Section 9. Item (a) omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004)

9. "ShahjahanpurKshetriyaGramin Bank, Shahjahanpur, Uttar Pradesh" excluded by RBI Notification No. RPCD.CO. RRB. No. 7431/03.05.100/2008-09, dated 27th January, 2009. 9. Item (a) omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). (c) any financial institution specified in or under section 6A of the Industrial Development Bank of India Act, 1964 (18 of 1964), or (d) any other institution that may be specified by the Bank in this behalf; (v) amounts received in the ordinary course of business, by way of — - (a) security deposit, - (b) dealership deposit, - (c) earnest money, or (d) advance against orders for goods, properties or services; (vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in any State; and (vii) any amount received by way of subscriptions in respect of a chit. Explanation I . — "Chit" has the meaning assigned to it in clause (b) of section 2 of the Chit Funds Act, 1982 (40 of 1982). Explanation II . — Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;] 1 [ Explanation III . — The amounts accepted by a co-operative society from the members or shareholders, by whatever name called, but excluding the amounts received as share capital, shall be deemed to be deposits for the purposes of this clause, if such members or shareholders are nominal or associate members, by whatever name called, who do not have full voting rights in the meetings of such co-operative society.] 2 [(c) "financial institution" means any non-banking institution which carries on as its business or — part of its business any of the following activities, namely: (i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own; (ii) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature; (iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire-Purchase Act, 1972 (26 of 1972); (iv) the carrying on of any class of insurance business; (v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto; 9. "Ambala-KurukshetraGramin Bank LTD., Ambala (Haryana)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. (vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lump sum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and awarding prizes or gifts, whether in cash or king, or disbursing monies in any other way, to persons from whom monies are collected or to any other person, 3 — [but does not include any institution, which carries on as its principal business, - (a) agricultural operations; or (aa) industrial activity; or] 1. Ins. by Act 21 of 2019, s. 42 the second schedule (w.e.f. 21-2-2019). 2. Subs. by Act 51 of 1974, s. 17, for clause (c) (w.e.f. 13-12-1974). 3. Subs. by Act 23 of 1997, s. 2, for certain words (w.e.f. 9-1-1997). (b) the purchase, or sale of any goods (other than securities) or the providing of any services; or (c) the purchase, construction or sale of immovable property, so, however, that no portion of the income of the institution is derived from the financing of purchases, constructions or sales of immovable property by other persons;] 1[ Explanation . — For the purposes of this clause, "industrial activity" means any activity specified in sub-clauses (i) to (xviii) of clause (c) of section 2 of the Industrial Development Bank of India Act, 1964 (18 of 1964);] (d) "firm" means a firm as defined in the Indian Partnership Act, 1932 (9 of 1932)[2] *; 9. "BalasoreGramya Bank, Balasore (Orissa)" excluded by RBI Notification No. RPCD.CO. RRB. BC. No. 95/03.05.100/201314, dated 9th April, 2014. (e) "non-banking institution" means a company, corporation[3] [or co-operative society]; 1 — [(f) "non-banking financial company" means - (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.] 4 [ 45-IA. Requirement of registration and net owned fund.— (1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no non-banking financial — company shall commence or carry on the business of a non-banking financial institution without - (a) obtaining a certificate of registration issued under this Chapter; and 5[(b) having the net owned fund of twenty-five lakh rupees or such other amount, not exceeding hundred crore rupees, as the Bank may, by notification in the Official Gazette, specify: Provided that the Bank may notify different amounts of net owned fund for different categories of non-banking financial companies.] (2) Every non-banking financial company shall make an application for registration to the Bank in such form as the Bank may specify: 9. "Baroda Rajasthan Gramin Bank, Ajmer, Rajasthan" excluded by RBI Notification No. RPCD.CO. RRB. No. 56/03.05.100/2013-14, dated 14th November, 2013. Provided that a non-banking financial company in existence on the commencement of the Reserve Bank of India (Amendment) Act, 1997 (23 of 1997) shall make an application for registration to the Bank before the expiry of six months from such commencement and notwithstanding anything contained in sub-section (1) may continue to carry on the business of a non-banking financial institution until a certificate of registration is issued to it or rejection of application for registration is communicated to it. (3) Notwithstanding anything contained in sub-section (1), a non-banking financial company in existence on the commencement of the Reserve Bank of India (Amendment) Act, 1997 (23 of 1997) and having a net owned fund of less than twenty-five lakh rupees may, for the purpose of enabling such company to fulfil the requirement of the net owned fund, continue to carry on the business of a non- — banking financial institution (i) for a period of there years from such commencement; or (ii) for such further period as the Bank may, after recording the reasons in writing for so doing, extend, subject to the condition that such company shall, within three months of fulfilling the requirement of the net owned fund, inform the Bank about such fulfillment: 1. Ins. by Act 23 of 1997, s. 2 (w.e.f. 9-1-1997). 2. The words ", of which the capital subscribed by its partners exceeds one lakh of rupees" omitted by Act 1 of 1984, s. 9 (w.e.f. 15-2-1984). 9. Included by RBI Notification No. RPCD.CO. RRB. No. 55/03.05.100/2013-14, dated 14th November, 2013. 3. Subs. by s. 9, ibid., for ", co-operative society or firm" (w.e.f. 15-2-1984). 4. Ins. by Act 23 of 1997, s. 3 (w.e.f. 9-1-1997). 5. Subs. by Act 23 of 2019, s. 137, for clause (b) (w.e.f. 9-8-2019) Provided that the period allowed to continue business under this sub-section shall in no case exceed six years in the aggregate. (4) The Bank, for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of the non-banking financial company or otherwise that the — following conditions are fulfilled: (a) that the non-banking financial company is or shall be in a position to pay its present or future depositors in full as and when their claims accrue; (b) that the affairs of the non-banking financial company are not being or are not likely to be conducted in a manner detrimental to the interest of its present or future depositors; (c) that the general character of the management or the proposed management of the non-banking financial company shall not be prejudicial to the public interest or the interests of its depositors; (d) that the non-banking financial company has adequate capital structure and earning prospects; (e) that the public interest shall be served by the grant of certificate of registration to the nonbanking financial company to commence or to carry on the business of India; 9. "The Co-operative Bank of Ahmedabad Ltd., Ahmedabad", excluded by Notification No. UBD/CO/BCD/01/12.22.040 /20052006, dated 20th June, 2006. 10. Subs. by RBI Notification No. 16813/23.13.025/2009-10, dated 31st March, 2010, for "Calyon Bank". Earlier the words "Calyon Bank" were substituted by Notification No. Ret. BC. No. 2/ 12.06.063/2004-05, dated 6th July, 2004, for the words "Credit Agricale Indosuez". (f) that the grant of certificate of registration shall not be prejudicial to the operation and consolidation of the financial sector consistent with monetary stability, and economic growth considering such other relevant factors which the Bank may, by notification in the Official Gazette, specify; and (g) any other condition, fulfilment of which in the opinion of the Bank, shall be necessary to ensure that the commencement of or carrying on of the business in India by a non-banking financial company shall not be prejudicial to the public interest or in the interests of the depositors. (5) The Bank may, after being satisfied that the conditions specified in subsection (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose. (6) The Bank cancel a certificate of registration granted to a non-banking financial company under — this section if such company (i) ceases to carry on the business of a non-banking financial institution in India; or (ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or (iii) at any time fails to fulfil any of the conditions referred to in clauses (d) to (g) of sub-section (4); or (iv) fails — (a) to comply with any direction issued by the Bank under the provisions of this Chapter; or 9. "EtahGramin Bank, Etah (Uttar Pradesh)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. (b) to maintain accounts in accordance with the requirements of any law or any direction or order issued by the Bank under the provisions of this Chapter; or (c) to submit or offer for inspection its books of account and other relevant documents when so demanded by an inspecting authority of the Bank; or (v) has been prohibited from accepting deposit by an order made by the Bank under the provisions of this Chapter and such order has been in force for a period of not less than three months: Provided that before cancelling a certificate of registration on the ground that the non-banking financial company has failed to company with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clause (iii) the Bank, unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the non-banking financial company, shall give an opportunity to such company on such term as the Bank may specify for taking necessary steps to comply with such provision or fulfilment of such condition: Provided further that before making any order of cancellation of certificate of registration, such company shall be given a reasonable opportunity of being heard. 9. "Gomati Gramin Bank, Jaunpur (Uttar Pradesh)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. (7) A company aggrieved by the order of rejection of application for registration or cancellation of certificate of registration may prefer an Appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government and the decision of the Central Government where an appeal has been preferred to it, or of the Bank where no appeal has been preferred, shall be final: Provided that before making any order of rejection of appeal, such company shall be given a reasonable opportunity of being heard. Explanations . — For the purposes of this section, — - (I) "net owned fund" means — (a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest — balance-sheet of the company after deducting there from - (i) accumulated balance of loss; - (ii) deferred revenue expenditure; and - (iii) other intangible assets; and - (b) further reduced by the amounts representing — - (1) investments of such company in shares of — - (i) its subsidiaries; - (ii) companies in the same group; - (iii) all other non-banking financial companies; and (2) the book value of debentures, bonds, outstanding loans and advances (including hire- — purchase and lease finance) made to, and deposits with, - (i) subsidiaries of such company; and - (ii) companies in the same group, 9. "Hissar-SirsaKshetriyaGramin Bank, Hissar (Haryana)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. to the extent such book value exceeds ten per cent. of (a) above. (II) "subsidiaries" and "companies in the same group" shall have the same meanings assigned to them in the Companies Act, 1956, (1 of 1956).] 45-IB. Maintenance of percentage of assets.— (1) Every non-banking financial company shall invest and continue to invest in India in unencumbered approved securities, valued at a price not exceeding the current market price of such securities, an amount which, at the close of business on any day, shall not be less than five per cent. or such higher percentage not exceeding twenty-five per cent. as the Bank may, from time to time and by notification in the Official Gazette, specify, of the deposits outstanding at the close of business on the last working day of the second preceding quarter: Provided that the Bank may specify different percentages of investment in respect of different classes of non-banking financial companies. (2) For the purpose of ensuring compliance with the provisions of this section, the Bank may require every non-banking financial company to furnish a return to it in such form, in such manner and for such period as may be specified by the Bank. 9. "Jhabua-DharKshetriyaGramin Bank, Jhabua, Madhya Pradesh" excluded by RBI Notification No. RPCD.CO. RRB. No. 56/03.05.100/2013-14, dated 14th November, 2013. (3) If the amount invested by a non-banking financial company at the close of business on any day falls below the rate specified under sub-section (1), such company shall be liable to pay to the Bank, in respect of such shortfall, a penal interest at a rate of three per cent.per annum above the bank rate on such amount by which the amount actually invested falls short of the specified percentage, and where the shortfall continues in the subsequent quarters, the rate of penal interest shall be five per cent.per annum above the bank rate on such shortfall for each subsequent quarter. (4) (a) The penal interest payable under sub-section (3) shall be payable within a period of fourteen days from the date on which a notice issued by the Bank demanding payment of the same is served on the non-banking financial company and, in the event of a failure of the non-banking financial company to pay the same within such period, penalty may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting non-banking financial company is situated and such direction shall be made only upon an application made in this behalf to the court by the Bank; and 9. Included by RBI Notification No. RPCD.CO. RRB. No. 46/03.05.100/2013-14, dated 22nd October 2013. (b) when the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the non-banking financial company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit. (5) Notwithstanding anything contained in this section, if the Bank is satisfied that the defaulting nonbanking financial company had sufficient cause for its failure to comply with the provisions of subsection (1), it may not demand the payment of the penal interest. Explanation . — For the purpose of this section, — (i) "approved securities" means securities of any State Government or of the Central Government and such bonds, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such Government; (ii) "unencumbered approved securities" includes the approved securities lodged by the nonbanking financial company with another institution for an advance or any other arrangement to the extent to which such securities have not been drawn against or availed of or encumbered in any manner; (iii) "quarter" means the period of three months ending on the last day of March, June, September or December. 9. "MarathwadaGramin Bank, Nanded (Maharashtra)" excluded by RBI Notification No. RPCD.CO. RRB. No. 11379/3.5.100/2010-11, dated 31st March, 2011. 45-IC. Reserve fund.— (1) Every non-banking financial company shall create a reserve fund the transfer therein a sum not less than twenty per cent.of its net profit every year as disclosed in the profit and loss account and before any dividend is declared. (2) No appropriation of any sum from the reserve fund shall be made by the non-banking financial company except for the purpose as may be specified by the Bank from time to time and every such appropriation shall be reported to the Bank within twenty-one days from the date of such withdrawal: Provided that the Bank may, in any particular case and for sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit or condone any delay in making such report. (3) Notwithstanding anything contained in sub-section (1), the Central Government may, on the recommendation of the Bank and having regard to the adequacy of the paid-up capital and reserves of a non-banking financial company in relation to its deposit liabilities, declare by order in writing that the provisions of sub-section (1) shall not be applicable to the non-banking financial company for such period as may be specified in the order: Provided that no such order shall be made unless the amount in the reserve fund under sub-section (1) together with the amount in the share premium account is not less than the paid-up capital of the nonbanking financial company.] 1[ 45-ID. Power of Bank to remove directors from office.— (1) Where the Bank is satisfied that in the public interest or to prevent the affairs of a non-banking financial company being conducted in a manner detrimental to the interest of the depositors or creditors, or financial stability or for securing the proper management of such company, it is necessary so to do, the Bank may, by order and for reasons to be recorded in writing, remove from office, a director (by whatever name called) of such company, other than Government owned non-banking financial company with effect from such date as may be specified in the said order. (2) No order under sub-section (1) shall be made unless the director concerned has been given a reasonable opportunity of making a representation to the Bank against the proposed order: 1. Ins. by 23 of 2019, s. 138 (w.e.f. 9-8-2019). Provided that if, in the opinion of the Bank, any delay will be detrimental to the interest of the said company or its depositors, the Bank may, at the time of giving the aforesaid opportunity or at any time thereafter, by order direct that, pending the consideration of the representation, if any, the director, shall not, with effect from the date of such order (a) act as such director of that company; (b) in any way, whether directly or indirectly, be concerned with or take part in the management of that company. 9. "ParvatiyaGramin Bank, Chamba, Himachal Pradesh" excluded by RBI Notification No. RPCD.CO. RRB. No. 56/03.05.100/2013-14, dated 14th November, 2013. 10. Ins. by RBI Notification No. RPCD.CO. RRB. BC. No. 94/03.05.100/2013-14, dated 9th April, 2014. (3) Where any order is made in respect of a director of a company under sub-section (1), he shall cease to be a director of that non-banking financial company and shall not, in any way, whether directly or indirectly, be concerned with, or take part in the management of any non-banking financial company for such period not exceeding five years at a time as may be specified in the order. (4) Where an order under sub-section (1) has been made, the Bank may, by order in writing, appoint a suitable person in place of the director, who has been so removed from his office, with effect from such date as may be specified in such order. - (5) Any person appointed under sub-section (4) shall, — (a) hold office during the pleasure of the Bank and subject thereto for a period not exceeding three years or such further periods not exceeding three years at a time; (b) not incur any obligation or liability by reason only of his being a director for anything done or omitted to be done in good faith in the execution of the duties of his office or in relation thereto. (6) Notwithstanding anything contained in any other law for the time being in force or in any contract, memorandum or articles of association, on the removal of a director from office under this section, such director shall not be entitled to claim any compensation for the loss or termination from office. 9. "PurvanchalGramin Bank, Gorakhpur, Uttar Pradesh" excluded by RBI Notification No. RPCD.CO. RRB. No. 47/03.05.100/2013-14, dated 22nd October 2013. Earlier it was included by RBI Notification No. RPCD.CO. RRB. No. 7430/03.05.100/2008-09, dated 27th January, 2009. 45-IE. Supersession of Board of directors of non-banking financial company (other than Government Company).— (1) Where the Bank is satisfied that in the public interest or to prevent the affairs of a non-banking financial company being conducted in a manner detrimental to the interest of the depositors or creditors, or of the non-banking financial company (other than Government Company), or for securing the proper management of such company or for financial stability, it is necessary so to do, the Bank may, for reasons to be recorded in writing, by order, supersede the Board of Directors of such company for a period not exceeding five years as may be specified in the order, which may be extended from time to time, so, however, that the total period shall not exceed five years. (2) The Bank may, on supersession of the Board of Directors of the non-banking financial company under sub-section (1), appoint a suitable person as the Administrator for such period as it may determine. (3) The Bank may issue such directions to the Administrator as it may deem appropriate and the Administrator shall be bound to follow such directions. (4) Upon making the order of supersession of the Board of Directors of a non-banking financial company, — (a) the chairman, managing director and other directors shall from the date of super session of the Board of Directors vacate their offices; 9. "Sabarkantha-GandhinagarGramin Bank, Himatnagar (Gujarat)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. (b) all the powers, functions and duties, which may, by or under the provisions of this Act or any other law for the time being in force, be exercised and discharged by or on behalf of the Board of Directors of such non-banking financial company or by a resolution passed in general meeting of such non-banking financial company, shall, until the Board of Directors of such company is reconstituted, be exercised and discharged by the Administrator referred to in sub-section (2). (5) (a) The Bank may constitute a committee consisting of three or more members who have experience in law, finance, banking, administration or accountancy to assist the Administrator in discharge of his duties. (b) The committee shall meet at such times and places and observe such rules of procedure as may be specified by the Bank. (6) The salary and allowances payable to the Administrator and the members of the committee constituted by the Bank shall be such as may be specified by the Bank and be paid by the concerned nonbanking financial company. (7) On or before the expiration of the period of super session of the Board of Directors as specified in the order issued under sub-section (1), the Administrator of the non-banking financial company shall facilitate reconstitution of the Board of Directors of the non-banking financial company. (8) Notwithstanding anything contained in any other law for the time being in force or in any contract, no person shall be entitled to claim any compensation for the loss or termination of his office. (9) The Administrator referred to in sub-section (2) shall vacate office immediately after the Board of Directors of the non-banking financial company has been reconstituted.] 9. "SreeAnanthaGrameena Bank, Anantpur (Andhra Pradesh)" excluded by RBI Notification No. RPCD.CO. RRB. No. 3230/03.05.100/2008-09, dated 22nd September, 2008. 9. Included by Notification No. UBD.CO/BP/20/16.05.00/2002-2003, dated 23rd January, 2003. 9. "UtkalGramya Bank, Odisha" excluded by RBI Notification No. RPCD.CO. RRB. No. 47/ 03.05.100/2013-14, dated 22nd October 2013. Earlier it was included by RBI Notification No. RPCD.CO. RRB. No. 11377/3.5.100/2010-11, dated 31st March, 2011.