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NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT ACT

Ministry of Law and Justice

Act nº 61 of 1981


  • Chapter I
  • Chapter II
  • Chapter III
  • Chapter IV
  • Chapter V
  • Chapter VI
  • Chapter VII
  • Chapter VIII
  • Chapter IX
  • Chapter X
  • Schedules
  • Amending Acts
  • Act nº 61 of 1981

Preamble

THE NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT ACT, 1981

[Act, No. 61 of 1981]

[30thDecember, 1981]

PREAMBLE

1[An Act to establish a development bank to be known as the National Bank for Agriculture and Rural Development for providing and regulating credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto.]

BE it enacted by Parliament in the Thirty-second year of the Republic of India as follows:--

1. Substituted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under:

"An Act to establish a bank to be known as the National Bank for Agriculture and Rural Development for providing credit for the promotion of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas, land for matters connected therewith or incidental thereto."


Chapter I

Section 1. Short title, extent and commencement

(1) This Act may be called the National Bank for Agriculture and Rural Development Act, 1981.

(2) It extends to the whole of India.

(3) It shall come into force on such date as {1stMay 1982, vide Notification No. S. O. 278 (E) dated 21-4-1982 (except sections 3 16 and 18). }the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act, and any reference in any provisions to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

Section 2. Definitions

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

(a) "agriculture" includes horticulture, animal husbandry, forestry, dairy and poultry farming, pisciculture, and other allied activities, whether or not undertaken jointly with agriculture and the expression "agricultural operations" shall be construed accordingly.

Explanation--For the purposes of this clause, "pisciculture" includes the development of fisheries, both inland and marine, catching of fish and all activities connected therewith or incidental thereto;

(b) "Agricultural Refinance and Development Corporation" means the Corporation established under section 3 of the Agricultural Refinance and Development Corporation Act, 1963 and renamed under section 3A of that Act as the Agricultural Refinance and Development Corporation.

(c) "Board" means the Board of Directors of the National Bank;

(d) "Central co-operative Bank" means the principal co-operative society in a district in a State, the primary object of which is the financing of other co-operative societies in that district;

Provided that in addition to such principal society in a district, or a where there is no such principal society in a district, the state Government may declare any one or more co-operative societies carrying on the business of financing other co-operative societies in that district to be also or to be a central co-operative bank or central co-operative banks with in the meaning of this definition;

(e) "Chairman" means the Chairman1[***] appointed under section 6;

(f) "co-operative society" means a society registered, or deemed to be registered, under the Co-operative Societies Act, 1912 or any other law relating to co-operative societies for the time being in force ;in any State;

(g) "crops" includes products of agricultural operations;

(h) "director" means a director appointed under section 6.

(i) "industry in the tiny and decentralized sector" means industrial concerns in the tiny and decentralized sector and "industrial concern in the tiny and decentralized sector" means an industrial concern in which the investment in machinery and plant is not in excess of rupees two lakhs or such higher amount as the Central Government may specify by notification in this behalf having regard to trends in industrial development and other relevant factors;

(j) "Managing Director" means the Managing Director appointed under section 6:

(k) "marketing of crops" includes the processing of crops prior to marketing by any agricultural producers or any organisation of such producers;

(l) "National Bank" means the National bank for Agriculture and Rural Development established under section 3.

(m) "Notification" means a notification published in the Official Gazette.

(n) "primary rural credit society" means a co-operative society by whatever name called,--

(1) Which has as its object or business the provision of financial accommodation to its members for agriculture or agricultural operations or for the marketing of crops, or for rural development; and

(2) the bye-laws of which do not permit admission of any other co-operative society as member:

Provided that this sub-clause shall not apply to the admission, as a member, of a co-operative society, which is a State co-operative bank or a central co-operative bank by reason of such bank subscribing to the share capital of the co-operative society out of funds provided by the State-Government for the purpose.

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

(p) "regional rural bank" means a regional rural bank established under section 3 of the Regional Rural Banks Act, 1976;

(q) "rural development" means development of rural areas through any activities conducive to such development.

Explanation--For the purposes of this clause,

(a) activities conducive to development of rural areas include activities relating to production of goods or provision of services in rural areas and activities for the promotion of cottage and village industries, industry in the tiny and decentralized sector and small-scale industry and handicrafts and other rural crafts;

(b) "rural area" means the area comprised in any village and includes the area comprised in any town, the population of which does not exceed ten thousand or such other figure as the Reserve Bank may specify from time to time;

(r) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934;

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

(t) "small-scale industry" means industrial concerns in the small scale sector and " industrial concern in the small scale sector" means an industrial concern--

(i) in which the investment in machinery and plant is not in excess of rupees twenty lakhs or such higher amount as the Central Government may specify by notification in this behalf having regard to trends in industrial development and other relevant factors, and

(ii) which is not an industrial concern in the tiny and decentralized sector;

(u) "State co-operative bank" means the principal co-operative society in a State, the primary object of which is the financing of other cooperative societies in the State.

Provided that in addition to such principal society in a State, or where there is no such principal society in a State, the State Government may declare any one or more co-operative societies carrying on business in that State to be also or to be a State co-operative bank or State co-operative banks within the meaning of this definition;

(v) "State land development bank" means the co-operative society which is the principal land development bank (by whatever name called) in a State and which has as its primary object the providing of long term finance for agricultural development;

Provided that, in addition to such principal land development bank in a State, or where there is no such bank in a State, the State Government may declare any co-operative society carrying on business in that State and authorised by the bye-laws of such co-operative society to provide long-term finance for agricultural development to be also or to be a State land development bank within the meaning of this definition;

(w) Words and expressions used herein and not defined but defined in the Reserve Bank of India Act, 1934, shall have the meanings respectively assigned to them in that Act.

(x) words and expressions used herein and not defined either in this Act or in the Reserve Bank of India Act, 1934, but defined in the Banking Regulation Act, 1949, shall have the meanings respectively assigned to them in the Banking Regulation Act, 1949.

1. "of the Board" omitted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000)


Chapter II

Section 3. Establishment and incorporation of National Bank for agriculture and Rural development

(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 bank to be known as the National Bank for Agriculture and Rural Development.

(2) The 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 may by that name sue and be sued.

(3) The head office of the National Bank shall be at Bombay or at such other place as the Central Government may, by notification, specify.

(4) (1) The capital of the National Bank shall be one hundred crores of rupees;

provided that the Central Government may, in consultation with the Reserve Bank and by notification, increase the said capital up to five hundred crores of rupees.

(2) The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank in equal proportions

Chapter III

Section 4. Capital

(1) The capital of the National Bank shall be one hundred crores of rupees:

Provided that the Central Government may, in consultation with the Reserve Bank and by notification, increase the said capital up to1[five thousand crores] of rupees.

2[(2) The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank to such extent and in such proportion as may be notified by the Central Government in consultation with the Reserve Bank, from time to time:

Provided that the National Bank may issue capital to such institutions and persons in such manner as may be notified by the Central Government:

Provided further that the combined shareholding of the Central Government and the Reserve Bank shall not at any time be less than fifty-one per cent, of the total subscribed capital.]

1. Substituted for "five hundered crores" by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000)

2. Sub-Section (2) Substituted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under:

"(2) The capital of the National Bank shall be subscribed to by the Central Government and the Reserve Bank in equal proportions."


Section 5. Management

(1) The general superintendence direction and management of the affairs and business of the national bank shall vest in a Board of Directors, which shall exercise all powers and do all acts and things which may be exercised or done by the national bank.

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

(3) Subject to the previous of sub-section (1) and save as otherwise provided in the regulations made under this Act, the Managing Director shall also have powers of general superintendence, direction and management of the affairs and business of the National Bank and may also exercise all powers and do all acts and things which may be exercised or done by the National Bank.

(4) Any whole-time director appointed under sub-section (3) of section 6 shall assist the Managing Director in the discharge of his functions under sub-section (3) and perform such duties as the Board may entrust or delegate to him.

(5) In the discharge of his powers and functions under sub-section (3) the Managing Director shall follow such directions as the Chairman may give.

(6) In the discharge of its functions under this Act, the National Bank shall be guided by such directions in matters of policy involving public interest as the Central Government in consultation with the Reserve Bank, or the Reserve Bank may give in writing.

Section 6. Board of Directors

1[(1) The Board of Directors of the National Bank shall consist of the following, namely:--

(a) a Chairman;

(b) three directors from amongst experts in rural economics, rural development, village and cottage industries, small-scale industries or persons having experience in the working of co-operative banks, regional rural banks or commercial banks or any other matter the special knowledge or professional experience in which is considered by the Central Government as useful to the National Bank;

(c) three directors from out of the directors of the Reserve Bank;

(d) three directors from amongst the officials of the Central Government;

(e) four directors from amongst the officials of the State Governments;

(f) such number of directors elected in the prescribed manner, by shareholders other than the Reserve Bank, the Central Government and other institutions owned or controlled by the Central Government whose names are entered on the register of shareholders of the National 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....................... two directors; share capital issued to such shareholders is ten per cent, or less of the total issued equity capital

(ii) where the total amount of equity............... three directors;

share capital issued to such shareholders is andmore than ten per cent. but less than twenty-five per cent, of the total issued equity capital

(iii) where the total equity share capital................ four directors:

issued to such shareholders is twenty-five per cent. or more of the total issued equity capital

Provided that until the assumption of charge by the elected directors under this clause, the Central Government may at any time nominate such number of directors not exceeding four from amongst persons having special knowledge of, and professional experience in, agricultural science, technology, economics, banking, co-operatives, law, rural 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 National Bank for carrying out its functions; and

(g) a Managing Director.

(2) The Chairman and other directors, excluding the directors referred to in clause (f), shall be appointed by the Central Government in consultation with the Reserve Bank:

Provided that no such consultation shall be necessary in the case of directors appointed under clause (d) of sub-section (1).]

(3) Where the Central Government is satisfied in consultation with the Reserve Bank and2[***], that it is necessary so to do it may appoint one or more whole-time directors with such designations as may be deemed appropriate by that Government and any whole-time director so appointed shall also be a member of the Board;

2[***]

1. Substituted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under:

"(1) The Board of Directors of the National Bank shall consist of the following namely:-

(a) a Chairman;

(b) two directors from amongst experts in rural economies, rural development handicrafts and other rural crafts, village and cottage industries and small-scale industries or in any other matter, the special knowledge or professional experience in which is considered by the Central Government as useful to the National Bank;

(c) three directors out of whom two shall be persons with experience in the working of co-operative banks and one shall be a person with experience in the working of commercial banks;

(d) three directors from out of the directors of the Reserve Bank;

(e) three directors from amongst the officials of the Central Government ;

(f) two directors from amongst the officials of the state Government ; and

(g) a Managing Director.

(2) The Chairman and other directors shall be appointed by the Central Government in consultation with the Reserve Bank; [Provided that no such consultation shall be necessary in the case of directors appointed under clause (e) of sub-section (1).]

(3) Where the Central Government is satisfied in consultation with the Reserve Bank and [***], that it is necessary so to do it may appoint one or more whole-time directors with such designations as may be deemed appropriate by that Government and any whole-time director so appointed shall also be a member of the Board;"

2 . Omitted by Banking Laws (Amendment) Act 1985, w.e.f.1-5-86.


Section 7. Term of office of Chairman and other directors, retirement and payment of fees

(1) The Chairman shall hold office for such term not exceeding five years and shall receive such salary and allowances as the Central Government may at the time of appointment specify;1[and shall be eligible for re-appointment]

2[***]

3[(1A) Notwithstanding anything contained in sub-section(1), the Central Government shall have the right to terminate the term of office of the Chairman at any time before the expiry of the term specified under that sub-section by giving him a notice of not less than three months in writing or three months' salary and allowances in lieu of such notice.]

1[(1B) In the case of a vacancy in the office of the Chairman, the Managing Director shall perform the functions and duties of the Chairman during such vacancy.]

4[(2) Subject to the provisions contained in sub-section (5), a director appointed under clause (b) or clause (c) of sub-section (1) of section 6, shall hold office for such term, not exceeding three years, as the Central Government may specify in this behalf5[***] and shall be eligible for reappointment:

Provided that no such director shall hold office continuously for a period exceeding six years.

(3) The Central Government may, in consultation with the Reserve Bank remove the Chairman or6[***] at any time before the expiry of his term of office after giving him a reasonable opportunity of showing cause against the proposed removal.

7[(4) The Chairman and any other director, who is not an officer of the Central Government or a State Government or an officer of the Reserve Bank or any body or corporation established by or under any Central Act or any State Act and owned or controlled by such Government, shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any of its committees and for attending to any other work of the National Bank.]

8[(5) The directors appointed under clauses (b) to (f) of sub-section (1) of section 6 shall hold office during the pleasure of the Central Government.]

1. Inserted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000)

2. Omitted by Banking Laws (Amendment) Act 1985, w.e.f.1-5-86.

3. Inserted by Banking Laws (Amendment) Act 1985, w.e.f.1-5-86.

4. Substituted by Banking, Public Financial Institutions and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88. Prior to substitution section 7(2) stood as under " The directors appointed under clauses (b) to (f) of sub-section (1) of section 6 shall hold office for a term of three years.

Provided that such director shall notwithstanding the expiration of his term continue to hold office until his successor enters upon his office.

5. Words "and thereafter until his successor enters upon his office" Substituted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000).

6. Words " any other director referred to in sub-section 2" omitted by Banking, Public Financial Institutions and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88.

7. Substituted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000). Prior to substitution it read as under:

"(4) The Chairman and the directors referred to in sub-section (2) shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any of its committees and for attending to any other work of the National Bank:

Provided that no such fee shall be payable to the Chairman or any other director who is an officer of the Government or an officer of the Reserve Bank."

8. Inserted by Banking, Public Financial Institutions and Negotiable Instrument (Amendment) Act 1988, w.e.f.30-12-88.


Section 8. Term of office of Managing Director and whole time directors conditions of service etc.

(1) The Managing Director and any whole-time director appointed under sub-section (3) of section 6 shall--

(a) hold office for such term not exceeding five years as the Central Government may, at the time of appointment, specify;1[and shall be eligible for re-appointment]

(b) receive such salary and allowances and be governed by such terms and conditions of service as the Board may, with the previous approval of the Central Government and in consultation with the Reserve Bank determine;

Provided that the Managing Director and any such whole-time director appointed to the first Board shall receive such salary and allowance and be governed by such terms and conditions of service as the Central Government may in consultation with the Reserve Bank, determine.

(2) The Central Government may in consultation with the Reserve Bank, remove the Managing Director or any whole-time director appointed under sub-section (3) of section 6 at any time before the expiry of his term of office, after giving him a reasonable opportunity of showing cause against the proposed removal.

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2) Central Government shall have the right to terminate the term of office of the Managing Director or of any whole-time director appointed under sub-section (3) of section 6 at any time before the expiry of the term fixed under sub-section (1) by giving him notice of not less than three months in writing or three months salary and allowances in lieu of such notice:

Provided that the Central Government shall before terminating the term of office of the Managing Director or any whole-time director appointed under sub-section (3) of section 6 consult the Reserve Bank

1. Inserted by National Bank For Agriculture And Rural Development (Amendment) Act, 2000 (55 of 2000)


Section 9. Disqualifications

(1) No person shall be director who -

(a) is of unsound mind and stands so declared by a competent court; or

(b) is or has been convicted of any Offences which in the opinion of the Central Government, involves moral turpitude; or

(c) is, or at any time has been, adjudicated insolvent or has suspended payment of his debts or has compounded with his creditors.

(2) The appointment as director of any person who is a Member of Parliament or the Legislature of any State shall, unless within two months of the date of his appointment he ceases to be such member, be void on the expiry of the said period of two months and if any director is elected or nominated as a member of parliament or of any State legislature he shall cease to be a director as from the date of such election or nomination as the case may be,

Section 10. Vacation and resignation of office by directors

(1) If a director--

(a) becomes subject to any of the Disqualifications mentioned in section 9; or

(b) is absent without leave of the Board for more than three consecutive meetings thereof, his seat shall thereupon became vacant,

(2) Any director may resign his office by giving notice thereof in writing to the Central Government and on his resignation being accepted by the Central Government or if his resignation is not sooner accepted, on the expiry of three months from the receipt thereof by the Central Government, he shall be deemed to have vacated his office.

Section 11. Casual vacancy in the office of Managing Director

If the Managing Director is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his appointment, the Central Government may, after consultation with the Reserve Bank and the Board, appoint an other person to act in his place as Managing Director during his absence