The State Bank of Hyderabad Act, 1956

An Act of Parliament being the State Bank of Hyderabad Act, 1956 (Act no. 79 of 1956) was enacted by the Central Government in the 7th year of republic of India with the view to make provisions for transferring the share capital in the Hyderabad State Bank to the Apex Bank i.e. Reserve Bank of India- RBI and also for providing its proper management. The Act has received the Assent of President of India on 22nd December, 1956. The said devolution of the function of State Government of Hyderabad relating to Hyderabad State Bank was in the view of re-organization of the States. The Act under its first Chapter deals with preliminary provision and most particularly it provides for the date of commencement of the provisions of the Act i.e. 22nd of October, 1956 as has been provided under first section of the Act itself.

The most important provisions dealing with re-naming of Hyderabad state Bank and its share capital’s to transfer with the RBI was given under second Chapter of the Act and section 3 where says that the said bank to be renamed as State Bank of Hyderabad and the said corporate body should be carry on its business as per the provisions of the State Bank of India (Subsidiary Banks) Act, 1959. The head office of the Bank is located at Hyderabad as per section 4 and it should continue to maintain every branches and agency of the earlier Hyderabad State Bank which were existed before the provisions of the Act was brought into force. It is empowered to establish any new branches or even it can discontinue any branch, however, a previous consultation with State Bank and approval from Reserve Bank of India is necessary. The RBI is vested with all the shares in the capital of the earlier Hyderabad State Bank which should be freed of all trusts, liabilities, etc, for which the RBI is required to pay compensation to that earlier bank and its all share holders. The earlier Director including President, Managing Director, deputy thereof in the earlier bank required to vacate office on such transfer of earlier Bank and payment of compensation or other benefits have been specified as per section 7.

Next Chapter in the Act making provisions as to authorized capital of the Hyderabad Bank, which should be 1 crore rupees. And such authorised capital are required to be divided into 100 rupees each share. The said authorized capital can be increased or reduced by the Bank with the previous approval from RBI. Further, after the commencement of amendments of this Act by the the State Bank of India (Subsidiary Banks) Act, 1959 the issued capital of the Bank will be State Bank’s fixed amount, which will be fixed by it with the prior approval from RBI and all shares in such issued capital of the Bank should vest with the State Bank. Originally, the Act was making provisions as to management of concerned Bank under its fourth Chapter, however, the Chapter was deleted by the Section 64 of the State Bank of India (Subsidiary Banks) Act, 1959 (Act no. 38 of 1959). Now, the said provision of section 64 of the Act of 1959 also was repealed by the Repealing and Amendment Act, 1964, with effect from date 29th December, 1964. Moreover, the chapter V of the Act which was making provisions as to carrying on of business by the Hyderabad Bank was also repealed or its effect was taken off by the said provisions of the Act of 1959.

Further, Chapter VI of the Act makes provisions as to reserve fund of the Hyderabad Bank and accounts and auditing thereof. The section 64 of the aforesaid Act of 1959 replaced the original provisions of section 27 and provides a new section 27 for making provisions as to the reserve fund of the Bank which is required to consist of the amount which is determined by the State Bank, with prior approval from RBI also anther amount as per section 27. And other provisions under this Chapter had been repealed by the section 64 of the Act of 1959.

Lastly, the seventh chapter under the present Act makes miscellaneous provisions, wherefrom section 32 to 40, 42 and 43 were repealed by the Act of 1959. Out of the remaining provisions the Section 41 empowers the Central Government as to making of Rules after having consultation with RBI. And such rules to provides for effecting the provisions of this Act and particularly on the matters enlisted in the provision. It is also required that such rules to be first tabled to the Houses of parliament within the prescribed period of 30 days. Section 44 says that wherever any reference to the Hyderabad State Bank will be there after this Act brought into force, the same to be treated as to the Hyderabad Bank unless contrary provided in the order by the Central Government.

by Faim Khalilkhan Pathan.