Act Number: 61

Act Name: The National Bank for Agriculture and Rural Development Act, 1981

Year: 1981

Enactment Date: 1981-12-30

Long Title: An Act to establish a development bank to be known as the National Bank for Agriculture and Rural Development for providing and regulating credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto.

Ministry: Ministry of Finance

Department: Department of Financial Services

Section 37A: Prohibited business.
    1[37A. Prohibited business.-- (1) The National Bank shall not make any loans or advances under section 30 or make any grants under this Act to any person or body of persons of which any of the directors of the National Bank is a proprietor, partner, director, manager, agent, employee or guarantor or in which one or more directors of the National Bank together hold substantial interest:
    Provided that this sub-section shall not apply to any borrower if any director of the National Bank--
         (a) is nominated as director of the Board of such borrower by the Government or a Government company as defined 2[in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013)] or by a corporation established by any other law;
         (b) is elected on the Board of such borrower by virtue of shares held in the borrower organisation by the Government, or a Government company as defined 2[in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013) ] or by a corporation established by any other law,
by reason only of such nomination or election, as the case may be.
     Explanation.--For the purposes of this sub-section, "substantial interest", in relation to a borrower, means the beneficial interest held by one or more of the directors of the National Bank or by any relative of such director as defined 3[in clause (77) of section 2 of the Companies Act, 2013 (18 of 2013)] whether singly or taken together, in the shares of the borrower, the aggregate amount paid-up on which either exceeds five lakhs of rupees or five per cent. of the paid-up share capital of the borrower, whichever is lesser.
     (2) The provisions of sub-section (1)--
         (a) shall not apply to any borrower, if the National Bank is satisfied that it is necessary in the public interest to enter into business with that borrower and entering into any kind of business with such borrower shall be in accordance with and subject to such conditions and limitations, as may be approved by the Board;
         (b) shall not apply to any transaction relating to the business entered into prior to the commencement of the National Bank for Agriculture and Rural Development (Amendment) Act, 2000 (55 of 2000), and all such business and any transaction in relation thereto may be implemented or continued as if that Act had not come into force;
         (c) shall apply only so long as the conditions precedent to such disability as set out in the said sub-section continue.]
Notes:
1. Ins. by Act 55 of 2000, s. 22 (w.e.f. 1-2-2001).
2. Subs. by Act 7 of 2018, s. 11, for "in section 617 of the Companies Act, 1956 (1 of 1956)" (w.e.f. 15-3-2018).
3. Subs. by s. 11, ibid., for "in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956)" (w.e.f. 15-3-2018).
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