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INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

18 of 1964

[16th May, 1964]

"The existing arrangements for the provision of credit for the expansion or development of industry are not adequate in relation to the needs of the various enterprises or projects. It is proposed, therefore, to establish a new institution, to be known as the Industrial Development Bank of India. It will be wholly-owned subsidiary of the Reserve Bank of India and will be managed by a Board of Directors consisting of persons who are for the time being the members of the Central Board of the Reserve Bank. 2. The Industrial Development Bank of India will be able to co-ordinate the activities of all the institutions which are or may be concerned with the provision of finance for industrial development. It will be in a position to provide refinance to these institutions or to grant direct loans to industrial concerns or to promote and develop key industries, as circumstances may require. 3. The provisions of the Bill are explained indetail in the notes on clauses."-S.O.R. Gazette of India, 27-2-1964, Pt, II, section 2, extra. page 60. Amending Act No. 75 of 1972 It has been found from experience gained by the Industrial Development Bank of India in its working, since its establishment in 1964, that it is necessary to amend the Act in certain respects. 2. The definition of industrial concern under section 2(c)of the Act is proposed to be enlarged to include establishments engaged in maintenance and repairs of vehicles as well as concerns engaged in fishing or in the maintennce of shore facilities for fishing, so as to enable the Industrial Development Bank of India to play its role effectively in all fields as an apex institution for financing and refinancing other institutions. 3.Section 9of the Act dealing with the scope of the business of the Development Bank is proposed to be enlarged in several respects. The Development Bank, at present, refinances loans and advances granted by the Industrial Finance Corporation of India, State Financial Corporations, Scheduled Banks and State Co-operative Banks to industrial concerns. Since some of these institutions give loans and advances for the establishment of industrial estates also but are unable to do so adequately from within their own limited resources, it is proposed to authorise the Development Bank to refinance these institutions in relation to such activities. 4. At present the Development Bank is empowered to refinance loans given by the State Financial Corporations, the Industrial Finance Corporation of India, the commercial banks and the co-operative banks for the export of machinery and merchandise. It is now proposed to extend these facilities of refinance to the institutions financing the agencies exporting manufactured capital goods and to the concerns or persons in India executing turn-key jobs in foreign countries. The refinancing facilites extended by the Development Bank are now restricted to the cases where the primary lending institution advances loans repayable within a period of ten years in all cases. It is now proposed to liberalise this provision to cases where the primary lending institutions grant loans to persons in India repayable within a period of 15 years and to persons outside India repayable within a period of 12 years. 5. The Development Bank can now accept, discount or rediscount bills of exchange and promissory notes of industrial concerns only. It is proposed to extend this facility to stockists or agents who sell plant and machinery of manufacturing concerns. The Act enables the Development Bank to subscribe, to shares and debentures of the Industrial Finance Corporation of India, the State Financial Corporations and any other financial institutions notified by the Central Government in this behalf. It is now proposed to enlarge the power so as to enable the Development Bank to participate in the share capital of notified financial institutions promoted outside India as well. 6. In the field of exports, it is now proposed to enable the Development Bank to grant loans and advances to any persons exporting products of industrial concerns or to any person outside India in connection with the export of capital goods from India, or for the execution of turn-key projects, outside India by any industrial concern or by any person in India. Financial assistance will therefore be available to parties outside India for importing capital goods from India and also for any activity in connection with it. The Development Bank is also being authorised to perform certain agency functions. 7. By a newsection 9A, it is proposed to prohibit, subject to certain exceptions, the Development Bank from granting assistance to industrial concerns in which any director of the Development Bank may be having a benefical interest. The Development Bank is the only institution capable of financing very large projects in the core and heavy investment sectors. It is, therefore, provided that the prohibition may be relaxed in cases where the Development Bank is satisfied that it is necessary in the public interest to finance such an industrial concern if the assistance is given subject to such conditions and limitations as may be prescribed by the Development Bank with the prior approval of the Reserve Bank of India. 8. It is considered necessry to effect certain liberalisation in regard to the liability arising out of fluctuations in the rate of exchange during the period of repayment of the foreign currency loans borrowed by the Development Bank fom foreign lending agencies. At present the liability arising out of fluctuations in foreign exchange is completely borne by the borrowig industrial concerns. It is now proposed that it need be borne by the borrowers only so long as they have not discharged their liability completely to the Development Bank. After that period the Development Bank will bear the losses arising out of the normal market fluctuations in foreign exchange and the Central Government will bear the losses in respect of fluctuations, such as devaluation of Indian currency or revaluation of foreign currency as may be adverse to Indian currency. Any profit arising from fluctuations in favour of Indian currency is also proposed to be similarly dealt with. 9. The Development Bank normally reserves the power to nominate one or more directors on the Boards of assisted concerns. The newsection 30Ais intended to enable the Development Bank to exercise the power effectively. 10. The Bill seeks to achieve these main objects. Opportunity has also been taken to incorporate some other amendments which are found necessary for the smooth working of the Development Bank and are of a consequential or procedural nature. The notes on clauses appended to the Bill explain the position thereof.- Gaz. of Ind., 8-12-72, Pt. II,section 2, Ext., p. 1544. Amending Act No. 52 of 1975 It is proposed to restructure the Industrial Development Bank of India in certain respects, so as to enlarge its role as the principal financial institution financing industry and for co-ordinating the working of other financial institutions engaged in the financing or promotion or development of industry. The financial institutions, in this context, include the Industrial Finance Corporation of India, the Life Insurance Corporation of India, the Unit Trust of India, the Industrial Reconstruction Corporation of India Limited, the State Financial Corporations, all in the public sector, the Industrial Credit and Investment Corporation of India Limited, in the private sector and such other institutions as may be notified by the Central Government in this behalf. Besides these, the State Bank of India, its seven subsidiary banks, the fourteen nationalised banks, scheduled banks and the State Co-operative Banks are also proposed to be brought within the purview of co-ordination by the Development Bank as these institutions participate with the Development Bank and other term lending institutions in financing industry. 2. The Development Bank is at present a wholly owned subsidiary of the Reserve Bank of India; the Directors on the Central Board of the Reserve Bank constitute the Board of Directors of the Development Bank. It is now proposed to transfer the entire capital of the Development Bank held by the Reserve bank to the Central Government. There will also be a separate Board of Directors for the Development Bank on which the financial institutions and the public sector banks will be represented. 3. In view of the enlarged role envisaged for the Development Bank, it is proposed that it should take over the capital held by the Reserve Bank in the different State Financial Corporations and in the Unit Trust of India. Since the Life Insurance Corporation is already wholly owned by the Central Government, no restructuring of its capital is envisaged. 50 per cent of the share capital of the Industrial Reconstruction Corporation of India Limited and the Industrial Finance Corporation of India are already held by the Development Bank. The Development Bank does not propose to hold any share capital in the Industrial Credit and Investment Corporation of India Limited as it is an institution in the private sector. The corporation is, however, being represented on the Board of Directors of Development Bank along with the other institutions and public sector banks so as to facilitate co-ordinate functioning. 4. With the Development Bank assuming the role of the principal financial institution, it is proposed to have representatives of the Development Bank on the Boards of other institutions, wherever considered necessary or feasible. 5. To give effect to the above, amendments are proposed to the Industrial Development Bank of India Act, 1964,the Reserve Bank of India Act, 1934,the Industrial Finance Corporation Act, 1948,the State Financial Corporations Act, 1951,the Life Insurance Corporation Act, 1956andthe Unit Trust of India Act, 1963. 6. Opportunity has also been taken to streamline other provisions of the different statutes and to propose certain amendments of a clarificatory nature. 7. The notes on clauses explain in detal the various provisions contained in the Bill. See Gaz. of India, 22-12-1973, Pt.II ,S.2,Ext.,p.1183. Amendment Act 73 of 1976- It is proposed to bring about a measure of uniformity in the procedure for appointment, fixation of the terms and conditions of service including removal from, or termination of, service of the chairman, vice-chairman, and managing directors of the State Bank of India, chairmen of the Regioal Rural Banks, chairman of the Industrial Finance Corporation of India and chairman and managing director of the Industrial Development Bank of India in the relevant enactments regulating the said institutions. These Executives will also have the option to relinquish office by giving the Central Government a notice of three months. It is proposed to make the amendments applicable to the existing incumbents of these offices also. : 2. Opportunity has also been taken to streamline some other provisions of these Statutes. SOR- See Gaz. of Ind..24-5-76, Pt. II,section 2, Ext., page 939. Amendment Act 35 of 1986.- The Industrial Development Bank of India (the Development Bank) established under the industrial Development Bank of India Act, 1964 is the principal financial institution for providing credit and other facilities for the development of industry, for coordinating the working of institutions engaged in financing, promoting or developing industries and for assisting the development of such institutons. The Development Bank has been providing direct financial assistance to large and medium large industrial concerns and also providing help to small and medium indusrial concerns through banks and state-level financial institution. In the light of experience gained over the years, it is felt necessary to make some new activities also eligible for financial assistance and to enlarge t he scope of business of the Development Bank to cover certain activities which the Development Bank could not take up in the absence of enabling provisions. It is also felt necessary to enlarge the capital base so as to enable the Development Bank to cater lo the growing volume of business. It is also proposed to provide more operational flexibility to the Development Bank to enable it to discharge more effectively its functions as the principal financial institution for the development of industries. 2. The main proposals are as follows: (a) The present definition of "industrial concern" as contained in the Act does not include many important activities. It is, therefore, proposed to widen the definition of "industrial concern" so as to enable the Development Bank to provide financial assistance of mines, medical, health or allied services, leasing and sub-leasing activities, information technology, telecommunicatons and electronics. It is also proposed to empower the Central Government to bring within the purview of the definition "industrial concern" engaged in activities which may be found to be support worthy. (b) In view of the expanding volume of its business and the expected growth if in the Development Bank's activities, it is proposed to raise the authorised capital of the Bank from Rs. 500 to Rs. 1,000 crores which limit may be increased by the Central Government up to Rs. 2,000 crores by notification in the .official Gazette. (c) It is proposed to enlarge the scope of business which the Development Bank can undertake by empowering it to grant lives of credit or loans and advances, otherwise than by way of subscription to shares/debentures to Industrial Finance Corporation of India, State Financial Corporations or any other financial institutions notified by the Central Government, to grant loans and advances to any person for purpose of investment in any industrial project to open and advise letters of credit and to negotiate or collect, bills and other documents drawn thereunder, to provide consultancy and merchant banking services in or outside India, to act as trustee for the holders of debentures and other securities and to provide for acquisition of business and undertaking of any other financial institution. In view of these amendments, the Development Bank will be able to undertake these activities and discharge its role as the principal financial institution. (d) It is proposed to amend the Act to enable the Development Bank to open offices even a the place where it has its head office. (e) A new provision is sought to be inserted to enable the Development Bank to purchase the participation certificates under the participation certificate scheme operated by IDBI, IFIC and ICICI providing for a single window clearance of the proposals for setting up an industrial unit, and speedy availability of funds for the project. (f) Presently, the directors nominated by the Central Government from amongst the employees of the Development Bank and financial institutions and persons having special skills and experience, hold office during the pleasure of the Central Government. It is proposed to provide that such members shall hold office for such term not exceeding three years as the Central Government may specify, (g) The acccountig year of the Development Bank at present is from 1st July to 30th June. It is proposed to amend the Act to provide flexibility to the Development Bank to change the accounting year, if need be, 3. It is also proposed to make certain other minor and consequential amendments in the Act. 4. The Bill seeks to achieve the above objects. -Gaz. of Ind., 20-12-85, Pt.II,section 2, Ext., page 5 (.No. 73).

An Act to establish the Industrial Development Bank of India

1[as the Principal financial institution for co-ordinating, in conformity with national priorities, the working of institutions engaged in financing, promoting or developing industry, for assisting the development of such institutions] for providing credit and other facilities for the development of industry and for matters connected therewith and further to amend certain enactments. Be it enacted by Parliament in the Fifteenth Year of the Republic of India as follows :-

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT

(1) This Act may be called the Industrial Development Bank of India Act, 1964.-

(2) It extends2to the whole of India.

(3) It shall come into force on such date as the Central Government may, by notification3in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act.

SECTION 02: DEFINITIONS

- In this Act, unless the context otherwise requires,-

(a) "Board" means the Board of Directors of the Development Bank;

(b) "Development Bank" means the Industrial Development Bank of India established under section 3-;

[(c) "Industrial concern" means any concern engaged or to be engaged in,-

(i) the manufacture, preservation or processing of goods; (ii) shipping; [(iii) mining including development of mines,] (iv) the hotel industry.

(v) the transport of passengers or goods by road or by water or4[by air or by ropeway or by lift];

[(vi) the generation, storage or distribution of electricity or any other form of energy;]

(vii) the maintenance, repair, testing or servicing of8[machinery or equipment] of any description or vehicles or vessels or motor boats or trailers or tractors.

(viii) assembling, repairing or packing any article with the aid of machinery or power;

7[(ix) the setting up of or development of, an industrial area or an industrial estate;]

(x) fishing or providing shore facilities for fishing or maintenance thereof;

(xi) providing special or technical knowledge or other services for the promotion of industrial growth; or

[(xii) providing engineering, technical, financial, management, marketing or other services or facilities for industry;

(xiii) service industry such as altering, ornamenting, polishing, finishing, oiling, washing, cleaning or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal;

(xiv) providing medical, health or other allied services;

(xv) providing services relating to information technology, telecommunication or electronics;

(xvi) leasing, sub-leasing or giving on hire or hire-purchase of industrial plants, equipments, machinery or other assets including vehicles, ships .and aircraft;

(xvii) such other activity as the Central Government may, having regard to the objects of this Act, by notification in the Official Gazette, specify in this behalf; or

(xviii) the research and development of any concept, technology, design, process or product whether in relation to any of the matters aforesaid, including any activities specified under sub-clause (xvii), or any other matter.

9(d) "Industrial Finance Corporation" means the Industrial Finance Corporation of India -Limited formed and registered under the Companies Act, 1956-.]

7(da) "nationalised bank" means a corresponding new bank specified in the First Schedule tothe Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970-or a corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980-;]

(e) "prescribed" means prescribed by regulations made under this Act;

(f) "Reserve Bank" means the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934-;

(g) "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934-;

5[(ga) "State Bank" means the State Bank of India constituted under the State Bank of India Act, 1955-;]

5[(gb) "subsidiary bank" has the meaning assigned to it in the State Bank of India (Subsidiary Banks) Act, 1959-;]

(h) "State co-operative bank" has the same meaning as in the Reserve Bank of India Act, 1934-;

(i) "State Financial Corporation" means a financial corporation established under section 3-orsection 3A-ofthe State Financial

Corporation Act, 1951-and includes 6[Tamil Nadu) Industrial Investment Corporation Limited;]

5[(j) "Unit Trust" means the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963-.]

SECTION 03: ESTABLISHMENT AND INCORPORATION OF INDUSTRIAL DEVELOPMENT BANK OF INDIA

- (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be established for the purposes of this Act a corporation to be known as the Industrial Development Bank of India.

(2) The Development Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may, by that name, sue or be sued.

(3) The head office of the Development Bank shall be at Bombay or at such other place as the10[Central Government] may, by notification in the Official Gazette, specify.

(4) The Development Bank may establish offices, branches or agencies at any11[x x] place in or outside India.

SECTION 04: AUTHORISED CAPITAL

(1) The authorised capital of the Development Bank shall be two thousand crores of rupees divided into one hundred and fifty crores fully paid-up equity shares of rupees ten each and subject to the provisions of section 4E-, fifty crores of fully paid-up redeemable preference shares of rupees ten each.

(2) The Development Bank may, from time to time, by a resolution in general meeting, increase the authorised capital to an amount not exceeding five thousand crores of rupees consisting of such number of equity shares and redeemable preference shares as it deems fit.]

SECTION 04A: TRANSFER OF CAPITAL TO CENTRAL GOVERNMENT

-13 (1) The issued capital of the Development Bank which has been subscribed by the Reserve Bank as on the date immediately preceding the commencement of section 5-of the Public Financial Institutions Laws (Amendment) Act, 1975 (hereinafter referred to as the "appointed day", shall, on such commencement, stand transferred to, and vested in, the Central Government.

14[(2) x x x x x x x x]

SECTION 04B: PAYMENT OF AMOUNT

The Reserve Bank shall be given by the Central Government, in cash, for the transfer to, and vesting in, the Central Government of the issued capital of the Development Bank which has been subscribed by the Reserve Bank, an amount equal to the face value of the said subscribed capital.]

SECTION 04C: ISSUED CAPITAL

(1) The issued capital of the Development Bank of seven hundred and fifty-three crores of rupees which stands fully vested in and subscribed by the Central Government immediately before the commencement of the Industrial Development Bank of India (Amendment) Act, 1995 shall on such commencement, stand divided into seventy-five crores and thirty lakhs equity shares of rupees ten each.

(2) The Board may, from time to time, increase the issued equity share capital of the Development Bank by allotment of shares to such persons and on such terms and conditions as the Board may determine: Provided that no increase in the issued equity capital shall be made in such a manner that the Central Government holds at any time less than fifty-one per cent. of the issued equity capital of the Development Bank.

SECTION 04D: REDUCTION OF SHARE CAPITAL

- (1) The Development Bank may, by a resolution passed in a general meeting of the shareholders, reduce its share capital in any way.

(2) Without prejudice to the generality of the foregoing power, the share capital may be reduced by,-

(a) extinguishing or reducing the liability on any of its equity shares in respect of share capital not paid-up;

(b) either with or without extinguishing or reducing liability on any of its equity shares, cancelling any paid-up share capital which is lost, or is unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its equity shares, paying off any paid-up share capital which is in excess of the wants of the Development Bank.

(3) In any general meeting referred to in sub-section (1), the resolution for reduction of share capital shall be passed by shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if. any, cast against the resolution by shareholders so entitled and voting.

SECTION 04E: CONVERSION OF EQUITY SHARES INTO REDEEMABLE PREFERENCE SHARES

- (1) The Central Government may, at any time after the commencement of the Industrial Development Bank of India (Amendment) Act, 1995 and by notification in the Official Gazette, convert such number of equity shares held by it not exceeding fifty crores as it may decide into redeemable preference shares.

(2) The redeemable preference shares referred to in sub-section (1) shall-

(a) carry such fixed rate of dividend as the Central Government may specify at the time of such conversion, and

(b) neither be transferable nor carry any voting rights.

(3) The redeemable preference shares referred to in sub-section (1) shall be redeemed by the Development Bank within three years from the date of such conversion in such instalments and in such manner as the Board may determine.]

SECTION 05: MANAGEMENT

-16[(1) The general superintendence, direction and management of the affairs and business of the Development Bank shall vest in a Board of directors which may exercise all powers and do all such acts and things, as may be exercised or done by the Development Bank and are not by this Act expressly directed or required to be done by the Development Bank in general meeting.

(2) The Board may direct that any power exercisable by it under this Act shall also be exercisable in such cases and subject to such conditions, if any, as may be specified by it, by the chairman, managing director or the whole-time director:]

(3) Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles with due regard to public interest.

17[(4)x x x x]

SECTION 06: CONSTITUTION OF BOARD

-20[ (1) The Board shall consist of the following, namely:-

(a) a chairman and a managing director appointed by the Central Government:

Provided that the same person may be appointed to function both as chairman and as managing director;

(b) one whole-time director appointed by the Central Government on the recommendation of the Board;

(d) three directors from amongst persons having special knowledge of, and professional experience in, science, technology, economics, industry, banking, industrial co- operatives, law, industrial finance, investment, accountancy, marketing or any other matter, the special knowledge of, and professional experience in, which would, in the opinion of the Central Government, be useful to the Development Bank, nominated by the Central Government; and

(e) such number of directors elected, in the prescribed manner, by shareholders other than the Central Government, whose names are entered on the register of share holders of the Development Bank ninety days before the date of the meeting in which such election takes place on the following basis, namely:-

(i) where the total amount of equity share capital issued to such shareholders is ten per cent, or less of the total issued equity capital, two directors;

(ii) where the total amount of equity share capital issued to such shareholders is more than ten per cent. but less than twenty-five per cent. of the total issued equity capital, three directors; and

(iii) where the total equity share capital issued to such shareholders is twenty-five per cent or more of the total issued equity capital, four directors: Provided that until the assumption of charge by the elected directors under this clause, the Central Government may at any time nominate such member of directors, not exceeding four, from amongst persons having special knowledge of, and professional experience in, science, technology, economics, industry, banking, industrial co-operatives, law, industrial finance, investment, accountancy, marketing or any other matter, the special knowledge of, and professional experience in, which would, in the opinion of the Central Government, be useful to the Development Bank for carrying out its functions.]

21[(2) The chairman, the managing director and the whole-time director] shall hold office for such term not exceeding five years as the Central Government may specify in this behalf and any person so appointed shall be eligible for reappointment.

19[(2A) Notwithstanding anything contained in sub-section (1) the Central Government shall have the right to terminate the term of office of22[the chairman, the managing director or the whole-time director] as the case may be, at any time before the expiry of the term specified under sub-section (2) by giving him notice of not less than three months in writing or three months' salary and allowances in lieu of such notice; and chairman or managing director, as the case may be, shall also have the right to relinquish his office at any time before the expiry of the term specified under sub-section (2) by giving to the Central Government notice of not less than three months in writing.]

(3) [The chairman, the managing director and the whole-time director] shall receive such salary and allowances as may be determined by the Central Government.

19[(3A) The Central Government may, at any time, remove22[the chairman, the managing director or the whole-time director] as the case may be, from office:

Provided that no person shall be removed from his office, under this sub-section, unless he has been given an opportunity of showing cause against his removal.]

(4) A nominated director shall hold office during the pleasure of the authority nominating him.

20[(4A) Subject to the provisions of sub-section (4),-

(a) every director nominated under clause (d) of sub-section (1) shall hold office for such term not exceeding three years as the Central Government may specify in this behalf and thereafter until his successor assumes office, and shall be eligible for re- nomination. Provided that no such director shall hold office continuously for a period exceeding six years; and

(b) every director elected under clause (e) of sub-section (1) shall hold office for three years and thereafter until his successor assumes office, and shall be eligible for re-election: Provided that no such director shall bold office continuously for a period exceeding six years;]

23[(4B) The shareholders, other than the Central Government may, after giving to the director a reasonable opportunity of being heard in the manner as may be prescribed, by resolution passed by majority of the votes of such shareholders holding the aggregate not less than one-half of the share capital held by such shareholders, remove any director elected under clause (e) of sub-section ( 1 ) and elect another director in his place to fill the vacancy so caused.]

20[(5)

(i) A meeting of the Board shall be held at least once every three months and at least four meetings shall be held every year and the meetings may be held at such places as may be prescribed.

(ii) Notice of every meeting of the Board shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.

(5A) Subject to the provisions contained in this Chapter, the Board may meet at such times and places and shall observe such rules of procedure in regard to transaction of its business including the manner of adoption of resolutions as may be prescribed.]

(6) The chairman or, if for any reason he is unable to attend a meeting of the Board, the managing director or, in the event of both the chairman and the managing director being unable to attend a meeting, any other director nominated by the chairman in this behalf and in absence of such nomination any director elected by the directors present from among themselves, shall preside at the meeting.

(7) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the director present and voting, and in the event of an equality of votes, the chairman, or in his absence, the managing director, or in the absence of both the chairman and the managing director, the person presiding, shall have a second or casting vote.

(8) Save as provided in sub-section (7), every director of the Board shall have one vote.]

SECTION 06A: OMITTED

x x x x x]State Amendments

SECTION 06B: DISQUALIFICATORS OF DIRECTIONS

- (1) A person shall not be eligible for being elected as director under clause (e) of sub-section (1) of section 6-, if he-

(a) has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force;

(b) is an undischarged insolvent.

(d) has been convicted by a court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence; or

(e) has not paid any call in respect of shares of the Development Bank held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call.

SECTION 06C: VACATION OF OFFICE BY DIRECTOR

(1) The office of a director shall become vacant if he-

(a) becomes subject to any of the disqualifications mentioned in section 6B -; or

(b) resigns his office by giving notice in writing under his hand and the resignation is accepted; or

(2) Notwithstanding anything in clause (a) of sub-section (1), the disqualifications referred to in that clause shall not take effect-

(a) for thirty days from the date of the adjudication, sentence or order;

(b) where any appeal or petition is preferred within thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence or order until the expiry of seven days from the date on which such appeal or petition is disposed of; or

(c) where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order and the appeal or petition, if allowed, would result in the removal of the disqualification until such further appeal or petition is disposed of.]

SECTION 07: EXECUTIVE COMMITTEE AND OTHER COMMITTEES

-26 [(1) The Board shall constitute an Executive Committee consisting of the chairman, the managing director, the whole-time director and such other directors as it may deem fit.]

(2) The Executive Committee shall discharge such functions as may be prescribed or as may be delegated to it by the Board.

(3) The Board may constitute such other committees whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons for such purpose or purposes as it may think fit.

(4) The Executive Committee or any other committee constituted under this section shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

State Amendments

SECTION 08: FEES AND ALLOWANCES OF DIRECTORS AND MEMBERS OF COMMITTEES

The directors and the members of a committee shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any committee constituted in pursuance of this Act and for attending to any other work of the Development Bank.27State Amendments

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