Act Info:
1[(1) Save as hereinafter provided, no co-operative society shall carry on banking business in India unless -
(a) it is a primary credit society, or
(b) it is a co-operative bank and holds a licence issued in that behalf by the Reserve Bank, subject to such conditions, if any, as the Reserve Bank may deem fit to impose :
Provided that nothing in this sub-section shall apply to a co-operative society, not being a primary credit society or a cooperative bank carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 for a period of one year from such commencement.
2[(2) Every co-operative society carrying on business as a co-operative bank at the commencement of the Banking Laws (Application to Co-opertive Societies) Act, 1965, (2) of 1965) shall before the expiry of three months from such commencement every co-operative bank which comes into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business shall, before the expiry of three months from its coming into existence, every primary credit society which becomes a primary co-operative bank after such commencement shall before the expiry of three months from the date on which it so becomes a primary co-operative bank and every co-operative society other than a primary credit society shall before commencing banking business in India, apply in writing to the Reserve Bank for a licence under this section:
Provided that nothing in clause (b) of sub-section (1) shall be deemed to prohibit-
(i) a co-operative society carrying on business as a cooperative bank at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), or
(ii) a co-operative bank which has come into existence as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965) or at any time thereafter; or
(iii) a primary credit society which becomes a primary cooperative bank after such commencement,
from carrying on banking business until it is granted a licence in pursuance of this section or is, by a notice in writing, notified by the Reserve Bank that the licence cannot be granted to it].
(3) Before granting any licence under this section, the Reserve Bank may require to be satisfied by an inspection of the books of the company or otherwise that 3[***] the following conditions are fulfilled namely :-
4[(a) that the company is or will be in a position to pay its present or future depositors in full as their claims accrue;
(b) that the affairs of the company are not being, or are not likely to be, conducted in a manner detrimental to the interests of its present or future depositors;]
5(c) that the general character of the proposed management of the company will not be prejudicial to the public interest of its depositors;
(d) that the company has adequate capital structure and earning prospects;
(e) that the public interest will be served by the grant of a licence to the company to carry on banking business in India;
(f) that having regard to the banking facilities available in the proposed principal area of operations of the company, the potential scope for expansion of banks already in existence in the area and other relevant factors, the grant of the licence would not be prejudicial to the operation and consolidation of the banking system consistent with monetary stability and economic growtih:
(g) any other condition, the fulfilment of which would, in the opinion of the Reserve Bank, be necessary to ensure that the carrying on of Banking business in India by the company will not be prejudicial to the public interest or the interests of the depositors].
6[(3A) * * *]
7[(4) The Reserve Bank may cancel a licence granted to a banking company under this section -
(i) if the company ceases to carry on banking business in India; or
(ii) if the company at any time fails to comply with any of the condition as imposed upon it under sub-section (1); or
(iii) if at any time, any of the conditions referred to in subsection (3) 3[* * *] is not fulfilled:
Provided that before cancelling licence under clause (ii) or clause (iii) of this sub-section on the ground that the banking company has failed to comply with or has failed to fulfil any of the conditions referred to therein, the Reserve Bank, unless it is of opinion that the delay will be prejudical to the interest of the company's depositors or the public, shall grant to the company on such terms as it may specify, an opportunity of taking the necessary steps for complying with or fulfilling such condition.
8[4A. Any Co-operative Bank other than a primary Cooperative bank requiring the permission of the Reserve Bank other this section shall forward its application to the Reserve Bank through the National Bank which shall give its comments on the merits of the application and send it to the Reserve Bank :
Provided that the Co-operative Bank shall also send an advance copy of the application directly to the Reserve Bank.]
(5) Any banking company aggrieved by the decision of the Reserve Bank cancelling a licence under this section may, within thirty days from the date on which such decision is communicated to it, appeal to the Central Government.
(6) The decision of the Central Government where an appeal has been preferred to it under sub-section (5) or of the Reserve Bank where no such appeal has been preferred shall be final].
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1. Substituted by Act 23 of 1965 section 10.
2. Substituted by Act 1 of 1984, section 42(vii) (w.e.f. 15.2.1984).
3. Omitted by Act No. 1 of 1984. section 25 (w.e.f. 15.2.1984).
4. Substituted by Act 33 of 1959, section 13, for cls. (a) and (b) (w.e.f. 1.10.1959).
5. Substituted by Act No. 1 of 1984. section 25 (w.e.f. 15.2.1984).
6. Omitted by Act 1 of 1984, section 42 (w.e.f. 15.2.1984).
7. Substituted by Act 33 of 1959. section 13 for sub-sections (4) and (5) (w.e.f. 1.10.1959).
8. 4A Inserted by Act 1 of 1984 section 42.