Section 7:
Issued capital of new banks.
(1) On the appointed day, the issued capital of a new bank
shall consist of such amount, divided into fully paid-up shares of hundred rupees each, as the State
Bank may, with the approval of the Reserve Bank, fix.
1
[(1A) Notwithstanding anything contained in sub-section (1), the issued capital of a new bank
shall, consist of such amount as the State Bank may, 2
[in consultation with the Reserve Bank and with
the approval of the Central Government], fix, and shall be divided into fully paid-up shares of such
denomination in accordance with sub-section (2) of section 6.]
(2) All shares in the issued capital of a new bank shall, on the appointed day, stand allotted to the
State Bank.
(3) The State Bank shall, as soon as may be, after the determination, if any, by the Tribunal, of the
amount of compensation payable in respect of an existing bank, consider whether any increase in, or
reduction of, the issued capital of the corresponding new bank as fixed under sub-section (1), by way
of adjustment, or transfer from, or to, the reserves of such bank, or in any other manner, is necessary
or expedient and may, thereafter with the approval of the Reserve Bank, direct that bank to increase or
reduce its issued capital.
3
[(4) A new bank may from time to time, 4
[with the approval of the State Bank and the Central
Government in consultation with the Reserve Bank], increase, whether by 5
[public issue or rights
issue] or by preferential allotment or private placement in accordance with the procedure as may be
prescribed, its issued capital by issue of equity or preference shares.
(5) The issued capital of a new bank shall consist of equity shares or equity and preference shares:
Provided that the issue of preference shares shall be in accordance with the guidelines framed by
the Reserve Bank specifying the class of preference shares, the extent of issue of each class of such
preference shares (whether perpetual or irredeemable or redeemable) and the terms and conditions
subject to which, each class of preference shares may be issued.
(6) A new bank may, 6
[with the approval of the State Bank and the Central Government in
consultation with the Reserve Bank], increase from time to time by way of issuing bonus shares to
existing equity shareholders, its issued capital in such manner as the State Bank, 7
[in consultation with
the Reserve Bank and with the approval of the Central Government], direct.
(7) No increase or reduction in the issued capital of a new bank shall be made in such a manner
that the State Bank holds at any time less than fifty-one per cent. of the issued capital consisting of
equity shares of new bank.
(8) A new bank may accept the money in respect of shares issued towards increase in issued
capital in instalments, make calls and forfeit unpaid shares and re-issue them, in the manner as may be
prescribed.]
Notes:
1. Ins. by Act 30 of 2007, s. 7 (w.e.f. 9-7-2007).
2. Subs. by Act 17 of 2011, s. 5, for "with the approval of the Reserve Bank" (w.e.f. 1-12-2011).
3. Subs. by Act 30 of 2007, s. 7, for sub-sections (4) and (5) (w.e.f. 9-7-2007).
4. Subs. by Act 17 of 2011, s. 5, for "with the approval of the State Bank and the Reserve Bank" (w.e.f. 1-12-2011).
5. Subs by s. 5, ibid., for "public issue" (w.e.f. 1-12-2011).
6. Subs. by Act 17 of 2011, s. 5, for "with the approval of the State Bank and the Reserve Bank" (w.e.f. 1-12-2011).
7. Subs. by s. 5, ibid., for "with the approval of the Reserve Bank" (w.e.f. 1-12-2011).