The Banking Laws (Amendment) Act, 1985 was enacted for the purpose of altering the Reserve Bank of India Act, 1934. It also aims to amend other enactments including the State Bank of India (Subsidiary Banks) Act, 1959, Deposit Insurance Corporation (Amendment and Miscellaneous Provisions) Act, 1978 and the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970 and 1980. It further make changes in the Deposit Insurance and Credit Guarantee Corporation Act, 1961 along with the Export-Import Bank of India Act, 1981. In addition to the above mentioned enactments, the present Act amends the Regional Rural Banks Act, 1976 as well as the National Bank for Agriculture and Rural Development Act, 1981.
As per the provisions of the legislation, Section 17 of the Reserve Bank of India Act of 1934 stands amended. Accordingly, the amendment adds clause 4A where the paid up share capital was increased from 90 % to two times over the paid up share capital. Moreover, the State Bank of India Act, 1955 was altered and omitted certain words under Section 40 (4) of the enactment. The State of Bank of India (Subsidiary Banks) Act of 1959 was amended where Section 43 (3) was deleted. Under the Deposit Insurance and Credit Guarantee Corporation Act, 1961, in Section 2 (g) Clause (ia) shall be included which states that the amount that is to be paid on account of the persons who deposit under any bank which is insured that are specifically excepted by the corporation with the prior sanction of Reserve Bank of India.
The Act further amended the Deposit Insurance Corporation Act where some terms like when the session is going on for the entire term of 30 days that is included with the first session or more than two sessions which comes subsequent to that was deleted. Under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, Section 3 was added with sub clause (2) where the paid up capital of the newly constituted banks created as per Section 2(1) if necessary be enhanced periodically by the amounts that are decided by the Director Board of the new banks subsequent to the discussion with the Reserve Bank of India and with the prior permission of the Government of India and shall be moved from the reserve fund constituted by that bank to the above mentioned paid up share capital. The amount shall also amplified as per the guidelines of the Government of India or after due discussion with the Reserve Bank of India. But the proviso states that the paid up share capital of the new bank shall not be more than 100 crores.
The Bank Nationalization Act was also amended by the present enactment. Accordingly, under Section 9(2)(a) the amount was increased from 15 crores to 100 crores. In Section 10 of the Bank Nationalization Act some words were deleted as provided under the Act. The United Commercial Bank constituted was given another name called UCO bank and therefore, the Schedule 1 of the Bank Nationalization Act was amended. But the privileges and the liabilities of the said bank remains unaffected by the change of name and the litigation initiated as against or by the bank shall remain valid. The Act also changed the terms of the Regional Rural Banks Act of 1976 where Section 20 was added with sub clause (1) and certain words were inserted. In view of that, the reports with respect to the audit of the said bank shall be laid before the Lok Sabha and Rajya Sabha. Chapter IV as provided under the Deposit Insurance Corporation (Amendment and Miscellaneous Provisions) Act, 1978 was deleted.
The present enactment also amended the Export-Import Bank of India Act, 1981 and the term 3 years was added. The Bank for Agriculture and Rural Development Act, 1981 was altered were the proviso under the Section 6 (2) (a) and Section 6(3) (b) (ii) was erased. Amendment was also effected to the National Bank Act where in Section 7 the Central Government was given the authority to stop the service of the Chairman during any period prior to the conclusion of the term after providing 3 months notice and complying with such other terms prescribed under the Act.