(1) Notwithstanding anything to thecontrary contained in 1 [section 235 of the Companies Act, 1956 (1 of 1956)], the Reserve Bank at any time may, and on beingdirected so to do by the Central Government shall, cause an inspection to bemade by one or more of its officers of any banking company and its books andaccounts; and the Reserve Bank shall supply to the banking company a copy ofits report on such inspection.
2 [(1A) (a) Notwithstanding anything to the contrarycontained in any law for the time being in force and without prejudice to theprovisions of sub-section (1), the Reserve Bank, at any time, may also cause ascrutiny to be made by any one or more of its officers, of the affairs of anybanking company and its books and accounts; and
(b) a copy of the report of thescrutiny shall be furnished to the banking company if the banking company makesa request for the same or if any adverse action is contemplated against thebanking company on the basis of the scrutiny.]
(2) It shall be the duty ofevery director or other officer 3 [or employee] ofthe banking company to produce to any officer making an inspection undersub-section (1) [or a scrutiny undersub-section (1A)] all such books, accounts andother documents in his custody or power and to furnish him with any statementsand information relating to the affairs of the banking company as the saidofficer may require of him within such time as the said officer may specify.
(3) Any person making aninspection under sub-section (1) 4 [for a scrutiny under sub-section (1A)] may examine on oath any director or other officer 3 [or employee] of the banking company in relation to itsbusiness, and may administer an oath accordingly.
(4) The Reserve Bank shall, ifit has been directed by the Central Government to cause an inspection to be made,and may, in any other case, report to the Central Government on any inspection 4 [or scrutiny] made under this section, and the CentralGovernment, if it is of opinion after considering the report that the affairsof the banking company are being conducted to the detriment of the interests ofits depositors, may, after giving such opportunity to the banking company tomake a representation in connection with the report as, in the opinion of theCentral Government, seems reasonable, by order in writing-
(a) prohibit the banking companyfrom receiving fresh deposits;
(b) direct the Reserve Bank toapply under section 38 for the winding up of the banking company:
Provided that the CentralGovernment may defer, for such period as it may think fit, the passing of anorder under this sub-section, or cancel or modify any such order, upon suchterms and conditions as it may think fit to impose.
(5) The Central Government may, after givingreasonable notice to the banking company, publish the report submitted by theReserve Bank or such portion thereof as may appear necessary.
5 [Explanation.--For the purpose of this section, theexpression "banking company" shall include-
(i) in the case of a bankingcompany incorporated outside India, all its branches in India; and
(ii) in the case of a bankingcompany incorporated in India-
(a) all its subsidiaries formedfor the purpose of carrying on the business of banking exclusively outsideIndia; and
(b) all its branches whethersituated in India or outside India.]
6 [(6) The powers exercisable by the Reserve Bank under thissection in relation to regional rural banks may (without prejudice to theexercise of such powers by the Reserve Bank in relation to anyregional rural bank whenever it considers necessary so to do) be exercised bythe National Sank in relation to the regional rural banks, and accordingly,sub-sections (1) to (5) shall apply in relationto regional rural banks as if every reference therein to the Reserve Bankincluded also a reference to the National Bank.]
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1. Subsituted by Act 95 of 1956, Section 14 and Schedule, for"section 138 of the Indian companies Act, 1913 (7 of 1913)" w.e.f. 14-1-1957.
2. Inserted by Act 1 of 1984, Section 29 w.e.f. 15-2-1984.
3. Inserted by Act 55 of 1963, Section 17 w.e.f. 1-2-1964.
4. Inserted by Act 1 of 1984, Section 29 w.e.f. 15-2-1984.
5. Added Act 33 of 1959 Section 20 w.e.f. 1-10-1959.
6. Insertedby Act 61 of 1981, Section 61 and Second Schedule, Pt. II. W.e.f. 1-5-1982.