[Act No. 61 of 1981] [30th December, 1981] [1][An Act to establish a development bank to be
known as the National Bank for Agriculture and Rural Development for providing
and regulating credit and other facilities for the promotion and development of
agriculture, [2][micro-enterprises,
small enterprises and medium enterprises, cottage and village industries,
handlooms], handicrafts and other rural crafts and other allied economic
activities in rural areas with a view to promoting integrated rural development
and securing prosperity of rural areas and for matters connected therewith or
incidental thereto.] BE it
enacted by Parliament in the Thirty-second year of the Republic of India as
follows:-- CHAPTER I
PRELIMINARY (1)
This Act may
be called the National Bank for Agriculture and Rural Development Act, 1981. (2)
It extends
to the whole of India. (3)
It shall
come into force on such date as {1stMay 1982, vide Notification No.
S. O. 278 (E) dated 21-4-1982 (except sections 3 16 and 18). }the Central
Government may, by notification in the Official Gazette, appoint, and different
dates may be appointed for different provisions of this Act, and any reference
in any provisions to the commencement of this Act shall be construed as a
reference to the coming into force of that provision. In this Act, unless the context otherwise requires,-- (a)
"agriculture"
includes horticulture, animal husbandry, forestry, dairy and poultry farming,
pisciculture, and other allied activities, whether or not undertaken jointly
with agriculture and the expression "agricultural operations" shall
be construed accordingly. Explanation--For the purposes of this clause, "pisciculture"
includes the development of fisheries, both inland and marine, catching of fish
and all activities connected therewith or incidental thereto; (b)
"Agricultural
Refinance and Development Corporation" means the Corporation established
under section 3 of the Agricultural Refinance and Development
Corporation Act, 1963 and renamed under section 3A of that Act as the
Agricultural Refinance and Development Corporation. (c)
"Board"
means the Board of Directors of the National Bank; (d)
"Central
co-operative Bank" means the principal co-operative society in a district
in a State, the primary object of which is the financing of other co-operative
societies in that district; Provided that in addition to such principal society in a district, or a
where there is no such principal society in a district, the state Government
may declare any one or more co-operative societies carrying on the business of
financing other co-operative societies in that district to be also or to be a
central co-operative bank or central co-operative banks with in the meaning of
this definition; (e)
"Chairman"
means the Chairman[3] [***] appointed under section 6; (f)
"co-operative
society" means a society registered, or deemed to be registered, under the
Co-operative Societies Act, 1912 or any other law relating to co-operative
societies for the time being in force ;in any State; (g)
"crops"
includes products of agricultural operations; (h)
"director"
means a director appointed under section 6. [4] [***] (i)
"Managing
Director" means the Managing Director appointed under section 6: (j)
"marketing
of crops" includes the processing of crops prior to marketing by any
agricultural producers or any organisation of such producers; [5] [(ka) "micro
enterprise", "small enterprise" and "medium enterprise",
shall have the same meanings as are respectively assigned to them in the Micro,
Small and Medium Enterprises Development Act, 2006 (27 of 2006);] (k)
"National
Bank" means the National bank for Agriculture and Rural Development
established under section 3. (l)
"Notification"
means a notification published in the Official Gazette. (m)
"primary
rural credit society" means a co-operative society by whatever name
called,-- (1)
Which has as
its object or business the provision of financial accommodation to its members
for agriculture or agricultural operations or for the marketing of crops, or
for rural development; and (2)
the bye-laws
of which do not permit admission of any other co-operative society as member: Provided that this sub-clause shall not apply to the admission, as a
member, of a co-operative society, which is a State co-operative bank or a
central co-operative bank by reason of such bank subscribing to the share
capital of the co-operative society out of funds provided by the
State-Government for the purpose. (n)
"prescribed
" means prescribed by regulations made under this Act; (o)
"regional
rural bank" means a regional rural bank established under section 3 of the Regional Rural Banks
Act, 1976; (p)
"rural
development" means development of rural areas through any activities
conducive to such development. Explanation--For the purposes of this clause, (a)
activities
conducive to development of rural areas include activities relating to
production of goods or provision of services in rural areas and activities for
the promotion of cottage and village industries, [6][micro-enterprises, small
enterprises and medium enterprises, handicrafts, handlooms] and other rural
crafts; (b)
"rural
area" means the area comprised in any village and includes the area
comprised in any town, the population of which does not exceed ten thousand or
such other figure as the Reserve Bank may specify from time to time; (q)
"Reserve
Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of
India Act, 1934; (r)
"scheduled
bank" means a bank for the time being included in the Second Schedule to
the Reserve Bank of India Act 1934; [7] [***] (s)
"State
co-operative bank" means the principal co-operative society in a State,
the primary object of which is the financing of other cooperative societies in
the State. Provided that in addition to such principal society in a State, or where
there is no such principal society in a State, the State Government may declare
any one or more co-operative societies carrying on business in that State to be
also or to be a State co-operative bank or State co-operative banks within the
meaning of this definition; (t)
"State
land development bank" means the co-operative society which is the
principal land development bank (by whatever name called) in a State and which
has as its primary object the providing of long term finance for agricultural
development; Provided that, in addition to such principal land development bank in a
State, or where there is no such bank in a State, the State Government may
declare any co-operative society carrying on business in that State and
authorised by the bye-laws of such co-operative society to provide long-term
finance for agricultural development to be also or to be a State land
development bank within the meaning of this definition; (u)
Words and
expressions used herein and not defined but defined in the Reserve Bank of
India Act, 1934, shall have the meanings respectively assigned to them in that
Act. (v)
words and
expressions used herein and not defined either in this Act or in the Reserve
Bank of India Act, 1934, but defined in the Banking Regulation Act, 1949, shall
have the meanings respectively assigned to them in the Banking Regulation Act,
1949. CHAPTER II ESTABLISHMENT OF THE NATIONAL BANK
FOR AGRICULTURE AND RURAL DEVELOPMENT AND CAPITAL THEREOF (1)
With effect
from such date as the Central Government may, by notification in the Official
Gazette, appoint, there shall be established for the purposes of this Act, a
bank to be known as the National Bank for Agriculture and Rural Development. (2)
The Bank
shall be a body corporate with the name aforesaid having perpetual succession
and a common seal with power , subject to the provisions of this Act, to
acquire, ;hold and dispose of property and to contract may by that name sue and
be sued. (3)
The head
office of the National Bank shall be at [8] [Mumbai] or at such other place
as the Central Government may, by notification, specify. (4)
(1) The
capital of the National Bank shall be one hundred crores of rupees; Provided that the Central Government may, in
consultation with the Reserve Bank and by notification, increase the said
capital up to five hundred crores of rupees. (2) The capital of the National Bank shall be
subscribed to by the Central Government and the Reserve Bank in equal
proportions (1)
The capital
of the National Bank shall be one hundred crores of rupees: [9] [Provided that the Central
Government may, by notification, increase the said capital up to thirty
thousand crore rupees: Provided further that the Central Government may, in consultation with
the Reserve Bank and by notification, further increase the said capital to such
amount as it may deem necessary from time to time.] [10] [(2) The capital of the National
Bank which has been subscribed to by the Reserve Bank valued at twenty crore
rupees as on the date immediately preceding the commencement of the National
Bank for Agriculture and Rural Development (Amendment) Act, 2017 shall, on such
commencement, stand transferred to, and vested in, the Central Government: Provided that the National Bank may issue capital to such institutions
and persons in such manner as may be notified by the Central Government: Provided further that the shareholding of the Central Government shall
not at any time be less than fifty-one per cent. of the total subscribed
capital. (3) The Central Government shall give to the
Reserve Bank an amount equal to the face value of the subscribed capital,
valued at twenty crores of rupees, referred to in sub-section (2), in cash, for
transfer to, and vesting in the Central Government of the capital of the
National Bank which has been so subscribed to by the said Bank.] CHAPTER
III MANAGEMENT OF THE NATIONAL BANK (1)
The general
superintendence direction and management of the affairs and business of the
national bank shall vest in a Board of Directors, which shall exercise all
powers and do all acts and things which may be exercised or done by the
national bank. (2)
Subject to
the provisions of this Act, the Board in discharging its functions, shall act
on business principles with due regard to public interest. (3)
Subject to
the previous of sub-section (1) and save as otherwise provided in the
regulations made under this Act, the Managing Director shall also have powers
of general superintendence, direction and management of the affairs and
business of the National Bank and may also exercise all powers and do all acts
and things which may be exercised or done by the National Bank. (4)
Any
whole-time director appointed under sub-section (3) of section 6shall assist
the Managing Director in the discharge of his functions section-section (3) and
perform such duties as the Board may entrust or delegate to him. (5)
In the
discharge of his powers and functions under sub-section (3)the Managing
Director shall follow such directions as the Chairman may give. (6)
In the
discharge of its functions under this Act, the National Bank shall be guided by
such directions in matters of policy involving public interest as the Central
Government in consultation with the Reserve Bank, or the Reserve Bank may give
in writing. [11] [(1) The Board of Directors of the National Bank shall consist of the
following, namely:-- (a)
a Chairman; (b)
three
directors from amongst experts in rural economics, rural development, village
and cottage industries,[12] [micro-enterprises, small enterprises and medium enterprises] or
persons having experience in the working of co-operative banks, regional rural
banks or commercial banks or any other matter the special knowledge or
professional experience in which is considered by the Central Government as
useful to the National Bank; (c)
three
directors from out of the directors of the Reserve Bank; (d)
three
directors from amongst the officials of the Central Government; (e)
four
directors from amongst the officials of the State Governments; (f)
such number
of directors elected in the prescribed manner, by shareholders other than the
Reserve Bank, the Central Government and other institutions owned or controlled
by the Central Government whose names are entered on the register of shareholders
of the National Bank ninety days before the date of the meeting in which such
election takes place on the following basis, namely:-- (i)
where the
total amount of equity....................... two directors; share capital
issued to such shareholders is ten per cent, or less of the total issued equity
capital (ii)
where the
total amount of equity............... three directors; (iii)
share
capital issued to such shareholders is and more than ten per cent. but less
than twenty-five per cent, of the total issued equity capital (iv)
where the
total equity share capital................ four directors: issued to such shareholders is
twenty-five per cent. or more of the total issued equity capital Provided that until the
assumption of charge by the elected directors under this clause, the Central
Government may at any time nominate such number of directors not exceeding four
from amongst persons having special knowledge of, and professional experience
in, agricultural science, technology, economics, banking, co-operatives, law,
rural finance, investment, accountancy, marketing or any other matter, the
special knowledge of, and professional experience in, which would, in the
opinion of the Central Government, be useful to the National Bank for carrying
out its functions; and (g)
a Managing
Director. (2) The Chairman and other
directors, excluding the directors referred to in clause (f), shall be
appointed by the Central Government in consultation with the Reserve Bank: Provided that no such
consultation shall be necessary in the case of directors appointed under clause
(d) of sub-section (1).] (3) Where the Central Government is satisfied in
consultation with the Reserve Bank and[13] [***], that it is necessary so to do it may appoint one or more
whole-time directors with such designations as may be deemed appropriate by
that Government and any whole-time director so appointed shall also be a member
of the Board; [14] [***] (1)
The Chairman
shall hold office for such term not exceeding five years and shall receive such
salary and allowances as the Central Government may at the time of appointment
specify;[15] [and shall be eligible for re-appointment] [16] [***] [17] [(1A) Notwithstanding anything contained in sub-section(1), the Central
Government shall have the right to terminate the term of office of the Chairman
at any time before the expiry of the term specified under that sub-section by
giving him a notice of not less than three months in writing or three months'
salary and allowances in lieu of such notice.] [18] [(1B) In the case of a vacancy in the office of the Chairman, the
Managing Director shall perform the functions and duties of the Chairman during
such vacancy.] [19] [(2) Subject to the provisions contained in sub-section (5), a director
appointed under clause (b) or clause (c) of sub-section (1) of section 6, shall
hold office for such term, not exceeding three years, as the Central Government
may specify in this behalf[20] [***] and shall be eligible for reappointment: Provided
that no such director shall hold office continuously for a period exceeding six
years. (3) The Central Government may,
in consultation with the Reserve Bank remove the Chairman or[21] [***] at any time before the expiry of his term of office after giving
him a reasonable opportunity of showing cause against the proposed
removal. [22] [(4) The Chairman and any other director, who is not an officer of the
Central Government or a State Government or an officer of the Reserve Bank or any
body or corporation established by or under any Central Act or any State Act
and owned or controlled by such Government, shall be paid such fees and
allowances as may be prescribed for attending the meetings of the Board or of
any of its committees and for attending to any other work of the National
Bank.] [23] [(5) The directors appointed under clauses (b) to (f) of sub-section
(1) of section 6 shall hold office during the pleasure of the Central
Government.] (1)
The Managing
Director and any whole-time director appointed under sub-section (3) of section
6 shall— (a)
hold office
for such term not exceeding five years as the Central Government may, at the time
of appointment, specify;[24] [and shall be eligible for re-appointment] (b)
receive such
salary and allowances and be governed by such terms and conditions of service
as the Board may, with the previous approval of the Central Government and in
consultation with the Reserve Bank determine; Provided that the Managing
Director and any such whole-time director appointed to the first Board shall
receive such salary and allowance and be governed by such terms and conditions
of service as the Central Government may in consultation with the Reserve Bank,
determine. (2)
The Central
Government may in consultation with the Reserve Bank, remove the Managing
Director or any whole-time director appointed under sub-section (3) of section
6 at any time before the expiry of his term of office, after giving him a
reasonable opportunity of showing cause against the proposed removal. (3)
Notwithstanding
anything contained in sub-section (1) or sub-section (2) Central Government
shall have the right to terminate the term of office of the Managing Director
or of any whole-time director appointed under sub-section (3) of section 6 at
any time before the expiry of the term fixed under sub-section (1) by giving
him notice of not less than three months in writing or three months salary and allowances
in lieu of such notice: Provided that the Central
Government shall before terminating the term of office of the Managing Director
or any whole-time director appointed under sub-section (3) of section 6 consult
the Reserve Bank. (1)
No person
shall be director who – (a)
is of
unsound mind and stands so declared by a competent court; or (b)
is or has
been convicted of any Offences which in the opinion of the Central Government,
involves moral turpitude; or (c)
is, or at
any time has been, adjudicated insolvent or has suspended payment of his debts
or has compounded with his creditors. (2)
The
appointment as director of any person who is a Member of Parliament or the
Legislature of any State shall, unless within two months of the date of his
appointment he ceases to be such member, be void on the expiry of the said
period of two months and if any director is elected or nominated as a member of
parliament or of any State legislature he shall cease to be a director as from
the date of such election or nomination as the case may be, (1)
If a
director— (a)
becomes
subject to any of the Disqualifications mentioned in section 9; or (b)
is absent
without leave of the Board for more than three consecutive meetings thereof,
his seat shall thereupon became vacant, (2)
Any director
may resign his office by giving notice thereof in writing to the Central
Government and on his resignation being accepted by the Central Government or
if his resignation is not sooner accepted, on the expiry of three months from
the receipt thereof by the Central Government, he shall be deemed to have
vacated his office. If the Managing Director 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
appointment, the Central Government may, after consultation with the Reserve
Bank and the Board, appoint an other person to act in his place as Managing
Director during his absence (1)
The Board
shall meet at such times and places and shall observe such rules of procedure
in regard to the transaction of business at its meetings as may be
prescribed. (2)
The Chairman
of the Board, or, if for any reason he is unable to attend any meeting [25][the Managing Director and in the absence of both, the Chairman and the
Managing Director] any other director nominated by the Chairman in this behalf
and in the absence of such nomination, any other director elected by the
directors present at the meeting shall preside at the meeting of the
Board. (3)
All
questions which come up before any meeting of the Board shall be decided by a
majority of votes of the directors present and voting and in the event of an
equality of votes, the chairman or, in his absence, the person presiding shall
have a second or casting vote. (1)
The Board
may constitute an Executive Committee consisting of such number of director as
may be prescribed. (2)
The
Executive Committee shall discharge such functions as may be prescribed or may
be delegated to it by the Board. (3)
The Board
may constitute such other committees, whether consisting wholly of directors or
wholly of other persons or partly of directors and partly of other persons as
it thinks fit and for such purposes as it may decide and every committee so
constituted shall discharge such functions as may be delegated to it by the
Board. (4)
The Executive
Committee shall meet at such times and places and shall observe such rules of
procedure in regard to the transaction of business at its meetings as may be
prescribed. (5)
The times
and places at which any committee constituted under sub-section (3) shall meet
the rules of procedure which such committee shall observe in regard to the
transaction of business at its meetings and the fees and allowances which may
be paid to the members of such committee for attending the meetings of the
committee and for attending to any other work of the National Bank shall be
such as may be specified by that Bank. (1)
[26] [The Board may] constitute an Advisory Council consisting of such
number of directors and such other persons who, in the opinion of the Board,
have special knowledge of agriculture, agricultural credit, co-operation and
rural economies, [27] [micro-enterprises, small enterprises and medium enterprises], village
and cottage industries and handicrafts and other rural crafter have special
knowledge and appreciation of the country's overall developmental policies and
in particular overall monetary and credit policies, which is considered by the
Board as useful to the National Bank. (2)
The Advisory
Council shall advise the National Bank in such matters as may be referred to
the Advisory Council by the National Bank and may discharge such other
functions as may be entrusted or delegated to the Advisory Council by the
National Bank. (3)
A member of
the Advisory Council shall hold office for such term not exceeding five years
as the National Bank may fix and receive such fees and allowances as may be
prescribed for attending the meetings of the Advisory Council for attending to
any other work of the National Bank. (4)
The Advisory
Council shall meet at such times and places and shall observe such rules of
procedure in regard to transaction of business at its meetings as may be
prescribed. A director
of the Board or a member of a Committee who has any direct or indirect
pecuniary interest in any matter coming up for consideration at a meeting of
the Board or a Committee thereof shall as soon as possible after relevant
circumstances have come to his knowledge, disclose the nature of his interest
at such meeting, and the disclosure shall be recorded in the minutes of the
Board or the Committee as the case may be, and the director or member shall not
take any part in any deliberation or decision of the Board or the Committee
with respect to that matter. CHAPTER IV
TRANSFER OF BUSINESS TO THE NATIONAL BANK (1)
On such date
as the Central Government in consultation with the Reserve Bank may, by
notification appoint the entire undertaking of the Agricultural Refinance and
Development Corporation (hereafter in this Chapter referred to as the
Corporation) including all business property assets and liabilities, rights,
interests, privileges and obligations of whatever nature, shall stand
transferred to and vest in the National Bank. (2)
As
compensation for the transfer of the undertaking of the Corporation to the
National Bank under sub-section ((1) the National Bank shall within six months
from the date appointed under that sub-section (hereinafter in this sub-section
referred to as the appointed date) pay to the shareholders of the Corporation a
sum of equal to the total paid-up capital of the corporation as on the date
immediately preceding the appointed date. (3)
The amount
of compensation payable under sub-section (2) to the share holders of the
Corporation shall be appropriated among the shareholders in proportion to their
contributions to the paid-up capital of the Corporation as on the date
immediately preceding the appointed date. Explanation--For
the purposes of this sub-section, shareholders of the Corporation means
shareholders of the Corporation whose names appear on the register of
shareholders maintained under section 8 of the Agricultural
Refinance and Development Corporation Act, 1963, on the date immediately
preceding the appointed date. (4)
The National
Bank shall also pay to the shareholders of the Corporation referred to in
sub-section (2) an amount calculated at the rate at which the shares to the
Corporation were guaranteed as to the payment of minimum divided
under section 6 of the Agricultural Refinance and Development
Corporation Act 1963 for the period, if any, that has expired in the accounting
year of the Corporation before the appointed date and this amount the National
Bank shall distribute to the shareholders of the Corporation referred to in
sub-section (2) in proportion to the shares held by such shareholders on the
date immediately preceding the appointed date and at the rate at which such
shares were guaranteed as to the payment of minimum dividend (5)
All
contracts, deeds, bonds, agreements, powers of attorney, grants of legal
representation and other instruments of whatever nature subsisting or having
effect immediately before the appointed date and to which the Corporation is a
party, or which are in favour of the Corporation shall be of as full force and
effect against or in favour of the National Bank as the case may be, and may be
enforced or acted upon as fully and effectually as if instead of the
Corporation the National Bank had been a party thereto or as if they had been
in favour of the National Bank . (6)
If,
immediately before the appointed date, any suit, appeal or other legal proceeding
of whatever nature is pending by or against the Corporation the same shall not
abate be discontinued or be in any way prejudicially affected by reason of the
transfer to the National Bank of the undertaking of the Corporation or of
anything contained in this Act, but the suit appeal or other proceeding may be
continued prosecuted and enforced by or against the National Bank. On the date
appointed under sub-section (1) of section 16 (a)
the
Corporation shall stand dissolved and (b)
the
Agricultural Refinance and Development Corporation Act 1963 shall stand
repealed. (1)
On such date
as the Central Government may in consultation with the Reserve Bank, by
notification, appoint the assets and liabilities with the Reserve Bank relating
to (a)
the National
Agricultural Credit (Long Term Operation) Fund established and maintained
under section 46A of the Reserve Bank of India Act, 1934 and (b)
the National
Agricultural Credit (Stabilization) Fund established and maintained under section 46B of the Reserve Bank of India Act, 1934, shall stand transferred to
the National Bank and form part of the National Rural Credit (Long Term
Operations) Fund referred to in section 42 and the National Rural Credit
(Stabilization) Fund referred to in section 43, respectively (2)
With effect
from such date as the Central Government may, in consultation with the Reserve
Bank, by notification, appoint the loans and advances which the Reserve Bank
has granted to State co-operative banks and regional rural banks under section
17 [except sub-clause (a) of clause (4) of the Reserve Bank of India Act, 1934,
and which the Reserve Bank may specify by a general or special order, shall as
far as may be become and be deemed to be loans and advances granted by the
National Bank under section 21 and the National Bank shall repay to the Reserve
Bank the amount of such loans and advances on such terms and conditions as the
Central Government may specify, in consultation with the Reserve Bank. (3)
All rights,
liabilities, interests, privileges and obligations of whatever nature
(including the rights and obligations arising by way of purchase, sale and
rediscount of any bills of exchange and promissory notes) of the Reserve Bank
in relation to any asset or liability referred to in sub-section (1) or any
loan or advance referred to in sub-section (2) shall stand transferred to and
vest in the National Bank under sub-section (1) or as the case may be such loan
or advance becomes under sub-section (2) a loan or advance granted by the
National Bank . (4)
All
contracts, deeds, bonds, agreements powers of attorney grants of legal
representations and other instruments of whatever nature relating to any asset
or liability referred to in sub-section (1) and subsisting or having effect
immediately before the date appointed under that sub-section or relating to any
loan or advance referred to in sub-section (2) and subsisting or having effect
immediately before the date appointed under that sub-section shall be of as
full forces and effect against, or in favour of, the National Bank as the case
may be and may be enforced or acted upon as fully and effectually as if instead
of the Reserve Bank the National Bank had been a party thereto or as if they
had been in favour of the National Bank. (5)
If,
immediately before the date appointed under sub-section (1) or sub-section (2)
as the case may be any suit, appeal or other legal proceedings of whatever
nature relating to any asset or liability referred to in sub-section (1) or any
loan or advance referred to in sub-section (2) is pending by or against the
Reserve Bank the same shall not abate, be discontinued or be in any way
prejudicially affected by reason of the transfer to the National Bank of such
asset or liability under sub-section (2) or as the case may be, such loan or
advance becoming under sub-section (2) a loan or advance granted by the
National Bank or of anything contained in this Act, but the suit appeal or
other proceedings may be continued, prosecuted and enforced by or against the
National Bank. CHAPTER V
BORROWINGS BY THE NATIONAL BANK The National Bank may for the
purpose of carrying out its functions under this Act. [28] [(a) issue and sell bonds, debentures and other financial instruments
with or without guarantee of the Central Government on such terms and
conditions as may be approved by the Board;] [29] [(b) borrow money from the Reserve Bank repayable on demand or
otherwise on such terms and conditions including the terms relating to security
and purposes as may be specified by the Reserve Bank; (c) borrow money from the
Central Government and from any other authority or organisation or institution
approved by the Board, on such terms and conditions as may be agreed upon; (d) accept from the Central
Government, a State Government, a local authority, a State land development
bank, a State co-operative bank or a scheduled bank or any person or body,
whether incorporated or not, deposits repayable on such terms as the National
Bank may, with the approval of the Reserve Bank, fix; and (e) receive gifts, grants,
donations or benefactions from the Central Government or any State Government
or any other source.] Notwithstanding anything
contained in the Foreign Exchange Management Act, 1999 (42 of 1999), or in any
other law for the time being in force, relating to foreign exchange, the
National Bank may borrow, with the previous approval of the Central Government
and in consultation with the Reserve Bank, foreign currency from any bank or
financial institution in India or elsewhere, for granting loans and advances or
for utilising such currency for any other purpose specified under the
provisions of this Act.][30] CHAPTER VI CREDIT FUNCTIONS OF THE
NATIONAL BANK (1)
The National
Bank may provide by way of refinance, loans and advances,repayable on demand or
on the expiry of fixed periods not exceeding eighteen months, [31] [to State co-operative banks, central co-operative banks]regional rural
banks or to any financial institutions, which are approved by the Reserve Bank
in this behalf, for financing. (i)
agricultural
operations or the marketing of crops or (ii)
the
marketing and distribution of inputs necessary for agriculture or rural
development, or (iii)
any other
activity for the promotion of or in the field of agriculture or rural
development or (iv)
bona fide
commercial or trade transactions or (v)
the
production or marketing activities of artisans or of [32] [village and cottage industries, micro-enterprises, small enterprises
and medium enterprises or of those engaged in the field of handicrafts,
handlooms] and other rural crafts. (2)
The National
Bank may make loans and advances under sub-section (1)against the security of (i)
stocks,
funds and securities other than immovable property, in which a trustee is
authorised to invest trust money by any law for the time being inforce; (ii)
promissory
notes supported by documents of title to goods such documents having been
transferred assigned or pledged to the borrowing institution as security for a
loan or advance made for any of the purposes specified in sub-section (1) Provided
that the National Bank may, whenever it considers it necessary so to do accept
in lieu of the actual assignment of any such security in favour of the National
Bank a declaration in writing from the borrowing institution. (a)
stating that
its holds such documents of title to goods as may be setout in the declaration
and (b)
containing
such other particulars as may be required by the National Bank. (3)
Notwithstanding
anything contained in sub-section (2) the National Bank may in its discretion
grant a loan or advance (a)
[33] [to any State co-operative bank or central co-operative bank] if
the loan or advance is fully guaranteed for repayment of principal and interest
by Government; (b)
to any State
co-operative bank which is a scheduled bank if the load or advance is secured
either by a bill of exchange or promissory note executed by the central
co-operative bank and assigned in favour of the State co-operative bank. (4)
Not with standing
anything contained in sub-section (2) and (3) the national bank may also make
loans and advances repayable on demand or on the expiry of fixed periods not
exceeding eighteen months against promissory notes of a State co-operative bank
or a regional rural bank or an institution approved under sub-section (1): Provided
that the borrowing institution furnishes a declaration in writing setting out
the purpose for which it has made loans and advances and such other particulars
as may be required by the National Bank. Where the National Bank is
satisfied that owing to drought, famine or other natural calamities, military
operations or enemy action, any State co-operative bank, central co-operative
bank, regional rural bank or any such financial institution or any financial
institution falling under any such class of financial institutions, as may be
approved by the Reserve Bank in this behalf, requires assistance under this
section, it may provide to such bank or institution such financial assistance
as it may deem fit by way of making loans and advances repayable on the expiry
of fixed periods not exceeding seven years and on such terms and conditions as
may be specified in this behalf by the National Bank: Provided that loans and advances
may be made under this section only for the purpose of enabling the borrowing
bank or institution,-- (a)
to pay any
dues to the National Bank for credit extended for financing agricultural
operations or the marketing of crops under clause (i) of subsection (1) of
section 21, or (b)
(i) to make
loans or advances to central co-operative banks or primary rural credit
societies in cases where the borrowing bank is a State co-operative bank, and (ii) to make loans and advances
to primary rural credit societies in cases where the borrowing bank is a
central co-operative bank, and such loans or advances in
both the cases being repayable on the expiry of fixed periods not being less
than eighteen months and not exceeding seven years, by way of reimbursement of
loans and advances made by such co-operative banks or societies for agriculture
or agricultural operations or for reimbursement of such loans or advances which
have been converted into loans or advances repayable on expiry of fixed periods
not being less than eighteen months and not exceeding seven years from the date
of conversion: Provided further that no loan or
advance shall be made under this section to a State co-operative bank or a
central co-operative bank unless such loan or advance is fully guaranteed as to
the repayment of the principal and payment of interest, by the State
Government.][34] Where the
National Bank is satisfied that owing to unforeseen circumstances the
rescheduling of any loans and advances made to artisans, [35] [village and cottage industries, micro enterprises, small enterprises
and medium enterprises and those engaged in the field of handicrafts, handlooms
and other rural crafts] by any State co-operative bank, regional rural bank or
any such financial institution or any financial institution falling under such
class of financial institution as may be approved by the Reserve Bank in this
behalf has become necessary it may provide to such bank or institution such
financial assistance as it may deem fit by way of loans and advances repayable
on the expiry of fixed periods not being less than eighteen months and not
exceeding seven years against such securities as may be specified in this
behalf by the National Bank; Provided
that no loan or advance shall be made under this section to a State
co-operative bank unless such loan or advance is fully guaranteed as to the
repayment of the principal and payment of interest by the State Government but
such guarantee may be waived by the National Bank if other security to the
satisfaction of the National Bank is furnished, or if for reasons to be
recorded by it in writing the National Bank is satisfied that the guarantee or
other security is not necessary. The National
Bank shall provide such financial assistance as it may consider necessary by
way of making to State co-operative banks, regional rural banks, loans and
advances repayable on the expiry of fixed periods not being less than eighteen
months and not exceeding seven years against such securities as may be
specified in this behalf, by the National Bank and such loans or advances may
be made for agriculture rural development or such other purposes as the
National Bank may, from time to time determine; Provided
that no loan or advance shall be made under this section to a State
co-operative bank unless such loan or advance is fully guaranteed as to the
repayment of the principal and payment of interest by the State Government but
such guarantee may be waived by the National Bank, if other security to the
satisfaction of the National Bank is furnished, or if for reasons to be
recorded by it in writing, the National Bank is satisfied that the guarantee or
other security is not necessary. (1)
The National
Bank may provide such financial assistance as it may consider necessary for
promoting agriculture and rural development by (a)
making loans
and advances by way of refinance, on such terms and conditions as the National
Bank may think fit to impose, to a State land development bank or a State
co-operative bank or a scheduled bank or any other financial institution
approved by the Reserve Bank in this behalf and also rescheduling the payment
of such loans and advances. Provided that the maximum period
for which any such loan or advance may be granted whether originally or by
rescheduling the payment thereof shall not exceed twenty-five years; (b)
purchasing
or selling, or subscribing to the bonds or debentures issued by any bank or
institution referred to in clause (a) and repayable within a period not
exceeding twenty-five years from the dates on which they are issued; (c)
making loans
and advanced on such terms and conditions as the National Bank may think fit to
impose, to a State co-operative bank or a scheduled bank for the purpose of
enabling such bank to make loans or advances to artisans,[36] [village and cottage industries, micro-enterprises, small enterprises
and medium enterprises and those engaged in the field of handicrafts,
handlooms] and other rural crafts and also rescheduling the payment of such
loans and advances; Provided that the maximum period
for which any such loan or advance may be granted whether originally or by
rescheduling the payment therof, shall not exceed twenty-five years; (d)
making where
it is considered necessary so to do in connection with any financial assistance
under clause (a) or clause (b) or clause (c) to a State land development bank
or a State co-operative bank or a scheduled bank, loans and advanced repayable
on demand or on the expiry of a fixed period not exceeding eighteen months, by
way of refinance[37][or otherwise] to such bank and also rescheduling the payment of such
loans and advances for such period as the National Bank may deem fit. (2)
The
provisions of this section shall be in addition to , and not in derogation of
the provisions of section 21 and section 24. The National
Bank may subscribe to, or purchase or sell stocks, shares, bonds or debentures
of, or invest in the securities of, any institution or class of institutions
concerned with agriculture and rural development which the Board may approve
subject to such terms and conditions as it may deem fit.] The National Bank may make loans
and advances to State Governments repayable on the expiry of fixed periods not
exceeding twenty years from the date of making such loans and advances from the
National Rural Credit (Long Term Operation) Fund established under section 42
for enabling them to subscribe directly or indirectly to the share capital of a
co-operative credit society. The National Bank may make loans
and advances to any State Government or a corporation owned or controlled by
the State Government or to any other person or class of persons, as may be
approved by the Board, repayable on the expiry of a fixed period not exceeding
twenty-five years from the date of making of such loans and advances and
subject to such terms and conditions, as may be approved by the Board, for the
purpose of development of infrastructure facilities for promotion of
agriculture and rural development.][38] (1)
No
accommodation shall be granted by the National Bank under clause(a) or
clause(c) of sub section (1) of section 25 or section 30 or section 32 to an
institution other than a scheduled bank unless it is fully and unconditionally
guaranteed by the Government as to the repayment of principal and payment of
interest: Provided that no such guarantee
shall be required in cases in which security to the satisfaction of the Board
is furnished by the borrowing institution. (2)
No
accommodation shall be granted by the National Bank under clause (a) or clause
(c) of sub-section (1) of section 25 or section 32 to any scheduled bank unless
security to the satisfaction of the Board is furnished by such scheduled bank [39] [(3) Notwithstanding anything contained in sub-section (/) or
sub-section (2), no guarantee or security referred to therein shall be required
in cases in which the Board, for reasons to be recorded in writing, decides
that no such security or guarantee is necessary in respect of a scheduled bank,
a State co-operative bank or any person or class of persons, specifically
approved by the Board or in respect Of any scheme or class of schemes, having
regard to the nature and scope of the scheme or schemes for which accommodation
is proposed to be granted by the National Bank.] (1)
Any sums
received by a borrowing institution in repayment or realisation of loans and
advances refinanced either wholly or partly by the National Bank shall, to the
extent of the accommodation granted by the National Bank and remaining
outstanding, be deemed to have been received by the borrowing institution in
trust from the National Bank, and shall accordingly be paid by such institution
to the National Bank as per the repayment schedule fixed by the National Bank (2)
Where an
accommodation has been granted to a borrowing institution, all securities held
or which may be held, by such borrowing institution on account of any
transaction in respect of which such accommodation has been granted by the
National Bank shall be held by such institution in trust for the National
Bank. [40] [(3) Notwithstanding anything to the contrary contained in any law for
the time being in force, where a liquidator is appointed for winding up a
borrowing institution, it shall be the duty of the liquidator to forthwith pass
on to the National Bank the sums recovered by the borrowing institution or the
liquidator, as the case may be, in repayment or realisation of the loans and
advances refinanced either wholly or partly by the National Bank to the extent
the refinance is outstanding and the National Bank shall be entitled to enforce
the securities held by the borrowing institution in trust for the National Bank
as if every reference to the borrowing institution in any contract, security or
other document obtained by borrowing institution is a reference to the National
Bank and accordingly, the National Bank shall be entitled to recover the
balance sums due under such loans and advances from the constituents of
borrowing institution and any discharge given by the National Bank to such
constituent shall be a valid discharge and the liquidator shall, on demand made
by the National Bank, deliver to it all such contracts, securities and other
documents, for due enforcement thereof by the National Bank. Explanation. --For the purposes
of this sub-section, the word "liquidator" shall include liquidator
or a provisional liquidator or any person or authority entrusted with the duty
of liquidating the borrowing institution.] The National
Bank may, in exceptional circumstances to be recorded in writing by the Board,
by itself or in association with other financial institutions or scheduled
banks, make loans and advances, otherwise than by way of refinance to any
person or class of persons or body corporate, on such terms and conditions,
including security and repayable within such period not exceeding twenty-five
years, as the National Bank may deem fit. The National Bank may rediscount
bills of exchange and promissory notes made, drawn, accepted or endorsed by any
company or body corporate concerned with agriculture and rural development
presented by a scheduled bank, a State co-operative bank, State land development
bank, regional rural bank or any other institution or class of institutions
approved by the Board.] The National Bank may receive for
the rendering of any of the services mentioned in this Chapter or Chapter VII,
such commission or other consideration as may be agreed upon The National Bank may guarantee,
subject to such directions as may be issued by the Board, from time to time,
deferred payments in connection with the purchase of capital goods or for any
other purpose for giving effect to the provisions of this Act, due from any
person or class of persons, whether incorporated or not.][41] In entering into any transaction[42][under this Act with a borrower] the National Bank may impose such
conditions as it may think necessary or expedient for protecting the interests
of the National Bank. Notwithstanding
anything to the contrary contained in any agreement or arrangement, the
National Bank may, by notice in writing, require any borrower or assisted
person to whom ithas granted any loan or other financial assistance including
grants, to discharge forthwith in full, the loan or other financial assistance,
including grants, as the case may be,-- (a)
if it
appears to the National Bank that false or misleading information in any
material particulars was given in the application for the loan or other
financial assistance; or (b)
if the
borrower or the person has failed to comply with any of the terms of the
contract or arrangement with the National Bank in the matter of loan or other
financial assistance, including grants; or (c)
if there is
a reasonable apprehension that the borrower is unable to pay its debts or that
proceedings for liquidation may be commenced in respect thereof; or (d)
if for any
reason it is necessary so to do, to protect the interests of the National
Bank.][43] [44] [(1) The National Bank shall have free access to all such records of a
borrower seeking to avail of any credit or other facilities from the National
Bank under this Act and also to all such records of any person seeking to avail
of any credit or other facilities from such borrower, perusal whereof may
appear to the National Bank to be necessary in connection with the providing of
finance or other assistance to such borrower or the refinancing of any loan or
advance made to such person by the borrower.] (2) The National Bank may require any institution
or person referred to in sub-section (1) to furnish to it copies of any of the
records referred to in that sub-section and the institution or the person as
the case may be, shall be bound to comply with such requisition. Notwithstanding
anything to the contrary contained in any other law for the time being in
force, the validity of any loan or advance granted by the National Bank in
pursuance of the provisions of this Act shall not be called in question merely
on the ground of non-compliance with the requirements of such other law as
aforesaid or of any resolution, contract memorandum, articles of association or
other instrument. Provided
that nothing in this section shall render valid any loan or advance obtained by
any company or co-operative society where such company or co-operative society
is not empowered by its memorandum to obtain loans or advances. The National
Bank shall not grant any loan or advances on the security of its own bonds or
debentures. (1)
The National
Bank shall not make any loans or advances under section 30 or make any grants
under this Act to any person or body of persons of which any of the directors
of the National Bank is a proprietor, partner, director, manager, agent,
employee or guarantor or in which one or more directors of the National Bank together
hold substantial interest: Provided that this sub-section
shall not apply to any borrower if any director of the National Bank-- (a)
is nominated
as director of the Board of such borrower by the Government or a Government
company as defined in 2[in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013)] or by a corporation
established by any other law (b)
is elected
on the Board of such borrower by virtue of shares held in the borrower
organisation by the Government, or a Government company as defined in [45] [in clause (45) of section 2 of the Companies Act, 2013
(18 of 2013)] or by a corporation established by any other law, by reason only of such nomination
or election, as the case may be. Explanation.-- For
the purposes of this sub-section, "substantial interest", in relation
to a borrower, means the beneficial interest held by one or more of the
directors of the National Bank or by any relative of such director as
defined [46] [in clause (77) of section 2 of the Companies Act, 2013
(18 of 2013)], whether singly or taken together, in the shares of the borrower,
the aggregate amount paid-up on which either exceeds five lakhs of rupees or
five per cent, of the paid-up share capital of the borrower, whichever is
lesser. (2)
The
provisions of sub-section (1)— (a)
shall not
apply to any borrower, if the National Bank is satisfied that it is necessary
in the public interest to enter into business with that borrower and entering
into any kind of business with such borrower shall be in accordance with and
subject to such conditions and limitations, as may be approved by the Board; (b)
shall not
apply to any transaction relating to the business entered into prior to the
commencement of the National Bank for Agriculture and Rural Development
(Amendment) Act, 2000, and all such business and any transaction in relation
thereto may be implemented or continued as if that Act had not come into force; (c)
shall apply
only so long as the conditions precedent to such disability as set out in the
said sub-section continue.][47] CHAPTER
VII OTHER FUNCTIONS OF THE NATIONAL BANK The National Bank (i)
shall
co-ordinate its operations and the operations of various institutions engaged
in the field of rural credit and maintain expert staff to study all problems
relating to agriculture and rural development and be available for
consultations to the Central Government, the Reserve Bank the State Governments
and other institutions engaged in the field of rural development. (ii)
may act as
the agent for the Central Government or a State Government or the Reserve Bank
in the transaction of any business in respect of loans and advances granted or
to be granted or bonds or debentures purchased or subscribed for, or to be
purchased or subscribed for; (iii)
may provide
facilities for training, for dissemination of information and the promotion of
research including the undertaking of studies, researches, techno-economic and
other surveys in the field of rural banking agriculture and rural development
and it may for the said purposes[48][make loans or advances or grants] including grants by way of provision
for fellowships and chairs to any institution. [49] [(iv) may provide technical, legal, financial, marketing and
administrative assistance to any person engaged in agriculture and rural
development activities; (v) may provide consultancy
services in the field of agriculture and rural development and other related
matters in or outside India, on such terms and against such remuneration, as
may be agreed upon; (vi) may perform the functions entrusted to or
required of the National Bank by any other law for the time being in force; and (vii) do any other kind of
business or undertake any other kind of activity which the Central Government
or the Reserve Bank may authorise.] The National Bank may, in consultation with the Reserve Bank, promote,
form or manage or associate itself in promotion, formation or management of
companies, subsidiaries, affiliates, societies, trusts or such other
association of persons, as it may deem fit, for the purpose of carrying out its
functions under this Act. Notwithstanding anything contained in this Act, the National Bank may-- (a)
create one
or more trusts and transfer loans and advances granted by it, with or without
the securities, to such trusts, for consideration; (b)
set aside
loans or advances held by the National Bank and issue and sell securities based
upon such loans or advances so set aside in the form of debt obligations, trust
certificates of beneficial interest or other instruments, by whatever name
called, and act as a trustee for the holders of such securities. Notwithstanding anything contained in sub-section (l) of section 17 of the
Registration Act, 1908 (16 of 1908)-- (a)
any
instrument in the form of debt obligations or trust certificate of beneficial
interest or any other instrument, by whatsoever name called, issued by the
National Bank or the trust created by it to securitise the loans granted by it
and not creating, declaring, assigning, limiting or extinguishing any right,
title or interest to or in immovable property; or (b)
any transfer
of such instruments referred to in clause (a), sna'' not require compulsory
registration.][50] The National Bank may also do all such things as may be necessary or
incidental to or consequential upon the exercise of its powers, discharge of
its functions and the performance of its duties, under this Act, or under any
other law for the time being in force. (1)
The National
Bank may invest its funds in promissory notes, stocks or securities of the
Central Government or keep the moneys deposited with the Reserve Bank or with
any agency of the Reserve Bank or with a State co-operative bank or a scheduled
bank. (2)
Notwithstanding
anything contained in sub-section (1) or section 30A, the National Bank may,
for beneficial investment of its surplus funds, rediscount bills of exchange or
promissory notes arising out of bona fide trade and commercial transactions and
also lend repayable at call or short notice to a scheduled bank or any
financial institution approved by the Reserve Bank, or invest in certificates
of deposit and other instruments or schemes as may be approved by the Board.][51] The National Bank may, for the purpose of the efficient discharge of its
functions under this Act, collect from or furnish to the Central Government,
the Reserve Bank or any banking company or such other financial institution as
may be notified by the Central government in this behalf, credit Information or
other information. Explanation,- For the purposes of this section, the expressions
"banking company" and "credit information" shall have the
same meanings as in section 45A of the Reserve Bank of
India Act, 1934. CHAPTER
VIII FUNDS, ACCOUNTS AND AUDIT (1)
The National
Bank shall establish and maintain a Fund to be known as the National Rural
Credit (Lone Term Operations) Fund. (2)
the Fund
shall (in addition to assets and liabilities transferred under section 18)
include,-- (a)
such sums of
money as the Central Government and the State Governments may contribute from
item to time; (b)
such sums of
money as the Reserve Bank may contribute every year; and (c)
such further
sums of money as the Board may contribute every year. (3)
the amount
in the said Fund shall be applied by the National Bank only to provide
financial assistance by way of loans and advances under section 23, section 24,
sub-section (1) of section 25 or section 27 or for the purposes of section
26. (1)
The National
Bank shall establish and maintain a Fund to be known as the National Rural
Credit (Stabilisation) Fund. (2)
The Fund
shall (in addition to assets and liabilities transferred under section 18)
include,-- (a)
such sums of
money as the Central Government and the State governments may contributes from
time to time; (b)
such sums of
money as the Reserve Bank, may contribute every year; and (c)
such further
sums of money as the Board may contribute every year. (3)
the amounts
in the said fund shall be applied by the National Bank only to provide loans
and advances under section 22. (1)
The National
Bank shall establish and maintain a Fund to be known as the Research and
Development fund, to which shall be credited— (a)
such sums of
money as are transferable to this fund in accordance with section 47; (b)
such sums of
money as the Board may contribute every year to this fund from out of its
annual profits; and (c)
such gifts,
grants, donations or benefactions which the National Bank may receive and which
the Board may earmark for this purpose. (2)
the Research
and Development Fund shall be expended on matters of importance to agriculture,
agricultural operations and rural development, including the provision of
training and research facilities and the[52] [making
of loans or advances or grants] under clause (iii) of section 38. The National
Bank shall establish a Reserve Fund[53][and
other funds] as the Board may consider necessary by transferring such sums as
it may deem fit, out of its annual profits an out of receipts from gifts,
grants, donations or benefactions, which it may receive. (1)
the
balance-sheet and accounts of the National Bank shall be prepared and
maintained in such form and manner as may be prescribed. (2)
The Board
shall cause the books and accounts of the National Bank to be balanced and
closed as on the thirtieth day of June,[54] [or
such other date in each year as the Central Government may, by notification in
the Official Gazette, specify.] [55] [Provided that with a view to facilitating the transition from one
period of accounting to another period of accounting under this sub-section,
the Central Government may, by order published in the Official Gazette, make
such provisions as it considers necessary or expedient for the balancing and
closing of, or for other matters relating to, the books or accounts in respect
of the concerned years.] After making
provision for bad and doubtful debts, depreciation of assets and all other
matters for which provision is necessary or expedient or which is usually
provided for by bankers, and for the funds referred to in section 42, 43 and
45, the National Bank shall transfer-- (i)
for a period
of fifteen years, following the accounting year during which the National Bank
is established, the amount remaining (thereafter in this section referred to as
surplus) to the Research and Development Fund under section 44; and [56] [(ii) after the expiry of the said period of fifteen years, the Board
shall, after making provision for the Fund referred to in clause (1), disburse
or spend the balance of the surplus in such manner as may be approved by the
Board.] (1)
the accounts
of the National Bank shall be audited by auditors duly qualified to act as
auditors under sub-section (1) of [57] [section 141 of the Companies Act, 2013 (18 of 2013)], who shall be appointed
by the Central Government in consultation with the Reserve Bank, for such term
and on such remuneration as the Central Government may fix (2)
the auditors
shall be supplied with a copy of the annual balance-sheet of the National Bank
and it shall be their duty to examine it together with the accounts and
vouchers relating thereto and they shall have a list delivered to them of all
books kept by the National Bank and shall at all reasonable times have access
to the books, accounts, vouchers and other documents of the National Bank. (3)
The auditors
may, in relation to the accounts of the National Bank, examine any director of
the Board or any officer or other employee of the National Bank and shall be
entitled to require from the Board or officers or employees of the National
Bank such information and explanation as they may think necessary for the
performance of their duties. (4)
the auditors
shall make a report to the National Bank upon the sheet-sheet and accounts
examined by them and in every such report, they shall state whether in their
opinion the balance-sheet is a full and fair balance-sheet containing all
necessary particulars and properly drawn up so as to exhibit a true and fair
view of the state of affairs of the National Bank and in case they had called
for any explanation or information form the Board or any officer or other
employee of the National Bank, whether it has been given and whether it is
satisfactory. (5)
the National
Bank shall furnish to the Central Government and the Reserve Bank within four
months from the date on which the annual accounts of the National Bank are
closed and balanced, a copy of its balance-sheet as on the close of that year
together with a copy of the profit and loss account for the year and a copy of
the auditors' report and a report of the working of the National Bank during
the relevant year and the Central Government shall as soon as may be after they
are received by it, cause the same to be laid before each House of Parliament
and cause the copies of the said balance-sheet, profit and loss account and
auditors' report to be published in the Official Gazette. (6)
Without
prejudice to anything contained in the preceding sub-sections, the Central
Government may, at any time, appoint the Comptroller and Auditor General of
India to examine and report upon the accounts of the National Bank and any
expenditure incurred by him in connection with such examination and report
shall be payable by the National Bank to the Comptroller and Auditor General of
India. The National Bank shall furnish from time to time, to the Central
Government and to the Reserve Bank such returns as the Central Government or
the Reserve Bank may require. CHAPTER
IX STAFF (1)
The National
Bank may appoint such number of officers and other employees as it considers
necessary or desirable for the efficient performance of its functions and
determine the terms and conditions of their appointment and service. (2)
Without
prejudice to the provisions of sub-section (1), it shall be lawful for the
National Bank to utilise, and for the Reserve Bank to make available, the
services of such staff of the Reserve Bank on such terms and conditions as may
be agreed upon between the National Bank and the Reserve Bank. (3)
Subject to
the provisions of sub-section (6), at any time before the expiry of six months
from the appointed day, the Reserve Bank may, in public interest, transfer to
the National Bank, such members of the staff of Reserve Bank whom the Reserve
Bank considers as engaged, or as suitable to be engaged, in attending to the
work of a nature which is same or similar to that which the National Bank may
require for its efficient functioning, and upon such transfer they shall be
deemed to be appointed by the National Bank under sub section (1)with effect
from the date of such transfer: Provided that every person so transferred may, before the expiry of a
period of six months from the appointed day, or before the expiry of a period
of thirty days from such transfer, whichever period expires later, elect to go
back to the Reserve Bank by exercising an option in writing to that effect, the
option once exercised being final, and on the exercise of such option, the
Reserve Bank shall, before the expiration of a period of eighteen months from
the appointed day, take back such member of the staff and he shall be deemed to
have been on deputation to the National Bank during the period he was a member
of the staff of the National Bank. (4)
(a) Any member of the staff of the Reserve
Bank who is not appointed under sub-section (3), may, if he so desires, make an
application to the Reserve Bank within six months from the appointed day, to be
considered for appointment as a member of the staff of the National Bank. (b) The Reserve Bank may, in consultation with the National Bank,
consider such application having regard to the suitability of the person so
applying, the availability of vacancies in the National Bank, the exigencies of
service in the Reserve Bank and the National Bank and such other factors as
maybe considered relevant in this regard, and, if the Reserve Bank is satisfied
having regard to these factors, that such applicant is suitable for being so
appointed recommend his appointment to the National Bank. (c) The National Bank may thereupon, within eighteen months from the
appointed day, appoint such a person applying under this sub-section as a
member of the staff of the National Bank and on such appointment, such a person
shall be deemed to have been appointed in the National Bank under sub-section
(3): Provided that the proviso to sub-section (3) and the proviso to
sub-section (3) and the proviso to sub-section (5) shall not apply in respect
of such person. (5)
Notwithstanding
anything contained elsewhere in this Act or in any other law or in any contract
for the time being in force at any time before the expiry of six months from
the appointed day the Reserve Bank may if it considers it necessary in
consultation with the National Bank so to do in the interest of the National
Bank , transfer on promotion any member of the staff of the National Bank to
the Reserve Bank, and on such transfer to the Reserve Bank, each such member of
the staff shall be deemed to be a member of the staff of the Reserve Bank and
shall be entitled to the same salary, emoluments and other conditions of
service to which he was entitled immediately before the date of such transfer
including benefits if any arising directly out of such promotion. Provided that every member of the staff who is transferred as aforesaid
may before the expiry of a period of six months from the appointed day or
within thirty days from such transfer, whichever period expires later elect to
go back to the National Bank by exercising an option in writing to that effect
the option once exercised being final and on the exercise of such option the
National Bank shall before the expiration of a period of eighteen months from
the appointed day, take back such member of the staff and he shall be deemed to
have been or deputation to the Reserve Bank during the period he was a member
of the staff of the Reserve Bank (6)
Every person— (a)
who
immediately before the date appointed under sub section (1) of section 16 is a
member of the staff of the Agricultural Refinance and Development Corporation
or (b)
who is a
member of the staff of the Reserve Bank but whose services are being utilised
immediately before that date by the said Corporation shall be deemed to appointed by the National bank under sub-section
(1)on the said date: Provided that every member of the staff of the Reserve Bank who is so
deemed to be appointed and who was not recruited specifically for
utilisationsin the Agricultural Refinance and Development Corporation may before
the expiry of a period of six months from the appointed day or within a period
of thirty days from the date appointed under sub-section (1) of section 16,
whichever period expires later, elect to go back to the Reserve Bank by
exercising an option in writing to that effect the option once exercised being
final and on the exercise of such option, the Reserve Bank shall before the
expiration of a period of eighteen months from the appointed day, take back
such member of the staff and he shall be deemed to have on deputation to the
National Bank during the period he was a member of the staff of the National
Bank. (7)
Notwithstanding
anything contained in any other law or in any agreement for the time being in
force no member of the staff shall be entitled to claim any compensation for,
or in relation to any matter concerning his transfer, appointment or as the
case may be, return, under sub-sections (3) to(6) and no claim in respect
thereof shall be entertained by any court, tribunal or other authority. (8)
Subject to
the provisions of sub-section (10) and subsection (11)every member of the staff
of the Agricultural Refinance and Development Corporation or of the Reserve
Bank who is deemed to be appointed as a member of the staff of the National
Bank under this section, shall be deemed to have been appointed by the National
Bank on the same salary, emoluments and other terms and conditions of service
to which he has entitled immediately before his appointment in the National
Bank. (9)
The
provisions relating to superannuation benefits namely the regulations relating
to provident fund and the rules relating to payment of gratuity and
compassionate gratuity and any other provision relating to superannuation as
are applicable to the staff of the Reserve Bank on the appointed day shall, so
far as may be apply to the staff of the National Bank, unless an until the
National Bank alters or amends the same: Provided that after the appointed day, any such alteration or amendment
may be effected by the National Bank as regards provident fund regulations in
accordance with section 60 and as regards the other rules in the manner they
would have been altered or amended but for this sub-section; Provided further that after the expiry of six months from the appointed
day, the balances held in the Reserve Bank of India Employees Provident Fund to
the credit of any member of the staff of the Reserve Bank whose services a
retransferred under this section to the National Bank and who does not opt to
go back to the Reserve Bank, shall be transferred to, and held in, the
Provident Fund of the National Bank on same or similar terms subject to which
those balances were held earlier in the Reserve Bank of India Employees
Provident Fund. (10)
Notwithstanding
anything contained in any other law, settlement or agreement every person
employed by the National Bank or whose services have been transferred to the
National Bank under this Act, shall be liable to serve anywhere in India. (11)
Notwithstanding
anything contained in the industrial Disputes Act,1947 or any other law for the
time being in force or in any award, judgment decree decision or order of any
Industrial Tribunal, Court or other authority or any settlement or agreement
made or entered into before the date of transfer to the National Bank of the
services of any person under this section the National Bank shall be free to
alter amend or repeal in such manner and to such extent it may consider
necessary any of the terms and conditions of services applicable to such
persons whose services are so transferred to the National Bank and who a
reappointed in the National Bank under this section except that the National
Bank shall not alter to their prejudice the terms relating to payment of salary
and other emoluments, retirement benefits and eligibility for leave Explanation- For the purposes of this section "appointed day"
means the date of establishment of the National Bank under section 3. CHAPTER
X MISCELLANEOUS (1)
The National
Bank shall not, except as otherwise required by this Act or any other law,
divulge any information relating to, or to the affairs of, its constituents
except in circumstances in which it is, in accordance with the law or practice
and usage customary among bankers, necessary or appropriate for the National
Bank to divulge such information. (2)
Every
director, member of a committee, auditor, officer or other employee of the
National Bank or of the Reserve Bank, whose services are utilized by the
National Bank under the provisions of this Act, shall before entering upon his
duties, make a declaration of fidelity and secrecy in the form set out in the
First Schedule to this Act. [58]"(3) Nothing contained in this section shall apply to the credit
information disclosed under the Credit Information Companies (Regulation) Act,
2005." (1)
No act or
proceeding of the Board or of any committee of the National Bank shall be
questioned on the ground merely of the existence of any vacancy in, or defect
in the constitution of the Board or the committee as the case may be (2)
No act done
by any person acting in good faith as director of the Board or as a member of a
committee of the National Bank shall become invalid merely on the ground that
he was disqualified to be a director or that there was any other defect in his
appointment. (1)
Where any
agreement entered into by the National Bank with a company or a body corporate
while granting loans and advances, provides for the appointment by the National
Bank of one or more directors of such company or body corporate, such
provisions and any appointment of directors made in pursuance thereof shall be
valid and effective, notwithstanding anything to the contrary contained
in [59]
[the Companies Act, 2013 (18 of 2013)] or in any other law for the time being
in force, or in the memorandum, articles of association or any other instrument
relating to the company or body corporate, and any provision regarding share
qualification, age-limit, number of directorships, removal from office of
directors and such like conditions contained in any such law or instrument
aforesaid, shall not apply to any director appointed by the National Bank in
pursuance of the agreement as aforesaid. (2)
Any director
appointed as aforesaid shall— (a)
hold office
during the pleasure of the National Bank and may be removed or substituted by
any person by order in writing of the National Bank; (b)
not incur
any obligation or liability by reason only of his being a director or for
anything done or omitted to be done in good faith in the discharge of his
duties as a director or anything in relation thereto; (c)
not be
liable to retirement by rotation and shall not be taken into account for
computing the number of directors liable to such retirement.][60] No suit or other legal proceeding shall lie against the National Bank or
any director or any officer or other employee of the National Bank or any other
person authorised by the National Bank to discharge any functions under this
Act for any loss or damage caused or likely to be caused by anything which is
in good faith done or intended to be done in pursuance of this Act or of any
other law or provision having the force of law. (1)
Every
director shall be indemnified by the National Bank against all losses and
expenses incurred by him in, or in relation to, the discharge of his duties
except such as are caused by his own willful act or default. (2)
A director
shall not be responsible for any other director or for any officer or other
employee of the National Bank or for any loss or expenses resulting to the
National Bank from the insufficiency or deficiency of the value of, or title
to, any property or security acquired or taken on behalf of the National Bank
or the insolvency or wrongful act of any debtor or any person under obligation
to the National Bank or any thing done in good faith in the execution of the
duties of his office in relation thereto [61][****] (1)
Whoever in
any return, balance-sheet or other document or in any information require or
furnished by or under or for the purposes of any provision of this Act,
willfully makes a statement which is false in any material particular, knowing
it to be false, or willfully omits to make a material statement shall be
punishable with imprisonment for a term which may extend to three years and
shall also be liable to fine. (2)
[If any person fails to produce any
book, account or other document, or to furnish any statement or information
which, under the provisions of this Act, it is his duty to produce or furnish,
he shall be liable to penalty which may extend to one lakh fifty thousand
rupees in respect of each failure and in the case of a continuing failure, an
additional penalty which may extend to seven thousand five hundred rupees for
every day during which the failure continues after the first such failure. (3)
For the purpose of adjudging penalty
under sub-section (2), the National Bank shall serve notice on the person
requiring it to show cause why the amount specified in the notice should not be
imposed as a penalty and a reasonable opportunity of being heard shall also be given
to such person. (4)
Any penalty imposed by the National
Bank under this section shall be payable within a period of fourteen days from
the date on which notice issued by the National Bank demanding payment of the
sum is served on the person and, in the event of failure of the person to pay
the sum within such period, may be levied on a direction made by the principal
civil court having jurisdiction in the area where the person is situated:
Provided that no such direction shall be made except on an application made to
the court by the National Bank or by any officer authorised by the National
Bank in this behalf. (5)
The court which makes a direction under
sub-section (4) shall issue a certificate specifying the sum payable by the
person and every such certificate shall be enforceable in the same manner as if
it were a decree made by the court in a civil suit. (6)
No complaint shall be filed against any
person in any court relating to any contravention or default in respect of
which any penalty has been imposed by the National Bank under sub-section (2). (7)
Where any complaint has been filed
against any person in any court in respect of the contravention or default of
the nature referred to in sub-section (1), then, no proceedings for the
imposition of any penalty on the person shall be initiated under sub-section
(2).][62] (1)
Where an offence
has been committed by a company every person who at the time the offence was
committed was in charge of and was responsible to the company for the conduct
of the business of the company as well as the company shall be deemed to be
guilty of the offence and shall be liable to be proceeded against and punished
accordingly. Provided that nothing contained in this sub-section shall render any
such person liable to any punishment in this Act, if he proves that the offence
was committed without his knowledge or that he exercised all due diligence to
prevent the commission of such offence. (2)
Notwithstanding
anything contained in sub-section (1) where an offence under this Act has been
committed by a company and it is proved that the offence has been committed with
the consent or connivance of, or is attributable to any neglect on the part of
any director, manager, secretary or other officer of the company such director
manager secretary or other officers shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and punished
accordingly. Explanation--For the purposes of this action - (a)
company
means anybody corporate and includes a firm or other association of individuals
and (b)
"director"
in relation to a firm means a partner in the firm The Bankers
Books Evidence Act, 1891 shall apply in relation to the National Bank as if it
were a bank as defined in section 2 of that Act No provision
of law relating to the winding up of companies shall apply to the National Bank
and the National Bank shall not be placed in liquidation save by order of the
Central Government and is such manner as it may direct. (1)
The Board
may with the previous approval of the Central Government and in consultation
with the Reserve Bank by notification make regulations not inconsistent with
this Act to provide for all matters for which provision is necessary or
expedient for the purpose of giving effect to the provisions of this Act. (2)
In
particular and without prejudice to the generality of the foregoing power such
regulations may provide for all or any of the following matters namely:-- (a)
the fees or
allowances that may be paid to the directors or members of the Advisory Council (b)
the times
and places of the meetings of the Board or the Executive Committee or the
Advisory Council and the procedure to be followed at such meetings including
the quorum necessary for the transaction of business; (c)
the number
of directors constituting the Executive Committee and the functions that such
Committee shall discharge; (d)
the manner
and terms of issue and redemption of bonds and debentures by the National Bank; [63] [***] (e)
The form and
manner in which the balance sheets and the accounts of the National Bank shall
be prepared or maintained [64] [***] (f)
the duties
and conduct, salaries, allowances and conditions of service of officers and
other employees; (g)
the
establishment and maintenance of provident or other benefit funds for employees
of the National Bank and (3)
Any
regulation which may be made by the Board under this Act may be made by the
Reserve Bank, in consultation with the Central Government, before the expiry of
three months from the date of establishment of the National Bank, and any
regulation so made may be altered and rescinded by the Board in the exercise of
its powers under this Act. (4)
The power to
make regulations conferred by this section shall include the power to give
retrospective effect to the regulations or any of them from a date not earlier
than the date of commencement of this Act, but no retrospective effect shall be
given to any regulation so as to prejudicially affect the interest of any
person to whom such regulation may be applicable. (5)
The Central
Government shall cause every regulation made under this Act to be laid as soon
as may be after it is made before each House of Parliament while it is in
session, for a total period of thirty days which may be comprised in one
session or in two or more successive sessions and if before the expiry of the
session immediately following the session or the successive sessions aforesaid
both Houses agree in making any modification or annulment shall be without prejudice
to the validity of anything previously under that regulation [Omitted by Repeating and Amending Act 1988, w.e.f. 31-4-88.] If any difficulty arises in giving effect to the provisions of this Act,
the Central Government may, by order not inconsistent with the provisions of
this Act, remove the difficulty; Provided that no such order shall be made after the expiry of a period
of three years from the commencement of this Act. THE FIRST SCHEDULE [See section 51(2)] DECLARATION OF FIDELITY AND SECRECY I do hereby declare that I will faithfully, truly and to the best of my
skill and ability execute and perform the duties required of me as director,
auditor officer or other employee (as the case may be) of the National Bank for
Agriculture and Rural Development and which properly relate to the office of
position held by me in the said National Bank I further declare that I will not communicate or allow to be
communicated to any person not legally entitled thereto any information
relating to the affairs of the National Bank for Agriculture and Rural
Development or to the affairs of any person having any dealing with the said
National Bank nor will I allow any such person to inspect or have access to any
books or documents belonging to or in the possession of the National Bank for
Agriculture and Rural Development and relating to the business of the said
National Bank or the business of any persons having any dealing with the said
National Bank Signed before me (Signature) [65] [THE SECOND SCHEDULE] (See section 61) [Omitted by Repeating and Amending Act 1988, w.e.f. 31-4-88.] "AMENDMENTS TO CERTAIN ENACTMENTS PART I AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934 (2 OF 1934) Amendments (1)
In section
2. – (a)
clauses (a),
(ai), (bi), (bii), (biii), (biv), (bv), (bvii), (ci), (cii), (cia), (cii),
(ciii), (civ), (cv) and (f) shall be omitted; (b)
after clause
(cc) the following clause shall be inserted namely:-- '(ccc)' National Bank means the National Bank for Agriculture and Rural
Development established under section 3 of the National Bank for
Agriculture and Rural Development Act, 1981; (c)
after clause
(g) the following clauses shall be inserted namely:- (h) agricultural operations, central co-operative
bank, co-operative society, crops, marketing of crops, pisciculture, regional
rural bank and State co-operative bank shall have the meanings respectively
assigned to them in the National Bank for Agriculture and Rural Development
Act, 1981; (i) co-operative bank,
co-operative credit society, director, primary agricultural credit society,
primary co-operative bank and primary credit society shall have the meanings
respectively assigned to them in Part V of the Banking Regulation Act, 1949.
(10 of 1949. ) (2)
In section
8, in sub-section (2), after the exiting proviso, the following proviso shall
be inserted, namely:, "Provided further that the Central Government may, in consultation
with the Bank appoint a Deputy Governor as the Chairman of the National Bank on
such terms and conditions as that Government may specify". (3)
In section
17,-- (a)
for clause
(4AA), the following clause shall be substituted, namely:, "(4AA) the making of annual contributions to the National Rural
Credit (Long Term Operations) Fund and the National Rural Credit(Stabilisation)
Fund established under sections 42 and 43,
respectively, of the National Bank for Agriculture and Rural Development Act
1981,"; (b)
for clause
(4E) the following clause shall be substituted. namely,- "(4E) the making to the National Bank of loans and advances
repayable on demand or on the expiry of fixed period not exceeding eighteen
months from the date of making of the loan or advance, either- (i)
against the
security of stocks, funds and securities (other than immovable property) in
which a trustee is authorised to invest trust money by any law for the time
being in force in India; or (ii)
on such
other terms and conditions as the Bank may specify', (c)
in clause
(8A), for the expression: Agricultural refinance and Development
Corporation", the expression "National Bank" shall be
substituted. (4)
For
sub-section (3) of section 33, the following sub-section shall be substituted,
namely:-- "(3) The remainder of the assets shall be held in rupee coin, Government
of India rupee securities of any maturity, promissory notes drawn by the
National Bank for any loans or advances under clause (4e) of section 17 and
such bills of exchange and promissory notes payable in India as are eligible
for purchase by the Bank under sub-clause 9a) or sub-clause (b) or sub
-clause(bb) of clause(2) of section 17 or under clause (1) of section
18". (5)
In section
42,-- (a)
in the
Explanation occurring after sub-section (1) in subclause (ii) of clause (c),
for the expression:Agricultural Refinance and Development Corporation",
the expression "National Bank" shall be substituted: (b)
after
sub-section (6), the following sub-section shall be inserted namely:- "(6A) In considering whether a State co-operative bank or a regional
rural bank should be included in or excluded from the Second schedule, it shall
be competent for the Bank to act on a certificate from the National Bank on the
question whether or not a State co-operative bank or a regional rural bank, as
the case may be, satisfies the requirements as to paid-up capital and reserves
or whether its affairs are not being conducted in a manner detrimental to the
interests of its depositors". (6)
For section
45, following section shall be substituted, namely:- 45. appointment of agents. -- (1)
Unless
otherwise directed by the Central Government with reference to any place, the
Bank may, having regard to public interest, convenience of banking, banking
development and such other factors which in its opinion are relevant in this regard,
appoint the National Bank,. or the State Bank, or a corresponding new bank
constituted under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970,(5 of 1970) or a
corresponding new bank constituted under section 3 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980,(40 of
1980) or any subsidiary bank as defined in the State Bank of India (Subsidiary
Banks) Act, 1959,(38 of 1959) as its agent at all places, or at any place in
India for such purposes as the Bank may specify. (2)
When any
bank is appointed by the Bank as its agent under sub-section (1) to receive on
behalf of the Bank any payment required to be made into the Bank, or any bill,
hundies or other securities required to be delivered into the Bank, under any
law or rule, regulations or other instructions having the force of law, the
same may be paid or delivered into the bank so appointed as the agent of the
Bank". (7)
On and from
the date appointed under sub-section(1) of section 18 of the
national Bank for Agriculture and Rural Development Act, 1981, for sections 46A
and 46B, the following section shall be substituted, namely:- 46A. Contribution to National Rural Credit (Long Term Operations) Fund
and National Rural Credit (Stabilisation) Fund. -- The bank
shall contribute every year such sums of money as it may consider necessary and
feasible to do so, to the National Rural Credit (Long Term Operations) Fund and
the National Rural Credit (Stabilisation) Fund established and maintained by
the National Bank under sections 42 and 43,
respectively, of the National Bank for Agriculture and Rural development Act,
1981.:" (8)
For section
54, the following section shall be substituted, namely:- 54. Rural Credit and Development. -- The Bank may
maintain expert staff to study various aspects of rural credit and development
and in particular it may,- (a)
Tender
expert guidance and assistance to the National Bank:, (b)
conduct
special studies in such areas as it may consider necessary to do for promoting
integrated rural development". PART II AMENDMENTS TO THE BANKING REGULATION ACT, 1949 (10 of 1049) Amendments (1)
In section
5, (i)
after clause
(h), the following clause shall be inserted, namely:-- '(ha) "National Bank" means the National Bank for Agriculture
and Rural Development established under section 3, of the
National Bank for Agriculture and Rural Development Act, 1981; (ii)
after clause
(j), the following clause shall be inserted, namely:-- '(ja) "regional rural bank" means a regional rural bank
established under section 3 of the Regional Rural Banks
Act, 1976; (21 of 1976) (2)
In section
23, after sub-section (4), the following sub-section shall be inserted,
namely:-- "(4A) Any regional rural bank requiring the permission of the
Reserve Bank under this section shall forward its application to the Reserve
Bank through the National Bank which shall give its comments on the merits of
the application and send it to the Reserve Bank: Provided
that the regional rural bank shall also send an advance copy of the application
directly to the Reserve Bank", (3)
In section
24, to sub-section(3), the following proviso shall be added, namely:--0 "Provided
that every regional rural bank shall also furnish a copy of the said return to
the National Bank". (4)
In section
25, to sub-section (2) the following proviso shall be added, namely:-- "Provided
that every regional rural bank shall also furnish a copy of the said return to
the National Bank". (5)
In section
26, after the existing proviso, the following proviso shall be inserted,
namely:-- "Provided
further that every regional rural bank shall also furnish a copy of the said
return to the National Bank". (6)
In section
27, after sub-section (2) the following sub-section shall be inserted,
namely:-- "(3) Every regional rural, bank shall submit a copy of the return
which it submits to the Reserve Bank under sub-section(1_ also to the National
Bank and the exercisable by the Reserve Bank under sun-section (2) may also be
exercised by the National Bank in relation to regional rural banks.". (7)
For section
28, the following section shall be substituted, namely:- 28. Power of public information. -- The Reserve
Bank or the National Bank or both if they consider it in the public interest so
to do, may publish any information obtained by them under this Act in such
consolidated form as they think fit", (8)
In section
32, after the existing proviso, the following proviso shall be inserted,
namely:-- "Provided
further that a regional rural bank shall furnish such returns also to the
National Bank". (9)
In
sub-section (3) of section 34A after the words "the Industrial Development
Bank of India". the words "the National Bank" shall be
inserted. (10)
In section
35, after sub-section (5), the following sub-section shall be inserted,
namely:-- "(6) The powers execrable by
the Reserve Bank under this section in relation to regional rural banks may
(without prejudice to the exercise of such powers by the Reserve Bank in
relation to any regional rural bank whenever it considers necessary so to do)
be exercised by the National Bank in relation to the regional rural banks, and
accordingly, sub-sections (1) to (5) shall apply in relation to regional rural
banks as if every reference therein to the reserve Bank included also a
reference to the National Bank". (11)
In sub-section
(3) of section 36AD, after the words 'the Industrial Development Bank of
India", the words " the National Bank" shall be inserted. (12)
In section
47, for the words " the Reserve Bank", wherever they occur the
words,:the Reserve Bank or, as the case may be the National Bank" shall be
substituted. (13)
In section
56, (I)
in clause
(c) for sub-clause (I) the following sub-clause shall be substituted namely:-- "(I) after clause (cc), the
following clauses shall be inserted, namely:-- '(cci) "cooperative bank" means a state cooperative bank a
central cooperative bank and a primary cooperative bank; (ccii) "co operative credit society" means a cooperative
society, the primary object of which is to provide financial accommodation to
its members and includes a cooperative land mortgagee bank" (cciii) "director", in relation to a cooperative society,
includes a member of any committee or body for the time being vested with the
management of the affairs of that society; (cciv) "primary agricultural credit society' means a cooperative
society. – (1)
the primary
object or principal business of which is to provide financial accommodation to
its members for agricultural purposes or for purposes connected with
agricultural activities (including the marketing of crops); and (2)
the bye-laws
of which do not permit admission of nay other cooperative society as a member: Provided
that this sub-clause shall not apply to the admission of a cooperative bank as
a member by reason of such cooperative bank subscribing to the share capital of
such co-operative society out of funds provided by the State Government for the
purpose; (ccv) "primary cooperative bank" means a cooperative society
other than a primary agricultural credit society,-- (1)
the primary
object or principal business of which is the transaction of banking business; (2)
the paid-up
share capital and reserves of which are not less than one lakhs of rupees; and (3)
the bye-laws
of which do not permit admission of any other cooperative society as a member: Provided
that this sub-clause shall not apply to the admission of a cooperative bank as
a member by reason of such cooperative bank subscribing to the share capital of
such co-operative society out of funds provided by the State Government for the
purpose; (ccvi) "Primary credit society" means cooperative society,
other than a primary agricultural credit society. - (1)
the primary
object or principal business of which is the transaction of banking business; (2)
the paid-up
share capital and reserves of which are less than one lakhs of rupees; and (3)
the bye-laws
of which do not permit admission of any other co-operative society as a member: Provided
that this sub-clause not apply to the admission of a co-operative bank as a
member by reason of such co-operative bank subscribing to the share capital of
such co-operative society out of funds provided by the State Government for the
purpose. Explanation--If any dispute arises as to the primary object or principal
business of any con-operative society referred to in clause (cciv) and (ccvi) a
determination thereof by the Reserve Bank shall be final; (ccvii) "central co-operative bank", "co-operative
society", "primary rural credit society" and "state
co-operative bank" shall have the meanings respectively assigned to them
in the National Bank for Agriculture and Rural Development Act, 1981;';"; (II)
in clause
(p),-- (a)
for the
words, figures and brackets "in section 23, for sub-section (1), the
following sub-section shall be substituted, namely", the following shall
be substituted, namely:-- "in
section 23,-- (I)
for
sub-section (1), the following sub-section shall be substituted, namely"; (b)
after
sub-clause (I), the following sub-clause shall be inserted, namely:-- '(ii) after sub-section (4), the
following sub-section shall be inserted, namely:-- "(4A) Any co-operative bank requiring the permission of the Reserve
Bank under this section shall forward its application to the Reserve Bank
through the National Bank which shall give its comments on the merits of the
application and send it to the Reserve Bank: Provided
that the co-operative bank shall also send an advance, copy of the application
directly to the Reserve Bank.";'; (III)
in clause
(q), after sub-clause (ii), the following sub-clause shall be inserted,
namely:-- "(iii) to sub-section (3), the following proviso shall be added,
namely:-- 'Provided
that every co-operative bank, other than a primary co-operative bank, shall
also furnish a copy of the said return to the National Bank. '"; (IV)
after clause
(r), the following clauses shall be inserted, namely:-- (ri) in the second proviso to section 26, for the expression
"regional rural bank", the expression "co-operative bank, other
than a primary co-operative bank" shall be substituted; (rii) in section 27, for sub-section (3), the following sub-section
shall be substituted, namely:-- "(3) Every co-operative bank, other than a primary co-operative
bank, shall submit a copy of the return which it submits to the Reserve Bank,
under sub-section (1) also to the National Bank and the powers expressible by
the Reserve Bank under sub-section (2) may also be exercised by the National
Bank in relation to co-operative banks, other than primary co-operative
banks.",'; (V)
for clause
(t), the following clause shall be substituted, namely:-- '(t) in section 31,-- (i)
for the
words "within three months" and " of three months", the
words "within six months" and "of six months" shall,
respectively, be substituted; (ii)
for the
second proviso, the following proviso shall be substituted, namely:-- "Provided
further that a co-operative bank, other than a primary co-operative bank, shall
furnish such returns also to the Natioanalised Bank.";'; (VI)
in clause
(iv), existing sub-clause (iii) shall be re-numbered as sub-clause (iv) and
before sub-clause (iv) as so re-numbered, the following sub-clause shall be
inserted, namely:-- '(iii) in sub-section (6), for the expressions "regional rural
banks" and "regional rural bank", wherever they occur, the
expressions "co-operative banks other than primary co-operative
banks" and "co-operative bank other than a primary co-operative
bank" shall, respectively, be substituted.'; (VII)
after clause
(zj), the following clause shall be inserted, namely:-- '(zji) in section 54, after the expression "Reserve Bank",
wherever it occurs, the expression "or the National Bank" shall be
inserted. '; (VIII)
in the Third
Schedule as substituted by clause (zi), after the expression "Reserve
Bank", wherever it occurs, the expression "the National Bank"
shall be inserted. (14)
On the
Banking Regulation Act, 1949,(10 of 1949) for the words "Agricultural
Refinance Corporation", wherever they occur, the words "National
Bank" shall be substituted. PART III AMENDMENT TO THE INDUSTRIAL, DISPUTES ACT, 1947 (14 OF 1947) Amendment In section
2, in clause (a), for the words and figures "the Agricultural Refinance
Corporation established under section 3 of the Agricultural Refinance
Corporation Act, 1963" (10 of 1963), the words and figures "the
National Bank for Agriculture and Rural Development established under section 3 of the
National Bank for Agriculture and Rural Development Act, 1981" shall be
substituted. PART IV AMENDMENT TO THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961 (47 OF 1961) Amendment In section
2, for clause (q), the following clauses shall be substituted namely:- '(q) the expressions "central
co-operative bank", "co-operative society" and "State
co-operative bank" shall have the meanings respectively assigned to them
in the National Bank for Agriculture and Rural Development Act, 1981; (r) the expressions
"primary co-operative bank" and "primary credit society"
shall have the meanings respectively assigned to them in Part V of the Banking
Regulation Act, 1949. '. PART V AMENDMENT TO THE PAYMENT OF BONUS ACT, 1965 (21 OF 1965) Amendment In section
32, for sub-clause (d) of clause (ix), the following sub-clause shall be
substituted, namely:-- "(d) the National Bank for Agriculture and Rural Development." [1]
Substituted by National Bank For Agriculture And Rural Development (Amendment)
Act, 2000 (55 of 2000). Prior to substitution it read as under: "An Act to establish a bank to be known as the
National Bank for Agriculture and Rural Development for providing credit for
the promotion of agriculture, small-scale industries, cottage and village
industries, handicrafts and other rural crafts and other allied economic
activities in rural areas with a view to promoting integrated rural development
and securing prosperity of rural areas, land for matters connected therewith or
incidental thereto." [2]
Substituted by the National Bank For Agriculture And Rural Development
(Amendment) Act, 2018 for the following :- " small-scale industries, cottage and village
industries" [3]
"of the Board" omitted by National Bank For Agriculture And Rural
Development (Amendment) Act, 2000 (55 of 2000) [4]
Omitted by the National Bank For Agriculture And Rural Development (Amendment)
Act, 2018 for the previous text was :- "(i) "industry in the tiny and
decentralized sector" means industrial concerns in the tiny and
decentralized sector and "industrial concern in the tiny and decentralized
sector" means an industrial concern in which the investment in machinery
and plant is not in excess of rupees two lakhs or such higher amount as the
Central Government may specify by notification in this behalf having regard to
trends in industrial development and other relevant factors;" [5]
Inserted by the National Bank For Agriculture And Rural Development (Amendment)
Act, 2018. [6]
Substituted by the National Bank For Agriculture And Rural Development
(Amendment) Act, 2018 for the following :- " industry in the tiny and decentralized
sector and small-scale industry and handicrafts" [7]
Omitted by the National Bank For Agriculture And Rural Development (Amendment)
Act, 2018 for the previous text was :- "(t) "small-scale industry" means
industrial concerns in the small scale sector and " industrial concern in
the small scale sector" means an industrial concern-- (i) in which the investment in machinery and plant
is not in excess of rupees twenty lakhs or such higher amount as the Central
Government may specify by notification in this behalf having regard to trends
in industrial development and other relevant factors, and (ii) which is not an industrial concern in the tiny
and decentralized sector;" [8]
Substituted by the National Bank For Agriculture And Rural Development
(Amendment) Act, 2018 for the following :- " Bombay" [9]
Substituted by the National Bank For Agriculture And Rural Development
(Amendment) Act, 2018 for the following :- "Provided that the Central Government may, in
consultation with the Reserve Bank and by notification, increase the said
capital up to[five thousand crores] of rupees." [10] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "[(2) The capital of the National Bank shall
be subscribed to by the Central Government and the Reserve Bank to such extent
and in such proportion as may be notified by the Central Government in
consultation with the Reserve Bank, from time to time: Provided that the National Bank may issue capital
to such institutions and persons in such manner as may be notified by the
Central Government: Provided further that the combined shareholding of
the Central Government and the Reserve Bank shall not at any time be less than
fifty-one per cent, of the total subscribed capital.]" [11] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it
read as under: "(1) The Board of Directors of the National
Bank shall consist of the following namely:- (a) a Chairman; (b) two directors from amongst experts in rural
economies, rural development handicrafts and other rural crafts, village and
cottage industries and small-scale industries or in any other matter, the
special knowledge or professional experience in which is considered by the
Central Government as useful to the National Bank; (c) three directors out of whom two shall be
persons with experience in the working of co-operative banks and one shall be a
person with experience in the working of commercial banks; (d) three directors from out of the directors of
the Reserve Bank; (e) three directors from amongst the officials of
the Central Government ; (f) two directors from amongst the officials of the
state Government ; and (g) a Managing Director. (2) The Chairman and other directors shall be
appointed by the Central Government in consultation with the Reserve Bank;
[Provided that no such consultation shall be necessary in the case of directors
appointed under clause (e) of sub-section (1).] (3) Where the Central Government is satisfied in
consultation with the Reserve Bank and [***], that it is necessary so to do it
may appoint one or more whole-time directors with such designations as may be
deemed appropriate by that Government and any whole-time director so appointed
shall also be a member of the Board;" [12] Substituted by the National Bank For Agriculture And
Rural Development (Amendment) Act, 2018 for the following :- "small-scale industries" [13] Omitted by Banking Laws (Amendment) Act 1985,
w.e.f.1-5-86. [14] Omitted by Banking Laws (Amendment) Act 1985,
w.e.f.1-5-86. [15] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [16] Omitted by
Banking Laws (Amendment) Act 1985, w.e.f.1-5-86. [17] Inserted by
Banking Laws (Amendment) Act 1985, w.e.f.1-5-86. [18] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [19] Substituted by Banking, Public Financial
Institutions and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88.
Prior to substitution section 7(2) stood as under " The directors
appointed under clauses (b) to (f) of sub-section (1) of section 6 shall hold
office for a term of three years. Provided that such director shall notwithstanding
the expiration of his term continue to hold office until his successor enters
upon his office. [20] Words "and thereafter until his successor
enters upon his office" Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). [21] Words " any other director referred to in
sub-section 2" omitted by Banking, Public Financial Institutions and
Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88. [22] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it
read as under: "(4) The Chairman and the directors referred
to in sub-section (2) shall be paid such fees and allowances as may be
prescribed for attending the meetings of the Board or of any of its committees
and for attending to any other work of the National Bank: Provided that no such fee shall be payable to the
Chairman or any other director who is an officer of the Government or an
officer of the Reserve Bank." [23] Inserted by Banking, Public Financial Institutions
and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88. [24] Inserted by
National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55
of 2000) [25] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [26] Substituted for "the Board shall" by
National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55
of 2000). [27] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "small-scale industries" [28] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it
read as under: "(a) issue and sell bonds and debentures
carrying interest, which bonds and debentures shall be guaranteed by the
Central Government as to the repayment of principal and payment of interest at
such rates as may be by the Central Government in consultation with the Reserve
Bank of the time the bonds or debentures are issued." [29] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it
read as under: "(b) borrow money from the Reserve Bank
repayable on demand or on the expiry of fixed periods not exceeding eighteen
months from the date of the making of the loan or advance, on such terms and
conditions including the terms relating to security and purpose as may be
specified by the Reserve Bank. (c) borrow money from the Central Government and
from any other authority or organisation or institution approved by that Government
on such terms and conditions as may be agreed upon; (d) accept the Central Government , a State
Government a local authority a State land development bank, a State
co-operative bank or a scheduled bank or any person approved by the Central
Government in this behalf, deposits repayable after the expiry of the period
which shall not in any case be less than twelve months from the making of such
deposit and on such other terms as the National Bank may with the prior
approval of the Reserve Bank fix and (e) receive gifts grants, donations and
benefactions from Government or any other source." [30] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it
read as under: "20 . Borrowings in foreign currency. -- (1) Notwithstanding anything contained in the
Foreign Exchange Regulation Act, 1973, or in any other law for the time being
in force relating to foreign exchange the National Bank may borrow with the
previous approval of the Central Government and in consultation with the
Reserve Bank, foreign currency from any bank or financial institution in India
or elsewhere. (2) The Central Government may guarantee loans
taken by the National Bank under sub-section (1) as to the repayment of
principal and the payment of interest thereon and other incidental
charges." [31] Words "to State Co-operative banks"
substituted by National Bank for Agriculture and Rural Development (Amendment)
Act, 2003. [32] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "small-scale industries industries in the tiny
and decentralized sector village and cottage industries or of those engaged in
the field of handicrafts" [33] Words "to any State Co-operative bank"
substituted by National Bank for Agriculture and Rural Development (Amendment)
Act, 2003. [34] Section 22 substituted by National Bank for
Agriculture and Rural Development (Amendment) Act, 2003. Prior to substitution
it read as under: "22. Conversion loan for production credit. -- Where the National Bank is satisfied that owing to
drought famine or other natural calamities, military operations or enemy
action. any State co-operative bank, regional bank or any such financial
institution or any financial institution falling under any such class or
financial institution as may be approved by the Reserve Bank in this behalf,
requires assistance under this section it may provide to such bank or
institution such financial assistance as it may deem fit by way of making loans
and advances repayable on the expiry of fixed periods not exceeding seven years
and on such terms and conditions as may be specified in this behalf by the
National Bank. Provided that loans and advances may be under this
section only for the purpose of enabling the borrowing bank or
institution. (i) to pay any dues to the National Bank for credit
extended for financing agricultural operations or the marketing of crops under
clause (1) of sub section (1) of section 21 or (ii) to make to central co-operative banks or
primary rural credit societies loans or advances repayable on the expiry of
fixed periods not being less than eighteen months and not exceeding seven years
by way of societies for agriculture or agricultural operations or for
reimbursement of such loans or advances which have been converted into loans or
advances repayable on expiry of fixed periods not being less than eighteen
months and not exceeding seven years from the date of conversion. Provided further that no loan or advance shall be
made under this section to the State Co-operative bank unless such loan or
advance is fully guaranteed as to the repayment of the principal and payment of
interest by the State Government. [35] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "small-scale industries, industries in the
tiny and decentralised sector, village and cottage industries and those engaged
in the field of handicrafts and other rural crafts" [36] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- " small-scale industries, industries in the
tiny and decentralised sector, village and cottage industries and those engaged
in the field of handicrafts" [37] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). [38] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [39] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). "(3) Notwithstanding anything contained in
sub-section (1) or sub-section (2) no guarantee or security referred to therein
shall be required in any case in which the Board, for reasons to be recorded by
it in writing decides having regard to the nature and scope of the scheme or
schemes for which accommodation is granted by the National Bank that such
security or guarantee is not necessary." [40] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [41] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under: "32. Issue of guarantees. -- The National Bank may guarantee, with the prior
approval of the Central Government and on such terms and conditions as may be
agreed upon deferred payments in connection with the purchase of capital goods (i) due from a co-operative society approved by the
Reserve Bank in this behalf or such other institution which may, on the
recommendation of the Reserve Bank, be approved by the Central Government in
this behalf, or (ii) due from any other person and guaranteed to
the National Bank by a State land development bank or a State co-operative bank
or a scheduled bank." [42] Substituted for "under this Chapter with a
borrowing institution " by National Bank For Agriculture And Rural
Development (Amendment) Act, 2000 (55 of 2000) [43] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). "34.Power to call for repayment before agreed
period. -- Notwithstanding anything to the contrary contained
in any agreement the National Bank may, by notice in writing require any
borrowing institution to which it has granted any loan or advance to discharge
forthwith in full its liabilities to the National Bank- (a) if it appears to the Board that false or
misleading information in any material particular was given in the application
for the loan or advance or (b) if the borrowing institution has failed to
comply with any of the terms of its contract with the National Bank in the
matter of the loan or advance, or (c) if there is a reasonable apprehension that the
borrowing institution is unable to pay its debts or that proceedings for
liquidation may be commenced in respect thereof or (d) if for any reason it is necessary so to do to
protect the interests of the National Bank" [44] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). "(1) The National Bank shall have free access
to all such records of any institution which seeks to avail of any credit
facilities from the National Bank and to all such records of any such person
who seeks to avail of any credit facilities from such institution, perusal
whereof may appear to the National Bank to be necessary in connection with the
providing of finance or other assistance to such institution or the refinancing
of any loan or advance made to such person by the borrowing institution." [45] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "section 617 of the Companies Act, 1956 (1 of
1956)" [46] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- " in clause (41) of section 2 of the Companies
Act, 1956 (1 of 1956) [47] Inserted by
National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55
of 2000) [48] Substituted for make grants" by National Bank
For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000) [49] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [50] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [51] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under: "40. Deposits and investments. -- The National Bank may invest its funds in
promissory notes, stocks or securities of the Central Government or keep the
moneys deposited with the Reserve Bank or with any agency of the Reserve Bank
or, in consultation with the Reserve Bank, with a State co-operative bank or a
scheduled bank" [52] Substituted for "making of grants" by National
Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000) [53] Substituted for "and such other funds"
by National Bank For Agriculture And Rural Development (Amendment) Act, 2000
(55 of 2000) [54] Substituted for "each year" by Banking,
Public Financial Institutions and Negotiable Instruments (Amendment) Act, 1988
w.e.f.30-12-1988. [55] Inserted by Banking, Public Financial Institutions
and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88. [56] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under: "(ii) after the expiry of the said period of
fifteen years the National Bank shall, after making provision for the Fund
referred to in clause (I), transfer half of the balance of surplus to the
Central government and the other half to the Reserve Bank." [57] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- "section 226 of the Companies Act, 1956(1 of 1956)" [58] Inserted vide Credit Information (Regulation) Act,
2005. [59] Substituted by the National Bank For Agriculture
And Rural Development (Amendment) Act, 2018 for the following :- " the Companies Act, 1956 (1 of 1956)" [60] Inserted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000) [61] Omitted by the Finance Act, 2001 w.e.f.01. 04.
2002. Prior to omission it read as under: "55. Exemption from income tax etc. -- Notwithstanding anything contained in the
Income-tax Act, 1961, or the Companies (Profits) Surtax Act, 1964 or any other
enactment for the time being in force relating to tax on income profits, or
gains the National Bank shall not be liable to pay income-tax surtax or any
other tax in respect of any income profits or gains derived or any amount
received by the National Bank" [62] Subs. by The Jan Vishwas (Amendment Of Provisions)
Act, 2023 No. 18 of 2023, s. 2 and the Schedule, for sub-section (2) (w.e.f.
22-01-2024). [63] Substituted by National Bank For Agriculture And
Rural Development (Amendment) Act, 2000 (55 of 2000). "(e) the conditions which the National Bank
may impose in granting loans and advances [64] Clause (f) and (h) omitted by National Bank For
Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to omission they it read as under: "(f) the manner and conditions subject to
which the National Bank may borrow in foreign currency. (h) the forms of returns and statements which the
National Bank may require under this Act;" [65] Prior to omission The Second Schedule stood as
follows. NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT ACT,
1981 (Amended Upto 2023)
PREAMBLE
Section 22 – [Conversion loan for production credit
Section 27A – [Loans to State Government, undertakings, etc.
Section 32 – [Issue of guarantees
Section 34 – [Power to call for repayment before agreed period
Section 37A – [Prohibited business
Section 38A – [Promotion of subsidiaries
Section 40 – [Deposits and investments
Section 52A – [Agreement with National Bank on appointment of directors to prevail
Prior to substitution it read as under:
Prior to substitution it read asunder:
Prior to substitution it read as under:
Prior to substitution it read as under: