*[(2A) A scheduled bank, in addition to the average daily balance which it is, or may be, required to maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934) and every other banking company, in addition to the cash reserve which it is required to maintain under section 18, shall maintain in India, assets, the value of which shall not be less than such percentage not exceeding forty per cent. of the total of its demand and time liabilities in India as on the last Friday of the second preceding fortnight as the Reserve Bank may, by notification in the Official Gazette, specify from time to time and such assets shall be maintained, in such form and manner, as may be specified in such notification.
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*Subs. by s. 2, ibid., for sub-section (2A) (w.e.f. 23-1-2007)
1* * * * *
2[(3) For the purpose of ensuring compliance with the provisions of this
section, every banking company shall, not later than twenty days after the
end of the month to which it relates, furnish to the Reserve Bank in the
prescribed form and manner a monthly return showing particulars of its
assets maintained in accordance with this section, and its demand and time
liabilities in India at the close of business on each alternate Friday
during the month, or if any such Friday is a public holiday, at the close of
business on the preceding working day:
Provided that every Regional Rural Bank shall also furnish a copy of the said return to the National Bank.
(4) (a) If on any alternate Friday or, if such Friday is a public holiday, on the preceding working day, the amount maintained by a banking company at the close of business on that day falls below the minimum prescribed by or under 3*** sub-section (2A), such banking company shall be liable to pay to the Reserve Bank in respect of that day's default, penal interest for that day at the rate of three per cent. per annum above the bank rate on the amount by which the amount actually maintained falls short of the prescribed minimum or that day; and
(b) if the default occurs again on the next succeeding alternate Friday, or, if such Friday is a public holiday, on the preceding working day, and continues on succeeding alternate Fridays or preceding working days, as the case may be, the rate of penal interest shall be increased to a rate of five per cent. per annum above the bank rate on each such shortfall in respect of that alternate Friday and each succeeding alternate Friday or preceding working day, if such Friday is a public holiday, on which the default continues.
(5) (a) Without prejudice to the provisions of sub-section (3), the Reserve Bank may require a banking company to furnish to it a return in the form and manner specified by it showing particulars of its assets maintained in accordance with this section and its demand and time liabilities in India, as at the close of business on each day of a month; and
(b) without prejudice to the provisions of sub-section (4), on the
failure of a banking company to maintain as on any day, the amount so
required to be maintained by or under 3*** sub-section (2A) the Reserve Bank
may, in respect of such default, require the banking company to pay penal
interest for that day as provided in clause (a) of sub-section (4) and if
the default continues on the next succeeding working day, the penal interest
may be increased as provided in clause (b) of sub-section (4) for the
concerned days.
(6) (a) The penalty payable under sub-section (4) and sub-section (5) shall
be paid within a period of fourteen days from the date on which a notice
issued by the Reserve Bank demanding payment of the same is served on the
banking company and in the event of failure of the banking company to pay
the same within such period, the penalty may be levied by a direction of the
principal civil court having jurisdiction in the area where an office of the
defaulting banking company is situated, such direction to be made only upon
an application made by the Reserve Bank in this behalf to the court; and
(b) when the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the banking company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit.
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1. Omitted by Act 17 of 2007, s. 2 (w.e.f. 23-1-2007).
2. Subs. by Act 1 of 1984, s. 26, for sub-section (3) (w.e.f. 29-3-1985).
3. The words, brackets and letter "clause (a) of" omitted by Act 4 of 2013,
s. 7 (w.e.f. 18-1-2013)
(7) When under the provisions of clause (b) of sub-section (4), penal interest at the increased rate of five per cent. above the bank rate has become payable by a banking company, if thereafter the amount required to be maintained on the next succeeding alternate Friday, or if such Friday is a public holiday, the next preceding working day, is still below the prescribed minimum, every director, manager or secretary of the banking company, who is knowingly and wilfully a party to the default, shall be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each subsequent alternate Friday or the preceding working day, as the case may be, on which the default continues.
(8) Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an application in writing by the defaulting banking company, that the banking company had sufficient cause for its failure to comply with the provisions of * sub-section (2A), the Reserve Bank may not demand the payment of the penal interest.
Explanation
In this section, the expression "public holiday" means a day which is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881).]
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*The words, brackets and letter "clause (a) of" omitted by Act 4 of 2013, s. 7 (w.e.f. 18-1-2013).
Section 16 Prohibition of common directors
Section 19 Restriction on nature of subsidiary companies
Section 20 Restrictions on loans and advances
Section 20A Restrictions on power to remit debts
Section 21 Power of Reserve Bank to control advances by banking companies
Section 21A Rates of interest charged by banking companies not to be subject to scrutiny by courts
Section 22 Licensing of banking companies
Section 23 Restrictions on opening of new and transfer of existing, places of business
Section 24 Maintenance of a percentage of assets
Section 26 Return of unclaimed deposits
Section 26A Establishment of Depositor Education and Awareness Fund
Section 27 Monthly returns and power to call for other returns and information
Section 28 Power to publish information
Section 29 Accounts and balance-sheet