Management of banking companies

ABHAY LIMAYE
B.Com., LLB., CAIIB
EX- DEPUTY CHIEF GENERAL MANAGER
RETAIL BUSINESS, SARASWAT COOPERATIVE BANK
Management of banking companies
 Banking Regulation Act is regulatory law for banking companies. It provides a number of sections
which aim at ensure better management of banking companies and confers wide powers on the
Reserve Bank in this regards.
 The Banking Laws ( Amendment Act ) , 1968 inserted new provisions under Sections 10 A, 40- B,
40 C and 40 D regarding the constitution of the Board of Directors and appointment of Chairman.
 Constitution of the board of Directors
 In pursuance of provisions of the Companies Act , Section 104 of the Banking regulation Act,
1949 provides eligibility of persons who may be appointed as Directors.
 Every company is required to constitute its Board of Directors in such a way that not less than
51% of the total members of the Board shall consist of persons who satisfy the following
conditions
Background of the persons to be appointed
as directors
 They shall have special knowledge or practical experience in respect of one or more of the
following matters , namely
 1) Accountancy
 2) Agriculture and Rural economy
 3) Banking
 4) Co-Operation
 5) Economics
 6) Finance
 7) Law
 8) Small – Scale Industry
 9) Any other matter the special knowledge of , and practical experience in , which would , in
the opinion of RBI be useful to the banking company.
Prohibition of employment of managing agent
 Section 10 of the Act provides that no banking company shall employ or managed by managing agent.
 Prohibition of employment of certain person
 Section 10 of the Act also provides restriction on employment or continuance the employment of following
persons
 1) adjudicated insolvent , suspended payment or compounded with his creditors , convicted by criminal
court involving moral turpitude
 2) Whose remuneration or part of remuneration takes the form of commission or of a share in the profits of
the company
 3) Whose remuneration is excessive in opinion of RBI
 Prohibition to be managed by certain persons ( Section 10 )
 Banking company shall not be managed , or
 (a) a subsidiary of the banking company
 (b) a company registered under Section 25 of the Companies Act ,1956
 (c) Who is engaged in any other business or vocation , or
 (d) whose term of office as a person managing the company is for a period exceeding five years at any
one time
Prohibition of employment of managing agent
 Provided that the term of office of such person ,may be renewed or extended by further periods
not exceeding five years on each occasion subject to the condition that such renewal or extension
shall not be sanctioned earlier than two years from the date on which it is to come into force.
 Prohibition to be managed by Political Persons – The Act bars members of parliament /
legislative assembly as well as stock brokers to become directors of Commercial Banks. Recently
the RBI is empowered full control over cooperative banks .
 Prohibition of Common Directors – Section 16 of the Act provides that no person shall be
appointed director who is already director of any other banking company. This will not apply to the
director appointed by Reserve Bank of India .
 Appointment of Whole Time Chairman – Every banking shall have one of its directors, who may
be appointed on a whole time or a part time basis as Chairman of its Board of Directors and where
he is appointed on a whole time basis , chairman of its Board of Directors , he shall be entrusted
with the Management of the whole of affairs of the banking company subject to the
superintendence , control and direction of the Board of Directors.
Chairman of bank
 Chairman on Part Time basis – Proviso of section 10 – B states
 i ) Such appointment shall be with the previous approval of the RBI
 Ii) The management of the whole of the affairs of such banking company shall be entrusted to a
Managing Director who shall exercise his powers subject to the superintendence , control and
direction of the board.
 Qualifications of Chairman – Such full time Chairman or Managing Director shall be a person
who has special knowledge and practical experience of
 (a) the working of a banking company
 ( b) the working of the State Bank of India, or
 ( c) the working of any subsidiary bank , or
 (d) The working of a Financial Institution , or
 ( e) Financial , economic or business administration
Chairman of bank
 Disqualification of Chairman – The following person shall be disqualified to be appointed as a
Chairman or Managing Director –
 ( 1 ) is a Director of any other company other than a company as referred above under proviso to
sub section ( 2) , or
 (2) is a partner of any firm which carries on any trade , business or industry , or
 ( 3 ) has substantial interest in any other company or firm, or
 (4) is a Director , Manager , Managing Agent , Partner or Proprietor of any trading , commercial or
industrial concern , or
 ( 5) is engaged in any other business or vocation
Powers of reserve bank of India
 If in the opinion of RBI the present Chairman / Managing Director is not a fit/ competent person
to continue to hold office , RBI may give opportunity to clarify and then takes review and advises
the bank to elect or appoint any other person to the post of Chairman or MD within a period of
two months and shall hold office for the residual period of office of the person in who’s place he
has been appointed.
 The bank or the concerned person against whom removal process is initiated u/s 6 can make an
appeal to the Central Government thereon within 30 days, and the decision of the Central
Government will be final.
 The RBI may at its discretion permit full time Chairman and Managing Director to undertake
such part time honorary work as is not likely to interfere with his duties as such Chairman or
Managing Director.
 If the Full time Chairman of the Board of Directors or Managing Director is incapacitated for one
of the other reason the banking company with the approval of the Reserve Bank make a suitable
alternate arrangements for carrying out the duties of Chairman or Managing Director for a total
period not exceeding four months.
Section 10 BB – empowers Reserve bank to appoint
chairman
 1) The section provides the Reserve Bank of India is of opinion that the continuation of vacancy
is likely to adversely affect the interests of the banking company , may appoint a person eligible
under sub section (4) of section 10-B to be so appointed , to be Chairman of the Board of
Directors appointed on full time basis or a Managing Director of the banking company and if
such person is not a director, be deemed to be director of the banking company .
 2) The Chairman or Managing Director so appointed by the RBI will hold position for such period
not exceeding three years .
 3) The Chairman so appointed by the Reserve Bank of India shall be in the whole time
employment of the banking company with such pay and allowances as the Reserve Bank of
India may determine and may also be removed from office only by the RBI.
 4) The provisions of Section 10 B shall apply to the Chairman appointed by the Reserve bank of
India under sub section (1) as they apply to the Chairman appointed by the banking company.
Control Over Management
 1) Election of New Directors – (1) The RBI may require by its order to convene a General
meeting of the shareholders within two months from the date of the order to elect fresh directors
in accordance with the voting right permissible under this Act .
 (2) every director will hold office for the residual period to which his predecessor would have hold
office, if the election had not been held.
 (3) Any election duly held under this section shall not be questioned in any court.
 2) Power of Reserve Bank to remove managerial and other persons ( Section 36 AA )
 (1) RBI may remove from office by order in public interest , or preventing the affairs of the
banking company being conducted in a detrimental to the interests of the depositors or for
securing for proper management the Chairman , Director , CEO or other Officer or Employee of
the banking company.
 (2) a reasonable opportunity of making a representation to the Reserve Bank against the
proposed order.
Control Over Management
 Amendment of provisions relating to appointments of managing directors tec. To be
subject to previous approval of Reserve Bank ( Section 35 B ) –
 Any amendments relating to provisions of directors , Chairman , Managing Director as per the
resolutions by Board of Directors , AGM shall have effect only after approved by RBI.
 Any appointment , reappointment and termination of the Chairman , Managing Director , Manager
, CEO unless it is approved by RBI.
 Further powers and functions of Reserve Bank
 The Reserve Bank may –
 Caution or prohibit banking company in particular transaction or class of transactions and give
advice to any banking company.
 On a request by the companies concerned and subject to the provisions of section 44 A , assist ,
an intermediary or otherwise , in proposals for the amalgamation or such banking companies.
 Give assistance to any banking company by means of the grant of a loan or advance to it under
the Clause (3) of sub section (1) of Section 18 of the RBI Act,1934.
 If at any time RBI finds that in the public interest or in banking policy or for preventing the affairs
of the banking company being conducted in the manner detrimental to the interests of the banking
company or its depositors , its necessary to do so , by order
Control Over Management
 1) require the meeting of its directors or official with the officer of the RBI to discuss the matter
 2) depute One or more its Officers to attend the meetings / proceedings of the meeting of board of
directors or any of the committees and be heard at the meeting and will submit his repost to the
RBI
 3) require the banking company to give notice/ s of the meetings of the board or any of its
committees to the RBI official so nominated by RBI.
 4) Appoint one or more of its officials to observe the manner in which the affairs of the banking
company or its branches are being conducted .
 5) require the banking company make such changes in the management of the banking company
as it may deem necessary.
 (2) RBI may submit an annual report to the Central Government on the trends and progress of
banking in the country and suggest measures for strengthening of banking business throughout
the country.
 (3) RBI may appoint such staff at such places as it considers necessary for the scrutiny of the
returns, statements and information furnished by the banking companies under the act.
Control Over Management
 Powers of RBI to appoint additional directors ( Section 36 AB )
 (1) In the interest of the banking company /policy or depositors the RBI may appoint one or more
persons as directors of the banking company .
 (2) Any person appointed as additional director in pursuance of this section
 (a) shall hold office during the pleasure of RBI but subject to maximum 3 years at a time
 (b) shall not incur any obligation or liability by reason only of he being the director
 (c) Shall not be required to hold qualifying shares in the banking company
 (3) For deciding the total number of directors the directors so appointed by RBI will not be taken in to
account.
 The provisions of section 36 AC for appointment, removal shall override any provisions under
the companies Act
Suppressions of board of directors of banking company

 36 ACA – 1) If in the interest of the banking company , policy and depositors the RBI may for the
reasons recorded in writing , by order may supersede the Board of Directors of such banking
company for a period not exceeding six months .this period may be extended for not more than
12 months.
 2) may appoint Administrator in consultation with Central Government who has experience in
Law, finance , banking , economics or accountancy.
 3) the Administrator so appointed shall follow the orders/ directions of the RBI as deemed
necessary
 4) after issuance of Order of supersession
 ( a) the Chairman , MD and other directors shall vacate their office from the date of order
 (b) All the powers , functions an duties conferred upon by the Companies Act , any other Law ,
Board of Directors through its meetings and by the Annual General Body meeting shall be
performed by the Administrator.
 5) The RBI may in consultation with Central Government appoint a committee of three / four
persons with background of economics, banking , finance or accountancy .
Suppressions of board of directors of banking comp

any
 6) The committee will meet and discuss at such places and times and issues as may be specified
in the order of the RBI.
 7) The administrator or the members of the advisory committee shall be paid such remuneration
as may be fixed by RBI
 8) On or before the expiration of the two months before the expiry of the period of the
supersession order the Administrator shall call the general meeting of the company for election of
new directors.
 9) No person so removed Chairman / MD / director can claim any loss or termination benefits
 10 ) The Administrator shall vacate his office as soon as the reconstituted board of directors have
been elected.
Acquisitions of the undertaking of the banking companies
 Section 36 AE provides
 1) If upon receipt of report from RBI the Central Government is satisfied that a banking company
 (a) has on more than one occasion failed to comply with the directions given to it in writing under
section 21 or Section 35 A in so far as such directions relate to banking policy or
 (b) is being managed in a manner detrimental to the interests of its depositors , and that
 1) in the interest of the depositors of the banking company
 2) in the interest of the banking policy
 3) for the better provisos' of the credit generally or credit to particular section of the community or
in particular area.
 It is necessary to acquire the undertaking of such banking company , the Central Government in
consultation with RBI as it thinks fit acquire the undertaking of such banking company after
giving a reasonable notice for showing cause against the proposed action.
 2) With effect from the appointed date the assets and liabilities of the acquired bank shall
transferred to , and vest in , the central government.
Acquisitions of the undertaking of the banking
companies
 3) The undertaking of the acquired bank and its assets and liabilities shall be deemed to include
everything ( rights, powers , authorities , movable , immovable assets , securities , cash , reserve
funds etc.
 4) The Central Government may if it is satisfied that the undertaking of the acquired bank along
with all assets , liabilities , securities , reserves and cash / bank balances etc, need to be
transferred to a company established under any scheme made under or shall vest in the
transferee bank .
 5) under subsection 4 the transferee bank shall be deemed to have become the transferee of the
acquired bank and all the rights and liabilities in relation to the acquired bank shall, on and from
the date of such vesting be deemed to have been the rights and liabilities of the transferee bank.
 6) All the rights , powers will get vested in the central government or the transferee bank
 7) Any legal proceedings or the court case etc will not be discontinued but will be addressed by
the transferee bank .
Return unclaimed deposits
 Section 26 provide that every banking company shall within 30 days after the close of each
calendar year submit a return in the prescribed form and manner to the Reserve Bank as at the
end of such calendar year of all accounts in India which have not been operated upon for ten
years.
 Establishment of Depositor Education and Awareness Fund ( Section 26 A – 1 )
 (1) The RBI has established a fund the “ Depositor Education and Awareness Fund “
 (2)There shall be credited to the fund the amount to the credit of any amount in India with a
banking company which has not been operated upon for a period of ten years or any deposit or
any amount remaining unclaimed for more than ten years or any amount remaining unclaimed for
more than ten years , within a period of three months from the expiry of the said period of ten
years.
 (3)Where the banking company has paid outstanding amount referred to in sub section (2) or
allowed operation of such account or deposit , such banking company may apply for refund .
 (4) The fund shall be utilised for promotion of depositor's interests and for such other purposes
which may be necessary for promotion of bank depositors interest as may be specified by RBI
Return unclaimed deposits
 (5) The RBI may notify the an authority or committee to administer the DEAF and to maintain
separate accounts and relevant records.
 (6) The Authority / Committee will be competent to spend money for the carrying out the objects
for which the funds has been established .
Monthly returns and power to call for other returns and
information
 Every banking company shall submit to RBI return in prescribed form and manner showing its
assets and liabilities as at the close of business on the last Friday of every month .
 The RBI may at any time direct a banking company to furnish it within stipulated time such
statements and information relating to the business or affairs of the banking company as the RBI
may deem necessary or expedient to obtain for the purpose of this Act.
 Power to publish information – The RBI considers it in the public interest so to do , may publish
any information obtained by them under this Act in such consolidated form as it may think fit.
 Accounts and balance sheet – ( section 29 ) --
 Every Banking Company for all its business transacted by it in the Financial year and by the and by
every banking company registered outside India for its branches in India , shall prepare with
reference to that year or period , as the case may be , a balance sheet and profit and loss account
as on the last working day of the year or period , as the case may be in the format set out in the
Third Schedule.
 The Balance sheet and the profit and Loss account will be signed
 1) By the Manager , Principle Officer and at least three Directors of the bank
 2) In case the banking company is incorporated outside India the by its Manager or its Principle
Officer of the Company in India.
Accounts and balance sheet
 3) The balance sheet of the banking company is to be prepared in a form as prescribed under
sub-section (1)
 3- A ) In case of banking company the period ending with the last working day of the year
immediately preceding the year in which the annual general meeting is held.
 4) The Central Government after giving notice of its intention of not less than three months amend
the forms set out in the Third Schedule.
 Powers in respect of Associate Enterprises / Companies ( SIL )
 1) The RBI may direct a banking company either to annexe or furnish to it separately such
statements and information relating to the business or affairs of any associate enterprise /
company of the banking company.
 2) The RBI may cause an inspection to be made of any associate / banking company and its
books of accounts jointly by one or more of its Officials or from other persons.
 3) The provisions of sub sections (2) and (3) of section 35 shall apply Mutantis Mutandis ( by
changing those things which need to be changed or having substituted new terms ) to the
inspection under this section.
Associate enterprise
 It includes an enterprise which
 1) is holding company or a subsidiary company of the banking company , or
 2) Is a Joint Venture of a Banking Company , or
 3) Is a subsidiary company or Joint Venture of the Holding of the banking company
 4) Controls the composition of the Board of Directors or other body governing the banking
company, or
 5) exercises, in the opinion of the Reserve Bank , significant influence on the banking company in
taking financial or policy decisions , or
 6) is able to obtain economic benefits from the activities of the banking company.
Audit
 Section 30
 1) The Balance sheet and the Profit and Loss account has to be audited by a competent person
duly qualified under the Law.
 1-A) Every Banking Company shall before appointing , reappointing or removing any Auditor , or
Auditors obtain the previous approval of the RBI
 1-B) RBI can direct a special audit of the banking company’s accounts , for any transaction or
class of transactions or for such period or periods as may be specified in its order in the public
interest or in the interest of the banking company.
 1-C ) the expenses for the above will be Bourne by the concerned banking company.
 2) The Auditors shall have the powers of exercise the functions vested in and discharge duties
and subject to the liabilities and penalties imposed on , auditors of companies by section 227 of
the Companies Act , 1956.
 3) The Auditor is required to state in his report –
 a) Whether or not the information and explanations required by him have been found to be
satisfactory ;
 b) Whether or not the transactions of the company which have come to his notice have been
within the powers of the company .
Audit
 c) Whether or not the returns received from branch offices of the company have been found
adequate for the purposes of his audit.
 d) Whether the profit and loss account shows a true balance of profit or loss for the period
 e) any other matter he considers should be brought to the notice of the shareholders of the
company.
 Submissions of Returns ( Section 31 )
 The accounts and balance sheet referred to in section 29 together with the Auditors report shall be
published in the prescribed manner and three copies thereof shall be furnished as returns to the
RBI within three months from the end of the period to which they refer.
 Copies of balance sheet and accounts to be sent to Registrar ( Section 32 )
 Along with RBI the banking company will have to send to Registrar three copies of such accounts
and balance- sheet and of the auditors report and will be chargeable with the filling fees as
applicable.
 When in pursuance of the sub section (2) of the Section 27 the Reserve Bank requires any
additional statement or information in connection with the balance sheet and accounts furnished
under section 31 , the banking company shall , when supplying such statements or information ,
send a copy thereof to the Registrar ( Public domain )
Audit
 Display of audited balance sheets by companies incorporated outside India ( section 33)
 Every banking company incorporated outside India shall not later than the first Monday in August
of any year in which it carries on business , display in its principal office and in every branch office
in India a copy of its last audited balance sheet and profit and loss account prepared under
Section 29 , shall keep the copy so displayed until replaced by the copy of the subsequent
balance sheet and Profit & Loss account so prepared.
 Accounting provisions of this Act not retrospective ( section 34 ) – Will not apply to any of
the previous years before the commencement of this Act / Provision .
 Production of document of confidential nature ( section 34 A )
 1) No Banking company shall , in any proceeding under the Industrial Disputes Act,1947 or in any
other appeal or other proceeding arising therefrom be compelled by any authority before which
such proceeding if that information is of confidential ion nature and that production or disclosure
of such information would involve disclosure of information relating to
 a) any reserves not shown as such in its published balance sheet
 b) any provisions not shown in respect of provisions for bad debts and other necessary provisions
 2) in case the amount of provision or reserves is questioned then the matter will be referred to
RBI and the certificate or the decision of RBI will be final and can not be challenged.
Power of the Central Government to make Scheme ( Section 35 – AF )

 3) Here the banking company will cover the Reserve Bank, Development Banks , Exim Bank ,
NABARD , NHB , SIDBI , SBI and its Associates etc.
 Power of the Central Government to make Scheme ( Section 35 – AF )
 1)The Central Government in consultation with RBI may form a scheme in relation to any acquired
bank
 2) The said scheme may provide for all or any of the following matters
 a ) The Capital , Constitution and Office thereof of the of the acquiree company formed for this
purpose
 b) The Constitution of the First Board of Management
 c) The continuance of the services of the employees of the acquired bank
 d) The continuation of the right of the person is entitled to a pension , superannuation benefit or
compassionate allowance or benefit
 e) the manner of payment of compensation to the shareholders of the acquired bank , or to the
acquired bank incorporated outside India in full satisfaction of their claims
 f) The provision if any for completing the effectual transfer to the Central Government or
Transferee Bank of any asset or any Liability of the Undertaking of the acquired bank.
Power of the Central Government to make Scheme ( Section 35 –
AF )

 g) Such incidental , consequential and supplemental matters as may be necessary to transfer the
property, assets and liabilities of the acquired bank to the Central Government or Transferee Bank
as the case may be is effective and complete.
 3) The Central Government may amend or vary in consultation with RBI any scheme made under
this section.
 4) Every Scheme made under this Section will be published in Official Gazette.
 5) Every Scheme made under this Section will be placed before both the houses of Parliament,
 6) The Scheme made under this section will have effect of the Act
 7) Every Scheme made under this section shall be binding on the Central Government on
the transferee bank and also on members , creditors, depositors and employees of the
acquired bank and the transferee bank
Section 36 AG provides compensation to be given to
shareholders of the acquired bank
 1)The registered share holder of the Acquired bank shall be given by the Central Government or
the Transferee Bank as the case may be such compensation as is determined with the principles
contained in the Fifth Schedule.
 2)This will not affect the rights inter se between the holder of any share and any other person who
may have any interest in such shares shall be entitled for enforcement of his interest against the
compensation awarded to the holder of such share but not against the Central Government or the
Transferee Bank
 3) The amount of compensation to be given in accordance with the principles contained in the Vth
Schedule shall be determined by the Central Government , or the Transferee Bank as the case
may be in full satisfaction .
 4) If any person is not satisfied with the compensation payable under the scheme can prefer an
appeal to the Tribunal constituted under the Section 36 AH
 5) if before the date notified the Central Government receives requests from 1/4 th of the Share
Holders or with 1/4th Share Holding rights the Central Government shall refer the matter to the
Tribunal for decision.
 6) if the Central Government does not receive any request or if the matter is refereed to the
Tribunal the amount determined by it shall be final and binding on all the parties concerned.
Suspension and winding up of banking companies
 Section 36 B to 45 and 45 A to 45 X of Chapter III of the Banking Regulation Act provides for the
suspension of banking business and winding up of banking companies.
 A) Suspension of Banking Business – Moratorium by
 (1) High Court
 1) A banking Company may apply to the High Court under section 37 of the Act and pray for an
order to stay the commencement or continuance of all actions and proceedings against it for a
period not exceeding six months. A report of the RBI indicating that within six months the bank will
be able to pay its debts if the application is granted.
 2) The High Court has even otherwise the powers to grant Moratorium without the application and
 3) Appoint special Officer and confer him suitable powers to take possession and control of the
assets , books and documents , effect and actionable claims.
 Powers of RBI Section 37( 4)
 Where the RBI is satisfied that the affairs of the Banking Company in respect of which an order
under sub section 1 has been made are detrimental to the interests of the depositors , it may
make an application to the High Court for the winding up of the Company.
Suspension and winding up of banking companies
 By Central Government ( Section 45 )
 (1) Section 45 provides that where it appears to the Reserve bank of India that there is a good
reason so to do , the Reserve Bank of India may apply to the Central Government for an order of
Moratorium in respect of the banking company.
 (2) The Central Government may make an order of Moratorium staying the commencement and
continuance of all actions and proceedings against the company for a total period of moratorium
not exceed six months.
Winding up of the banking companies
 Winding up of Banking companies is related to the provisions of Inspection Under Section 35 of
the Act
 Inspection
 (1) The RBI may carry out the Inspection of the Books and accounts / records of a banking
company at any time by one or more of its Officials on its own or at the instance of Central
Government and will supply a copy of the report to the banking company.
 (1A ) (a) The RBI may also cause a scrutiny of the affairs of any banking company by one or
more of its Officers and its books and accounts.
 (b) A copy of the report will be furnished on request to the banking company or if any action is
contemplated against the banking company on the basis of the scrutiny.
 (2) Every director / officer of the bank company has the duty to produce to any officer making an
Inspection and or a scrutiny all such books of accounts and other documents and statements etc
as may be asked / required .
 (3) Any Officer of RBI making an Inspection or Scrutiny may examine on oath any director or
other officer or employee of the banking company in relation to its business .
Winding up of the banking companies – powers of
the RBI u/s 35 (4 ) , (5) and (6)
 The RBI may report to the Central Government on any Inspection / Scrutiny, and the Central
Government if its is of opinion after considering the report that the affairs of the company are being
conducted to the detrimental to the interest of its depositors , may after giving such opportunity to
the banking company to make a representation in connection with the report as , in the opinion of
the Central Government, seem reasonable by order in writing
 (a) Prohibit the banking company from receiving fresh deposits ;
 (b) Direct the RBI to apply under section 38 for winding up of the Company
 Powers of the RBI to give directions ( Section 35 A )
 Where the RBI is satisfied that (a) In the Public Interest
 (aa) In the interest of the banking policy
 (b) To prevent the affairs of any banking company being conducted in a manner detrimental to the
interest of the depositors or in a manner prejudicial to the interests of the banking company ,or
 © to secure the proper management of any banking company
 Issue such directions as it may deem fit and the banking company shall be bound to comply with
such directions .
Kinds of methods of winding up of banking companies
 A Banking company may be wound up in any one of the following ways
 I. Winding up by the High Court ( Section 38 )
 II. Voluntary Winding up ( Section 44 -1 )
 III. Winding up under the Supervision of the Court
Winding up by High court ( section 38 )
 (1)The High Court may order for winding up of a banking company
 (a) If the banking company is unable to pay its debts
 (b) if an application has been made by RBI for its winding up
 (2) The RBI shall make an application under this section for winding up of a banking company if
it is directed to do so by an order Clause (b) of sub section (4) of Section 35.
 (3 ) the RBI may make an application under this section for the winding up of a banking
company
 (a) If the banking company
 (1) Has failed to comply with the requirements specified in section 11 , or
 (2) has by reasons of the provisions of section 22 ( Want of license ) become disentitled to carry
on banking business in India
 (3) has been prohibited from receiving fresh deposits by an order Clause (a) of Subsection (4)
Of Section 35 or under Clause (b) of sub section 3 – A of section 42 of the RBI Act
 (4) having failed to comply with any requirement of this Act , has continued such failure or having
contravened any provisions of this Act even after notice has been given about such failure or
contravention to the banking company.