28. Receivables to be held in trust.—(1) Any sums received by a financial institution for refinancing
from the Institution shall, to the extent of the accommodation granted by the Institution and remaining
outstanding, be deemed to have been received by the financial institution in trust for the Institution and
shall accordingly be paid by such financial institution to the Institution.
(2) Where any accommodation has been granted by the Institution to a financial institution, all securities
held, or which may be held, by such financial institution on account of any transaction in respect of which
such accommodation has been granted, shall be held by such financial institution in trust for the Institution.
29. Setting up of other development financial institution.—(1) Any person who intends to set up a
development financial institution, in addition to the Institution established under this Act, shall make an
application to the Reserve Bank for licence.
(2) The Reserve Bank may in consultation with the Central Government, grant licence subject to such
criteria, terms and conditions as may be specified by the Reserve Bank by regulations.
(3) Any institution to which licence is granted under sub-section (2) shall be subject to the provisions
of the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949), as
the case may be.
(4) The regulations made by the Reserve Bank shall apply to the Institution established under this Act
to such extent as are not inconsistent with the provisions of this Act.
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30. Officers and employees.—(1) The Institution may appoint such number of officers and other
employees as it considers necessary or desirable for the efficient performance of its functions and determine
the terms and conditions of their appointment of service.
(2) The duties and conduct, terms and other conditions of service including their salaries and allowances
and the establishment and maintenance of provident fund or any other fund for the benefit of the officers
and other employees of the Institution appointed under sub-section (1) shall be such as may be specified by
regulations:
Provided that the salaries and allowances payable to the officers and employees shall be determined by
the Nomination and Remuneration Committee guided by the market standards.
(3) The Institution may depute any officer or any member of its staff for such period and on such terms
and conditions as it may determine, to any other institution including an infrastructure finance or
development institution.
(4) The Institution may receive or take on deputation any officer or other employee from any institution
including an infrastructure finance or development institution, for such period and on such terms and
conditions as may be specified by regulations.
(5) Nothing contained in this section shall empower the Institution to depute any officer or member of
its staff to any institution on any salary, emoluments or other terms and conditions which is or are less
favourable to him than that or those to which he is entitled to immediately before such deputation.
31. Power of Central Government to make rules.—(1) The Central Government may, by
notification, make rules to carry out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide
for all or any of the following matters, namely:—
(a) institutions that may hold shares of the Institution under sub-section (3) of section 5;
(b) the manner of election of directors by shareholders under clause (e) of sub-section (1) of section
6;
(c) the terms and conditions of induction of independent directors to the Board under sub-section
(5) of section 6;
(d) the fees and reimbursements in respect of independent directors under sub-section (3), and the
term of office and other terms and conditions of service of, the Chairperson, Managing Director, Deputy
Managing Directors and other directors of Board under sub-section (5), of section 9;
(e) manner of disclosure of interest by members of Board and of committees under sub-section (1)
of section 16;
(f) the threshold for determination of beneficial interest by directors of the Institution or any relative
of such director under the Explanation to sub-section (3) of section 18;
(g) conditions subject to which the Institution may enter into a contract or an arrangement under
sub-section (1) of section 19;
(h) the parameters on the basis of which the external agency shall review the performance of the
Institution under sub-section (2) of section 20;
(i) the rate of fees for Government under section 22;
(j) the form and manner in which the balance-sheet and accounts of the Institution shall be prepared
under sub-section (1) of section 25;
(k) any other matter which is to be, or may be, prescribed.
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32. 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 the provisions of 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 salaries and allowances payable to the Managing Director and Deputy Managing Directors
under sub-section (4) of section 9;
(b) the times, places and rules of procedure in regard to the transaction of business of the Board
under sub-section (1) of section 13;
(c) the times, places and rules of procedure in regard to the transaction of business of the committees
and their functions under sub-section (5) of section 15;
(d) amount for transactions under the proviso to sub-section (1) of section 19;
(e) the terms and other conditions of service of the officers and employees of the Institution under
sub-section (2) and the terms and conditions of deputation under sub-section (4), of section 30;
(f) the mechanism under sub-section (1) of section 39 for the purpose of determining the penalties
specified under sub-section (5) of section 16 and sub-section (5) of section 19;
(g) any other matter which is to be, or may be, specified by regulations.
33. Rules and regulations to be laid before Parliament.—Every rule and every regulation made
under this Act shall 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 rule or regulation or
both Houses agree that the rule or regulation should not be made, the rule or 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
rule or regulation.
34. Protection of action taken in good faith.—No suit, prosecution or other legal proceedings shall
lie against the Institution or its Chairperson or other directors, employees or officers for anything which is
done in good faith or intended to be done under this Act, or the rules or the regulations made thereunder,
including in respect of assets created or transferred to the Institution.
35. Sanction for enquiry, inquiry investigation and prosecution.—(1) No investigation agency,
including but not limited to Police, Central Bureau of Investigation, Serious Fraud Investigation Office,
Directorate of Enforcement and such other agencies, shall conduct any enquiry or inquiry or investigation
into any offence alleged to have been committed under any law, in relation to any recommendation made
or decision taken by the Chairperson or other directors, employees or officers of the Institution in discharge
of his official functions or duties, without the previous approval of—
(a) the Central Government, where the offence is alleged have to been committed by the
Chairperson or other directors; or
(b) the Managing Director, where the offence is alleged to have been committed by an employee
or officer of the Institution:
Provided that no such approval shall be necessary for cases involving arrest of a person on the spot on
the charge of accepting or attempting to accept any undue advantage for himself or for any other person:
Provided further that the Central Government or the Managing Director, as the case may be, shall
convey its decision within a period of three months, and such period may, for reasons to be recorded in
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writing by the Central Government or the Managing Director, as the case may be, be extended by a further
period of one month:
Provided also that failure of the Central Government or the Managing Director to convey its decision
under this sub-section within the time specified under the second proviso shall not be considered as deemed
approval for initiation of any enquiry or inquiry or investigation.
Explanation.—For the purposes of this sub-section, the expression “undue advantage” shall have the
meaning as assigned to it under the Prevention of Corruption Act, 1988 (49 of 1988).
(2) No court shall take cognizance of an offence punishable under any law alleged to have been
committed by the Chairperson or other directors, employees or officers of the Institution for which a
sanction to conduct any enquiry or inquiry or investigation was granted under sub-section (1), except with
the previous sanction of—
(a) the Central Government, where the offence is alleged to be committed by the Chairperson or
other directors; or
(b) of the Managing Director, where the offence is alleged to be committed by an employee or
officer of the Institution:
Provided that the Central Government or the Managing Director shall, after the receipt of the proposal
requiring sanction for prosecution under this sub-section, endeavour to convey the decision on such
proposal within a period of three months from the date of its receipt:
Provided further that in case where, for the purpose of grant of sanction for prosecution, legal
consultation is required, such period may, for the reasons to be recorded in writing, be extended by a further
period of one month:
Provided also that failure of the Central Government or the Managing Director to convey its decision
under this sub-section within the time specified shall not be considered as deemed approval for the initiation
of prosecution.
36. Appointment of directors by Institution to prevail.—(1) Where any arrangement entered into by
the Institution with a borrowing entity while granting loans and advances provides for the appointment or
nomination by the Institution of one or more directors of such entity, such provision and any appointment
of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary
contained in the Companies Act, 2013 (18 of 2013), or in any other law for the time being in force or in the
memorandum and articles of association or any other instrument relating to the entity, 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 Institution in pursuance of the arrangement as aforesaid.
(2) Any director appointed as aforesaid shall—
(a) be deemed to be an independent director under the Companies Act, 2013 (18 of 2013) for the
purpose of immunities available to independent directors;
(b) hold office during the pleasure of the Institution and may be removed or substituted by any
person by order in writing of the Institution;
(c) 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;
(d) not be liable to retirement by rotation and shall not be taken into account for computing the
number of directors liable to such retirement.
37. Validity of loan or advance not to be questioned.—(1) Notwithstanding anything to the contrary
contained in any other law for the time being in force, the validity of any loan or advance granted by the
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Institution in pursuance of the provisions of this Act shall not be called in question merely on the ground
of non-compliance with the requirements of such other law as aforesaid or of any resolution, contract,
memorandum, articles of association or other instrument.
(2) Nothing in this section shall enable any company to obtain any loan or advance where the instrument
relating to the constitution of such company does not empower such company to do so.
38. Obligations as to fidelity and secrecy.—(1) The Institution shall not, except as otherwise required
by this Act or by 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 Institution to divulge such information.
(2) Every director, member of a committee, auditor, officer or other employee of the Institution or of
the Reserve Bank, whose services are utilised by the Institution 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.
39. Adjudication.—(1) The Board shall make regulations for setting up a mechanism for the purpose
of determining the penalties specified under sub-section (5) of section 16 and sub-section (5) of section 19.
(2) The regulations shall provide for a reasonable opportunity of being heard to the director or an
employee against whom a complaint is made for violating the provisions of section 16 or section 19, as the
case may be, and a right to prefer an appeal against any order imposing the penalty.
40. Indemnity of directors.—(1) Every director shall be indemnified by the Institution 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
Institution or for any loss or expenses resulting to the Institution from the insufficiency or deficiency of the
value of, or title to, any property or security acquired or taken on behalf of the Institution or the insolvency
or wrongful act of any debtor or any person under obligation to the Institution or anything done in good
faith in the execution of the duties of his office or in relation thereto.
41. Bankers’ Books of Evidence Act, 1891 to apply in relation to the Institution.—The Bankers'
Books Evidence Act, 1891 (18 of 1891), shall apply in relation to the Institution as if it were a bank as
defined in section 2 of that Act.
42. Sections 34A and 36AD of the Banking Regulation Act, 1949 (10 of 1949) to apply to
Institution.—The provisions of sections 34A and 36AD of the Banking Regulation Act, 1949 (10 of 1949)
shall apply to the Institution.
43. Liquidation of Institution.—No provision of law relating to the winding up of companies shall
apply to the Institution and the Institution shall not be placed in liquidation save by order of the Central
Government and in such manner as it may direct.
44. Power of Central Government to issue directions.—Without prejudice to the foregoing
provisions of this Act, the Institution shall, in the performance of its functions under this Act, be bound by
such directions on questions of policy as the Central Government may give in writing to it from time to
time.
45. Overriding effect of this Act.—The provisions of this Act shall have effect, notwithstanding
anything inconsistent therewith contained in any other law for the time being in force or any instrument
having effect by virtue of any such law.
46. Power to remove difficulties.— (1) If any difficulty arises in giving effect to the provisions of this
Act, the Central Government may, by order, published in the Official Gazette, make such provisions or give
such directions not inconsistent with the provisions of this Act, as appears to it to be necessary or expedient
for removing the difficulty:
Provided that no such order shall be made after the expiry of three years from the date of
commencement of this Act.
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(2) Every order made under this section shall be laid, as soon as may be after it is made, before each
House of Parliament.
47. Amendment of Act 2 of 1934.—The Reserve Bank of India Act, 1934 shall be amended in the
manner specified in the Second Schedule.
48. Amendment of Act 10 of 1949.—The Banking Regulation Act, 1949 shall be amended in the
manner specified in the Third Schedule.