32. State Bank to act as agent of the Reserve Bank.—(1) The State Bank shall, if so required, by
the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch 3*** and
where there is no branch of the banking department of the Reserve Bank, for—
(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any
Government in India; and
(b) undertaking and transacting any other business which the Reserve Bank may from time to
time entrust to it.
(2) The terms and conditions on which any such agency business shall be carried on by the State
Bank on behalf of the Reserve Bank shall be such as may be agreed upon.
(3) If no agreement can be reached on any matter referred to in sub-section (2) or if a dispute arises
between the State Bank and the Reserve Bank as to the interpretation of any agreement between them, the
matter shall be referred to the Central Government and the decision of the Central Government thereon
shall be final.
(4) The State Bank may transact any business or perform any functions entrusted to it under subsection (1) 4
[by itself 5***] or through an agent approved by the Reserve Bank.
6 [33. Other business which the State Bank may transact.—Subject to the other provisions
contained in this Act, the State Bank may carry on and transact the business of banking as defined in
clause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and may engage in one or more
of the other forms of business specified in sub-section (1) of section 6 of that Act.]
34. Business which the State Bank may not transact.—7***.
(6) Save as otherwise provided in8
[this Act] the State Bank shall not own or, acquire any 9***
immovable property except for the purpose of providing buildings or other accomodation in which to
carry on the business of the State Bank or for providing residences for its officers and other employees:
Provided that if any such building or other accommodation is not immediately required for any of the
purposes of the State Bank, the State Bank may utilise it to the best advantage by letting it out or in any
other manner.
35. State Bank may acquire the business of other Banks.—(1) The State Bank may, with the
sanction of the Central Government, and shall, if so directed by the Central Government in consultation
with the Reserve Bank, enter into negotiations for acquiring the business, including the assets and
liabilities, of any banking institution.
1. Subs. by Act 48 of 1973, s. 11, for certain words (w.e.f. 1-7-1974).
2. Subs. by Act 27 of 2010, s. 24, for “the vice-chairman, if he is a member of the Local Board” (w.e.f. 15-9-2010).
3. The words “or where there is a branch of a subsidiary bank” omitted by Act 19 of 2018, s. 7 (w.e.f. 1-4-2017).
4. Subs. by Act 38 of 1954, s. 64 and the Third Schedule, for “either by itself” (w.e.f. 10-9-1959).
5. The words “or through a subsidiary bank” omitted by Act 19 of 2018, s. 7 (w.e.f. 1-4-2017).
6. Subs. by Act 48 of 1973, s. 12, for section 33 (w.e.f. 1-3-1977).
7. Sub-sections (1), (2), (3) or (5) omitted by s. 13, ibid. (w.e.f. 1-3-1977).Earlier sub-section (3) was substituted for sub-sections
(3) or (4) by Act 29 of 1959, s. 5 (w.e.f. 1-3-1977).
8. Subs. by Act 56 of 1962, s.2, for “section 33” (w.e.f. 1-1-1963).
9. The words “interest in” omitted by s. 2, ibid. (w.e.f. 1-1-1963).
21
1
[(2) The terms and conditions relating to such acquisition, if agreed upon by the Central Board of the
State Bank and the directorate or management of the banking institution concerned and approved by the
Reserve Bank, shall be submitted to the Central Government for its sanction and that Government may by
order in writing (hereafter in this section referred to as the order of sanction) accord its sanction thereto.
(3) Notwithstanding anything contained in this Act or any other law for the time being in force or any
instrument regulating the constitution of the banking institution concerned, the terms and conditions as
sanctioned by the Central Government shall come into effect on the date specified by the Central
Government in this behalf in the order of sanction and be binding upon the State Bank and the banking
institution concerned as well as upon the shareholders (or, as the case may be, proprietors) and creditors
of that banking institution.
(4) If for any reason the terms and conditions cannot come into effect on the date specified in the
order of sanction, the Central Government may fix another suitable date for that purpose.
(5) On the date on which the terms and conditions as aforesaid come into effect the business and the
assets and liabilities of the banking institution concerned as covered by the acquisition shall, by virtue,
and in accordance with the provisions, of the order of sanction stand transferred to, and become
respectively the business and the assets and liabilities of, the State Bank.
(6) The consideration for the acquisition of the business and the assets and liabilities of any banking
institution under this section may, if so agreed upon, be paid either in cash or by allotment of shares in the
capital of the State Bank or partly in cash and partly by allotment of shares, and the State Bank may, for
the purpose of any such allotment, increase, subject to the other provisions contained in this Act relating
to the increase of capital, the capital of the State Bank by the issue of such number of shares as may be
determined by the State Bank.
(7) Any business acquired under this section shall thereafter be carried on by the State Bank in
accordance with the provisions of this Act, subject to such exemptions or modifications as the Central
Government may, by notification in the Official Gazette, make in this behalf in consultation with the
Reserve Bank:
Provided that no such exemption or modification shall be made so as to have effect for a period of
more than seven years from the date of acquisition.
(8) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any
other law or in any agreement for the time being in force, on the acquisition of the business and the assets
and liabilities of any banking institution under this section, no officer or other employee of that banking
institution shall be entitled to any compensation to which he may be entitled under that Act or that other
law or that agreement and no claim in respect of such compensation shall be entertained by any Court,
Tribunal or other authority, if on his having accepted in writing an offer of employment by the State Bank
on the terms and conditions proposed by it he has been employed in accordance with such terms and
conditions.
(9) The Central Government may, if it considers necessary or expedient in the case of any banking
institution in relation to which an order of sanction has been made under this section, appoint whether
before or after the coming into effect of the terms and conditions relating to the acquisition of the business
and the assets and liabilities of that banking institution, a suitable person to take over the management of
that banking institution for the purposes of winding up its affairs and distributing its assets, and the
expenditure incurred in connection with such management (including the remuneration for the person so
appointed and his staff, if any) shall be paid out of the assets of the banking institution or by the State
Bank as the Central Government may direct.
(10) Simultaneously with the appointment of a suitable person to take over the management of any
banking institution under sub-section (9) or immediately thereafter, the Central Government shall issue
directions to be followed by that person in the management of that banking institution for the purposes
aforesaid and thereupon—
1. Subs. by Act 26 of 1959, s. 6, for sub-sections (2), (3) and (4) (w.e.f. 28-8-1959).
22
(a) the provisions of the Companies Act, 1956 (1 of 1956), or the 1
[Banking Regulation Act, 1949
(10 of 1949),] or any other law for the time being in force or any instrument having effect by virtue of
any such Act or law, in so far as they are inconsistent with such directions, shall cease to apply to or
in relation to that banking institution;
(b) all persons in charge of the management, including any person holding office as manager or
director of the banking institution immediately before the issue of such directions, shall be deemed to
have vacated their offices as such; and
(c) the persons appointed to take over the management of the banking institution shall in
accordance with those directions take all such steps as may be necessary to facilitate the winding up
of its affairs and distribution of its assets.
(11) The Central Government, when satisfied that nothing further remains to be done in order to wind
up the affairs of any such banking institution, may by another order in writing direct that as from such
date as may be specified therein the banking institution shall stand dissolved and thereupon any such
direction shall have effect notwithstanding anything to the contrary contained in any otherlaw.
(12) No action under this section shall be questioned on the ground merely of any defect in the
constitution of any banking institution in relation to which such action has been taken or in the
constitution of its Board of Directors or in the appointment of any person entrusted with the management
of its affairs.
(13) In this section “banking institution” includes any individual or any association of individuals
(whether incorporated or not, or whether a department of Government or a separate institution), carrying
on the business of banking.]
2
[35A. Arrangement with the State Bank on appointment of directors to prevail.—(1) Where any
arrangement entered into by the State Bank with a company provides for the appointment by the State
Bank of one or more directors of such company, such provisions and any appointment of directors made
in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the
Companies Act, 1956 (1 of 1956), or in any other law for the time being in force or in the memorandum,
articles of association or any other instrument relating to the company, and any provision regarding share
qualification, age limit, number of directorships, removal from office of directors and such like conditions
contained in any such law or instrument aforesaid, shall not apply to any director appointed by the State
Bank in pursuance of the arrangement as aforesaid.
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the State Bank and may be removed or substituted by any
person by order in writing of the State Bank;
(b) not incur any obligation or liability by reason only of his being a director or for anything done
or omitted to be done in good faith in the discharge of his duties as a director or anything in relation
thereto;
(c) not be liable to retirement by rotation and shall not be taken into account for computing the
number of directors liable to such retirement.]