51. Obligation as to fidelity and secrecy.—(1) The National Bank shall not, except as otherwise
required by this Act or any other law, divulge any information relating to, or to the affairs of, its
constituents except in circumstances in which it is, in accordance with the law or practice and usage
customary among bankers, necessary or appropriate for the National Bank to divulge such information.
(2) Every director, member of a committee, auditor, officer or other employee of the National Bank or
of the Reserve Bank, whose services are utilised by the National Bank under the provisions of this Act,
shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the
First Schedule to this Act.
1
[(3) Nothing contained in this section shall apply to the credit information disclosed under the Credit
Information Companies (Regulation) Act, 2005 (30 of 2005).]
52. Defects in appointment not to invalidate acts, etc.—(1) No act or proceeding of the Board or of
any committee of the National Bank shall be questioned on the ground merely of the existence of any
vacancy in, or defect in the constitution of, the Board or the committee, as the case may be.
(2) No act done by any person acting in good faith as a director of the Board or as a member of a
committee of the National Bank shall become invalid merely on the ground that he was disqualified to be
a director or that there was any other defect in his appointment.
2
[52A. Agreement with National Bank on appointment of directors to prevail.—(1) Where any
agreement entered into by the National Bank with a company or a body corporate while granting loans
and advances, provides for the appointment by the National Bank of one or more directors of such
company or body corporate, such provisions and any appointment of directors made in pursuance thereof
shall be valid and effective, notwithstanding anything to the contrary contained in 3
[the Companies Act,
2013 (18 of 2013)] or in any other law for the time being in force, or in the memorandum, articles of
association or any other instrument relating to the company or body corporate, and any provision
regarding share qualification, age-limit, number of directorships, removal from office of directors and
such like conditions contained in any such law or instrument aforesaid, shall not apply to any director
appointed by the National Bank in pursuance of the agreement as aforesaid.
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the National Bank and may be removed or substituted by
any person by order in writing of the National Bank;
(b) 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 discharge of his duties as a director or anything in relation
thereto;
(c) not be liable to retirement by rotation and shall not be taken into account for computing the
number of directors liable to such retirement.]
53. Protection of action taken under the Act.—No suit or other legal proceeding shall lie against
the National Bank or any director or any officer or other employee of the National Bank or any other
person authorised by the National Bank to discharge any functions under this Act for any loss or damage
1. Ins. by Act 30 of 2005, s. 34 and the Schedule (w.e.f. 14-12-2006).
2. Ins. by Act 55 of 2000, s. 29 (w.e.f. 1-2-2001).
3. Subs. by Act 7 of 2018, s. 13, for “the Companies Act, 1956 (1 of 1956)” (w.e.f. 15-3-2018).
26
caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance
of this Act or of any other law or provision having the force of law.
54. Indemnity of directors.—(1) Every director shall be indemnified by the National Bank against
all losses and expenses incurred by him in, or in relation to, the discharge of his duties, except such as are
caused by his own wilful act or default.
(2) A director shall not be responsible for any other director or for any officer or other employee of
the National Bank or for any loss or expenses resulting to the National Bank from the insufficiency or
deficiency of the value of, or title to, any property or security acquired or taken on behalf of the National
Bank or the insolvency or wrongful act of any debtor or any person under obligation to the National Bank
or anything done in good faith in the execution of the duties of his office in relation thereto.
55. [Exemption from income-tax, etc.]—Omitted by the Finance Act, 2001 (14 of 2001), s. 140 (w.e.f.
1-4-2002).
56. Penalties.—(1) Whoever in any return, balance-sheet, or other document or in any information
required or furnished by or under or for the purposes of any provision of this Act, wilfully makes a
statement which is false in any material particular, knowing it to be false, or wilfully omits to make a
material statement, shall be punishable with imprisonment for a term which may extend to three years and
shall also be liable to fine.
1
[(2) If any person fails to produce any book, account or other document, or to furnish any statement or
information which, under the provisions of this Act, it is his duty to produce or furnish, he shall be liable to
penalty which may extend to one lakh fifty thousand rupees in respect of each failure and in the case of a
continuing failure, an additional penalty which may extend to seven thousand five hundred rupees for every
day during which the failure continues after the first such failure.
(3) For the purpose of adjudging penalty under sub-section (2), the National Bank shall serve notice on
the person requiring it to show cause why the amount specified in the notice should not be imposed as a
penalty and a reasonable opportunity of being heard shall also be given to such person.
(4) Any penalty imposed by the National Bank under this section shall be payable within a period of
fourteen days from the date on which notice issued by the National Bank demanding payment of the sum is
served on the person and, in the event of failure of the person to pay the sum within such period, may be
levied on a direction made by the principal civil court having jurisdiction in the area where the person is
situated:
Provided that no such direction shall be made except on an application made to the court by the
National Bank or by any officer authorised by the National Bank in this behalf.
(5) The court which makes a direction under sub-section (4) shall issue a certificate specifying the sum
payable by the person and every such certificate shall be enforceable in the same manner as if it were a
decree made by the court in a civil suit.
(6) No complaint shall be filed against any person in any court relating to any contravention or default in
respect of which any penalty has been imposed by the National Bank under sub-section (2).
(7) Where any complaint has been filed against any person in any court in respect of the contravention
or default of the nature referred to in sub-section (1), then, no proceedings for the imposition of any penalty
on the person shall be initiated under sub-section (2).]
57. Offences by companies.—(1) Where an offence has been committed by a company, every person
who, at the time the offence was committed, was in charge of, and was responsible to the company for the
conduct of the business of the company, as well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any
punishment provided in this Act, if he proves that the offence was committed without his knowledge or
that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been
committed by a company and it is proved that the offence has been committed with the consent or
1. Subs. by Act 18 of 2023, s. 2 and the Schedule, for sub-section (2) (w.e.f. 22-01-2024).
27
connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other
officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty
of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purpose of this section—
(a) “company” means any body corporate and includes a firm or other association of individuals;
and
(b) “director”, in relation to a firm, means a partner in the firm.
58. Bankers’ Books Evidence Act, 1891, to apply in relation to National Bank.—The Bankers’
Books Evidence Act, 1891 (18 of 1891), shall apply in relation to the National Bank as if it were a bank as
defined in section 2 of that Act.
59. Liquidation of National Bank.—No provision of law relating to the winding up of companies
shall apply to the National Bank and the National Bank shall not be placed in liquidation save by order of
the Central Government and in such manner as it may direct.
60. Power of Board to make regulations.—(1) The Board may, with the previous approval of the
Central Government and in consultation with the Reserve Bank, by notification, make regulations not
inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the
purpose of giving effect to the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such regulations may
provide for all or any of the following matters, namely:—
(a) the fees or allowances that may be paid to the directors or members of the AdvisoryCouncil;
(b) the times and places of the meetings of the Board or the Executive Committee or the Advisory
Council and the procedure to be followed at such meetings including the quorum necessary for the
transaction of business;
(c) the number of directors constituting the Executive Committee and the functions that such
Committee shall discharge;
(d) the manner and terms of issue and redemption of bonds and debentures by the National Bank;
1
[(e) the manner of election of directors under clause (f) of sub-section (1) of section 6;]
2* * * * *
(g) The form and manner in which the balance-sheets and the accounts of the National Bank shall
be prepared or maintained;
2* * * * *
(i) the duties and conduct, salaries, allowances and conditions of service of officers and other
employees;
(j) the establishment and maintenance of provident or other benefit funds for employees of the
National Bank; and
(k) such other matters for which the Board may consider it expedient or necessary to provide for
by way of regulations.
(3) Any regulation which may be made by the Board under this Act may be made by the Reserve
Bank, in consultation with the Central Government, before the expiry of three months from the date of
establishment of the National Bank, and any regulation so made may be altered and rescinded by the
Board in the exercise of its powers under this Act.
1. Subs. by Act 55 of 2000, s. 30, for clause (e) (w.e.f. 1-2-2001).
2. Clauses (f) and (h) omitted by s. 30, ibid. (w.e.f. 1-2-2001).
28
(4) The power to make regulations conferred by this section shall include the power to give
retrospective effect to the regulations or any of them from a date not earlier than the date of
commencement of this Act, but no retrospective effect shall be given to any regulation so as to
prejudicially affect the interest of any person to whom such regulation may be applicable.
(5) The Central Government shall cause every regulation made under this Act to be laid, as soon as
may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or the successive sessions aforesaid, both Houses
agree in making any modification in the regulation or both Houses agree that the regulation should not be
made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case
may be; so, however, that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that regulation.
[61. Amendment of certain enactments].—Rep. by the Repealing and Amending Act, 1988
(19 of 1988), s. 2 and the First Schedule (w.e.f. 31-3-1988).
62. Power to remove difficulty.—If any difficulty arises in giving effect to the provisions of this
Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the
difficulty:
Provided that no such order shall be made after the expiry of a period of three years from the
commencement of this Act.