The Regional Rural Banks Act, 1976
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 1 Short title, extent and commencement.
(1) This Act may be called the Regional Rural Banks Act, 1976.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 26th day of September, 1975.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 26th day of September, 1975.
Section 2 Definitions.
In this Act, unless the context otherwise requires,--
(a) "Board", in relation to a Regional Rural Bank, means the Board of directors of that Regional Rural Bank;
(b) "Chairman", in relation to a Regional Rural Bank, means the individual appointed or re-appointed under sub-section (1) of section 11 as the Chairman of that bank;
(c) "director", in relation to a Regional Rural Bank, means a member of the Board of that bank; 1
[(ca) "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 (61 of 1981);]
(d) "notified area" means the local limits, specified under sub-section (1) of section 3, within which a Regional Rural Bank shall operate;
(e) "prescribed" means prescribed by rules made under this Act;
(f) "Regional Rural Bank" means a Regional Rural Bank established under sub-section (1) of section 3;
(g) "Sponsor Bank", in relation to a Regional Rural Bank, means a bank by which such Regional Rural Bank has been sponsored;
(h) "State Government" means,--
(i) in relation to a Regional Rural Bank established in a Union territory, the Central Government;
(ii) in relation to a Regional Rural Bank established in a State, the Government of that State;
(i) words and expressions used herein and not defined but defined in the Reserve Bank of India Act, 1934 (2 of 1934), shall have the meanings respectively assigned to them in that Act;
(j) words and expressions used herein and not defined either in this Act or in the Reserve Bank of India Act, 1934 (2 of 1934), but defined in the Banking Regulation Act, 1949 (10 of 1949), shall have the meanings respectively assigned to them in the Banking Regulation Act, 1949 (10 of 1949).
(a) "Board", in relation to a Regional Rural Bank, means the Board of directors of that Regional Rural Bank;
(b) "Chairman", in relation to a Regional Rural Bank, means the individual appointed or re-appointed under sub-section (1) of section 11 as the Chairman of that bank;
(c) "director", in relation to a Regional Rural Bank, means a member of the Board of that bank; 1
[(ca) "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 (61 of 1981);]
(d) "notified area" means the local limits, specified under sub-section (1) of section 3, within which a Regional Rural Bank shall operate;
(e) "prescribed" means prescribed by rules made under this Act;
(f) "Regional Rural Bank" means a Regional Rural Bank established under sub-section (1) of section 3;
(g) "Sponsor Bank", in relation to a Regional Rural Bank, means a bank by which such Regional Rural Bank has been sponsored;
(h) "State Government" means,--
(i) in relation to a Regional Rural Bank established in a Union territory, the Central Government;
(ii) in relation to a Regional Rural Bank established in a State, the Government of that State;
(i) words and expressions used herein and not defined but defined in the Reserve Bank of India Act, 1934 (2 of 1934), shall have the meanings respectively assigned to them in that Act;
(j) words and expressions used herein and not defined either in this Act or in the Reserve Bank of India Act, 1934 (2 of 1934), but defined in the Banking Regulation Act, 1949 (10 of 1949), shall have the meanings respectively assigned to them in the Banking Regulation Act, 1949 (10 of 1949).
1 Ins. by Act 1 of 1988, s. 2 (w.e.f. 28-9-1988).
Section 3 Establishment and incorporation of Regional Rural Banks.
(1) The Central Government may, if requested so to do by a Sponsor Bank, by notification in the Official Gazette, establish in a State or Union territory, one or more Regional Rural Banks with such name as may be specified in the notification and may, by the said or subsequent notification, specify the local limits within which each Regional Rural Bank shall operate.
(2) Every Regional Rural Bank shall be a body corporate with 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 and may sue and be sued in its name.
1 [(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by it, by--
(a) subscribing to the share capital of such Regional Rural Bank;
(b) training personnel of such Regional Rural Bank; and
(c) providing such managerial and financial assistance to such Regional Rural Bank 2 ***, as may be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank:
3 * * * * *]
(2) Every Regional Rural Bank shall be a body corporate with 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 and may sue and be sued in its name.
1 [(3) It shall be the duty of the Sponsor Bank to aid and assist the Regional Rural Bank, sponsored by it, by--
(a) subscribing to the share capital of such Regional Rural Bank;
(b) training personnel of such Regional Rural Bank; and
(c) providing such managerial and financial assistance to such Regional Rural Bank 2 ***, as may be mutually agreed upon between the Sponsor Bank and the Regional Rural Bank:
3 * * * * *]
1. Subs. by Act 1 of 1988, s. 3, for sub-section (3) (w.e.f. 28-9-1988).
2. The words "during the first five years of its functioning" omitted by Act 14 of 2015, s. 2 (w.e.f. 4-2-2016).
3. The proviso omitted by s. 2, ibid. (w.e.f. 4-2-12016).
2. The words "during the first five years of its functioning" omitted by Act 14 of 2015, s. 2 (w.e.f. 4-2-2016).
3. The proviso omitted by s. 2, ibid. (w.e.f. 4-2-12016).
Section 4 Offices and agencies.
(1) A Regional Rural Bank shall have its head office at such place in the notified area as the Central Government may, after consultation with the 1 [National Bank] and the Sponsor Bank, specify by notification in the Official Gazette.
(2) A Regional Rural Bank may, if it is of opinion that it is necessary so to do, establish its branches or agencies at any place in the notified area.
(2) A Regional Rural Bank may, if it is of opinion that it is necessary so to do, establish its branches or agencies at any place in the notified area.
1. Subs. by Act 1 of 1988, s. 4, for "Reserve Bank" (w.e.f. 28-9-1988).
Section 5 Authorised capital.
The authorised capital of each Regional Rural Bank shall be 1 [two thousand crore of rupees, divided into two hundred crore of fully paid-up shares of ten rupees each]:
Provided that the Central Government may, after consultation with the 2 [National Bank] and the Sponsor Bank, increase or reduce such authorised capital; so, however, that the authorised capital shall not be reduced below 3 [one crore of rupees, and the shares shall be, in all cases, fully paid-up shares of ten rupees each].
Provided that the Central Government may, after consultation with the 2 [National Bank] and the Sponsor Bank, increase or reduce such authorised capital; so, however, that the authorised capital shall not be reduced below 3 [one crore of rupees, and the shares shall be, in all cases, fully paid-up shares of ten rupees each].
1 Subs. by Act 14 of 2015, s. 3, for "five crores of rupees divided into five lakhs of fully paid-up shares of one hundred rupees each" (w.e.f. 4-2-2016).
2 Subs. by Act 1 of 1988, s. 5, for "Reserve Bank" (w.e.f. 28-9-1988).
3 Subs. by Act 14 of 2015, s. 3, for "twenty-five lakhs of rupees, and the shares shall be, in all cases, fully paid-up shares of one hundred rupees each" (w.e.f. 4-2-2016).
2 Subs. by Act 1 of 1988, s. 5, for "Reserve Bank" (w.e.f. 28-9-1988).
3 Subs. by Act 14 of 2015, s. 3, for "twenty-five lakhs of rupees, and the shares shall be, in all cases, fully paid-up shares of one hundred rupees each" (w.e.f. 4-2-2016).
Section 6 Issued capital.
1 [(1) The issued capital of each Regional Rural Bank shall, in the first instance, be such as may be fixed by the Central Government in this behalf, but it shall in no case be less than 2 [one 2 [one crore of rupees].]
(2) Of the capital issued by a Regional Rural Bank under sub-section (1), fifty per cent. shall be subscribed by the Central Government; fifteen per cent. by the concerned State Government and thirty-five per cent. by the Sponsor Bank.
3[Provided that in case the Regional Rural Bank raises its capital from sources other than the Central Government or the State Government or the Sponsor Bank, the shareholding of the Central Government and the Sponsor Bank shall not be less than fifty-one per cent.:
Provided further that the Central Government shall consult the concerned State Government if the level of shareholding in the Regional Rural Bank of such State Government is reduced below fifteen per cent.]
4 [(2A) The Central Government may, in consultation with the Sponsor Bank and the State Government, by notification, either raise or reduce the limit of shareholding of the Central Government, the State Government or the Sponsor Bank specified in sub-section (2):
Provided that the Central Government shall consult the concerned State Government before reducing the limit of shareholding of such State Government.]
(3) The Board may, after consultation with the 5 [National Bank], the concerned State Government and the Sponsor Bank and with the prior approval of the Central Government, from time to time, increase the issued capital of the Regional Rural Bank; and, where additional capital is issued, such capital shall also be subscribed in the same proportion as is specified in sub-section (2) 4 [or, as the case may be, notified by the Central Government under sub-section (2A)].
(2) Of the capital issued by a Regional Rural Bank under sub-section (1), fifty per cent. shall be subscribed by the Central Government; fifteen per cent. by the concerned State Government and thirty-five per cent. by the Sponsor Bank.
3[Provided that in case the Regional Rural Bank raises its capital from sources other than the Central Government or the State Government or the Sponsor Bank, the shareholding of the Central Government and the Sponsor Bank shall not be less than fifty-one per cent.:
Provided further that the Central Government shall consult the concerned State Government if the level of shareholding in the Regional Rural Bank of such State Government is reduced below fifteen per cent.]
4 [(2A) The Central Government may, in consultation with the Sponsor Bank and the State Government, by notification, either raise or reduce the limit of shareholding of the Central Government, the State Government or the Sponsor Bank specified in sub-section (2):
Provided that the Central Government shall consult the concerned State Government before reducing the limit of shareholding of such State Government.]
(3) The Board may, after consultation with the 5 [National Bank], the concerned State Government and the Sponsor Bank and with the prior approval of the Central Government, from time to time, increase the issued capital of the Regional Rural Bank; and, where additional capital is issued, such capital shall also be subscribed in the same proportion as is specified in sub-section (2) 4 [or, as the case may be, notified by the Central Government under sub-section (2A)].
1. Subs. by Act 1 of 1988, s. 6, for sub-section (1) (w.e.f. 28-9-1988).
2. Subs. by Act 14 of 2015, s. 4, for "“twenty-five lakhs of rupees or exceed one crore of rupees" (w.e.f. 4-2-2016).
. Ins. by s. 4, ibid. (w.e.f. 4-2-2016).
4. Ins. by Act 14 of 2015, s. 4 (w.e.f. 4-2-2016).
5. Subs. by Act 1 of 1988, s. 6, for "Reserve Bank" (w.e.f. 28-9-1988).
2. Subs. by Act 14 of 2015, s. 4, for "“twenty-five lakhs of rupees or exceed one crore of rupees" (w.e.f. 4-2-2016).
. Ins. by s. 4, ibid. (w.e.f. 4-2-2016).
4. Ins. by Act 14 of 2015, s. 4 (w.e.f. 4-2-2016).
5. Subs. by Act 1 of 1988, s. 6, for "Reserve Bank" (w.e.f. 28-9-1988).
Section 7 Shares to be approved securities.
Notwithstanding anything contained in the Acts hereinafter mentioned in this section, the shares of a Regional Rural Bank shall be deemed to be included among the securities enumerated in section 20 of the Indian Trusts Act, 1882 (2 of 1882), and shall also be deemed to be approved securities for the purposes of the Banking Regulation Act, 1949 (10 of 1949).
Section 8 Management.
(1) Subject to the provisions of this Act, the general superintendence, direction and management of the affairs and business of a Regional Rural Bank shall vest in a Board of directors who may exercise all the powers and discharge all the functions which may be exercised or discharged by the Regional Rural Bank.
(2) In discharging its functions, the Board shall act on business principles and shall have due regard to public interest.
(2) In discharging its functions, the Board shall act on business principles and shall have due regard to public interest.
Section 9 Board of directors.
(1) The Board of directors shall consist of the Chairman appointed under sub-section (1) of section 11, and the following other members, namely:--
1 [(a) two directors, who are not officers of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, to be nominated by the Central Government;
2 [Provided that no person shall be nominated as a director, if he is already a director on the Board Board of any other Regional Rural Bank;]
(b) one director, who is an officer of the Reserve Bank, to be nominated by that Bank;
(c) one director, who is an officer of the National Bank, to be nominated by that Bank;
(d) two directors, who are officers of the Sponsor Bank, to be nominated by that Bank; and
(e) two directors, who are officers of the concerned State Government, to be nominated by that Government:]
2 [(f) such number of directors elected by the shareholders other than the directors nominated by the Central Government, the State Government, the Sponsor Bank and other institutions owned or controlled by the Central Government or the State Government, whose names are entered in the register of shareholders of the Regional Rural Bank at least ninety days before the date of the meeting in which the election of directors takes place on the following basis, namely:--
(i) where the total amount of equity share capital issued to such shareholders is ten per cent. or less of the total issued equity capital, one director shall be elected from such shareholders;
(ii) where the total amount of equity share capital issued to such shareholders is more than ten per cent. but less than twenty-five per cent. of the total issued equity capital, two directors shall be elected from the shareholders including the shareholders referred to in sub-clause (i);
(iii) where the total amount of equity share capital issued to such shareholders is twenty-five per cent. or more of the total issued equity capital, three directors shall be elected from the shareholders including shareholders referred to in sub-clauses (i) and (ii).]
(2) The Central Government may increase the number of members of the Board; so, however, that the number of directors does not exceed fifteen in the aggregate and also prescribe the manner in which the additional number may be filled in.
3 [(3) The Central Government may appoint an officer of the Central Government on the Board of Regional Rural Banks, if it considers necessary for the purposes of effective functioning of the Regional Rural Banks.]
1 [(a) two directors, who are not officers of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, to be nominated by the Central Government;
2 [Provided that no person shall be nominated as a director, if he is already a director on the Board Board of any other Regional Rural Bank;]
(b) one director, who is an officer of the Reserve Bank, to be nominated by that Bank;
(c) one director, who is an officer of the National Bank, to be nominated by that Bank;
(d) two directors, who are officers of the Sponsor Bank, to be nominated by that Bank; and
(e) two directors, who are officers of the concerned State Government, to be nominated by that Government:]
2 [(f) such number of directors elected by the shareholders other than the directors nominated by the Central Government, the State Government, the Sponsor Bank and other institutions owned or controlled by the Central Government or the State Government, whose names are entered in the register of shareholders of the Regional Rural Bank at least ninety days before the date of the meeting in which the election of directors takes place on the following basis, namely:--
(i) where the total amount of equity share capital issued to such shareholders is ten per cent. or less of the total issued equity capital, one director shall be elected from such shareholders;
(ii) where the total amount of equity share capital issued to such shareholders is more than ten per cent. but less than twenty-five per cent. of the total issued equity capital, two directors shall be elected from the shareholders including the shareholders referred to in sub-clause (i);
(iii) where the total amount of equity share capital issued to such shareholders is twenty-five per cent. or more of the total issued equity capital, three directors shall be elected from the shareholders including shareholders referred to in sub-clauses (i) and (ii).]
(2) The Central Government may increase the number of members of the Board; so, however, that the number of directors does not exceed fifteen in the aggregate and also prescribe the manner in which the additional number may be filled in.
3 [(3) The Central Government may appoint an officer of the Central Government on the Board of Regional Rural Banks, if it considers necessary for the purposes of effective functioning of the Regional Rural Banks.]
1 Subs. by s. 7, ibid., for clauses (a), (b) and (c) (w.e.f. 28-9-1988).
2 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).
3 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).
2 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).
3 Ins. by Act 14 of 2015, s. 5 (w.e.f. 4-2-2016).
Section 10 Term of office of director.
1 [10. Term of office of director.--A director nominated under clause (a) of sub-section (1) of section 9 shall hold office during the pleasure of the Central Government and for such term, not exceeding three years, from the date on which he assumes his office, as the Central Government may specify at the time of his nomination and shall be eligible for renomination:
Provided that no such director shall hold office either continuously or intermittently for a period exceeding six years.]
Provided that no such director shall hold office either continuously or intermittently for a period exceeding six years.]
1. Subs. by s. 6, ibid., for section 10 (w.e.f. 4-2-2016).
Section 11 Chairman.
(1) 1 [The Sponsor Bank] shall appoint an individual to be the Chairman of a Regional Rural Bank and specify the period, not exceeding five years, for which such individual shall, subject to the provisions of sub-section (4), hold office as the Chairman:
2 [Provided that no appointment of such an individual shall be made,--
(a) if such an individual is an officer of the Sponsor Bank, except after consultation with the National Bank;
(b) in any other case, except with the prior approval of the Central Government.]
3 [(1A) Notwithstanding anything contained in sub-section (1),--
(a) the Sponsor Bank shall have the right to terminate the term of office of the Chairman at any time before the expiry of the period specified in sub-section (1):
Provided that no such termination shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that where the Chairman is not an officer of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, he shall be given notice of not less than three months in writing or three months' salary and allowances in lieu of such notice; and
(b) the Chairman shall have the right to resign his office at any time before the expiry of the period specified in sub-section (1) by giving to the Sponsor Bank, notice of not less than three months in writing.]
(2) The individual, appointed as a Chairman under sub-section (1), shall, on the expiry of the period specified under that sub-section, be eligible for re-appointment.
(3) The Chairman shall devote his whole time to the affairs of the Regional Rural Bank and shall have, subject to the superintendence, control and direction of the Board, the management of the whole of the affairs of the Regional Rural Bank.
4 [(4) 5 [The Sponsor Bank] may, at any time, remove the Chairman from office:
6 [Provided that no such removal shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that] no person shall be removed from his office, under this sub-section, unless he has been given an opportunity of showing cause against his removal.]
(5) The Chairman shall receive such salary and allowances and be governed by such terms and conditions of service as may be determined by the 7 [the Sponsor Bank in consultation with the National Bank].
(6) If the Chairman 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 office, the Central Government may appoint another individual to act as the Chairman during the absence of the first-mentioned Chairman
2 [Provided that no appointment of such an individual shall be made,--
(a) if such an individual is an officer of the Sponsor Bank, except after consultation with the National Bank;
(b) in any other case, except with the prior approval of the Central Government.]
3 [(1A) Notwithstanding anything contained in sub-section (1),--
(a) the Sponsor Bank shall have the right to terminate the term of office of the Chairman at any time before the expiry of the period specified in sub-section (1):
Provided that no such termination shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that where the Chairman is not an officer of the Central Government, State Government, Reserve Bank, National Bank, Sponsor Bank or any other bank, he shall be given notice of not less than three months in writing or three months' salary and allowances in lieu of such notice; and
(b) the Chairman shall have the right to resign his office at any time before the expiry of the period specified in sub-section (1) by giving to the Sponsor Bank, notice of not less than three months in writing.]
(2) The individual, appointed as a Chairman under sub-section (1), shall, on the expiry of the period specified under that sub-section, be eligible for re-appointment.
(3) The Chairman shall devote his whole time to the affairs of the Regional Rural Bank and shall have, subject to the superintendence, control and direction of the Board, the management of the whole of the affairs of the Regional Rural Bank.
4 [(4) 5 [The Sponsor Bank] may, at any time, remove the Chairman from office:
6 [Provided that no such removal shall be made,--
(a) if the Chairman is an officer of the Sponsor Bank, except after consultation with the National Bank; and
(b) in any other case, except with the prior approval of the Central Government:
Provided further that] no person shall be removed from his office, under this sub-section, unless he has been given an opportunity of showing cause against his removal.]
(5) The Chairman shall receive such salary and allowances and be governed by such terms and conditions of service as may be determined by the 7 [the Sponsor Bank in consultation with the National Bank].
(6) If the Chairman 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 office, the Central Government may appoint another individual to act as the Chairman during the absence of the first-mentioned Chairman
1. Subs. by Act 1 of 1988, s. 8, for "The Central Government" (w.e.f. 28-9-1988). 2. Proviso ins. by s. 8, ibid. (w.e.f. 28-9-1988). 3. Subs. by s. 8, ibid., for sub-section (1A) (w.e.f. 28-9-1988).
4. Subs. by Act 73 of 1976, s. 6, for sub-section (4) (w.e.f. 11-6-1976).
5. Subs. by Act 1 of 1988, s. 8, for "The Central Government" (w.e.f. 28-9-1988).
6. Subs. by s. 8, ibid., for "Provided that" (w.e.f. 28-9-1988).
7. Subs. by s. 8, ibid., for "the Central Government" (w.e.f. 28-9-1988).
4. Subs. by Act 73 of 1976, s. 6, for sub-section (4) (w.e.f. 11-6-1976).
5. Subs. by Act 1 of 1988, s. 8, for "The Central Government" (w.e.f. 28-9-1988).
6. Subs. by s. 8, ibid., for "Provided that" (w.e.f. 28-9-1988).
7. Subs. by s. 8, ibid., for "the Central Government" (w.e.f. 28-9-1988).
Section 12 Disqualifications.
A person shall be disqualified for being appointed or, as the case may be, nominated as, and for being, a director, if he--
(a) is, or, at any time has been, adjudged insolvent or has suspended payment of his debt or has compounded with his creditors, or
(b) is of unsound mind and stands so declared by a competent court, or
(c) is, or has been, convicted of an offence which, in the opinion of the Central Government, involves moral turpitude.
(a) is, or, at any time has been, adjudged insolvent or has suspended payment of his debt or has compounded with his creditors, or
(b) is of unsound mind and stands so declared by a competent court, or
(c) is, or has been, convicted of an offence which, in the opinion of the Central Government, involves moral turpitude.
Section 13 Vacation of the seat of directors.
(1) If a director--
(a) becomes subject to any disqualification specified in section 12, or
(b) is absent without leave of the Board for more than three consecutive meetings thereof,
his seat shall thereupon become vacant.
1 [(2) A director may resign his office by giving notice thereof in writing to the authority by which he was nominated; and, on such resignation being accepted, the director shall be deemed to have vacated his office.]
(a) becomes subject to any disqualification specified in section 12, or
(b) is absent without leave of the Board for more than three consecutive meetings thereof,
his seat shall thereupon become vacant.
1 [(2) A director may resign his office by giving notice thereof in writing to the authority by which he was nominated; and, on such resignation being accepted, the director shall be deemed to have vacated his office.]
1 Subs. by s. 9, ibid., for sub-section (2) (w.e.f. 28-9-1988).
Section 14 Meetings of Board.
(1) The Board of directors of a Regional Rural Bank 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.
(2) The Chairman of the Regional Rural Bank shall preside over every meeting of the Board, and, in his absence, such director as the Chairman may generally, or in relation to any particular meeting, authorise in this behalf shall preside; and, in the absence of both the Chairman and the director so authorised, the directors present at the meeting shall elect one from among themselves to preside over the meeting.
Explanation.--For the purposes of this sub-section, "absence" from a meeting means non-attendance for any reason whatsoever at the meeting, or any part of the meeting during which any business is transacted.
(3) All questions at a meeting of the Board shall be decided by a majority of the votes of the directors present and voting; and, in case of equality of votes, the person presiding shall have a second or casting vote.
(4) No director shall, as a director, take part in the discussion of, or vote on, any contract, loan, arrangement or proposal entered into or to be entered into, by or on behalf of the Regional Rural Bank, if he is, in any way, whether directly or indirectly, interested in the contract, loan, arrangement or proposal and, where a director is interested in any such matter, he shall, at the earliest possible opportunity, disclose to the Board the nature of his interest in such contract, loan, arrangement or proposal, and where he does so, his presence at the meeting shall not count for the purpose of forming any quorum at the time of any such discussion or vote, and if he does vote, his vote shall be void:
Provided that nothing contained in this sub-section shall apply to such director by reason only of his being--
(i) a shareholder (other than a director) holding not more than two per cent. of the paid-up capital in any public company within the meaning of the Companies Act, 1956 (1 of 1956), or any corporation established by or under any law for the time being in force in India or any co-operative society, with which the Regional Rural Bank has entered into, or proposes to enter into, any contract, loan, arrangement or proposal; or
(ii) a director of the Regional Rural Bank as such.
(2) The Chairman of the Regional Rural Bank shall preside over every meeting of the Board, and, in his absence, such director as the Chairman may generally, or in relation to any particular meeting, authorise in this behalf shall preside; and, in the absence of both the Chairman and the director so authorised, the directors present at the meeting shall elect one from among themselves to preside over the meeting.
Explanation.--For the purposes of this sub-section, "absence" from a meeting means non-attendance for any reason whatsoever at the meeting, or any part of the meeting during which any business is transacted.
(3) All questions at a meeting of the Board shall be decided by a majority of the votes of the directors present and voting; and, in case of equality of votes, the person presiding shall have a second or casting vote.
(4) No director shall, as a director, take part in the discussion of, or vote on, any contract, loan, arrangement or proposal entered into or to be entered into, by or on behalf of the Regional Rural Bank, if he is, in any way, whether directly or indirectly, interested in the contract, loan, arrangement or proposal and, where a director is interested in any such matter, he shall, at the earliest possible opportunity, disclose to the Board the nature of his interest in such contract, loan, arrangement or proposal, and where he does so, his presence at the meeting shall not count for the purpose of forming any quorum at the time of any such discussion or vote, and if he does vote, his vote shall be void:
Provided that nothing contained in this sub-section shall apply to such director by reason only of his being--
(i) a shareholder (other than a director) holding not more than two per cent. of the paid-up capital in any public company within the meaning of the Companies Act, 1956 (1 of 1956), or any corporation established by or under any law for the time being in force in India or any co-operative society, with which the Regional Rural Bank has entered into, or proposes to enter into, any contract, loan, arrangement or proposal; or
(ii) a director of the Regional Rural Bank as such.
Section 15 Committees of Board.
The Board may constitute such committees, whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons, as it may think fit, for such purposes as it may decide.
Section 16 Fees and allowances of directors and members of committees.
(1) Every director and every member of a committee (other than the Chairman) shall be paid such fees and allowances as may be determined by the Central Government:
Provided that no fees shall be paid to any director, or member of a committee, if he is an officer of the Central Government, State Government, the Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank.
(2) The allowances payable to a director or a member of a committee, who is an officer of the Central Government, State Government, Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank, shall be paid by the Government or bank by which such officer is employed; and the allowances and fees payable to any other director or member of a committee shall be payable by the concerned Regional Rural Bank.
Provided that no fees shall be paid to any director, or member of a committee, if he is an officer of the Central Government, State Government, the Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank.
(2) The allowances payable to a director or a member of a committee, who is an officer of the Central Government, State Government, Reserve Bank, 1 [National Bank,] Sponsor Bank or any other bank, shall be paid by the Government or bank by which such officer is employed; and the allowances and fees payable to any other director or member of a committee shall be payable by the concerned Regional Rural Bank.
1 Ins. by Act 1 of 1988, s. 10 (w.e.f. 28-9-1988).
Section 17 Staff of Regional Rural Banks.
(1) A Regional Rural Bank may appoint such number of officers and other employees as it may consider necessary or desirable 1 [in such manner as may be prescribed] for the efficient performance of its functions and may determine the terms and conditions of their appointment and service:
Provided that it shall be lawful for a Sponsor Bank, if requested so to do by a Regional Rural Bank sponsored by it, to send, 2 *** such number of officers or other employees on deputation to the Regional Rural Bank as may be necessary or desirable for the efficient performance of its functions:
Provided further that the remuneration of officers and other employees appointed by a Regional Rural Bank shall be such as may be determined by the Central Government, and, in determining such remuneration, the Central Government shall have due regard to the salary structure of the employees of the State Government and the local authorities of comparable level and status in the notified area.
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force, no award, judgment, decree, decision or order of any industrial tribunal, court or other authority, made before the commencement of this Act, shall apply to the terms and conditions in relation to the persons appointed by a Regional Rural Bank.
(3) The officers and other employees of a Regional Rural Bank shall exercise such powers and perform such duties as may be entrusted or delegated to them by the Board.
Provided that it shall be lawful for a Sponsor Bank, if requested so to do by a Regional Rural Bank sponsored by it, to send, 2 *** such number of officers or other employees on deputation to the Regional Rural Bank as may be necessary or desirable for the efficient performance of its functions:
Provided further that the remuneration of officers and other employees appointed by a Regional Rural Bank shall be such as may be determined by the Central Government, and, in determining such remuneration, the Central Government shall have due regard to the salary structure of the employees of the State Government and the local authorities of comparable level and status in the notified area.
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force, no award, judgment, decree, decision or order of any industrial tribunal, court or other authority, made before the commencement of this Act, shall apply to the terms and conditions in relation to the persons appointed by a Regional Rural Bank.
(3) The officers and other employees of a Regional Rural Bank shall exercise such powers and perform such duties as may be entrusted or delegated to them by the Board.
1. Ins. by s. 11, ibid. (w.e.f. 28-9-1988).
2. The words ", during the first five years of the functioning of a Regional Rural Bank," omitted by s. 11, ibid. (w.e.f. 28-9-1988).
2. The words ", during the first five years of the functioning of a Regional Rural Bank," omitted by s. 11, ibid. (w.e.f. 28-9-1988).
Section 18 Business which a Regional Rural Bank may transact.
(1) Every Regional Rural Bank shall carry on and transact the business of banking as defined in clause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and may engage in one or more forms of business specified in sub-section (1) of section 6 of that Act.
(2) Without prejudice to the generality of the provisions of sub-section (1), every Regional Rural Bank may, in particular, undertake the following types of business, namely:--
(a) the granting of loans and advances, particularly to small and marginal farmers and agricultural labourers, whether individually or in groups, and to co-operative societies, including agricultural marketing societies, agricultural processing societies, co-operative farming societies, primary agricultural credit societies or farmers service societies, for agricultural purposes or agricultural operations or for other purposes connected therewith;
(b) the granting of loans and advances, particularly to artisans, small entrepreneurs and persons of small means engaged in trade, commerce or industry or other productive activities, within the notified area in relation to the Regional Rural Bank.
(2) Without prejudice to the generality of the provisions of sub-section (1), every Regional Rural Bank may, in particular, undertake the following types of business, namely:--
(a) the granting of loans and advances, particularly to small and marginal farmers and agricultural labourers, whether individually or in groups, and to co-operative societies, including agricultural marketing societies, agricultural processing societies, co-operative farming societies, primary agricultural credit societies or farmers service societies, for agricultural purposes or agricultural operations or for other purposes connected therewith;
(b) the granting of loans and advances, particularly to artisans, small entrepreneurs and persons of small means engaged in trade, commerce or industry or other productive activities, within the notified area in relation to the Regional Rural Bank.
Section 19 Closure of accounts.
(1) Every Regional Rural Bank shall cause its books to be closed and balanced as on the 1 [31st day of March] 2 [or such other date in each year as the Central Government may, by notification in the Official Gazette, specify] and shall appoint with the approval of the Central Government auditors for the audit of its accounts:
3 [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 closing and balancing of, or for other matters relating to, the books in respect of the concerned years.]
(2) Every auditor of a Regional Rural Bank shall be a person who is qualified to act as an auditor of a company under section 226 of the Companies Act, 1956 (1 of 1956), and shall receive such remuneration as the Regional Rural Bank may fix with the approval of the Central Government.
(3) Every auditor shall be supplied with a copy of the annual balance-sheet and profit and loss account of the Regional Rural Bank, and a list of all books kept by the Regional Rural Bank, and it shall be the duty of the auditor to examine the balance-sheet and vouchers relating thereto, and, in the performance of his duties, the auditor--
(a) shall have, at all reasonable times, access to the books, accounts and other documents of the Regional Rural Bank;
(b) may, at the expense of the Regional Rural Bank, employ accountants or other persons to assist him in investigating such accounts; and
(c) may, in relation to such accounts, examine the Chairman or any officer or employee of the Regional Rural Bank.
(4) Every auditor of a Regional Rural Bank shall make a report to that bank upon the annual balance-sheet and accounts and in every such report shall state,--
(a) whether, in his opinion, the balance-sheet is a full and fair balance-sheet containing all necessary particulars and is properly drawn up so as to exhibit a true and fair view of the affairs of the Regional Rural Bank, and, in case he had called for any explanation or information, whether it has been given and whether it is satisfactory;
(b) whether or not, the transactions of the Regional Rural Bank, which have come to his notice, have been within the powers of that bank;
(c) whether or not, the returns received from the offices and branches of the Regional Rural Bank have been found adequate for the purpose of his audit;
(d) whether the profit and loss account shows a true balance of profit or loss for the period covered by such accounts; and
(e) any other matter which he considers should be brought to the notice of the Regional Rural Bank.
3 [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 closing and balancing of, or for other matters relating to, the books in respect of the concerned years.]
(2) Every auditor of a Regional Rural Bank shall be a person who is qualified to act as an auditor of a company under section 226 of the Companies Act, 1956 (1 of 1956), and shall receive such remuneration as the Regional Rural Bank may fix with the approval of the Central Government.
(3) Every auditor shall be supplied with a copy of the annual balance-sheet and profit and loss account of the Regional Rural Bank, and a list of all books kept by the Regional Rural Bank, and it shall be the duty of the auditor to examine the balance-sheet and vouchers relating thereto, and, in the performance of his duties, the auditor--
(a) shall have, at all reasonable times, access to the books, accounts and other documents of the Regional Rural Bank;
(b) may, at the expense of the Regional Rural Bank, employ accountants or other persons to assist him in investigating such accounts; and
(c) may, in relation to such accounts, examine the Chairman or any officer or employee of the Regional Rural Bank.
(4) Every auditor of a Regional Rural Bank shall make a report to that bank upon the annual balance-sheet and accounts and in every such report shall state,--
(a) whether, in his opinion, the balance-sheet is a full and fair balance-sheet containing all necessary particulars and is properly drawn up so as to exhibit a true and fair view of the affairs of the Regional Rural Bank, and, in case he had called for any explanation or information, whether it has been given and whether it is satisfactory;
(b) whether or not, the transactions of the Regional Rural Bank, which have come to his notice, have been within the powers of that bank;
(c) whether or not, the returns received from the offices and branches of the Regional Rural Bank have been found adequate for the purpose of his audit;
(d) whether the profit and loss account shows a true balance of profit or loss for the period covered by such accounts; and
(e) any other matter which he considers should be brought to the notice of the Regional Rural Bank.
1. Subs. by Act 14 of 2015, s. 7, for "31st day of December" (w.e.f. 4-2-2016).
2. Subs. by Act 66 of 1988, s. 33, for "of each year" (w.e.f. 30-12-1988).
3. Ins. by s. 33, ibid. (w.e.f. 30-12-1988).
2. Subs. by Act 66 of 1988, s. 33, for "of each year" (w.e.f. 30-12-1988).
3. Ins. by s. 33, ibid. (w.e.f. 30-12-1988).
Section 20 Annual report to be furnished to the shareholders.
1 [(1)] Every Regional Rural Bank shall, within 2 [three months from the date of the closure of its accounting year, or such further period, not exceeding three months, as may be permitted by the Reserve Bank], send to each of its shareholders a report as to its working and activities during the accounting year immediately preceding together with a copy of its balance-sheet, profit and loss account and the auditor’s report in relation to the accounts of the said accounting year.
3 [(2) The Central Government shall cause every auditor’s report and report on the working and activities of each Regional Rural Bank to be laid, as soon as may be after they are received, before each House of Parliament.]
3 [(2) The Central Government shall cause every auditor’s report and report on the working and activities of each Regional Rural Bank to be laid, as soon as may be after they are received, before each House of Parliament.]
1. S. 20 renumbered as sub-section (1) thereof by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986).
2. Subs. by Act 1 of 1988, s. 12, for "sixty days from the date of closure of its accounting year" (w.e.f. 28-9-1988).
3. Ins. by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986).
2. Subs. by Act 1 of 1988, s. 12, for "sixty days from the date of closure of its accounting year" (w.e.f. 28-9-1988).
3. Ins. by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986).