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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY PART II—Section 2 PUBLISHED BY AUTHORITY

No. 58] NEW DELHI, THURSDAY DECEMBER 17, 1964/AORAHATANA16,1886

Separate paying is given to this Part in order that it may be filed

as a separate compilation .

LOK SABHA

The following Bill was introduced in Lok Sabha on the 17th December, 1964:—

BILL NO. 85 OF 1964

A Bill further to amend the Reserve Bank of India Act, 1934 and the Banking Companies Act, 1949 for the purpose of regulating the banking business of certain co-operative societies and for matters connected therewith.

BE it enacted by Parliament in the Fifteenth Year of the Republic of India as follows: —

CHAPTER I

1. (1) This Act may be called the Banking Laws (Application to 5

Co-operative Societies) Act, 1964.

Short titlte and com- mence- ment.

(2) It shall come into force on such date as the Central Govern- ment may, by notification in the Official Gazette, appoint, and diffe- rent dates may be appointed for different provisions of this Act,

CHAPTER II

AMENDMENT OF THE RESERVE BANK OF INDIA ACT, 1934

10

2. In section 2 of the Reserve Bank of India Act, 1934 (hereinafter 2 of 1984.

in this Chapter referred to as the principal Act),—

Amend- ment of section 2.

(i) clauses (a) and (aa) shall be re-lettered as clauses (ai) and (aii) respectively, and before clause (ai) as so re-lettered, the following clause shall be inserted, namely: —

15

'(a) "agricultural operations" includes animal husban- dry and allied activities jointly undertaken with agricultura operations;';

(951)

702 G of I Ext.—1.

(ii) for clause (bb), the following clauses shall be substi-

tuted, namely: —

5 '(bi) "central co-operative bank" means the principal co-operative society in a district in a State, the primary ob- ject of which is the financing of other co-operative societies in that district:

10 Provided that in addition to such principal society in a district or 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 a central cooperative bank or banks within the meaning of this defini- tion;

15 (bii) "co-operative bank" means a State co-operative bank, a central co-operative bank and a primary co-opera- tive bank;

23 (biii) "co-operative credit society" means a co-opera- tive society, the primary object of which is to provide finan- cial accommodation to its members and includes a co-opera- tive land mortgage bank;

2 of 1012.

(biv) "co-operative society" means a society registered, or deemed to be registered, under the Co-operative Societies Act, 1&12, or any other law relating to co-operative societies for the time being in force in any State;

25 (bv) "crops" Includes products of agricultural opera-

tions;';

(Hi) clauses (bbb) and (bbbb) shall be re-lettered aa clauses (bvi) and (bvii) respectively, and after clause (bvii) as so re- lettered, the following clause shall be inserted, namely: —

3o l(bvni) "director", in relation to a co-operative society, includes a member of any committee or body for the time being vested with the management of the affairs of that society;';

;

(iv) after clause (c), the following clauses shall be inserted,

namely:—

35

'(ci) "marketing of crops" includes the processing ot crops prior to marketing by agricultural producers or any organization of such producers;

(cii) "primary agricultural credit society" means a co- operative society,—

5

(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

10

of any other co-operative society as a member; (ciii) "primary co-operative bank" means a co-operative 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 15

are not less than one lakh of rupees; and

(3) the bye-laws of which do not permit admission

of any other co-operative society as a member; (civ) "primary credit society" means a |co-operativ<" society, other than a primfeixy agricultural credit society,—

²⁰ (1) the primary object or principal business at

which is the transaction of banking business;

(2) the paid-up share capital and reserves of which

are less than one lakh of rupees; and

(3) the bye-laws of which do not permit admission

of any other co-operative society as a member;

Explanation.—-If any dispute arises as to the primary object or principal business of any co-operative society refer- red to in this clause or clause (cii) or clause (eiii), a deter- mination thereof by the Bank shall be final.';

³⁰ (v) clause (ee) shall be re-lettered as clause (ei);

35

(vi) in clause (f), for the words beginning with "the prin- cipal society" and ending with "are deemed to be so registered", the words "the principal co-operative society in a State, the pri- mary object of which is the financing of other co-operative so^ cieties in the State" shall be substituted.

3. In section 10 of the principal Act, for clause (e) of sub-section (1), the following clause shall be substituted, namely:—

Amend-

ment of

tectionlO.

10 of 1949.

40

" (e) is a director of a banking company within the meaning of clause (c) of section 5 of the Banking Companies Act, 1949, or of a co-operative bank.".

4. In section 17 of the principal Act, in clause (2), Explanation to

sub-clause (b) shall be omitted.

Amend- ment of ^section IT,

5. In section 1& of the principal Act, in cleuse (3) of sub-section Amend- ment of section It.

5 (1), after the words and figures "the Banking Companies Act, 1949";, the words "or to a State co-operative bank or, on the recommenda- tion of the State co-operative bank, to any other co-operative bank" shall be inserted.

i" 6. In section 42 of the principal Act,—Amend- ment of Section 42. (1) in sub-section (1), for clause (c) of the Explanation, the following clause shall be substituted, namely: —

'(c) "liabilities" shall not include—

(i) the paid-up capital or the reserves or any credit

balance in the profit and loss account of the bank,

15 (ii) the amount of any loan taken from the Bank or from the Development Bank or from the agricultural Refinance Corporation or from the State Bank or from any other bank notified by the Central Government in this behalf, and .

20 (in) in the case of a State co-operative bank, also any loan taken by such bank from a State Government and any deposit of money with such bank representing the reserve fund or any part thereof required to be maintained with it by any co-operative society within its area of operation;';

35 (ii) in sub-section (6), in sub-clause (Hi) of clause (o), for the words "is a company", the words "is a State co-operative bank or a company" shall be substituted.

7. Section 44 of the principal Act shall be omitted.

Omission of section 44.

30 Amend- ment of tection 45H.

8. In section 45H of the principal Act, after the words and figures "section 51 of that Act", the words "or a co-operative bank or a pri- mary agricultural credit society or a primary credit society" shall be inserted.

9. In section 451 of the principal Act, in clause (e), after the word

"corporation,", the words "co-operative society" shall b" inserted.

Amend- ment of ••ction 48 I.

CHAPTER III

AMENDMENT OF THE BANKING COMPANIES ACT, 1949

19 "f 1149. 10. In the Banking Companies Act, 1949 (hereinafter in this Chapter referred to as the principal Act), in the long title and in tht preamble, the word "companies" shall be omitted.

5

Amend- ment of long title and pre- amble.

11. (1) In section 1 of the principal Act, in sub-section (1), for the word "Companies", the word "Regulation" shall be substituted.

Amend- ment of section 1.

10 a

It ef ¹⁹⁴¹. (2) Any reference to the Banking Companies Act, 1949 In any law for the time being in force, or in any instrument or other docu- ment, shall be construed as a reference to the Banking Regulation Act, 1949.

12. For section 3 of the principal Act, the following section shall

be substituted, namely: —

Substitu- tion of new sec- tion tor lection 3.

"3. Nothing in this Act shall apply to—

15

(a) a primary agricultural credit society; (b) a co-operative land mortgage bank; and (c) any other co-operative society, except in the

manner and to the extent specified in Part V.".

Act to apply to co-opera- tive societies in certain cases.

13. In section 18 of the principal Act, in clause (b) of the

20

Amend- ment of section H, Explanation, for the words "the Refinance Corporation for Industry Limited,", the words "the Industrial Development Bank of India or from the Agricultural Refinance Corporation" shall be substituted,

14. In the principal Act, after Part IV, the following Part shall

bt inserted, namely: —

Insertion of new Part V.

'PART V

25

APPLICATION OF THE ACT TO CO-OPERATIVE BANKS

56. The provisions of this Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely: —

30

(a) Throughout this Act, unless the context otherwise

requires,—

Act to apply to co-opera- tive societies subject to modifica- tions.

company" or "such company" shall be construed as references to a co-operative bank,

5

(ii) references to "commencement of this Act" shall be construed as references to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1964;

(6) in section 2, the words and figures "the Companies Act, 1956, and" shall he omitted;

(c) in section 5,—

10

(i) after clause (cc), the following clause shall be inserted, namely: —

.15

2 of 1984.

'(ccc) "central co-operative bank", "co-opera- tive bank", "co-operative society", "director", "primary agricultural credit society", "primary co-operative bank", "primary credit society" and "State co-operative bank" shall have the meanings respectively assigned to them in the Reserve Bank of India Act, 1934.'; i

(ii) clauses (ff) and (h) shall be omitted;

20 (d) for section 5A, the following section shall be substi- tuted, namely: —

Act to

override bye-laws, etc.

25

30

"5A. (1) The provisions of this Part shall have effect, notwithstanding anything to the contrary con- tained in the bye-laws of a co-operative society, or in any agreement executed by it, or in any resolution passed by it in general meeting, or by its Board of directors or other body entrusted with the management of its affairs, whether the same be registered, executed or passed, as the case may be, before or after the com- mencement of the Banking Laws (Application to Co- operative Societies) Act 1964.

(2) Any provision contained in the bye-laws, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Part, become or be void, as the case may be.";

35 (e) in section 6, in sub-section (1),—

(i) in clause (b), the words ", but excluding the business of a managing agent or secretary and treasurer of a company" shall be omitted;

(ii) In clause (d), after the word "company,", the

40 words "co-operative society," shall b* inserted;

(Hi) in clause (m), after the word "company", the

words "or co-operative society" shall be inserted;

(f) for section 7, the following section shall be substi-

tuted, namely: —

Use of word "bank", "banker", or "bank- Ing".

r"

5 '7. (1) No co-operative society other than a co- operative bank shall use as part of its name any of the words "bank", "banker" or "banking" and no co-opera- tive society shall carry on the business of banking in India unless it uses as part of its name at least one of such words. !

(2) Nothing in this section shall apply to—

(a) a primary credit society, or

"5

(b) a co-operative society formed for the pro- tection of the mutual interests of co-operative banks or co-operative land mortgage banks.';

(g) section 10 shall be omitted;

(h) for section 11, the following section shall be substi-

tuted, namely: —

20

Require- ment as to minimum paid-up capital and reserves.

"11. (1) Notwithstanding any law relating to co- operative societies for the time being in force, no co- operative bank shall commence or carry on the business of banking in India unless the aggregate value of its paid-up capital and reserves is not less than one lakh of rupees:

25

Provided that nothing in this sub-section shall

apply to— j 1

3©

(a) any such bank which is carrying on such business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1964, for a period of three years from such commence- ment; or

'

35

(b) to a primary credit society which becomes a primary co-operative bank after such commence- ment, for a period of two years from the date it so becomes e primary co-operative bank or for such further period not exceeding one year as the Re- serve Bank, having regard to the interests of the depositors of the primary co-operative bank, may think fit in any particular case to allow.

(2) For the purposes of this section, "value" means the real or exchangeable value and not the nominal value which may be shown in the books of the co-ope- rative bank concerned.

5 (3) If any dispute arises in computing the aggre- gate value of the paid-up capital and reserves of any such co-operative bank, a determination thereof by the Reserve Bank shall be final for the purposes of this section."; ' !

10 (i) sections 12, 12A, 13 and 15 to 17 shall be omitted;

(j) for section 18, the following section shall be substi- tuted, namely: —

reserve.

15

2 "t 1984.

20

25

30

26 of 1811.

'18. Every co-operative bank, not being a State co- operative bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934, shal maintain in India, by way of cash reserve with itself, or in current account opened witK the Re- serve Bank or the State Bank of India or the State co- operative bank of the State concerned or with any other bank notified by the Central Government in this behalf or, In the case of a primary co-operative bank, with the central co-operative bank of the district concerned or partly in cash with itself and partly in such account or accounts, a sum equivalent to at least three per cent, of the total of its time and demand liabilities in India, and shall submit to the Reserve Bank before the 15th day of every month a return showing the amount no held on Friday of each week of the preceding month with particulars of its time and demand liabilities in India on each such Friday, or, if any such Friday is a public holiday under the Negotiable Instrument^ Ar-t. 1881, at the close of business on the preceding working day.

Explanation.—In this section and section 24, "liabi- lities in India" shall not include,— 35

(a) the paid-up capital or the reserves or any credit balance in the profit and loss account of the co-operative bank;

40

(b) any advance token from a State Govern- ment, the Reserve Bank, the State Bank of India, the Industrial Development Bank of

2 of 19.14.

India, the Agricultural Refinance Corporation or any bank notified by the Central Government under clause (c) of the Explanation to sub-section (7) of section 42 of the Reserve Bank of India Act, 1934;

s

10

(r) in the case of a central co-operative bank, also any advance taken by it from the State co- operative? bank of the State concerned and any deposit of money with it representing the reserve fund or any part thereof required to be maintained with it by any other co-operative society within the area of its operation;

(d) in the case of a primary co-operative bank, also any advance taken by it from the State co- operative bank of the State concerned or the cen- tral co-operative bank of the district concerned.';

IS

(7c) for section 19, the following section shall be substi- tuted, namely: —

20

"19. No co-operative bank shall hold shares in any other co-operative society except to such extent and subject to such conditions as the Reserve Bank may specify in that behalf:

Provided that nothing contained in this section

Restric- tion on holding shares in other co- operativo societies.

shall apply to—

(/) shores acquired through funds provided by 2S

the State Government for that purpose;

(ii) in the case of a central co-operative bank, the holding of shares in the State co-operative bank to which it is affiliated;

3f

(Hi) in the case of a primary co-operalive bank, the holding of shares in the central co-operative bank to which it is affiliated or, where there is no such central co-operative bank, shares in the State co-operative bank of the State in which it is regis- tered:

40

35 Provided further that where any shares are held by a co-operative bank in contravention of this section at the commencement of the Banking Laws (Applica- tion to Co-operative Societies) Act, 1964, the co-opera- tivo bank shall without delay report the matter to the Reserve Bank and shall, notwithstanding anything con- 702 GofI Ext.—2.

tained in this section, be entitled to hold the shares for such period and on such conditions as the Reserve Bank may specify.";

(I) in section 20, in sub-section (1),—

5

1 of 1956.

(0 the words and figures "Notwithstanding any- thing to the contrary contained in section 77 of the Companies Act, 1956," shall be omitted;

(ii) for the proviso, the following proviso shall be substituted, namely: —

10

"Provided that nothing in clause (b) shall apply to the grant of unsecured loans or ad- vances—

(a) made by a co-operative bank—

15

(i) against bills for supplies or services made or rendered to Government or bills of exchange arising out of bona fide com- mercial or trade transactions, or

(ii) in respect whereof trust-receipts

are furnished to the co-operative bank;

20

(b) made by a primary co-operative bank to any of its directors within such limits and on such terms and conditions as may be approv- ed by the Reserve Bank in this behalf.";

25

1 of 1956, (m) in section 20A, in sub-section (1), the words and figures "Notwithstanding anything to the contrary contained in section 293 of the Companies Act, 1956," shall be omitted;

30 (n) in section 21, in sub-section (2), in clauses (c) and (d), for the words "any one company, firm, asso- ciation of persons or individual", the words "any one party" shall be substituted;

(o) in section 22,—

(i) for sub-sections (1) and (2), the following sub- sections shall be substituted, namely: —

35

" (1) Seve as hereinafter provided, no co-opera- tive society shall carry on banking business in India unless—

(a) it is a primary credit society, or

(b) it is a co-operative bank and holds a licence issued in that behalf by the Reserve Bank, subject to such conditions, if any, as the Reserve Bank may deem fit to impose:

5

lo

Provided that nothing in this sub-section shall apply to a co-operative society, not being a primary credit society or a co-operative bank carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Socie- ties) Act, 1964, lor

,

2 5

30

(a) any balances maintained in India by a co-operative bank in current account with the Reserve Bank or the State Bank of India or with any other bank which may be notified in this behalf by the Central Government, includ- ing in the case of a State co-operative bank, the balance required under section 42 of the Reserve Bank of India Act, 1934, to bo so maintained, 2 of 1934.

(b) any balances maintained by a central co-operative bank with the State co-operative bank of the State concerned, and

35

(c) any balances maintained by a primary co-operative bank with the central co-operative bank of the district concerned or with the State co-operative bank of the State concerned,

shall be deemed to be cash maintained in India.

40

(2A) (a) Notwithstanding anything contained in sub-section (1) or in sub-section (2), after the

5

expiry of twu years from the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1964, or of such further period not exceeding one year as the Reserve Bank, having regard to the interests of the co-operative bank concerned, may think fit in any particular case to allow,—

2 of 1934. 10

(i) a State co-operative bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the Reserve Bank of India Act, 1934, and

(ii) every other co-operative bank, in addition to the cash reserve which it is required to maintain under section 18,

r^ shall maintain in India in cash, gold or unencum- bered approved securities, valued at a price not exceeding the current market price, an amount which shall not at the close of business on any day be less than twenty-five per cent, of the total of its demand and time liabilities in India;

20

(fa) in computing the amount for the purposes of clause (a),—

25

3°

(i) any cash or balances maintained in India by a co-operative bank, other than a State co-operative bank, with itself or in current account with the Reserve Bank or the State Bank of India or the State co-operative bank of the State concerned or with any other bank which may be notified in this behalf by the Central Government and, in the case oC a primary co-operative bank, also any balances maintained with the central co-operative bank of the district concerned, in excess of the aggre- gate of the cash or balance or both required to be maintained under section 18, and

35

40

(ii) any balance maintained by a State co- operative bank with the Reserve Bank in excess of the balance required to be maintained by it under section 42 of the Reserve Bank of India Act, 1934, and any balances maintained by a State co-operative bank with the State Bank of India or with any other bank which may

be notified in this behalf by the Central Govern- ment,

shall be deemed to be cash maintained in India.";

(r) section 25 shall be omitted;

(s) for sections 29 and 30, the following section shall 5 be substituted, namely: —

Accounts and balance- sheet.

10

"29. (1) At the expiration of each year ending with the 30th. day of June, every co-operative bank, in respect of all business transacted by it, shall prepare with- reference to that year a balance-sheet and profit and loss account as on the last working day of the year in the Forms set out in the Third Schedule or as near thereto as circumstances admit..

¹5

(2) The balance-sheet and profit and loss account shall be signed by the manager or the principal officer of the bank and where there are more than three direc- tors of the bank, by at least three of those directors, or where there are not more than three directors, by all the directors.

20

(3) The Central Government, after giving not less than three months' notice of its intention so to do by a notification in the Official Gazette, may from time to time by a like notification amend the Forms set out in the Third Schedule.";

25 (t) in section 31, for the words within three months and "of three months", the words "within six months" and "of six months" shall respectively Ibe substituted;

30 (u) sections 32 to 34 shall be omitted; (v) in section 34A, sub-section (3) shall be omitted; (w) in section 35,—

(i) in sub-section (1),—

1 of 1958.

(a) for the words and figures "section 235 of the Companies Act, 1956", the words "any law relat- ing to co-operative societies for the time being in force" shall be substituted;

35

(b) the following proviso shall be inserted at

the end, namely: —

"Provided that the Reserve Bank may, if

40

it considers necessary or expedient so to do, cause an inspection to be made of a primary co- operative bank under this sub-section by one or

more officers of a State co-operative bank In the State in which such primary co- operative 'bank carries on business.";

(ii) in sub-section (4), clause (b) shall be omitted;

(in) the Explanation shall be omitted;

5

(x) in section 35A, in sub-section (1), in clause (c), for the words "any banking company", tho words "the bank- ing business of any co-operalivc bank" shall be substituted;

(y) section 35B shall be omitted;

10

(z) in section 36, in sub-section (1), clauses (b) and

(d) shall be omitted;

(2a) in section 36A,—

(0 for sub-section (1), the following sub-section shall be substituted, namely: —

20

15 "(1) The provisions of section 11, section 18 and section 24 shall not apply to a co-operative bank which has been refused a licence under sec- tion 22 or whose licence has been cancelled under that section or which is or has been prohibit- ed or precluded from accepting deposits by virtue of any order made under this Act or of any alteration made in its bye-laws.";

(ii) after sub-section (2), the following sub-section shall be inserted, namely: —

²5

30

35

"(3) Subject to the provisions of sub-sections (1) and (2), a co-operative society carrying on busi- ness as a primary co-operative bank at the com- mencement of the Banking Laws (Application to Co-operative Societies) Act, 1964, or a co-operative society which becomes a primary co-operative bank after such commencement shall, notwithstanding that it does not at any time thereafter satisfy the requirements of the definition of primary co-opera- tive bank in clause (ccc) of section 5, continue to be a primary co-operative bank within the meaning of this Act, and may, with the approval of the Reserve Bank and subject to such terms and conditions as the Reserve Bank may specify in that behalf, conti- nue to carry on the business of banking.";

40 (zb) Part IIA, Part III, except sub-sections (J), (2) and (3) of section 45, and Part TI1A except section 45W shall be omitted;,

(zc) in section 4ti, in clause (a) of the Explanation, after the words "includes a", the words "co-operative society," shall be inserted;

(zd) in section 47, the worda, brackets, figures and letters "sub-section (5) of section 36AA or" shall be omitted; 5

(ze) section 49 shall be omitted; (if) in section 49A, for the proviso, the following pro- viso shall be substituted, namely: —

"Provided that nothing contained in this section shall apply to— 10

(a) a primary credit society,

15

(b) any other co-operative society accepting such deposits at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1964, for a period of one year from the date of such commencement; and

(c) any savings bank scheme run by the Gov-

ernment.";

(zg) sections 4PB and 49C shall be omitted;

20 (2/1) in section 50, the figures and letters "10, 12A, 16,", "35B," and ",43A" shall be omitted;

(zi) section 51 shall be omitted;

(zj) in section 52,—

25

(i) in sub-section (2), the words, figures and letter "and the form in which the official liquidator may file lists of debtors to the Court having jurisdiction under Part III or Part IIIA and the particulars which such lists may contain" shall be omitted;

(ii) sub-section (4) shall be omitted;

(zk) for section 55 and the First Schedule, the following 30 section shall be substituted, namely: —

"55. (1) The Bankers' Books Evidence Act, 1891 shall apply in relation to a co-operative bank as it applies in relation to a bank as defined in section 2 of that Act.

35

(2) The Banking Companies (Legal Practitioners' Clients' Accounts) Act, 1949 shall apply in relation to a co-operative bank as H applies m relation to a banking company as defined In section 2 of that Act.";

Act 18 of 1891 and Act 46 of 1949 lo apply in relation to co- operative banks.

(zl) for the Third Schedule and the Fourth Schedule the following Schedule shall be substituted, namely: —

S E C

.

T HE THIRD SCHEDULE

2

]

(See section 29)

FORM A

FORM OF BALANCE-SHEET

T H E 5

P R O P E R TY A ND A S S E TS

CAPITAL AND LIABILITIES

Rs. P. Rs. P.

R s. P. Rs. P.

G A Z E T T E

1. C A SH I

1. CAPITAL :

O F

I (0 Authorised. Capital

In h a nd a nd w i th R e s e r ve B a n k, S t a te B a nk of I n d i a, S t a te c o - o p e r a t i ve b a nk a nd

10

N D

c e n t r al c o - o p e r a t i ve b a n k.

I Shares of Rs each Shares ofjRs each

A

2. B A L A N C ES W I TH O T H ER B A N KS :

(H) Subscribed Capital

Shares of Rs each Share* of Rs each

i-5

(i) C u r r e nt d e p o s i ts . . . .. ( i i) S a v i n gs b a nk d e p o s i ts . . .. (iti) F i x ed d e p o s i ts

E X T R A O R D

I

3. M O N EY AT C A LL A ND S H O RT N O T I CE

(lit) Amount called up]

•*,

4- I N V E S T M E N TS :

N A R Y On. . . .Shares at Rs each less calls unpaid . . . . ..

On Shares at Rs each less calls

20

(0 In C e n t r al a nd S t a te G o v e r n m e nt s e c u r i t i es (at b o o k v a h i e ). . . . ..

unpaid .

Of (in) above, held by (a) Individuals (b) Co-operative institutions . (c) State G-ovemment

25

F a ce v a l ue R s. . M a r k et v a l ue R s. . . . .. (if) O t h er T r u s t ee s e c u r i t i es . . .. (iit) S h a r es in c o - o p e r a t i ve i n s t i t u t i o ns o t h er t h an in i t em ( 5) b e l ow . . . ..

9 9 7

9

6 8

PROPERTY AND ASSETS

-APITAL AND LIABILITIES

Rs. P.

Rs. P.

Rs. P. Rs. P.

1- RSSERVB FUND AND OTHEE RESERVES :

(iv) Other investments (to be specified)

(0 Statutory Reserve . . ..

5

5. INVESTMENTS OOTOF THE PRINCIPAL /SUBSHHABT

T H E ( n) Agricultural (Credit Stabilization Fund) . (lit) Building F u nd (w) Dividend Equalization F u nd -

STATB PARTNERSHIP FUND

O) Special Bad Debts Reserve

In shares of :

10

(oO Bad and Doubtful Debts Reserve . {vit) Investment Depreciation Reserve . (vtit) Other Funds and Reserves (to be specified)

G A Z E T T E

(i) Central co-operative banks C") Primary agricultural credit societies (tii) Other societies . . . ..

O F

3. PRINCIPAL/SUBSIDIARY STATE PARTNERSHIP

6. ADvANCESt :

I

F U ND ACCOUNT :

15

N D

I For share capital of :

(0 Short-term loans, cash credits, overdrafts and bills discounted . . . ..

A

(t) Central co-operative banks

Of which secured against:

(jt) Primary agricultural credit societies

(a) Government and other appro-

20

ved securities

(6) Other tangible securities @

Of the advances, amount due from in-

4. DEPOSITS AND OTHER ACCOUNTS :

E X T R A O R D

dividuals

I

(0 Fixed deposits* . . ..

25

(a) Individuals**

(b) Central co-operative b a n k s.

N A R Y

Of the advances, amount overdue

(c) Other societies

(n) Savings Bank Deposits . .

[

Considered bad and doubtful of recov-

(a) Individuals** . . .. (&) Central co-operative banks

3°

ery

P A

(c) Other societies . ..

I I I

(a) Medium-term loans

Of which secured against:

I I

f.i'ji,) Current deposits . . ..

S E C

.

(a) Individuals** . . ..

2 J

(0) Government and other approved securities

Kb) Centra]cooperative banks

>[c) Other societies.

¹ ) Other tangible securities@

(fy) Money at call and short notice .

T H E

5

5. BoRROWIMOst

Of the advances, amount due from individuals . . ..

: 0 From the Reserve Bank of India/State/

Central cu-operative bank :

Of the advancesj amount overdue :

G A Z E T T E

Considered bad and doubtful of

O F (a) Short-term loans, cash credits and 1 overdrafts . . . • •

recovery . . ..

ic

I

Of which secured against :

N D

I

(JJ'O Long-term loans

A

Of which secured against:

(A) Government and other

(a) Government and other ap-

proved securities

15

approved securities CS) Other tangible seenri-

(6) Other tangible securitieE@ .

ties<3|

•i) Aledium-term loans of which secured

against :

Of the advances^ amount due from individuals . . ..

E X T R A O R D 20

I (A) Government and other

Of the advances, amount overdue

approved securities . (B) Other tangible securi-

ties®

Considered bad and doubtful of recovery . . ..

N A R Y

(c) Long -term loans

Of which secured against :

²5

(A) Government and other

7- INTEKEST RHCEIvABIJl :

approved securities

Of which overdue

(&) Other tangible securi- ties® . . .

3©

9 6 9

9 7 0

PROPERTY AND ASSETS

CAPITAL AND LIABILITIES

Rs. P. Rs. P.

Rs. P.

Rs. P.

Considered bad and doubtful of

CM) From the State Bank of India

recovery .•

T H E 5

(a) Short-term loans, cash credits and overdrafts . . ..

8. BILLS RECEIVABLE BEING BILLS FOB COLLEC-

Of which secured against :

TION AS per conlra •

( \) Government and other approved securities

to

G A Z E T T E

9- B R A N CH A D J U S T M E N TS . . . ..

i.BJ Other tangible securi-

O F ties®

I

I O. P R E M I S ES L E SS D E P B E O A T I ON

{b) Medium-term loans i

N D

I

A

11- r UEN111JRE AND FIXTURES LESS DHrRa^lATtON .

Of which secured against :

15

12. OTHEB ASSETS (to be specified)

(Al Government and other approved securities

i'B) Other tangible securi-

ties©

E X T R A O R D

I

i3- NON-BANKING ASSETS ACQUIRED IN SATISFACTION

(e) Long-term loans Of which secured against :

20

OF CLAIMS (stating mode of valuation)

N A R Y (A) Government and other approved securities .

14. PROFIT AND LOSS

CB) Other tangible securi-

ties®

25

[

'iiij From the State Government

P A R T

(a) Short-term loans

I I Of which secured against:

(A) Government and other

approved^securities .

S E C

.

2 CB) Other tangible secu-

]

rities@ .

\b) JAiedium-tenn loans

^

Of which secured against:

T H E

(A) Government and other approved securities .

fBj Other tangible secu-

riti:s@ .

10

G A Z E T T E 'ci Long -term loans

O F Of which secured against;

I

(A) Ckivemment and other

N D approved securities .

I

A (B) Other tangible secu-

15

rities@ .

''Jv) Loans from other sources (source and

security to be specified)

6

E X T R A O R D . BILLS FOR COLLECTION BEING BILLS RECEIV- ABLE AS per contra • - , . .

I 20

• BRANCH ADJUSTMENTS

!•

N A R Y . OVERDUE INTEREST RESERVE

8,

INTEREST PAYABLE

. . ..

9-

1 0. . O T H ER LIABILITIES

(t) Bills payable . . ..

25

(it) Unclaimed dividends •

9 7 1

<

f l

2

PROPERTY AND ASSETS

CAPITAL AND LIABILITIES

Rs. P. Rs. P.

Rs. P. RE. P.

(JH) Suspense (to) Sundries

T H E I I. PROFIT AND LOSS

5

Profit as per last balance-sheet Leu appropriations

Add profit for the year brought from

G A Z E T T E the Profit and Loss Account

O F

TOTAL

TOTAL

10

I

CONTINGE1 JT LIABILITIES

N D

I

A (i) Outstanding liabilities for

guarantees issued .

(ii) Others .

TOTAL .

15

NOTES

E X T R A O R D

I

*" Fixed deposits "will include reserve fund deposits of societies, employees provident fund deposits, staff security depositgj recurring deposits,

cash certificates, etc.

••Undertheitem''JndividuaIs"deposit3frominstiraticFnsotfaerthanccHOperative banks and societies may be included.

N A R Y

26

t "Borrowings" and "Advances".—Short-term loans will be for periods up to 15 months, medium-term loans from 15 months to 5 years and '

long-term loans over 5 years.

@" Other tangible security" willindude borrowings against gold and gold ornaments, repledge of goods, mortgageof Iarri,etc.

[

General iTtstructiom—The corresponding figures (to the nearest rnpee,if so desiKd) for t ie year immediately preceding the year to which the

balance-sheet relates should be shown in separate columns.

P A R T

I I

FORM B

S E C

FOBM OF PROFIT AND LOSS ACCOUNT

.

2

] Profit an-1 loss account for the year ended

INCOME

EXPEND ITU RE

T H E

Rs. P. Rs. P.

Rs. P. Rs. P.

1. Interest and discount . . ..

1. Interest on deposits, borrowings, etc. .

2. Commission, exchange and brokerage.

2. Salaries m i allowances and pro vide at fu a d.

3. Subsidies and donations . . ..

3. Directors'and local Jcommittee members'

G A Z E T T E fees and allowances " . . . .,

O F

Income from non-banking assets and profit

4. R e n t j U x cS insurance, lighting, etc. ,

4-

I

from sale of or dealing with such assets

1

10

N D

Other receipts

5. Law charges . . . .

I

5-

A

6.

6. Postage, telegrams and telephone charges .

Loss (if any) . . . ..

7. Auditor's fees . • • • • "

8. Depreciation on. and repairs to property

9. Stationery, printing and advertisement, etc. .

E X T R A O R D 15

I

10. Loss from sale of or dealing with non-banking assets . . . . . ..

N A R Y

11. Other e i p e e d i t u re

iz. Balance of profit . . . ..

T O T AL

TOTAL

2O

General Instructions.—The corresponding figures (to t b e a e a r e s t n q 5 e e , i f s o d e s i r e d ) f o r t h e y e a r i r n m e d i a t e l v p r e c e d i ng t h e i ' e a r to which the

9 7 profit and loss account relates should be shown in separate corainns'V.

STATEMENT OF OBJECTS OF REASONS

The provisions of the Banking Companies Act, 1949 are not now- applicable to or in relation to co-operative banks. The deposits and working funds of co-operative banks are now so large that the exten- sion of the more important provisions of the Banking Companies Act, 1949 (and of certain other allied provisions of the Reserve Bank of India Act, 1934) to these banks will be in the public interest. The Bill seeks accordingly to extend to the State co-operative banks, the central co-operative banks and the more important primary non- agricultural co-operative banks certain provisions of the existing Central laws which are relatable to "banking".

2. The notes on clauses explain in detail the various provisions of the Bill.

NEW DELHI;

The 3rd December, 1964. T. T. KRISHNAMACHARI

PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy of letter No. F. 10/7/64-SB, dated the 9th December, 1964 from Shri T. T. Krishnamachari, Minister of Finance to the Secre- tary, Lok Sabba.]

The President having been informed of the subject matter of the proposed Banking Laws (Application to Co-operative Societies) Bill, 1964, recommends the introduction of the Bill in the Lok Sabha under clause (1) of article 117 of the Constitution,

Notes on clauses

Clause 2.—Chapter II of the Bill provides for certain amendments to the Reserve Bank of India Act, consequent on the application of the. more important provisions of this Act to co-operative societies. Clause 2 provides for the definition of the expressions used in the Act in relation to co-operative banks or other co-operative societies.

According to the scheme of control as it is envisaged in the Re- serve Bank of India Act and in the Banking Companies Act, (a) all the State or apex co-operative banks, (b) all central co-operative banks and (c) such of the primary non-agricultural credit societies, including in particular urban co-operative banks, as have paid-up capital and reserves of a nominal value of Rs. 1 lakh or more, will be deemed to be co-operative banks. The definition of the expression "co-operative bank" will exclude (a) all primary agricultural credit societies, whatever the nominal value of their paid-up capital may be, (b) primary non-agricultural credit societies with paid-up capital and reserves of a nominal value of less than rupees one lakh, even though they may be accepting deposits from non-members and (c) all other co-operative societies which do not obtain, or may hereafter cease to obtain, deposits from non-members.

If any doubt arises in regard to the classification of any particular society having regard to the nature of its business or operations, the question, it Is proposed, should be decided finally by the Reserve Bank.

Clause 3 provides for a consequential change in the qualifications now prescribed for the appointment of the directors of the Central Board of the Reserve Bank- It is proposed that directors of co- operative banks should in future be disqualified, (as directors of banking companies are at present) for appointment to this board. Although the nomination of representatives of co-operative banks, which will be controlled by the Reserve Bank in future, will be In- appropriate and will not, therefore, be possible, persons with experi- ence and knowledge of co-operation, and not connected actively with the management of co-operative banks as directors, will still continue to be eligible for appointment to the Central Board of the Reserve Bank.

Clause 4 provides for an amendment of a consequential nature. Clause 5.—According to the scheme of the Reserve Bank of India Act, only scheduled banks (and State or apex co-operative banks which are entitled to be included in the Second Schedule to the Reserve Bank of India Act) are or will normally be entitled to loans and advances from the Reserve Bank. Commercial banks which are not included in the Second Schedule, and central and primary co- operative banks, which are not entitled to be so included, do not ox will not enjoy the facility of direct access to the Reserve Bank. In

the event of an emergency, however, the Reserve Bank will be able according to the provisions of section 18(1) of its statute to grant loans or advances to non-scheduled banks direct or to relax the conditions as regards the security in respect of such loans. Clause 5 seeks to extend the benefit of these provisions, in the event of emer- gencies, to central and primary co-operative banks (which will be treated for this and for other purposes as non-scheduled banks).

Clause 6 seeks to modify the definition of "liabilities" in the case of apex co-operative banks for the purpose of calculating the reserve at 3 per cent, which will have to be maintained with the Reserve Bank. The amount of the loans obtained by co-operative banks from the Industrial Development Bank of India, the Agricultural Refinance Corporation and the State Government concerned and deposits re- presenting the reserves of other co-operative societies will be ex- cluded from the definition of liabilities.

Clause 7 seeks to omit section 44, aa the returns from State or apex co-operative banks, which are now provided for by this section can be obtained under the provisions of section 42 as extended to these banks. ,

Clauses 8 and. 9 provide for the modification of the definition of (a) financial institutions and (b) non-banking institu- tions for the purposes of Chapter IIIB of the Reserve Bank of India Act. It is proposed that (a) all co-operative banks, (b) all agricul- tural credit societies and (c) all primary non-agricultural credit so- cieties which are not co-operative banks should be excluded from the scope of the statutory provisions relating to the Reserve Bank's control over the loan investment or other allied policies of financial and nonjbanking institutions. Co-operative banks will be effectively controlled in accordance with other provisions which are being made for this purpose in the Reserve Bank of India Act and the Banking Companies Act and it will not, therefore, be necessary to make any separate provision in regard to them. Agricultural credit societies have been excluded generally from the scope of the various provi- sions of the present Bill. The working funds and turnover of pri- mary non-agricultural credit societies which are not co-operative banks are relatively insignificant, with the result that the trouble or expense involved in controlling their loans or advances or invest- ment policies may not be worthwhile.

Claires 10 and 11.—Chapter III provides for the amendments necessary to Banking Companies Act. Clauses 10 and 11 seek to alter the description of this Act and to make certain consequential changes in the long title and the preamble. The Act, it is proposed, should be known in future as the Banking Regulation Act, 1949. This will be appropriate, as its application will not be confined any

longer to companies incorporated under the Companies Act and carry- ing on the business of banking. > Clause 12 provides that the provisions of the Banking Companies Act, 1949 will not be applicable to primary agricultural credit socie- ties and landmortgage banks and that they will be applicable to other co-operative banks only to the extent specified.

Clause 13 seeks to modify, on the analogy of clause 6 of the Bill, the definition of "liabilities in India" in the case of co-operative banks for the purpose of calculating the cash reserve at 3 per cent-

Clause 14 seeks to insert a new section in the Banking Companies Act, 1949 providing for the necessary modifications to the various sections of this Act in their application to or in relation to co-opera- tive banks.

Parts IIA, III and IIIA and wuch of the provisions in the other Parts of the Act as are relatafole either directly or indirectly to the incorporation, management and winding up of co-operative banks are proposed to be omitted, as these Parts or provisions are not in pith and substance within the scope of any entry in the Central or Con- current List of subjects in the Seventh Schedule to the Constitution. The other modifications of importance in the provisions of the Banking Companies Act will be as indicated below. The references are to the various clauses of section 56, as proposed to be inserted in the Act,—

(1) the operations or working of agricultural credit societies and landmortgage banks, by whatever name called, will continue to be unaffected, as the provisions of the Banking Companies Act, 1949, as renamed will not be applicable to them;

(ii) primary non-agricultural credit societies with paid-up capital and reserves of a nominal value of less than Rs. 1 lakh, which according to the definition will not be treated as co- operative banks, will be permitted as a special case to carry on the business of banking i.e. acceptance of deposits from non- members and the grant of loans and advances, without being re- quired to apply for licences or to comply with any of the other provisions of the Act [clause (o)];

(iii) primary non-agricultural credit societies with paid-up capital and reserves of Rs. 1 lakh or more, which by definition are co-operative banks, central co-operative banks arid State or apex co-operative banks will be required to apply for licences within a period of three months, and will be permitted to carry on the business of banking, If licences are granted to them, or in the case of such banks which are already In existence if they are not informed that licences will not be granted for enabling them to continue to carry on the business [clause (0)];

(iv) primary non-agricultural credit societies, which by de- finition are co-operative banks, central co-operative banks and State or apex co-operative banks will, once the provisions of the Banking Companies Act have been applied to, or in relation to them, continue to be 'banks within the meaning of the Act, and if at any time any of these banks ceases to carry on banking business, it may begin to transact such business again, subject to the directions, if any, of the Reserve Bank [clause (za)~\;

(v) co-operative societies (other than agricultural credit societies, or landmortgage banks, or primary non-agricultural credit societies, or central co-operative banks or State or apex co- operative banks) will be able to accept deposits from non-mem- bers and to grant simultaneously loans and advances in future only for a period of one year from the commencement of the provisions of the present Bill [clause (o)];

(m) the investment of the funds of co-operative banks in other co-operative societies will, except in certain specified cir- cumstances, be subject to the approval of the Reserve Bank [clause (fc)];

(•wii) central co-operative banks will be enabled, without obtaining the prior permission of the Reserve Bank, to open new branches within the area of their operations [clause (p) ];

(viii) the Reserve Bank will be able to have the inspection of a primary co-operative bank conducted, if necessary, through the State or apex co-operative bank with which that bank is affiliated [clause (w)];

(ix) primary co-operative banks will be enabled to grant, if necessary, and on terms and conditions which may be approved by the Reserve Bank, unsecured loans to their directors, In cir- cumstances in which such loans may have to be granted for any essential purpose [clause (I)];

(x) the accounts of the co-operative banks will continue to be closed at the end of the co-operative year, that is on the 30th June [clause (s)].

The provisions of the Bankers' Books Evidence Act, 1891 and the Banking Companies (Legal Practitioners' Clients' Accounts) Act, 1949 are proposed to be modified suitably, so that the special procedure as to evidence or the protection in respect of certain ac- counts may be extended to or be available in future in relation to co-operative banks [clause (zk)].

The Third Schedule as proposed to be amended provides for the prescribed Forms in which the balance-sheets and profit and loss accounts of co-operative banks will have to be maintained. The Forms may, if necessary, be modified In future in the light of further experience and in accordance with the procedure which is already prescribed in the Act^ior this purpose.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Section 52 of the Banking Companies Act, 1949 as proposed to be extended to co-operative banks provides for the making of rules for carrying out the purposes of the Act in relation to these institutions and for prescribing the details to be included in the returns required to be submitted under the Act and the manner in which the returns should be submitted.

The delegation of legislative powers is of a normal character.

S. L. SHAKDHER,

Secretary.

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