The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

What the Act governs

The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, Act No. 5 of 1970, is a Parliamentary law for acquiring and transferring the undertakings of certain large banking companies. It establishes the corresponding new banks listed in the First Schedule and governs their capital, management, accounts and related matters.

The law defines an existing bank as a banking company listed in the First Schedule whose deposits, according to the specified June 1969 return to the Reserve Bank, were at least fifty crore rupees. A foreign company is excluded from the definition of banking company.

Commencement and amendments

The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 provides that:

• Most provisions are deemed to have commenced on 19 July 1969.
• The repeal and savings provision commenced on the appointed day, 14 February 1970.
• The supplied consolidation is stated as on 1 October 2025.
• The listed amendments run from the Banking Laws (Amendment) Act, 1983 to the Banking Laws (Amendment) Act, 2025.

Key provisions

The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 includes the following measures:

• Corresponding new banks named in the First Schedule were constituted when the law commenced.
• The undertakings of the existing banks vest in their corresponding new banks.
• The authorised capital of each corresponding new bank is three thousand crore rupees, divided into three hundred crore fully paid shares of ten rupees each, subject to the permitted changes and approvals.
• Capital may be increased through specified transfers, Central Government contributions, public issues, rights issues, bonus shares, preferential allotments or private placements.
• The Central Government must always hold at least fifty-one per cent of the paid-up equity capital of each corresponding new bank.
• Shares not held by the Central Government are freely transferable, subject to the stated restriction on investment connected with persons or companies outside India.
• A shareholder other than the Central Government cannot exercise voting rights above ten per cent of total voting rights.
• The law also covers compensation, Central Government directions, management schemes, annual general meetings, unpaid or unclaimed money, secrecy, regulations and possible supersession of a board.

Relevance to Tamil Nadu property readers

The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 concerns specified banks rather than Tamil Nadu land classification, planning permission, registration or ownership records. It is mainly relevant to banking institutions, their shareholders and professionals dealing with their corporate structure or governance.