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STATE BANK OF INDIA (AMENDMENT) ACT 2010

THE STATE BANK OF INDIA (AMENDMENT) ACT, 2010
NO. 27 OF 2010
[24th August, 2010.]
An Act further to amend the State Bank of India Act, 1955.
BE it enacted by Parliament in the Sixty-first Year of the Republic of India as follows:--
1. Short title and commencement. - (1)
This Act may be called the State Bank of India (Amendment) Act, 2010.
(2) It shall come into force on such date as the Central Government may, by notification in the Official
Gazette, appoint:
Provided
that different dates may be appointed for different provisions of this Act and any reference in any
such provision to the commencement
of this Act shall be construed as a reference to the coming into force
of that provision.
2. Amendment of section 2. - In section
2 of the State Bank of India Act, 1955 (hereinafter referred to as the
principal Act), clause (i) shall be omitted.
3. Substitution of new section for section 4. - For
section 4 of the principal Act, the following section shall be
substituted, namely:--
"4. Authorised capital. - Subject to the provisions
of this Act, the authorised capital of the State Bank shall be
five thousand crores of rupees divided into five hundred crores of
fully paid-up shares of ten rupees
each:
Provided that the Central Board may reduce the nominal or face value of the shares, and
divide
the authorised capital into such denomination as it may decide with the approval of the Reserve
Bank:
Provided further that
the Central Government may, in consultation with the Reserve Bank,
increase or reduce the authorised capital so however that the
shares in all cases shall be fully paid-up
shares.".
4. Amendment of section 5. - In section 5 of the principal Act,--
(a) for sub-section
(2), the following sub-section shall be substituted, namely:--
"(2) The issued capital of the State Bank shall consist of equity
shares or equity and
preference shares:
Provided that the issue of preference shares shall be in accordance with the guidelines
framed
by the Reserve Bank specifying the class of preference shares, the extent of issue of
each class of such preference shares (whether
perpetual or irredeemable or redeemable) and the
terms and conditions subject to which, each class of preference shares may be issued:
Provided further that the Central Board may from time to time increase, with the previous
approval of the Reserve Bank and the Central
Government, whether by public issue or rights
issue or preferential allotment or private placement, in accordance with the procedure
as may
be prescribed, the issued capital by the issue of equity or preference shares:
Provided also that the Central Government shall,
at all times, hold not less than fifty-one
per cent. of the issued capital consisting of equity shares of the State Bank.";
(b) after
sub-section (3), the following sub-sections shall be inserted, namely:--
"(4) Subject to the provisions contained in sub-section
(2), the Central Board may
increase from time to time, by way of issuing bonus shares to existing equity shareholders, the
issued
capital in such manner as the Central Government may, after consultation with the
Reserve Bank, direct.
(5) The State Bank may, accept
the money in respect of shares issued towards increase in
the issued capital in instalments, make calls, forfeit unpaid shares and
re-issue them, in such
manner as may be prescribed.".
5. Amendment of section 10. - In section 10 of the principal Act, in sub-section
(2), for the words "fifty-five per
cent. of the issued capital", the words "fifty-one per cent. of the issued capital consisting
of equity shares,"
shall be substituted.
6. Insertion of new section 10A. - After section 10 of the principal Act, the following
section shall be inserted,
namely:--
"10A. Right of registered shareholders
to nominate. - (1) Every individual registered shareholder
may, at any time, nominate, in the prescribed
manner, an individual to whom all his rights in the shares shall vest in the event
of his death.
(2) Where the shares are registered in the name of more than one individual jointly, the joint
holders may together
nominate in the prescribed manner, an individual to whom all their rights in the
shares shall vest in the event of the death of all
the joint holders.
(3) Notwithstanding anything contained in any other law for the time being
in force or in any disposition, whether
testamentary or otherwise, where a nomination in respect of
shares is made in the prescribed manner and which purports to confer
on the nominee the right to vest
the shares, the nominee shall, on the death of the shareholder or, as the case may be, on the death
of
all the joint holders, become entitled to all the rights of the shareholder or, as the case may be, of all
the joint holders,
in relation to such shares and all other persons shall be excluded unless the
nomination is varied or cancelled in the prescribed manner.
(4) Where the nominee is a
minor, it shall be lawful for the individual registered holder of the
shares to make nomination to appoint, in the prescribed manner,
any person to become entitled to the
shares in the event of his death during the minority of the nominee.".
7. Amendment of section
11. - In section 11 of the principal Act, after the proviso, the following provisos
shall be inserted, namely:--
"Provided further
that the shareholder holding any preference share capital in the State Bank
shall, in respect of such capital, have a right to vote
only on resolutions placed before the State Bank
which directly affect the rights attached to his preference shares:
Provided also
that no preference shareholder, other than the Central Government, shall be
entitled to exercise voting rights in respect of preference
shares held by him in excess of ten per cent.
of total voting rights of all the shareholders holding preference share capital only.".
8. Amendment of section 13. - In section 13 of the principal Act, in sub-section (2), for the words "in computer
floppies or diskettes",
the words "in computer floppies or diskettes or any other electronic form" shall be
substituted.
9. Amendment of section 16. - In
section 16 of the principal Act,--
(a) in sub-section (1), for the word "Bombay", the words "Mumbai, and shall also be known as
Corporate
Centre" shall be substituted;
(b) in sub-section (2), for the words "Bombay, Calcutta and Madras", the words "Mumbai,
Kolkata and
Chennai" shall be substituted.
10. Amendment of section 19. - In section 19 of the principal Act,--
(a) in clause (a), the words
"and a vice-chairman" shall be omitted;
(b) for clause (b), the following clause shall be substituted, namely:--
"(b) such number
of managing directors not exceeding four, as may be appointed by the
Central Government in consultation with the Reserve Bank;";
(c) clause (bb) shall be omitted;
(d) in clause (d), the words "in consultation with the Reserve Bank," shall be omitted;
(e) for
clause (f), the following clause shall be substituted, namely :--
"(f) one director, possessing necessary expertise and experience
in matters relating to
regulation or supervision of commercial banks to be nominated by the Central Government on
the recommendation
of the Reserve Bank.".
11. Insertion of new sections 19A and 19B. - After section 19 of the principal Act, the following sections
shall be inserted, namely:--
"19A. Qualifications for election of directors elected by shareholders. - (1) The directors elected
under
clause (c) of section 19 shall--
(a) have special knowledge or experience in respect of one or more of the following
areas,
namely:--
(i) agriculture and rural economy,
(ii) banking,
(iii) co-operation,
(iv) economics,
(v) finance,
(vi) law,
(vii) small-scale
industry,
(viii) any other area the special knowledge of, and experience in, which in the
opinion of the Reserve Bank shall be useful
to the State Bank;
(b) represent the interests of depositors; or
(c) represent the interests of farmers, workers and artisans.
(2)
Without prejudice to the provisions of sub-section (1) and notwithstanding anything to the
contrary contained in this Act or in any
other law for the time being in force, no person shall be
eligible to be elected as director under clause (c) of section 19 unless
he is a person having fit and
proper status based upon track record, integrity and such other criteria as the Reserve Bank may
notify
from time to time in this regard and the Reserve Bank may specify in the notification issued
under this sub-section, the authority
to determine the fit and proper status, the manner of such
determination, the procedure to be followed for such determinations and
such other matters as may be
considered necessary or incidental thereto.
(3) Where the Reserve Bank is of the opinion that any director
of the State Bank elected under
clause (c) of section 19 does not fulfil the requirements of
sub-sections (1) and (2), it may, after giving to such director and the
State Bank a reasonable
opportunity of being heard, by order, remove such director.
(4) On the removal of a director under sub-section
(3), the Central Board shall co-opt any other
person fulfilling the requirements of sub-sections (1) and (2), as a director in place
of the person so
removed, till a director is duly elected by the shareholders of the State Bank in the next annual
general meeting;
and the person so co-opted shall be deemed to have been duly elected by the
shareholders of the State Bank as a director.
19B. Power
of Reserve Bank to appoint additional directors. - (1) If the Reserve Bank is of the opinion
that in the interest of banking policy
or in the public interest or in the interests of the State Bank or its
depositors, it is necessary so to do, it may, from time to
time and by order in writing appoint, with
effect from such date as may be specified in the order, one or more persons as additional
directors of
the State Bank.
(2) Any person appointed as additional director under sub-section (1) shall,--
(a) hold office during
the pleasure of the Reserve Bank and subject thereto for a period
not exceeding three years or such further periods not exceeding
three years at a time as the
Reserve Bank may, by order, specify;
(b) not incur any obligation or liability by reason only of his
being an additional director
or for anything done or omitted to be done in good faith in the execution of the duties of his
office
or in relation thereto; and
(c) not be required to hold qualification shares in the State Bank.
(3) For the purpose of reckoning
any proportion of the total number of directors of the State
Bank, any additional director appointed under this section shall not
be taken into account.".
12. Amendment of section 20. - In section 20 of the principal Act,--
(a) in sub-section (1), the words ",
vice-chairman" shall be omitted;
(b) in sub-section (1A), the word ", vice-chairman", occurring at both the places, shall be
omitted;
(c) in sub-section (3A), the words "and thereafter until his successor shall have been duly
appointed or nominated", shall be omitted.
13. Amendment of section 21. - In section 21 of the principal Act,--
(a) in sub-section (1) --
(i) for clause (a), the following
clause shall be substituted, namely: --
"(a) the chairman, ex officio or the managing director nominated by the chairman;";
(ii)
in clause (c), the words "in consultation with the Reserve Bank" shall be omitted;
(b) in sub-section (5), for the words "Governor
of the Reserve Bank", the words "Central
Government" shall be substituted.
14. Substitution of new section for section 21B. - For
section 21B of the principal Act, the following section
shall be substituted, namely:--
"21B. Powers of Local Board. - In respect
of the area falling within the jurisdiction of the local head
office for which the Local Board has been constituted, a Local Board
shall, subject to such general or
special direction as the Central Board may give from time to time, exercise such powers and perform
such duties and functions as may be entrusted or delegated to it by the Central Board.".
15. Amendment of section 21C. - In section
21C of the principal Act, for sub-section (2), the following
sub-section shall be substituted, namely:--
"(2) The chairman or the
managing director nominated by him shall be an
ex officio member of every such Local Committee.".
16. Amendment of section 22. -
In section 22 of the principal Act, in sub-section (1),--
(a) in clause (d), the word "vice-chairman" shall be omitted;
(b) for clause
(h), the following clause shall be substituted, namely:--
"(h) in the case of an elected director, he is not registered as a holder
in his own right of
unencumbered shares in the State Bank, either as sole holder or as first named holder when
jointly held, of a
nominal value of at least five thousand rupees:".
17. Amendment of section 23. - In section 23 of the principal Act, in clause (b), the word ", vice-
chairman" shall be omitted.
18. Amendment
of section 24. - In section 24 of the principal Act, --
(a) in sub-section (1), the word ", vice-chairman" shall be omitted;
(b)
in sub-section (3), the words "after consulting the Reserve Bank," shall be omitted.
19. Insertion of new section 24A. - After section
24 of the principal Act, the following section shall be
inserted, namely:--
"24A. Supersession of Central Board in certain cases.
- (1) Where the Central Government, on the
recommendation of the Reserve Bank is satisfied that in the public interest or for preventing
the
affairs of the State Bank being conducted in a manner detrimental to the interest of the depositors or
the State Bank or for
securing the proper management of the State Bank, it is necessary so to do, the
Central Government may, for reasons to be recorded
in writing, by order, supersede the Central
Board for a period not exceeding six months as may be specified in the order:
Provided
that the period of supersession of the Central Board may be extended from time to
time, so, however, that the total period shall
not exceed twelve months.
(2) On supersession of the Central Board under sub-section (1), the Central Government may,
in consultation
with the Reserve Bank, appoint an Administrator (not being an officer of the Central
Government or a State Government) who has experience
in law, finance, banking, economics or
accountancy, for such period as it may determine.
(3) The Central Government may issue such
directions to the Administrator as it may consider
necessary and the Administrator shall be bound to follow such directions.
(4)
Notwithstanding anything contained in this Act, upon making the order of supersession of
the Central Board--
(a) the chairman, managing
director and other directors shall, as from the date of
supersession, vacate their offices as such;
(b) all the powers, functions
and duties which may, by or under the provisions of this Act
or any other law for the time being in force, be exercised and discharged
by or on behalf of the
Central Board, or by a resolution passed in the general meeting of the State Bank, shall, until
the Central
Board is reconstituted, be exercised and discharged by the Administrator appointed
under sub-section (2):
Provided that the powers
exercised by the Administrator shall be valid notwithstanding
that such power is also exercisable by a resolution passed in the general
meeting of the State
Bank.
(5) The Central Government may, in consultation with the Reserve Bank, constitute a
committee of three
or more persons who have experience in law, finance, banking, economics or
accountancy to assist the Administrator in the discharge
of his duties.
(6) The committee shall meet at such times and places and observe such rules of procedure as
may be specified by the
rules made under this Act.
(7) The salary and allowances of the Administrator and the members of the committee shall be
such as may
be specified by the rules made under this Act and be payable by the State Bank.
(8) On and before the expiration of two months before
the expiry of the period of supersession
of the Central Board, the Administrator of the State Bank shall call the general meeting
of the State
Bank to elect new directors and re-constitute the said Board.
(9) Notwithstanding anything contained in any other law
for the time being in force or in any
contract, no person shall be entitled to claim any compensation for the loss or termination
of his
office on supersession of the Central Board.
(10) The Administrator appointed under sub-section (2) shall vacate office immediately
after
the re-constitution of the Central Board.".
20. Amendment of section 25. - In section 25 of the principal Act,--
(a) in sub-section
(1), the word ", vice-chairman" shall be omitted;
(b) in sub-section (2),--
(i) the word ", vice-chairman" shall be omitted;
(ii)
in clause (b), the words "in consultation with the Reserve Bank" shall be omitted.
21. Omission of section 28. - Section 28 of the principal Act shall
be omitted.
22. Amendment of section 29. - In section 29 of the principal Act, in sub-section (1),--
(a) in clause (a), the word
"and" shall be omitted;
(b) in clause (b),--
(i) the words "and the vice-chairman," shall be omitted;
(ii) at the end, the word ";
and" shall be inserted;
(c) after clause (b), the following clause shall be inserted, namely:--
"(c) when authorised by the chairman,
shall preside at the meetings of the Central Board
in his absence.".
23. Amendment of section 31. - In section 31 of the principal
Act,--
(a) for sub-sections (1) and (2), the following sub-sections shall be substituted, namely:--
"(1) The Central Board shall
meet at such time and place and shall observe such rules of
procedure in regard to the transaction of business at its meetings as
may be prescribed; and the
meeting of the Central Board may be held by participation of the directors of the Central Board
through
videoconferencing or such other electronic means, as may be prescribed, which are
capable of recording and recognising the participation
of the directors and the proceedings of
such meetings are capable of being recorded and stored:
Provided that the Central Government
may in consultation with the Reserve Bank, by
notification in the Official Gazette, specify the matters which shall not be discussed
in a
meeting of the Central Board held through videoconferencing or such other electronic means.
(2) All questions at the meeting
shall be decided by a majority of the votes of the
directors present in the meeting or through videoconferencing or such other electronic
means
and in the case of equality of votes the chairman or, in his absence, the managing director
authorised by the chairman shall
have a second or casting vote.";
(b) in sub-section (4), for the word "vice-chairman", the words "managing director authorised
by
the chairman" shall be substituted.
24. Amendment of section 31A. - In section 31A of the principal Act, in sub-section (5), for
the words "the
vice-chairman, if he is a member of the Local Board", the words "the managing director authorised by the
chairman"
shall be substituted.
25. Insertion of new section 38A. - After section 38 of the principal Act, the following section shall be
inserted,
namely:--
'38A. Transfer of unpaid or unclaimed dividend. - (1) Where, after the commencement of the State
Bank of India (Amendment) Act, 2010, a dividend has been declared by the State Bank but which has
not been paid to a shareholder or claimed by any shareholder entitled
to it, within thirty days from the
date of declaration, the State Bank shall, within seven days from the date of expiry of the said
period
of thirty days, transfer the total amount of dividend which remains unpaid, or unclaimed, to a special
account to be named,
the "unpaid dividend account" maintained by it.
Explanation.-- In this sub-section, the expression "dividend which remains unpaid"
means any
dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid
or claimed.
(2) Where
the whole or any part of any dividend, declared by the State Bank before the
commencement of the State Bank of India (Amendment) Act, 2010, remainsunpaid at such
commencement, the State Bank shall, within a period of six months from such commencement,
transfer such unpaid
amount to the account referred to in sub-section (1).
(3) Any money transferred to the unpaid dividend account of the State Bank,
in pursuance of
this section which remains unpaid or unclaimed for a period of seven years from the date of such
transfer shall be
transferred by the State Bank to the Investor Education and Protection Fund
established under sub-section (1) of section 205C of
the Companies Act, 1956 for being utilised for
the purpose and in the manner specified in that section.'.
26. Amendment of section 39. - In section 39 of
the principal Act, for the word "December", the word
"March" shall be substituted.
27. Amendment of section 40. - In section 40 of
the principal Act,--
(a) in sub-section (1), for the word "December", the word "March" shall be substituted;
(b) for sub-section
(2), the following sub-section shall be substituted, namely:--
"(2) The balance sheet and the profit and loss account shall be signed
by the chairman,
managing directors and at least three other directors of the Central Board.".
28. Amendment of section 41. - In
section 41 of the principal Act,--
(a)in sub-section (1), for the words "the Reserve Bank in consultation with the Central
Government",
the words "the State Bank with the previous approval of the Reserve Bank" shall be
substituted;
(b)in sub-section (5), for the words
"the Reserve Bank", the words "the State Bank with the
previous approval of the Reserve Bank" shall be substituted.
29. Substitution
of new section for section 42. - For section 42 of the principal Act, the following section
shall be substituted, namely:--
"42.
Balance sheet, etc., of State Bank may be discussed at general meeting. - (1) An annual general meeting
shall be held in each financial
year at the Corporate Centre or at such other place in Mumbai other
than the Corporate Centre or at such other place in India and
at such time, as shall from time to time
be specified by the Central Board and a general meeting other than an annual general meeting
may be
convened by the State Bank at any other time and at such place in India as shall from time to time be
specified by the Central
Board:
Provided that such annual general meeting shall be held before the expiry of six weeks from the
date on which the balance
sheet together with the profit and loss account and auditors' report, under
sub-section (1) of section 40, is forwarded to the Central
Government or to the Reserve Bank,
whichever date is earlier.
(2) The shareholders present at an annual general meeting shall be
entitled to discuss and adopt
the balance sheet and the profit and loss account of the State Bank made up to the previous 31st day
of March or the date specified under section 39, as the case may be, the report of the Central Board
on the working and activities
of the State Bank for the period covered by the accounts and the
auditors' report on the balance sheet and accounts.".
30. Amendment
of section 43. - In section 43 of the principal Act, for sub-section (2), the following sub-
section shall be substituted, namely:--
"(2) The officers, advisers and employees of the State Bank shall individually or jointly or with
other officers, advisers and employees
in a Local Committee exercise such powers and perform such
duties as may by general or special order, be entrusted or delegated to
them by the Central Board or
its executive committee.".
31. Amendment of section 49. - In section 49 of the principal Act, in sub-section
(2), after clause (c), the
following clauses shall be inserted, namely:--
"(d) the time and place of meeting of the Committee and
the rules of procedure to be observed
by it under sub-section (6) of section 24A;
(e) the salary and allowances of the Administrator
and the members of the committee under
sub-section (7) of section 24A.".
32. Amendment of section 50. - In section 50 of the principal
Act, in sub-section (2),--
(i) after clause (a), the following clauses shall be inserted, namely:--
"(aa) the procedure for increasing
issued capital by the issue of equity or preference
shares under sub-section (2) and the manner of accepting money for issued capital,
forfeiture
and re-issue of shares under sub-section (5), of
section 5;
(ab) the manner of nominating an individual by one individual
under sub-section (1), the
manner of nominating an individual by the joint holders under sub-section (2), the manner of
varying or
cancellation of nomination under sub-section (3), and the manner of nominating a
minor under sub-section (4),
of section 10A;";
(ii) in clause (b), for
the words "floppies or diskettes", the words "floppies or diskettes or any
other electronic form" shall be substituted.
33. Amendment
of enactment. - The enactment specified in the Schedule is hereby amended to the extent
and in the manner as given below:--
THE SCHEDULE
(See section 33)
Short title
THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959
(38 of 1959)
In section 26, in sub-section (2A), the words "and thereafter until his successor shall have been duly
appointed" shall
be omitted.
V. K. BHASIN,
Secy. to the Govt. of India.