3. Establishment of the State Bank.—(1) A Bank to be called the State Bank of India shall be
constituted to carry on the business of banking and other business in accordance with the provisions of
this Act and for the purpose of taking over the undertaking of the Imperial Bank.
(2) The 1
[Central Government], together with such other persons as may from time to time become
shareholders in the State Bank in accordance with the provisions of this Act, shall, so long as they are
shareholders in the State Bank, constitute a body corporate with perpetual succession and a common seal
under the name of the State Bank of India, and shall sue and be sued in that name.
(3) The State Bank shall have power to acquire and hold property, whether movable or immovable,
for the purposes for which it is constituted and to dispose of the same.
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[4. Authorised capital.—Subject to the provisions of this Act, the authorised capital of the State
Bank shall be five thousand crores of rupees divided into five hundred crores of fully paid-up shares often
rupees each:
Provided that the Central Board may reduce the nominal or face value of the shares, and divide the
authorised capital into such denomination as it may decide with the approval of the Reserve Bank:
Provided further that the Central Government may, in consultation with the Reserve Bank, increase or
reduce the authorised capital so however that the shares in all cases shall be fully paid-up shares.]
5. Issued capital.—(1) The issued capital of the State Bank shall, on the appointed day, be five
crores, sixty-two lakhs and fifty thousand rupees divided into five lakhs, sixty-two thousand and five
hundred shares, all of which shall, on the appointed day, stand allotted to the Reserve Bank in lieu of the
shares of the Imperial Bank 3
[transferred to and vested in it under section 6].
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[(2) The issued capital of the State Bank shall consist of equity shares or equity and preference
shares:
Provided that the issue of preference shares shall be in accordance with the guidelines framed by the
Reserve Bank specifying the class of preference shares, the extent of issue of each class of such
preference shares (whether perpetual or irredeemable or redeemable) and the terms and conditions subject
to which, each class of preference shares may be issued:
Provided further that the Central Board may from time to time increase, with the previous approval of
the Reserve Bank and the Central Government, whether by public issue or rights issue or preferential
allotment or private placement, in accordance with the procedure as may be prescribed, the issued capital
by the issue of equity or preference shares:
Provided also that the Central Government shall, at all times, hold not less than fifty-one per cent. of
the issued capital consisting of equity shares of the State Bank.]
(3) No increase in the issued capital beyond twelve crores and fifty lakhs of rupees shall be made
under sub-section (2) without the previous sanction of the Central Government.
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[(4) Subject to the provisions contained in sub-section (2), the Central Board may increase from time
to time, by way of issuing bonus shares to existing equity shareholders, the issued capital in such manner
as the Central Government may, after consultation with the Reserve Bank, direct.
(5) The State Bank may, accept the money in respect of shares issued towards increase in the issued
capital in instalments, make calls, forfeit unpaid shares and re-issue them, in such manner as may be
prescribed.]