The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
Administered Ministry: Ministry of Finance / Department of Financial Services
Act details
| Short title | The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 |
|---|---|
| Long title | An Act to provide for the acquisition and transfer of the undertakings of certain banking companies, having regard to their size, resources, coverage and organisation, in order further to control the heights of the economy, to meet progressively, and serve better, the needs of the development of the economy and to promote the welfare of the people, in conformity with the policy of the State towards securing the principles laid down in clauses (b) and (c) of article 39 of the Constitution and for matters connected therewith or incidental thereto. |
| Act number | 40 of 1980 |
| Act year | 1980 |
| Enactment date | 11 Jul 1980 |
| Ministry | Ministry of Finance / Department of Financial Services |
| Department | Department of Financial Services |
| Jurisdiction | Central (Parliament of India) |
| Sections | 29 |
| Schedules | 3 |
| Status | Not repealed |
| Last checked on India Code | 2 Nov 2026 |
| Source | India Code, Government of India |
Summary
Summary of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
Purpose:
• To provide for the acquisition and transfer of undertakings of certain banking companies.
• To control the heights of the economy, serve the development needs of the economy, and promote public welfare in line with the Constitution's Article 39 (b) and (c).
Key Provisions:
1. Acquisition and Transfer: - Enables the Central Government to acquire and transfer the undertakings of specified banking companies.
• Undertakings, assets, and liabilities of acquired banks vest in the Central Government or a designated transferee bank.
2. Existing and Corresponding New Banks: - Existing Bank: A banking company with total demand and time liabilities in India of not less than ₹200 crores as of March 14, 1980.
• Corresponding New Bank: A body corporate established under the Act, corresponding to an existing bank, with an initial paid-up capital equal to that of the existing bank.
3. Management and Capital: - Corresponding new banks are guided by the Central Government's directions.
• Authorised capital of corresponding new banks initially set at ₹3,000 crores, with provisions for adjustment and capital increase through various means, ensuring the Central Government holds at least 51% of the paid-up equity capital.
4. Miscellaneous: - Provisions for the management of undertakings, payment of amounts, employee continuance, and indemnity.
• Amendments to various enactments and repeal/saving clauses.
Legislative history
Legislative History:
The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
● Act Title - The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980
● Act Number / Year - 40 of 1980
● Act ID (India Code) - 198040
● Presidential Assent Date - July 11, 1980
● Enforcement Date - April 15, 1980
● Nodal Ministry - Ministry of Finance
Precedent & Historical Rationale
● Second Phase of Bank Nationalisation - Enacted to carry out the second major wave of commercial bank nationalisation in India, following the first phase under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969.
● Socio-Economic Development & Credit Expansion - Formulated to acquire six major private sector commercial banks whose demand and time liabilities exceeded ₹200 crores (including Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank). The objective was to better serve the development needs of the economy, align institutional credit with national priorities, and expand banking infrastructure into unbanked rural and semi-urban regions.
Parliamentary Trajectory & Enactment
● Formulation - Introduced by the Union Ministry of Finance to replace the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1980 (Ordinance 3 of 1980) promulgated by President N. Sanjiva Reddy on April 15, 1980.
● Parliamentary Passage - Debated and passed by both Houses of Parliament (Seventh Lok Sabha and Rajya Sabha) during the monsoon session in June–July 1980.
● Presidential Assent - Received Presidential Assent on July 11, 1980.
● Enforcement - Enforced on April 15, 1980 .
Source - Official Record of Parliament, India Code, and Ministry of Finance.