36. Integration and Development Fund.—(1) The State Bank shall maintain a special fund to be
known as the Integration and Development Fund into which shall be paid—
1. Subs. by Act 3 of 1994, s. 17, for “Banking Companies Act, 1949” (w.e.f. 15-10-1993).
2. Ins. by Act 1 of 1984, s. 43 (w.e.f. 15-2-1984).
23
(a) the dividends payable to the 1
[Central Government] on such shares of the State Bank held by
it as do not exceed fifty-five per cent. of the total issued capital; and
(b) such contributions as the 2*** the Central Government may make from time to time.
3
[Provided that if the balance in the Integration and Development Fund on the date of declaration of
any dividends by the State Bank is rupees five crores or more, no amount shall be paid into that Fund
under clause (a) and the dividends payable to the 1
[Central Government] shall be 4
[paid to that
Government], and if such balance on such date is less than rupees five crores, only so much of dividends
then payable as will bring such balance to rupees five crores shall be paid into that Fund and the balance
of such dividends shall be paid to the 1
[Central Government].]
(2) The amount in the said Fund shall be applied exclusively for meeting—
(a) losses in excess of such yearly sum as may be agreed upon between the 1
[Central
Government] and the State Bank and attributable to the branches established in pursuance of subsection (5) of section 16; 5***
6
* * * * * *
(b) such other losses or expenditure as may be approved by the Central Government in
consultation with the Reserve Bank.
(3) Subject to the provisions of sub-section (2), the said Fund shall be the property, of the 1
[Central
Government] and no shareholder of the State Bank or any other person shall have any claim to the amount
held in the said Fund.
7
[(4) No amount applied for any of the purposes specified in sub-section (2) shall, for the purposes of
the 8
[Income-tax Act, 1961 (43 of 1961)], be treated as income, profits or gains of the State Bank.]
37. Reserve Fund.—The State Bank shall establish a Reserve Fund which shall consist of—
(a) the amount held in the Reserve Fund of the Imperial Bank transferred to the State Bank on the
appointed day; and
(b) such further sums as may be transferred to it by the State Bank out of its annual net profits
before declaring a dividend.
38. Disposal of profits.—(1) After making provision for bad and doubtful debts, depreciation in
assets, equalisation of dividends, contribution to staff and superannuation funds and for all other matters
for which provisions is necessary by or under this Act or which are usually provided for by banking
companies, the State Bank may, out of its net profits, declare a dividend.
(2) Subject to the provisions of paragraph 6 of the First Schedule, the rate of dividend shall be
determined by the Central Board.
9
[38A. Transfer of unpaid or unclaimed dividend.—(1) Where, after the commencement of the
State Bank of India (Amendment) Act, 2010 (27 of 2010), a dividend has been declared by the State Bank
but which has not been paid to a shareholder or claimed by any shareholder entitled to it, within thirty
days from the date of declaration, the State Bank shall, within seven days from the date of expiry of the
said period of thirty days, transfer the total amount of dividend which remains unpaid, or unclaimed, to a
special account to be named, the “unpaid dividend account” maintained by it.
1. Subs. by Act 32 of 2007, s. 9, for “Reserve Bank” (w.e.f. 29-6-2007).
2. The words “the Reserve Bank or” omitted by s. 9, ibid. (w.e.f. 29-6-2007).
3. The proviso added by Act 35 of 1964, s. 12 (w.e.f. 1-12-1964).
4. Subs. by Act 32 of 2007, s. 9, for “paid to that Bank” (w.e.f. 29-6-2007).
5. The word “and” omitted by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 10-9-1959).
6. Clause (aa) omitted by Act 19 of 2018, s. 8 (w.e.f. 1-4-2017).
7. Ins. by Act 26 of 1959, s. 7 (w.e.f. 28-8-1959).
8. Subs. by Act 3 of 1994, s. 18, for “Indian Income-tax Act, 1922 (11 of 1922)” (w.e.f. 15-10-1993).
9. Ins. by Act 27 of 2010, s. 25 (w.e.f. 15-9-2010).
24
Explanation.—In this sub-section, the expression “dividend which remains unpaid” means any
dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or
claimed.
(2) Where the whole or any part of any dividend, declared by the State Bank before the
commencement of the State Bank of India (Amendment) Act, 2010 (27 of 2010), remains unpaid at such
commencement, the State Bank shall, within a period of six months from such commencement, transfer
such unpaid amount to the account referred to in sub-section (1).
(3) Any money transferred to the unpaid dividend account of the State Bank, in pursuance of this
section which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall
be transferred by the State Bank to the Investor Education and Protection Fund established under subsection (1) of section 205C of the Companies Act, 1956 (1 of 1956) for being utilised for the purpose and
in the manner specified in that section.]
39. Books to be balanced each year.—The Central Board shall cause the books of the State Bank to
be closed, and balanced 1
[as] on the 31st day of 2
[March] 3
[or such other date in each year as the Central
Government may, by notification in the Official Gazette, specify:]
4 [Provided that with a view to facilitating the transition from one period of accounting to
another period of accounting under this section, the Central Government may, by order published in the
Official Gazette, make such provisions as it considers necessary or expedient for the closing and
balancing of, or for other matters relating to, the books in respect of the concerned years.]
40. Returns.—(1) The State Bank shall furnish to the Central Government and to the Reserve Bank
5
[within three months from the 31st day of 6
[March] 7
[or the date specified under section 39, as the case
may be] as on which its books are closed and balanced]; its balance sheet, together with the profit and loss
account and the8
[auditor’s report and a report by the Central Board on the working and activities of the
State Bank] during the period covered by the accounts:
9
[Provided that the Central Government may, after consultation with the Reserve Bank, extend the
said period of three months by such further period, not exceeding three months, as it may think fit.]
10[(2) The balance sheet and the profit and loss account shall be signed by the chairman, managing
directors and at least three other directors of the Central Board.]
(3) The State Bank shall also, within two months from the date on which its accounts are closed and
balanced, transmit to the Central Government and the Reserve Bank a statement showing, as far as may
be available, the name, address and occupation of, and the number of shares held by, each shareholder of
the State Bank as on the said date.
11[(4) The Central Government shall cause the auditors’ report and the report by the Central Board on
the working and activities of the State Bank to be laid, as soon as may be after they are received, before
each House of Parliament 12***.
1. Ins. by Act 48 of 1973, s. 14 (w.e.f. 31-12-1973).
2. Subs. by Act 27 of 2010, s. 26, for “December” (w.e.f. 15-9-2010).
3. Subs. by Act 66 of 1988, s. 14, for “in each year” (w.e.f. 30-12-1988).
4. The proviso ins. by s. 14, ibid. (w.e.f. 30-12-1988).
5. Subs. by Act 48 of 1973, s. 15, for certain words (w.e.f. 31-12-1973).
6. Subs. by Act 27 of 2010, s. 27, for “December” (w.e.f. 15-9-2010).
7. Ins. by Act 66 of 1988, s. 15 (w.e.f. 30-12-1988).
8. Subs. by Act 1 of 1984, s. 44, for certain words (w.e.f. 15-2-1984).
9. The proviso added by Act 48 of 1973, s. 15 (w.e.f. 31-12-1973).
10. Subs. by Act 27 of 2010, s. 27, for sub-section (2) (w.e.f. 15-9-2010).
11. Ins. by Act 1 of 1984, s. 44 (w.e.f. 15-2-1984).
12. Certain words omitted by Act 81 of 1985, s. 3 (w.e.f. 1-5-1986).
25
41. Audit.—(1) The affairs of the State Bank shall be 1
[audited by two or more auditors] duly
qualified to act as auditors of companies under 2
[section 226 of the Companies Act, 1956 (1 of 1956)],
who shall be appointed by 3
[the State Bank with the previous approval of the Reserve Bank].
(2) The auditors shall receive such remuneration as the Reserve Bank may fix in consultation with the
Central Government.
(3) An auditor may be a shareholder but not director or member of a Local Board or of a Local
Committee or an officer of the State Bank shall be eligible to be an auditor during his continuance in
office as such director, member or officer.
(4) An auditor shall on relinquishing office, be eligible for reappointment.
(5) The auditors shall severally be, and continue to act as, auditors until the 4
[annual] general meeting
after their respective appointment, and if any vacancy arises before the expiry of the term of office of an
auditor, the vacancy may be filled by 3
[the State Bank with the previous approval of the ReserveBank].
(6) Every auditor shall be supplied with a copy of the annual balance sheet and profit and loss
account, and a list of all books kept by the State Bank, and it shall be the duty of the auditor to examine
the balance sheet and profit and loss account with the accounts and vouchers relating thereto, and in the
performance of his duties, the auditor—
(a) shall have, at all reasonable times, access to the books, accounts and other documents of the
State Bank;
(b) may, at the expense of the State Bank, or if he is appointed by the Central Government, at the
expense of the Central Government, employ accountants or other persons to assist him in
investigating such accounts; and
(c) may, in relation to such accounts, examine any director or any member of a Local Board or of
a Local Committee or any officer of the State Bank.
(7) The auditors shall make a report to the Central Government upon the annual balance sheet and
accounts, and in every such report they shallstate—
(a) whether, in their opinion, the balance sheet is a full and fair balance sheet containing all the
necessary particulars and properly drawn up so as to exhibit 5
[a true and fair view] of the affairs of the
State Bank, and in case they have called for any explanation or information, whether it has been given
and whether it is satisfactory;
(b) whether or not the transactions of the State Bank which have come to their notice have been
within the powers of the State Bank;
(c) whether or not the returns received from the offices and branches of the State Bank have been
found adequate for the purpose of their audit;
(d) whether the profit and loss account shows a true balance of 6
[profit or loss] for the period
covered by such account; and
(e) any other matter which they consider should be brought to the notice of the shareholders or
the Central Government, as the case may be.
7
[Explanation 1.—For the purposes of this Act,—
(a) the balance sheet shall not be treated as not disclosing a true and fair view of the affairs of
the State Bank, and
1. Subs. by Act 48 of 1973, s. 16, for “audited by two auditors” (w.e.f. 31-12-1973).
2. Subs. by Act 26 of 1959, s. 8, for “sub-section (1) of section 144 of the Indian Companies Act, 1913 (7 of 1913)”
(w.e.f. 28-8-1959).
3. Subs. by Act 27 of 2010, s. 28, for “the Reserve Bank in consultation with the Central Government” (w.e.f. 15-9-2010).
4. Subs. by Act 26 of 1959, s. 8, for “first” (w.e.f. 28-8-1959).
5. Subs. by Act 35 of 1964, s. 13, for “a true and correct view” (w.e.f. 1-12-1964).
6. Subs. by Act 26 of 1959, s. 8, for “profit and loss” (w.e.f. 28-8-1959).
7. Ins. by Act 48 of 1973, s. 16 (w.e.f. 31-12-1973).
26
(b) the profit and loss account shall not be treated as not showing a true balance of profit or
loss of the period covered by such account,
merely, by reason of the fact that the balance sheet or, as the case may be, the profit and loss account,
does not disclose any matters which are, by the provisions of the Banking Regulation Act, 1949
(10 of 1949) read with the relevant provisions of this Act, not required to be disclosed.
Explanation 2.—For the purposes of this Act, the accounts of the State Bank shall not be deemed
as having not been properly drawn up on the ground merely that they do not disclose certain matters
if—
(i) those matters are such as the State Bank is, by virtue of any provision contained in the
Banking Regulation Act, 1949 (10 of 1949), read with the relevant provisions of this Act, or any
other Act, not required to disclose; and
(ii) the provisions referred to in clause (i) are specified in the balance sheet and profit and loss
account of the State Bank or in the auditors’ report].
(8) The auditors shall also forward a copy of the audit report to the State Bank.
(9) Without prejudice to anything contained in the foregoing provisions, the Central Government may
appoint at any time such auditors as it thinks fit to examine and report on the accounts of the StateBank.
1
[42. Balance sheet, etc., of State Bank may be discussed at general meeting.—(1) An annual
general meeting shall be held in each financial year at the Corporate Centre or at such other place in
Mumbai other than the Corporate Centre or at such other place in India and at such time, as shall from
time to time be specified by the Central Board and a general meeting other than an annual general
meeting may be convened by the State Bank at any other time and at such place in India as shall from
time to time be specified by the Central Board:
Provided that such annual general meeting shall be held before the expiry of six weeks from the date
on which the balance sheet together with the profit and loss account and auditors' report, under subsection (1) of section 40, is forwarded to the Central Government or to the Reserve Bank, whichever date
is earlier.
(2) The shareholders present at an annual general meeting shall be entitled to discuss and adopt the
balance sheet and the profit and loss account of the State Bank made up to the previous 31st day of March
or the date specified under section 39, as the case may be, the report of the Central Board on the working
and activities of the State Bank for the period covered by the accounts and the auditors' report on the
balance sheet and accounts.]