Banking Regulation Act, 1949 Section 11

(1) Notwithstanding anythingcontained in ¹ [section 149 of the Companies Act, 1956 (1 of 1956)], no banking company in existence on thecommencement of this Act, shall, after the expiry of three years from suchcommencement or of such further period not exceeding one year as the ReserveBank, having regard to the interests of the depositors of the company, maythink fit in any particular case to allow, carry on business 2 [in India], and no other banking company shall after thecommencement of this Act, commence or carry on business 2 [in India] ³ [unless it complies with such of therequirements of this section as are applicable to it].

⁴ [(2) In the case of a banking company incorporated outsideIndia-

(a) the aggregate value of itspaid-up capital and reserves shall not be less than fifteen lakhs of rupees andif it has a place or places of business in the city of Bombay or Calcutta orboth, twenty lakhs of rupees; and

(b) ⁵ [the banking companyshall deposit and keep deposited with the Reserve Bank either in cash or in theform of unencumbered approved securities, or partly in cash and partly in theform of such securities-

(i) an amount which shall not beless than the minimum required by clause (a); and

(ii) as soon as may be after theexpiration of each ⁶ [* * *] year, an amount calculated at twenty percent of its profit for that year in respect of all business transacted throughits branches in India, as disclosed in the profit and loss account preparedwith reference to that year under section 29:]

Provided that any such banking company may at anytime replace-

(i) any securities so depositedby cash or by any other unencumbered approved securities or partly by cash andpartly by other such securities, so however, that the total amount deposited isnot affected;

(ii) any cash so deposited byunencumbered approved securities of an equal value.]

⁷[(2A) Notwithstanding anything contained in sub-section(2), the Central Government may, on the recommendation of the Reserve Bank, andhaving regard to the adequacy of the amounts already deposited and keptdeposited by a banking company under sub-section (2), in relation to itsdeposit liabilities in India, declare by order in writing that the provisionsof sub-clause (ii) of clause (b) of sub-section (2) shall not apply to suchbanking company for such period as may be specified in the order.]

(3) In the case of anybanking company to which the provisions of sub-section (2) do not apply, theaggregate value of its paid-up capital and reserves shall not be less than-

(i) if it has places of businessin more than one State, five lakhs of rupees, and if any such place or placesof business is or are situated in the city of Bombay or Calcutta or both, tenlakhs of rupees;

(ii) if it has all its places ofbusiness in one State none of which is situated in the city of Bombay orCalcutta, one lakh of rupees in respect of its principal place of business,plus ten thousand rupees in respect of each of its other places of businesssituated in the same district in which it has its principal place of business,plus twenty-five thousand rupees in respect of each place of business situatedelsewhere in the State otherwise than in the same district:

Provided that no banking companyto which this clause applies shall be required to have paid-up capital andreserves exceeding an aggregate value of five lakhs of rupees:

Provided further that no bankingcompany to which this clause applies and which has only one place of business,shall be required to have paid-up capital and reserves exceeding an aggregatevalue of fifty thousand rupees:

⁸ [Provided further that in the case of every banking companyto which this clause applies and which commences banking business for the firsttime after the commencement of the Banking Companies (Amendment) Act, 1962 (36of 1962), the value of its paid-up capital shall not be less than five lakhs ofrupees;]

(iii) if it has all its places of business inone State, one or more of which is or are situated in the city of Bombay orCalcutta, five lakhs of rupees, plus twenty-five thousand rupees in respect ofeach place of business situated outside the city of Bombay or Calcutta, as thecase may be:

Provided that no banking companyto which this clause applies shall be required to have paid-up capital andreserves exceeding an aggregate value of ten lakhs of rupees.

Explanation.--For the purposes ofthis sub-section, a place of business situated ⁹ [in a State] otherthan that in which the principal place of business of the banking company issituated shall, if it is not more than twenty-five miles distant from suchprincipal place of business, be deemed to be situated within the same State assuch principal place of business.

(4) Any amount deposited andkept deposited with the Reserve Bank under ¹⁰ [* * *] sub-section (2) by any banking companyincorporated ¹¹ [outside India]shall, in the event of the company ceasing for any reason to carry on bankingbusiness ¹² [inIndia], be an asset of the company on whichthe claims of all the creditors of the company ¹² [in India] shall bea first charge.

¹³ [(5) For the purposes of this section,-

(a) "place ofbusiness" means any office, sub-office, sub-pay office and any place ofbusiness at which deposits are received, cheques cashed, or moneys lent;

(b) "value" means thereal or exchangeable value, and not the nominal value which may be shown in thebooks of the banking company concerned.]

(6) If any dispute arisesin computing the aggregate value of the paid-up capital and reserves of anybanking company, a determination thereof by the Reserve Bank shall be final forthe purposes of this section.

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1. Subsituted by Act 95 of 1956, Section 14 and Schedule, for"section 103 of the Indian Companies Act, 1913 (7 of 1913)" w.e.f. 14-1-1957.

2. Subsituted by Act 20 of 1950, Section 3, for "in any state".

3. Subsituted by Act 33 of 1959, Section 7, for certain words w.e.f.1-10-1959.

4. Subsituted by Act 33 of 1959, Section 7, for sub-section (2)w.e.f. 1-10-1959.

5. Subsituted by Act 36 of 1962, Section 2, for certain words.

6. The word "calendar" omitted by Act 66 of 1988, Section 7 w.e.f.31-12-1988.

7. Inserted by Act 36 of 1962, Section 2.

8. Inserted by Act 36 of 1962, Section 2.

9. Subsituted by Act 62 of 1956, Section 2 andSchedule, for "in India".

10. The words "the proviso to" omitted by Act 33 of 1959, Section 7w.e.f. 1-10-1959.

11. Subsituted by Act 20 of 1950, Section 3, for "elsewhere than in aState".

12. Subsituted by Act 20 of 1950, Section 3, for "in the States".

13. Subsituted by Act 33 of 1959, Section 7, for sub-section (5)w.e.f. 1-10-1959.