33. Funds of the Financial Corporation.—(1) Every Financial Corporation shall have its own fund,
and all receipts of the Financial Corporation shall be carried thereto and all payments by the Corporation
shall be made therefrom.
(2) All moneys belonging to the fund shall be deposited in the Reserve Bank 2
[or the State Bank of
India or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks)
Act, 1959 (38 of 1959)] 3
[or in any of the banks specified in column 2 of the First Schedule to the
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) 1
[or any of the
banks specified in column 2 of the First Schedule to the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980)] 4
[or, in consultation with the Reserve Bank, in a scheduled bank or
a State Co-operative Bank].
5
[34. Investment of funds.—The Financial Corporation may invest its funds in accordance with
applicable guidelines and prudential norms as may be prescribed and in such securities as the Board may
decide from time to time.]
35. Disposal of profits.—(1) The Financial Corporation shall establish a reserve fund.
(2) After making provision for bad and doubtful debts, depreciation of assets and all other matters
which are usually provided for by banking companies, the Financial Corporation may out of its net annual
profits declare a dividend:
1. Ins. by Act 43 of 1985, s. 21 (w.e.f. 21-8-1985).
2. Subs. by Act 6 of 1962, s. 17, for “or with any agency of the Reserve Bank other than a Government treasury”
(w.e.f. 16-4-1962).
3. Ins. by Act 77 of 1972, s. 22 (w.e.f. 30-12-1972).
4. Subs. by Act 56 of 1956, s. 18, for “or in a scheduled bank in consultation with the Reserve Bank” (w.e.f. 1-10-1956).
5. Subs. by Act 39 of 2000, s. 21, for section 34 (w.e.f. 5-9-2000).
26
1* * * * *
2* * * * *
3
[35A. Special reserve fund.—(1) the Financial Corporation may establish a special reserve fund, to
which shall be transferred such portion of the dividends accruing to the State Government Development
Bank and the Small Industries Bank on the shares of the Financial Corporation as may be fixed by
agreement between the State Government, Development Bank and the Small Industries Bank:
Provided that after the notified date this sub-section shall have effect as if for the words “the State
Government, the Development Bank and the Small Industries Bank”, the words “the State Government
and the Small Industries Bank” have been substituted except as regards all dividends accruing in respect
of any completed accounting period prior to the notified date.
(2) No shareholder of the Financial Corporation, other than the State Government or the Small
Industries Bank, shall have any claim to the special reserve fund.
(3) The amount standing to the credit of the special reserve fund may be utilised by the Financial
Corporation for only such purposes as are approved by the State Government and the Small Industries
Bank.]
36. General meetings.—(1) A general meeting (hereinafter referred to as the annual general meeting)
shall be held annually at a place in the State where there is an office of the Financial Corporation within
4
[four months] from the date on which the annual accounts of the Financial Corporation are closed, and a
general meeting may be convened by the Board at any other time.
5
[(2) The shareholders present at the annual general meeting shall be entitled to discuss and adopt—
(a) the balance-sheet and profit and loss account of the Financial Corporation made up to the date
on which its accounts are closed and balanced;
(b) the report of working of the Financial Corporation for the period covered by the accounts;
(c) the auditor’s report on the balance-sheet and accounts; and
(d) proposals for declaration of dividend and capitalisation of reserves.
(3) The shareholders present at an annual general meeting may also discuss any other matter to be
transacted at such meetings in accordance with the provisions of this Act.]
37. Audit.—6
[(1) The accounts of the Financial Corporation shall be audited by auditors duly
qualified to act as the auditors under sub-section (1) of section 226 of the Companies
Act, 1956 (1 of 1956), who shall be appointed by the Financial Corporation in general meeting of
shareholders out of the panel of auditors approved by the Reserve Bank of India for such terms and on
such remuneration as the Reserve Bank may fix.]
(2) Every auditor shall be supplied with a copy of the annual balance-sheet of the Financial
Corporation, and it shall be his duty to examine it, together with the accounts and vouchers relating
thereto, and every auditor shall have a list delivered to him of all books kept by the Financial Corporation
and shall at all reasonable times have access to the books, accounts and other documents of the Financial
Corporation and may in relation to such accounts examine any director or officer of the Financial
Corporation.
(3) The auditors shall make a report to the shareholders upon the annual balance-sheet and accounts,
and in every such report they shall state whether in their opinion the balance-sheet is a full and fair
balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and
1. The proviso omitted by s. 22, ibid. (w.e.f. 5-9-2000).
2. Omitted by Act 39 of 2000, s. 22 (w.e.f. 5-9-2000).
3. Subs. by s. 23, ibid., for section 35A (w.e.f. 5-9-2000).
4. Subs. by Act 43 of 1985, s. 24, for “three months” (w.e.f. 21-8-1985).
5. Subs. by Act 39 of 2000, s. 24, for sub-section (2) (w.e.f. 5-9-2000).
6. Subs. by s. 25, ibid., for sub-section (1) (w.e.f. 5-9-2000).
27
correct view of the state of affairs of the Financial Corporation, and in case they had called for any
explanation or information from the Board, whether it has been given and whether it is satisfactory.
(4) The State Government may, in consultation with the Comptroller and Auditor-General of India, at
any time issue directions to the auditors requiring them to report to it upon the adequacy of measures
taken by the Financial Corporation for the protection of its shareholders and creditors or upon the
sufficiency of their procedure in auditing the affairs of the Financial Corporation and may enlarge or
extend the scope of the audit or direct that a different procedure in audit be adopted, or direct that any
other examination be made by the auditors, if in its opinion public interest so requires.
(5) The Financial Corporation shall send a copy of every report of the auditors to the Comptroller and
Auditor-General of India at least one month before it is placed before the shareholders.
(6) Notwithstanding anything contained in the preceding sub-sections, the Comptroller and
Auditor-General of India may, either of his own motion or on a request received in this behalf from a
State Government, undertake such audit and at such times as he may consider necessary:
1* * * * *
(7) Every audit report under sub-section (6) shall be forwarded to the State Government and the
Government shall cause the same to be laid before the Legislature of the State.
37A. Inspection.—(1) The 2
[Small Industries Bank] at any time may, with the approval of the
Central Government, and on being directed so to do by that Government shall cause an inspection to be
made by one or more of its officers of the working of any Financial Corporation and its books and
accounts; and the 2
[Small Industries Bank] shall send the report of such inspection to the Central
Government and to the State Government and shall supply a copy thereof to the Financial Corporation.
(2) It shall be the duty of every director or every officer of the Financial Corporation to produce to
any officer making an inspection under sub-section (1) all such books, accounts and other documents in
his custody or power and to furnish him with any statement and information relating to the affairs of the
Financial Corporation as the said officer may require of him within such time as the said officer may
specify.
(3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872) or in any other
law for the time being in force, no court, tribunal or other authority shall have power to require
the 2
[Small Industries Bank] or any of its officers to produce before such court, tribunal or other authority
the report of the inspection made by it under sub-section (1) or any copy thereof.
(4) The State Government may, after considering any report sent to it under sub-section (1), give such
instructions to the Board as it considers necessary and it shall be the duty of the Board to comply with
such instructions.]
38. Returns.—3
[(1) The Financial Corporation shall furnish to the State Government, the 4
[Small
Industries Bank] and the Reserve Bank such statements and returns in such form as the State Government,
the 4
[Small Industries Bank] or the Reserve Bank may require from time to time.]
(2) The Financial Corporation shall furnish 5
[to the State Government, the 4
[Small Industries Bank]
and the Reserve Bank] within 6
[four months] of the close of each financial year a statement in the
prescribed form of its assets and liabilities as at the close of that year, together with a profit and loss
account for the year, the auditors’ report and a report of the working of the Financial Corporation during
the year and copies of the said statement, account and reports shall be published in the Official Gazette
and shall also be laid before the Legislature of the State.