The Small Industries Development Bank of India Act, 1989
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 15 Borrowings and acceptance of deposits by the Small Industries Bank.
(1) The Small Industries Bank may, for the purpose of carrying out its functions under this Act,--
(a) issue and sell bonds and debentures with or without the guarantee of the Central Government;
(b) borrow money from the Reserve Bank--
(i) repayable on demand or on the expiry of the fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India;
(ii) against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing;
(iii) out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934), for any of the purposes specified in that section;
(c) borrow money from the Development Bank or such other authority, organisation or institution as may be generally or specially 1[approved by the Board];
(d) accept deposits repayable after the expiry of such period and on such terms as may be generally or specially 1[approved by the Board].
(2) The Central Government may, on a request being made to it by the Small Industries Bank, guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.
(a) issue and sell bonds and debentures with or without the guarantee of the Central Government;
(b) borrow money from the Reserve Bank--
(i) repayable on demand or on the expiry of the fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India;
(ii) against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing;
(iii) out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934), for any of the purposes specified in that section;
(c) borrow money from the Development Bank or such other authority, organisation or institution as may be generally or specially 1[approved by the Board];
(d) accept deposits repayable after the expiry of such period and on such terms as may be generally or specially 1[approved by the Board].
(2) The Central Government may, on a request being made to it by the Small Industries Bank, guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.
1. Subs. by Act 7 of 2000, s. 9, for "approved by the Development Bank" (w.e.f. 27-3-2000).
Section 16 Investment.
1[16. Investment.-- The Small Industries Bank may invest (whether by way of deposits in banks or otherwise) the amounts available in the Small Industries Development Assistance Fund or the Small Industries General Fund or any other fund or account which are not for the time being required for the transaction of business in such manner as may be approved by the Board.]
1. Subs. by s. 10, ibid., for section 16 (w.e.f. 27-3-2000).
Section 17 Power to transfer rights.
The rights and interests of the Small Industries Bank (including any other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable, by it may be transferred by the Small Industries Bank, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument by endorsement, or in any other manner in which the rights and interests in relation to such loan or advance may be lawfully transferred, and the Small Industries Bank may, notwithstanding such transfer, act as the trustee for the transferee.
Section 18 Power to acquire rights.
The Small Industries Bank shall have the right to acquire, by transfer on assignment the rights and interests of any public financial institution as defined in section 4A of the Companies Act, 1956 (1 of 1956) (including any other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable by such institution, either in whole or in part, by the execution or issue of any instrument or by the transfer of any instrument or in any other manner.
Section 19 Loan in foreign currency.
(1) Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1973 (46 of 1973), or in any other enactment for the time being in force relating to foreign exchange, the Small Industries Bank may, for the purposes of granting loans and advances under this Act, borrow, with the previous consent of the Central Government 1 ***, foreign currency from any bank or financial institution in any foreign country or otherwise.
(2) The Central Government may, where necessary, guarantee any loan taken by the Small Industries Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of interest and other incidental charges.
(3) All loans and advances granted by the Small Industries Bank out of foreign currency borrowed under sub-section (1) shall be expressed in terms of foreign currency as equivalent of Indian currency calculated in accordance with the rate of exchange prevailing at the time of grant thereof, and the amount due thereunder shall be repayable in equivalent Indian currency, calculated in accordance with the rate of exchange prevailing at the time of repayment of such loan or advance.
(4) Unless otherwise provided by the Central Government, any loss or profit in connection with any borrowing of foreign currency under sub-section (1) for the purpose of granting loans and advances under this Act, or with its repayment to the concerned foreign lending agency, on account of any fluctuations in the exchange accruing--
(a) during the period within which the loan or advance is repayable by the industrial concern in the small-scale sector or the period of actual repayment thereof by the concern, whichever is longer, shall be reimbursed by, or paid to, as the case may be, the recipient of such loans and advances;
(b) after the expiry of the period specified in clause (a),--
(i) shall be borne by the Small Industries Bank in respect of normal market fluctuations in the rate of foreign exchange;
(ii) shall be reimbursed by, or paid to, as the case may be, the Central Government in respect of fluctuations other than the normal market fluctuations in foreign exchange.
Explanation.--If any question arises as to whether any fluctuation as aforesaid is a normal market fluctuation or not, the same shall be decided by the Central Government whose decision thereon shall be final.
(2) The Central Government may, where necessary, guarantee any loan taken by the Small Industries Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of interest and other incidental charges.
(3) All loans and advances granted by the Small Industries Bank out of foreign currency borrowed under sub-section (1) shall be expressed in terms of foreign currency as equivalent of Indian currency calculated in accordance with the rate of exchange prevailing at the time of grant thereof, and the amount due thereunder shall be repayable in equivalent Indian currency, calculated in accordance with the rate of exchange prevailing at the time of repayment of such loan or advance.
(4) Unless otherwise provided by the Central Government, any loss or profit in connection with any borrowing of foreign currency under sub-section (1) for the purpose of granting loans and advances under this Act, or with its repayment to the concerned foreign lending agency, on account of any fluctuations in the exchange accruing--
(a) during the period within which the loan or advance is repayable by the industrial concern in the small-scale sector or the period of actual repayment thereof by the concern, whichever is longer, shall be reimbursed by, or paid to, as the case may be, the recipient of such loans and advances;
(b) after the expiry of the period specified in clause (a),--
(i) shall be borne by the Small Industries Bank in respect of normal market fluctuations in the rate of foreign exchange;
(ii) shall be reimbursed by, or paid to, as the case may be, the Central Government in respect of fluctuations other than the normal market fluctuations in foreign exchange.
Explanation.--If any question arises as to whether any fluctuation as aforesaid is a normal market fluctuation or not, the same shall be decided by the Central Government whose decision thereon shall be final.
Section 20 Grants, donations, etc., to the Small Industries Bank. 1 docs
The Small Industries Bank may receive gifts, grants, donations, benefactions or other monies from Government or any other source.
Section 20A Free transferability of shares.
1[20A. Free transferability of shares.--(1) Save as otherwise provided in sub-section (2), the equity shares of the Small Industries Bank shall be freely transferable.
(2) Nothing contained in sub-section (1) shall entitle the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government to transfer any shares held by them in the Small Industries Bank if such transfer will result in reducing the equity shares held in aggregate by them to less than fifty-one per cent. of the issued equity share capital of the Small Industries Bank.]
(2) Nothing contained in sub-section (1) shall entitle the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government to transfer any shares held by them in the Small Industries Bank if such transfer will result in reducing the equity shares held in aggregate by them to less than fifty-one per cent. of the issued equity share capital of the Small Industries Bank.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20B Register of shareholders.
1[20B. Register of shareholders.--(1) The Small Industries Bank shall keep at its head office a register, in one or more books, of the shareholders and shall enter therein the following particulars so far as they may be available, namely:--
(i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number;
(ii) the date on which each person is so entered as a shareholder;
(iii) the date on which any person ceases to be a shareholder; and
(iv) such other particulars as may be prescribed:
Provided that nothing in this sub-section shall apply to the shares held with a depository under the Depositories Act, 1996 (22 of 1996).
(2) Notwithstanding anything contained in sub-section (1), it shall be lawful for the Small Industries Bank to keep the register of the shareholders in computer floppies, diskettes, compact disk or any other electronic form, subject to such safeguards, as may be prescribed.
(3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), a copy of, or extract from, the register of the shareholders, certified to be a true copy under the hand of an officer of the Small Industries Bank authorised in this behalf, shall, in all legal proceedings, be admissible in evidence.
(4) The Register of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996) shall be deemed to be a Register of the shareholders for the purposes of this Act.]
(i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number;
(ii) the date on which each person is so entered as a shareholder;
(iii) the date on which any person ceases to be a shareholder; and
(iv) such other particulars as may be prescribed:
Provided that nothing in this sub-section shall apply to the shares held with a depository under the Depositories Act, 1996 (22 of 1996).
(2) Notwithstanding anything contained in sub-section (1), it shall be lawful for the Small Industries Bank to keep the register of the shareholders in computer floppies, diskettes, compact disk or any other electronic form, subject to such safeguards, as may be prescribed.
(3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), a copy of, or extract from, the register of the shareholders, certified to be a true copy under the hand of an officer of the Small Industries Bank authorised in this behalf, shall, in all legal proceedings, be admissible in evidence.
(4) The Register of beneficial owners maintained by a depository under section 11 of the Depositories Act, 1996 (22 of 1996) shall be deemed to be a Register of the shareholders for the purposes of this Act.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20C Trust not to be entered on the register of shareholders.
1[20C. Trust not to be entered on the register of shareholders.--Notwithstanding anything contained in section 20B, no notice of any trust, express, implied or constructive, shall be entered on the register of shareholders or be receivable by the Small Industries Bank:
Provided that nothing in this section shall apply to a depository in respect of the shares held by it as a registered owner on behalf of a beneficial owner.
Explanation.--For the purposes of section 20B and this section, the expressions "beneficial owner", "depository" and "registered owner" shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).]
Provided that nothing in this section shall apply to a depository in respect of the shares held by it as a registered owner on behalf of a beneficial owner.
Explanation.--For the purposes of section 20B and this section, the expressions "beneficial owner", "depository" and "registered owner" shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20D Board's right to refuse registration of transfer of shares. 1 docs
1[20D. Board’s right to refuse registration of transfer of shares.--(1) The Board may refuse to register the transfer of any shares in the name of the transferee on any one or more of the following grounds, and on no other ground, namely:--
(a) the transfer of the shares is in contravention of the provisions of this Act or regulations made thereunder or any other law;
(b) the transfer of the shares, in the opinion of the Board, is prejudicial to the interests of the Small Industries Bank or to the public interest;
(c) the transfer of shares is prohibited by an order of a court, tribunal or any other authority under any law for the time being in force.
(2) The Board shall, before the expiry of two months from the date on which the instrument of transfer of shares of the Small Industries Bank is lodged with it for the purpose of registration of such transfer, not only form, in good faith, its opinion as to whether such registration ought not or ought to be refused on any of the grounds referred to in sub-section (1) but also,--
(a) if it has formed the opinion that such registration ought not to be so refused, effect such registration; and
(b) if it has formed the opinion that such registration ought to be refused on any of the grounds mentioned in sub-section (1), intimate the transferor and the transferee by notice in writing.
(3) An appeal against the order of refusal of the Board under sub-section (2) shall lie to the Central Government and the procedure for filing and hearing of such appeal shall be in accordance with the rules made by the Central Government in this behalf.]
(a) the transfer of the shares is in contravention of the provisions of this Act or regulations made thereunder or any other law;
(b) the transfer of the shares, in the opinion of the Board, is prejudicial to the interests of the Small Industries Bank or to the public interest;
(c) the transfer of shares is prohibited by an order of a court, tribunal or any other authority under any law for the time being in force.
(2) The Board shall, before the expiry of two months from the date on which the instrument of transfer of shares of the Small Industries Bank is lodged with it for the purpose of registration of such transfer, not only form, in good faith, its opinion as to whether such registration ought not or ought to be refused on any of the grounds referred to in sub-section (1) but also,--
(a) if it has formed the opinion that such registration ought not to be so refused, effect such registration; and
(b) if it has formed the opinion that such registration ought to be refused on any of the grounds mentioned in sub-section (1), intimate the transferor and the transferee by notice in writing.
(3) An appeal against the order of refusal of the Board under sub-section (2) shall lie to the Central Government and the procedure for filing and hearing of such appeal shall be in accordance with the rules made by the Central Government in this behalf.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20E Shares to be securities under the Indian Trusts Act, 1882.
1[20E. Shares to be securities under the Indian Trusts Act, 1882.--Notwithstanding anything contained in the Indian Trusts Act, 1882 (2 of 1882), the shares of the Small Industries Bank shall be deemed to be included among the securities enumerated in section 20 of the said Act.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20F Annual general meeting.
1[20F. Annual general meeting.--(1) The Small Industries Bank shall in each year hold, in addition to any other meetings, a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting and that of the next:
Provided that the Small Industries Bank may hold the first annual general meeting within a period of six months from the date on which it allots shares for the first time to public for subscription:
Provided further that the Central Government may extend the time within which any annual general meeting shall be held by a period not exceeding three months.
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not public holiday, and shall be held either at head office or at some other place within the city or town in which the head office is situated.
Explanation.--For the purposes of this section, "public holiday" means a public holiday within the meaning of the Negotiable Instruments Act, 1881 (26 of 1881):
Provided that no Sunday shall be deemed to be such a holiday in relation to any meeting:
Provided further that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified before the issue of the notice convening such meeting.]
Provided that the Small Industries Bank may hold the first annual general meeting within a period of six months from the date on which it allots shares for the first time to public for subscription:
Provided further that the Central Government may extend the time within which any annual general meeting shall be held by a period not exceeding three months.
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not public holiday, and shall be held either at head office or at some other place within the city or town in which the head office is situated.
Explanation.--For the purposes of this section, "public holiday" means a public holiday within the meaning of the Negotiable Instruments Act, 1881 (26 of 1881):
Provided that no Sunday shall be deemed to be such a holiday in relation to any meeting:
Provided further that no day declared by the Central Government to be a public holiday shall be deemed to be such a holiday, in relation to any meeting, unless the declaration was notified before the issue of the notice convening such meeting.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 20G Matters to be discussed and procedure in annual general meeting.
1[20G. Matters to be discussed and procedure in annual general meeting.--(1) The shareholders present at an annual general meeting shall be entitled to discuss and adopt--
(a) the balance-sheet and profit and loss account of the Small Industries Bank made up to the date on which its accounts are closed and balanced;
(b) the report of working of the Small Industries Bank for the period covered by the accounts;
(c) the auditors report on the balance-sheet and accounts;
(d) proposals for declaration of dividend and capitalisation of reserves;
(e) appointment of auditors referred to in sub-section (1) of section 30.
(2) The shareholders present at an annual general meeting may also discuss any other matter to be transacted at such meetings in accordance with the provisions of this Act. (3) The matters relating to--
(a) the manner in which annual general meeting or other meetings are held under this Act and the procedure to be followed thereat;
(b) the manner in which voting rights may be exercised and resolutions may be passed; and
(c) the procedure for transaction of business at such meetings and related matters.
shall be such as may be prescribed.]
(a) the balance-sheet and profit and loss account of the Small Industries Bank made up to the date on which its accounts are closed and balanced;
(b) the report of working of the Small Industries Bank for the period covered by the accounts;
(c) the auditors report on the balance-sheet and accounts;
(d) proposals for declaration of dividend and capitalisation of reserves;
(e) appointment of auditors referred to in sub-section (1) of section 30.
(2) The shareholders present at an annual general meeting may also discuss any other matter to be transacted at such meetings in accordance with the provisions of this Act. (3) The matters relating to--
(a) the manner in which annual general meeting or other meetings are held under this Act and the procedure to be followed thereat;
(b) the manner in which voting rights may be exercised and resolutions may be passed; and
(c) the procedure for transaction of business at such meetings and related matters.
shall be such as may be prescribed.]
1. Ins. by s. 12, ibid. (w.e.f. 27-3-2000).
Section 21 Small Industries Development Assistance Fund.
(1) With effect from such date as the Central Government may, by notification, appoint, the Small Industries Bank shall establish and maintain, a special fund to be called the Small Industries Development Assistance Fund.
(2) The Small Industries Bank may, at any time, establish any fund as part of the Small Industries Development Assistance Fund for such purpose or purposes as may be approved by the Central Government on the recommendation of the 1[Board], or establish any other fund as may be required by or under any law for the time being in force.
(2) The Small Industries Bank may, at any time, establish any fund as part of the Small Industries Development Assistance Fund for such purpose or purposes as may be approved by the Central Government on the recommendation of the 1[Board], or establish any other fund as may be required by or under any law for the time being in force.
1. Subs. by Act 7 of 2000, s. 13, for "Development Bank" (w.e.f. 27-3-2000).
Section 22 Credits to Small Industries Development Assistance Fund.
To the Small Industries Development Assistance Fund shall be credited--
(a) all amounts received for the purpose of that Fund by way of loans, gifts, grants, donations, benefactions or otherwise from Government or any other source;
(b) repayments or recoveries in respect of loans, advances or other facilities granted from the Fund;
(c) income or profits from investments made from the Fund; and
(d) income accruing or arising to the Fund, by way of interest or otherwise, on account of the application of the Fund in accordance with the provisions of section 23.
(a) all amounts received for the purpose of that Fund by way of loans, gifts, grants, donations, benefactions or otherwise from Government or any other source;
(b) repayments or recoveries in respect of loans, advances or other facilities granted from the Fund;
(c) income or profits from investments made from the Fund; and
(d) income accruing or arising to the Fund, by way of interest or otherwise, on account of the application of the Fund in accordance with the provisions of section 23.
Section 23 Utilisation of Small Industries Development Assistance Fund.
The Small Industries Bank may disburse or spend from the Small Industries Development Assistance Fund, any amount for such purposes as the Central Government may, on the recommendation of the 1[Board], specify.
1. Subs. by s. 14, ibid., for "Development Bank" (w.e.f. 27-3-2000).
Section 24 Debits to Small Industries Development Assistance Fund.
(1) To the Small Industries Development Assistance Fund shall be debited--
(a) such amounts as may from time to time be disbursed or spend under section 23;
(b) such amounts as may be required for discharging the liabilities in respect of loans received for the purpose of that Fund;
(c) any loss arising on account of investment made out of that Fund; and
(d) such expenditure arising out of, or in connection with, the administration and application of that Fund as may be determined by the Board.
(2) No amount shall be debited to the Small Industries Development Assistance Fund except as provided for in sub-section (1).
(a) such amounts as may from time to time be disbursed or spend under section 23;
(b) such amounts as may be required for discharging the liabilities in respect of loans received for the purpose of that Fund;
(c) any loss arising on account of investment made out of that Fund; and
(d) such expenditure arising out of, or in connection with, the administration and application of that Fund as may be determined by the Board.
(2) No amount shall be debited to the Small Industries Development Assistance Fund except as provided for in sub-section (1).
Section 25 Accounts and audit of Small Industries Development Assistance Fund.
(1) The balance-sheet and accounts of Small Industries Development Assistance Fund shall be prepared in such form and manner as may be prescribed.
(2) The Board shall cause the books and accounts of the Small Industries Development Assistance Fund to be closed and balanced as on the 31st day of March, each year or such other date as the 1[Board] may specify.
2[(3) The Small Industries Development Assistance Fund shall be audited by the auditors, appointed under sub-section (1) of section 30, who shall make a separate report thereon.]
(4) The provisions of sub-sections (2), (3) and (4) of section 30 shall, so far as may be, apply in relation to the audit of the Small Industries Development Assistance Fund.
(5) The Small Industries Bank shall furnish to the Central Government 5*** within four months from the date on which the accounts of the Small Industries Development Assistance Fund are closed and balanced, a copy of balance-sheet and accounts together with a copy of its auditors' report and a report on the operation of that Fund during the relevant year and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.
(2) The Board shall cause the books and accounts of the Small Industries Development Assistance Fund to be closed and balanced as on the 31st day of March, each year or such other date as the 1[Board] may specify.
2[(3) The Small Industries Development Assistance Fund shall be audited by the auditors, appointed under sub-section (1) of section 30, who shall make a separate report thereon.]
(4) The provisions of sub-sections (2), (3) and (4) of section 30 shall, so far as may be, apply in relation to the audit of the Small Industries Development Assistance Fund.
(5) The Small Industries Bank shall furnish to the Central Government 5*** within four months from the date on which the accounts of the Small Industries Development Assistance Fund are closed and balanced, a copy of balance-sheet and accounts together with a copy of its auditors' report and a report on the operation of that Fund during the relevant year and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.
1. Subs. by s. 15, ibid., for "Development Bank" (w.e.f. 27-3-2000).
2. Subs. by s. 15, ibid., for sub-section (3) (w.e.f. 27-3-2000).
3. The words "and the Development Bank" omitted by s. 15, ibid. (w.e.f. 27-3-2000).
2. Subs. by s. 15, ibid., for sub-section (3) (w.e.f. 27-3-2000).
3. The words "and the Development Bank" omitted by s. 15, ibid. (w.e.f. 27-3-2000).
Section 26 Liquidation of Small Industries Development Assistance Fund.
The Small Industries Development Assistance Fund shall not be closed or wound up save by order of the Central Government and in such manner as that Government may, 1*** direct.
1. The words ", on the recommendation of the Development Bank" omitted by Act 7 of 2000, s. 16 (w.e.f. 27-3-2000).
Section 27 Small Industries General Fund.
All receipts of the Small Industries Bank other than those which are to be credited to the Small Industries Development Assistance Fund under this Act shall be credited to a fund to be called the Small Industries General Fund and all payments by the Small Industries Bank, other than those which are to be debited to the Small Industries Development Assistance Fund, shall be made out of the Small Industries General Fund.