Sections Particulars
Chapter I Preliminary
1 Short title, extent and commencement
(1) This Act may be called the State Financial Corporations Act, 1951.(2) It extends to the whole of India.(3) It shall come into force in any State on such da...
2 Definitions
In this Act unless the context otherwise requires-(a) "" means the Board of Directors of the Financial Corporation;(aa) "" means the Industrial Development Ba...
Chapter II Incorporation Of State Financial Corporations, Their Capital And Management
3 Establishment of State Financial Corporations
(1) The State Government may, by notification in the Official Gazette, establish a Financial Corporation for the State under such name as may be specified in ...
3A Establishment of Joint Financial Corporations
(1) Notwithstanding anything contained in section 3, two or more States may, after consultation with the Development Bank, enter into an agreement that there ...
4 Share capital and shareholders
(1) The authorized capital of the Financial Corporation shall be such sum as may be fixed by the State Government in this behalf, 2[but it shall be less than ...
4A Special class of shares
(1) The State Government may, in consultation with the Development Bank, specify from time to time such part of the Unicode capital of the Financial Corporati...
4B Transfer of share capital to Development Bank
On such date as the Central Government may, by notification in the Official Gazette, specify (hereinafter referred to as the specified date), all the shares o...
4C Payment of amount
The Reserve Bank shall be given by the Development Bank, in cash, for the transfer to, and vesting in, the Development Bank of the shares of every Financial C...
5 Restrictions on transfer of shares
(1) The shares of the Financial Corporation shall not be transferable except to the State Government, the Reserve Bank, the Development Bank] or any other fin...
6 Shares to be guaranteed by the State Government and to be trust or approved securities
(1) The Shares of the Financial Corporation shall be guaranteed by the State Government as to the repayment of principal and the payment of annual dividend a...
7 Additional capital of the Financial Corporation and its borrowing powers
(1) The Financial Corporation may, in consultation with the Development Bank and the Reserve Bank, issue and sell bonds and debentures carrying interest for t...
7A Power to transfer rights
The rights and interests of the Financial Corporation (including any other rights incidental thereto) in relation to any loan or advance granted or any amount...
8 Deposits with the Financial Corporation
(1) The Financial Corporation may accept from the State Government or, with the prior approval of the State Government, the Development Bank and the Reserve B...
9 Management of Financial Corporations
The general superintendence, direction and management of the affairs and business of the Financial Corporation shall vest in a Board of Directors which, with ...
10 Board of Directors
The Board of Directors shall consist of the following, namely:-(a) four Directors nominated by the State Government of whom one Director shall be a person who ...
10A Vacation of office by an elected Director
The office of a Director elected under clause (d) of section 10 shall become vacant if he ceases to hold any office in the scheduled bank, insurance company,...
Chapter II Incorporation of State Financial Corporations, Their capital and Management
11 Term of office and retirement of Directors
(1) A nominated Director shall hold office during the pleasure of the authority nominating him.(2) An elected Director other than a Director deemed to be elec...
12 Disqualification for being a Director
No person shall be a Director who-(a) except in the case of Managing Director, is a salaried official of the Financial Corporation; or(b) is or at any time has...
13 Removal of Director from office
The State Government may remove from office any Director who-(a) is, or has become, subject to any of the disqualifications mentioned in section 12; or(b) with...
14 Resignation of office by Director and filling up of casual vacancies
(1) The Managing Director may, by giving notice in writing to the State Government, and any Director elected under clause (d) or clause (e) of section 10 may,...
15 Chairman of the Board
(1) The Chairman of the Board shall be one of the Directors 6[***], nominated by the State Government, after considering, except in the case of the nomination...
16 Remuneration of Directors
The Directors other than the Managing Director and not being servants of the Government shall be paid such fees as may be prescribed for attending meetings of...
17 Managing Director
(1) The Managing Director shall-(a) be a whole time officer of the Financial Corporation:that the Board may, if in its opinion it is necessary in the public i...
18 Executive Committee
(1) The Executive Committee shall consist of the Managing Director who shall be the Chairman of the Committee, and the following other Directors, chosen as fo...
19 Meetings of the Board and Committee
(1) The Board and the Executive Committee shall meet at such times and places and shall observe such rules of procedure in regard to transaction of business a...
20 Powers of Executive Committee
(1) Subject to such general or special directions as the Board may from time to time give, the Executive Committee may deal with any matter within the compete...
21 Advisory Committee
The Financial Corporation may appoint 2[one or more committee or committees consisting wholly of Directors or wholly of other persons or partly of Directors a...
22 Offices and agencies
The Financial Corporation shall establish its head office and other offices and agencies at such places as the State Government may, from time to time, specif...
23 Officers and other employees of the Financial Corporation
The Financial Corporation may appoint such officers, advisers and employees as it considers necessary for the efficient performance of its functions, and dete...
ChapterIII Powers And Duties Of The Board
24 General duty of the Board
The Board in discharging its functions under this Act shall act on business principles, due regard being had by it to the interests of industry, commerce and ...
25 Business which Financial Corporation may transact
(1) The Financial Corporation may subject to the provisions of this Act, carry on and transact any of the following kinds of business, namely,-(a) guaranteein...
25A Power to acquire rights
The Financial Corporation shall have the right to acquire, by transfer or assignment, the rights and interests of any such financial institution as may be no...
26 Limit of accommodation
(1) On and from the commencement of the 16[State Financial Corporations (Amendment) Act, 1985 (43 of 1985), the Financial Corporation shall not enter into any...
27 Power to impose conditions for accommodation
(1) In entering into any arrangement under section 25 with an industrial concern, the Financial Corporation may impose such conditions as it may think necessa...
28 Prohibited business
(1) The Financial Corporation shall not-(a) except as provided in section 8, accept deposits;(b) except as provided in clauses (da), (f) and (g) of sub-sectio...
29 Rights of Financial Corporation in case of default
(1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or ad...
30 Power to call for repayment before agreed period
Notwithstanding anything in any agreement to the contrary, the Financial Corporation may, by notice in writing, require any industrial concern to which it has...
31 Special provisions for enforcement of claims by Financial Corporation
(1) Where an industrial concern, in breach of any agreement, make any default in repayment of any loan or advance or any installment thereof or in meeting its...
32 Procedure of District Judge in respect of applications under section 31
(1) When the application is for the relief’s mentioned in clauses (a) and (c) of sub-section (1) of section 31, the District Judge shall pass an ad interim or...
32A Power of Financial Corporation to appoint Directors or administrators of an industrial concern when management is taken over
(1) When the management of an industrial concern is taken over by the Financial Corporation, the Financial Corporation may, by order notified in the Official ...
32B Effect of notified order under section 32A
On the issue of a notified order under section 32A,- (a) in any case in which the industrial concern is a company as defined in the Companies Act, 1956 (...
32C Powers and duties of Directors and administrators
(1) Subject to the control of the Financial Corporation, the Directors, or as the case may be, the administrators appointed under section 32A, shall take such...
32D No right to compensation for termination of contract of Managing Agent, Managing Director, etc.
(1) Notwithstanding anything to the contrary contained in any contract or in any law for the time being in force, no Managing agent, Managing Director or any ...
32E Application of Act 1 of 1956
(1) Where the management of an industrial concern, being a company as defined in the Companies Act, 1956 (1 of 1956), is taken over by the Financial Corporati...
32F Restriction on filing of suits for dissolution, etc. of an industrial concern not being a company when its management is taken over
(1) Where the management of an industrial concern not being a company as defined in the Companies Act, 1956 (1 of 1956), is taken over by the Financial Corpor...
32G Recovery of amounts due to the Financial Corporation as an arrear of land revenue
Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or an...
Chapter IV Investment Of Funds, Accounts And Audit
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 Corpor...
34 Investment of funds
The Financial Corporation may invest its funds in the securities of the Central Government or of any State Government....
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 matter...
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 Governme...
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 F...
37 Audit
(1) The affairs of the Financial Corporation shall be audited by auditors duly qualified to act as auditors of companies under sub-section (1) of section 226 ...
37A Inspection
(1) The Development 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 inspe...
38 Returns
2[(1) The Financial Corporation shall furnish to the State Government, the Development Bank and Reserve Bank such statements and returns in such form as the S...
Chapter V Miscellaneous
39 Power to give instructions to Financial Corporation on questions of policy
(1) In the discharge of its functions, the Board shall be guided by such instructions on questions of policy as may be given to it by the State Government in ...
40 Declaration of fidelity and secrecy
22[(1) The Financial Corporation shall not, except as otherwise required by this Act or any other law for the time being in force, divulge any information rel...
41 Indemnity of Directors
(1) Every Director shall be indemnified by the Financial Corporation against all losses and expenses incurred by him in the discharge of his duties except suc...
41A Protection of action taken by persons appointed under section 27 or section 32A
No suit, prosecution or other legal proceeding shall lie against any person appointed as Director, administrator, managing agent or manager by the Financial ...
42 Offences
(1) Whoever, in any bill of lading, warehouse receipt or other document given to the Financial Corporation, whereby security is given or is purported to be g...
43 Provisions relating to income tax and super-tax
For the purposes of the 24[Income Tax Act, 1961 (43 of 1961)], the Financial Corporation shall be deemed to be a company within the meaning of that Act and sh...
43A Delegation of powers
The Board may, by general or special order, delegate to the Managing Director or to any other officer of the Financial Corporation 3[or to any committee appoi...
43B Reports to the Board
(1) The minutes of every meeting of the committee appointed under section 21 shall, after confirmation thereof at the next meeting of the committee, be laid ...
44 Act 18 of 1891 to apply to the books of the Financial Corporation
The Financial Corporation shall be deemed to be a bank for the purposes of the Bankers Books Evidence Act, 1891 (18 of 1891)....
45 Liquidation of Financial Corporation
No provision of law relating to the winding up of companies or corporations shall apply to the Financial Corporation, and the Financial Corporation shall not ...
46 Power to apply Act to certain financial institutions in existence at commencement of Act
(1) The Central Government may by notification in the Official Gazette, direct that all or any of the provisions of this Act shall, subject to such exceptions...
46A Extension of jurisdiction of the Financial Corporation to other States by agreement
(1) Where a Financial Corporation has been established for any State and one or more other States not served in whole or in part by a Financial Corporation de...
46B Effect of Act on other laws
The provision of this Act and of any rule or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other l...
47 Power of State Government to make rules
The State Government may 25[by notification in the Official Gazette,] make rules not inconsistent with the provisions of this Act to give effect to the provis...
48 Power of Board to make regulations
(1) The Board may, after consultation with the Development Bank and with the previous sanction of the State Government, make regulations not inconsistent with...
48A Laying of rules and regulations before State Legislature
Every rule made under section 47 and every regulation made under section 48 shall be laid, as soon as may be after it is made, before the State Legislature.]...
49 Power to remove difficulty
If any difficulty arises in giving effect to the provisions of this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975, (52 of 19...
Schedule Declaration Of Fidelity And Secrecy
22[Section 40(3)] I, __________________ do hereby declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties...
Foot Notes
1 The appointed date is 1st. August, 1952 (in the whole of India except the State of Jammu and Kashmir), vide Notification No. SRO 1317, dated 28th. July, 195...
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