36AA. Power of Reserve Bank to remove managerial and other persons from office.—(1)
Where the Reserve Bank is satisfied that in the public interest or for preventing the affairs of a banking
company being conducted in a manner detrimental to the interests of the depositors or for securing the
proper management of any banking company it is necessary so to do, the Reserve Bank may, for
reasons to be recorded in writing, by order, remove from office, with effect from such date as may be
specified in the order, 4
[any chairman, director,] chief executive officer (by whatever name called) or
other officer or employee of the banking company.
(2) No order under sub-section (1) shall be made 5
[unless the chairman, director] or chief executive
officer or other officer or employee concerned has been given a reasonable opportunity of making a
representation to the Reserve Bank against the proposed order:
Provided that if, in the opinion of the Reserve Bank, any delay would be detrimental to the interests
of the banking company or its depositors, the Reserve Bank may, at the time of giving the
opportunity aforesaid or at any time thereafter, by order direct that, pending the consideration of the
1. Certain words omitted by Act 58 of 1968, s. 12 (w.e.f. 1-2-1969).
2. Ins. by Act 33 of 1959, s. 23 (w.e.f. 1-10-1959).
3. Ins. by Act 55 of 1963, s. 18 (w.e.f. 1-2-1964).
4. Subs. by Act 58 of 1968, s. 13, for “any director” (w.e.f. 1-2- 1969).
5. Subs. by s. 13, ibid., for “unless the director” (w.e.f. 1-2- 1969).
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representation aforesaid, if any, 1
[the chairman or, as the case may be, director or chief executive
officer] or other officer or employee, shall not, with effect from the date of such order—
(a) 2
[act as such chairman or director] or chief executive officer or other officer or employee of
the banking company;
(b) in any way, whether directly or indirectly, be concerned with, or take part in the
management of, the banking company.
(3) (a) Any person against whom an order of removal has been made under sub-section (1) may,
within thirty days from the date of communication to him of the order, prefer an appeal to the Central
Government.
(b) The decision of the Central Government on such appeal, and subject thereto, the order made by
the Reserve Bank under sub-section (1), shall be final and shall not be called into question in any court.
(4) Where any order is made in respect of 3
[a chairman, director] or chief executive officer or other
officer or employee of a banking company under sub-section (1), he shall cease to be 4
[a chairman or,
as the case may be, a director,] chief executive officer or other officer or employee of the banking
company and shall not, in any way, whether directly or indirectly, be concerned with, or take part in the
management of, any banking company for such period not exceeding five years as may be specified in
the order.
(5) If any person in respect of whom an order is made by the Reserve Bank under sub-section (1) or
under the proviso to sub-section (2) contravenes the provisions of this section, he shall be punishable
with fine which may extend to two hundred and fifty rupees for each day during which such
contravention continues.
(6) Where an order under sub-section (1) has been made, the Reserve Bank may, by order in
writing, appoint a suitable person in place of 5
[the chairman or director] or chief executive officer or
other officer or employee who has been removed from his office under that sub-section, with effect
from such date as may be specified in the order.
(7) Any person appointed as 6
[chairman, director or chief executive officer] or other officer or
employee under this section, shall—
(a) hold office during the pleasure of the Reserve Bank and subject thereto for a period not
exceeding three years or such further periods not exceeding three years at a time as the Reserve
Bank may specify;
(b) not incur any obligation or liability by reason only of his being a [chairman, director or
chief executive officer] or other officer or employee or for anything done or omitted to be done in
good faith in the execution of the duties of his office or in relation thereto.
(8) Notwithstanding anything contained in any law or in any contract, memorandum or articles of
association, on the removal of a person from office under this section, that person shall not be entitled
to claim any compensation for the loss or termination of office.
36AB. Power of Reserve Bank to appoint additional directors.—(1) If the Reserve Bank is of
7
[opinion that in the interest of banking policy or in the public interest or] in the interests of the
banking company or its depositors it is necessary so to do, it may, from time to time by order in writing,
1. Subs. by Act 58 of 1968, s. 13, for “the director or, as the case may be, chief executive officer” (w.e.f. 1-2-1969).
2. Subs. by s. 13, ibid., for “act as such director” (w.e.f. 1-2- 1969).
3. Subs. by s. 13, ibid., for “a director” (w.e.f. 1-2-1969).
4. Subs. by s. 13, ibid., for “a director or as the case may be,” (w.e.f. 1-2-1969).
5. Subs. by s. 13, ibid., for “the director” (w.e.f. 1-2-1969).
6. Subs. by s. 13, ibid., for “director or chief executive officer” (w.e.f. 1-2-1969).
7. Subs. by s. 14, ibid., for “opinion that” (w.e.f. 1-2-1969).
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appoint, with effect from such date as may be specified in the order, one or more persons to hold office
as additional directors of the banking company.
1* * * * *
(2) Any person appointed as additional director in pursuance of this section—
(a) shall hold office during the pleasure of the Reserve Bank and subject thereto for a period
not exceeding three years or such further periods not exceeding three years at a time as the Reserve
Bank may specify;
(b) shall not incur any obligation or liability by reason only of his being a director or for
anything done or omitted to be done in good faith in the execution of the duties of his office or in
relation thereto; and
(c) shall not be required to hold qualification shares in the banking company.
(3) For the purpose of reckoning any proportion of the total number of directors of the banking
company, any additional director appointed under this section shall not be taken into account.
36AC. Part IIA to override other laws.—Any appointment or removal of a director, chief
executive officer or other officer or employee in pursuance of section 36AA or section 36AB shall have
effect notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), or
any other law for the time being in force or in any contract or any other instrument.]