The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 came into force on July 19, 1969 and Section 21 shall be effected on the appointed day which shall be February 14, 1970. This is the day on which the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1970 was publicized. According to the provisions of the Act, banking company excludes a foreign company from its definition as provided under the Companies Act of 1956. The corresponding new bank with respect to an already prevailing bank is similar to that of a company described with respect to that bank under Schedule I Column 2 of the Act.
The Act states that from the initiation of the enactment corresponding new banks shall be constituted as described under the Schedule I of the present legislation. The paid up capital of the banks so established be similar to the paid up capital of the already existing banks with respect to the newly constituted corresponding new bank. This provision shall be made applicable only until new terms are formulated with regard to the plan as provided under the Act. The corresponding new bank shall keep its endorsed capital as provided under the provisions of the enactment. The proviso states that the Government of India may take the advice of the Reserve Bank of India enhance or deduct the endorsed capital according to its decision but subsequent to such enhancement or deduction the endorsed capital shall fixed as specified under the enactment. As stated in the Act, the paid up share capital of the newly constituted bank may be augmented by the Director Board with due discussion with the Reserve Bank of India and with the authorization of the Government of India. The fund shall also be enhanced by the Government of India after discussion with the Reserve Bank of India or as specified by under the provisions of the enactment. The funds shall also be raised by public subscription of shares.
In addition, the paid up capital shall be diminished by put out or deducing the accountability on the shares with regard to the not paid up share capital or revoking the paid up capital that is lost. From the day of initiation of the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995 the paid up capital of the newly established bank shall not be diminished during any period so that the amount goes further than 25 percent. The newly established bank shall hold a register that contain the details of the shareholders and such other particulars as enumerated under the Act. It shall contain the name of the shareholders, designation, facts of the shares held by him, date of purchasing the shares and the date of sale of the shares etc. The notices relating to trust shall not be included in the book kept as register or shall be accessible to the new bank constituted under the Act. But the provisions shall not be relevant to a depository with regard to the shares purchased by him as the authorized agent in the name of the beneficial holder. At the date of pioneering of the enactment, the undertaking held by all the prevailing banks shall be assigned to the newly constituted bank. When such transfer is being performed, the Central Government shall compensate the prevailing banks as specified under the Act. In order to put into operation the provisions of the enactment effectually the Central Government is empowered to formulate specific methods and plans. The directors to be proposed or to be chosen shall have exceptional knowledge in the fields like co-operation, business, banking, small scale trade, economics etc.
The present Act repealed The Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1970. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 was amended by enacting Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 and the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act, 1995.