constituted,...

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