The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

Summary of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

Purpose:

• To provide for the acquisition and transfer of undertakings of certain banking companies.

• To control the heights of the economy, serve the development needs of the economy, and promote public welfare in line with the Constitution's Article 39 (b) and (c).

Key Provisions:

1. Acquisition and Transfer: - Enables the Central Government to acquire and transfer the undertakings of specified banking companies.

• Undertakings, assets, and liabilities of acquired banks vest in the Central Government or a designated transferee bank.

2. Existing and Corresponding New Banks: - Existing Bank: A banking company with total demand and time liabilities in India of not less than ₹200 crores as of March 14, 1980.

• Corresponding New Bank: A body corporate established under the Act, corresponding to an existing bank, with an initial paid-up capital equal to that of the existing bank.

3. Management and Capital: - Corresponding new banks are guided by the Central Government's directions.

• Authorised capital of corresponding new banks initially set at ₹3,000 crores, with provisions for adjustment and capital increase through various means, ensuring the Central Government holds at least 51% of the paid-up equity capital.

4. Miscellaneous: - Provisions for the management of undertakings, payment of amounts, employee continuance, and indemnity.

• Amendments to various enactments and repeal/saving clauses.