After making provisions for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds and all other matters for which provision is, under law, necessary or which are usually provided for by banking companies, a Regional Rural Bank may, out of its net profits, declare a dividend. 22. Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961.—For the purpose of the Income-tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on income, profits or gains, a Regional Rural Bank shall be deemed to be a co-operative society. 23. Interest-tax not payable.—Notwithstanding anything contained in the Interest-tax Act, 1974 (45 of 1974), no Regional Rural Bank shall be liable to pay any tax under that Act. 4 [CHAPTER VA AMALGAMATION OF REGIONAL RURAL BANKS 23A. Amalgamation of Regional Rural Banks.—

(1) Notwithstanding anything contained in this Act, if the Central Government, after consultation with the National Bank, the concerned State Government and the Sponsor Bank, is of the opinion that it is necessary in the public interest or in the interest of the development of the area served by any Regional Rural Bank or in the interest of the Regional Rural Banks themselves, that two or more Regional Rural Banks should be amalgamated, that Government may, by notification in the Official Gazette, provide for the amalgamation of such Regional Rural Banks (hereafter in this Chapter referred to as the transferor Regional Rural Banks) into a single Regional Rural Bank (hereafter in this Chapter referred to as the transferee Regional Rural Bank) with such constitution, property, powers, rights, interests, authorities and privileges; and with such liabilities, duties and obligations, as may be specified in the notification.

(2) Every notification issued under sub-section

(1) shall indicate the date with effect from which the amalgamation shall become effective. 1. S. 20 renumbered as sub-section

(1) thereof by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986). 2. Subs. by Act 1 of 1988, s. 12, for “sixty days from the date of closure of its accounting year” (w.e.f. 28-9-1988). 3. Ins. by Act 81 of 1985, s. 11 (w.e.f. 1-5-1986). 4. Ins. by Act 1 of 1988, s. 13 (w.e.f. 28-9-1988). 10

(3) Every notification issued under sub-section

(1) may also provide for all or any of the following matters, namely:—

(4) Every notification issued under sub-section

(1) shall, as soon as may be after it has been made, be laid before each House of Parliament. 23B. Notification under section 23A to be sufficient notice to concerned parties.—

(1) A notification issued under sub-section

(1) of section 23A, shall constitute sufficient notice of the provisions thereof to all the parties concerned and shall be binding on the transferor Regional Rural Banks and the transferee Regional Rural Bank and to the depositors, creditors, employees and all other persons having dealings with such banks.

(2) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882) or the Registration Act, 1908 (16 of 1908), any notification issued under sub-section

(1) of section 23A shall be sufficient conveyance, in accordance with the provisions of the notification, of the business, properties, assets and liabilities, rights, interests, powers, privileges, benefits and obligations of whatever nature of the transferor Regional Rural Banks to the transferee Regional Rural Bank.

(3) On and from the date on which the amalgamation takes effect under section 23A, any reference to the transferor Regional Rural Banks in any agreement, conveyance, assurance, power of attorney or any other document of whatsoever nature, shall be deemed to be a reference to the transferee Regional Rural Bank and the rights and obligations of the transferor Regional Rural Banks shall be deemed to be the rights and obligations of the transferee Regional Rural Bank to the extent specified in the said amalgamation. 23C. Cessation of business of transferor Regional Rural Banks.—On and from the date on which the amalgamation takes effect under section 23A, the transferor Regional Rural Banks shall cease to carry on business, including that of making of any payment to any depositors or discharge any liability or obligation to the creditors except to the extent as may be necessary for the implementation of the provisions of the said amalgamation. 23D. Liquidation of Regional Rural Banks.—Where a notification is issued for the amalgamation of Regional Rural Banks under sub-section

(1) of section 23A, the Central Government may, by a further notification in the Official Gazette, direct that on such date, as may be specified therein, the transferor Regional Rural Banks, which by reason of amalgamation will cease to function, shall stand dissolved and such direction shall take effect notwithstanding anything to the contrary contained in section 26.] 11 CHAPTER VI MISCELLANEOUS 24. Power of Central Government to give directions.—

(1) A Regional Rural Bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Reserve Bank, give.

(2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final. 1 [24A. Inspection, audit and scrutiny by the Sponsor Bank.—Notwithstanding anything contained in section 19 and without prejudice to the provisions of section 35 of the Banking Regulation Act, 1949 (10 of 1949), the Sponsor Bank shall, from time to time, monitor the progress of the Regional Rural Banks sponsored by it and cause inspection, internal audit and scrutiny to be made by one or more of its officers and suggest corrective measures to be taken by such Regional Rural Bank.] 25. Obligations as to fidelity and secrecy.—

(1) A Regional Rural Bank shall observe, except as otherwise required by law, the practices and usages customary among bankers and, in particular, it shall not 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 Regional Rural Bank to divulge.

(2) Every director, member of a committee or auditor, officer or other employee of a Regional Rural Bank shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the Schedule to this Act; 2 [

(3) Nothing contained in this section shall apply to the credit information disclosed under the Credit Information Companies (Regulation) Act, 2005 (30 of 2005).] 26. Bar to liquidation of Regional Rural Bank.—No provision of law relating to the winding up of companies shall apply to a Regional Rural Bank and a Regional Rural Bank shall not be placed in liquidation save by order of the Central Government and in such manner as it may direct. 27. Defects in appointment or constitution not to invalidate acts or proceedings.—

(1) No act of a Chairman, acting in good faith, shall be invalid merely by reason of any defect in his appointment or in the procedure.

(2) No act or proceeding of any Board of directors or of any committee of a Regional Rural Bank shall be invalid merely on the ground of the existence of any vacancy in, or defect in the constitution of, such Board or committee, as the case may be.

(3) Acts done by a person, acting in good faith, as a director or member of a committee of a Regional Rural Bank shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in any law for the time being in force:

(1) A director or a member of a committee of a Regional Rural Bank shall not be responsible for any loss or expense caused to such bank by insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of a Regional Rural Bank or by the insolvency or wrongful act of any customer or debtor or anything done in, or in relation to, the execution of the duties of his office, unless such loss, expense, insufficiency or deficiency was due to any wilful act or default on the part of such director or member. 1. Ins. by Act 1 of 1988, s. 14 (w.e.f. 28-9-1988). 2. Ins. by Act 30 of 2005, s. 2 and the Schedule (w.e.f. 23-6-2005). 12

(2) The Chairman of a Regional Rural Bank and every officer of the Central Government or State Government or an officer of the Reserve Bank 1[or the National Bank] or the Sponsor Bank and every officer or other employee of a Regional Rural Bank shall be indemnified by such bank against all losses and expenses incurred by him in, or in relation to, the discharge of his duties except such as have been caused by his own wilful act or default. 29. Power to make rules.—

(1) The Central Government may, after consultation with the 2[National Bank] and the Sponsor Bank, by notification in the Official Gazette, make rules for carrying 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:—

(2) of section 9;

(1) of section 14; 3 [(ba) the manner in which the officers and other employees of the Regional Rural Banks shall be appointed;]

(3) Every rule made by the Central Government 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 both Houses agree that the rule should not be made, the rule 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. 30. Power to make regulations.—4[

(1)] The Board of directors of a Regional Rural Bank may, after consultation with the Sponsor Bank and the 5[National Bank], and with the previous sanction of the Central Government, 6[by notification in the Official Gazette,] make regulations, not inconsistent with the provisions of this Act and the rules made thereunder, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act. 7 [

(2) Every regulation shall, as soon as may be after it is made under this Act by the Board of directors, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid 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.] 1. Ins. by Act 1 of 1988, s. 15 (w.e.f. 28-9-1988). 2. Subs. by s. 16, ibid., for “Reserve Bank” (w.e.f. 28-9-1988). 3. Ins. by s. 16, ibid. (w.e.f. 28-9-1988). 4. Section 30 renumbered as sub-section

(1) thereof by Act 1 of 1984, s. 70 (w.e.f. 15-2-1984). 5. Subs. by Act 1 of 1988, s. 17, for “Reserve Bank” (w.e.f. 28-9-1988). 6. Ins. by Act 66 of 1988, s. 34 (w.e.f. 30-12-1988). 7. Ins. by Act 1 of 1984, s. 70 (w.e.f. 15-2-1984). 13 31. Removal of difficulties.—If any difficulty arises in giving effect to the provisions of this Act, the Central Government may make such order, not inconsistent with the provisions of this Act, as may appear to it to be necessary for the purpose of removing the difficulty:

(2)] I,...................., do hereby declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as a director, member of a committee, officer, employee or auditor (as the case may be) of the Regional Rural Bank and which properly relate to any office or position in the said Bank held by me. I further declare that I will not communicate or allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the Regional Rural Bank or to the affairs of any person having any dealings with the Regional Rural Bank, nor will I allow any such person to inspect or have access to, any books or documents belonging to, or in the possession of the Regional Rural Bank and relating to the business of the Regional Rural Bank, or to the business of any person having any dealings with the Regional Rural Bank. Signature. Signed before me. Dated 15