Section 39 of the Banking Regulation Act, 1949: Reserve Bank to be Official Liquidator

Section 39 of the Banking Regulation Act, 1949 deals with the appointment of an official liquidator in a High Court winding-up proceeding concerning a banking company. On an application by the Reserve Bank of India, the person or institution specified in that application is to be appointed as the official liquidator, subject to the statutory conditions stated in the section.

In simple terms: Section 39 gives the Reserve Bank of India a special role in the winding up of a banking company. If RBI applies to the High Court, RBI, the State Bank of India, another notified bank, or an individual named in the application may be appointed as the official liquidator. The existing liquidator must then vacate office.

Text of Section 39

39. Reserve Bank to be official liquidator.

(1) Notwithstanding anything contained in section 38A of this Act or in section 448 or section 449 of the Companies Act, 1956 (1 of 1956), where in any proceeding for the winding up by the High Court of a banking company, an application is made by the Reserve Bank in this behalf, the Reserve Bank, the State Bank of India or any other bank notified by the Central Government in this behalf or any individual, as stated in such application shall be appointed as the official liquidator of the banking company in such proceeding and the liquidator, if any, functioning in such proceeding shall vacate office upon such appointment.

(2) Subject to such directions as may be made by the High Court, the remuneration of the official liquidator appointed under this section, the cost and expenses of his establishment and the cost and expenses of the winding up shall be met out of the assets of the banking company which is being wound up, and notwithstanding anything to the contrary contained in any other law for the time being in force, no fees shall be payable to the Central Government, out of the assets of the banking company.

The statutory wording above follows the current text displayed in the official India Code compilation. The provision retains historical references to sections 448 and 449 of the Companies Act, 1956.

Meaning and effect of Section 39

Special override: Sub-section (1) begins with a non-obstante clause. For the appointment contemplated by Section 39, the special mechanism in this provision operates notwithstanding Section 38A and the Companies Act provisions expressly mentioned in the statutory text.
RBI must apply: The special appointment under Section 39 is triggered when the Reserve Bank makes an application in the winding-up proceeding.
Who may be appointed: The application may identify RBI itself, the State Bank of India, another bank notified by the Central Government for this purpose, or an individual.
Existing liquidator vacates office: Once the appointment under Section 39 is made, a liquidator already functioning in the proceeding must vacate office.
Costs come from the bank's assets: Subject to High Court directions, remuneration and winding-up expenses are paid from the assets of the banking company being wound up.
No Central Government fee: Sub-section (2) expressly states that no fee is payable to the Central Government out of those assets.

Related provisions

Section 39 should be read with the surrounding provisions in Part III of the Banking Regulation Act, particularly Section 38 on winding up by the High Court, Section 38A on the Court Liquidator, Section 39A on application of company-law provisions to liquidators, and Section 40 on stay of proceedings.

Legislative note

Section 39 was re-numbered as sub-section (1) by Section 16 of Act 58 of 1968 with retrospective effect. Sub-section (2) was inserted by the same amending provision with retrospective effect. The official text should always be checked for the latest amendments, notifications and judicial interpretation before relying on the provision in a particular proceeding.

Current-law note: The official India Code text continues to reproduce the historical references to the Companies Act, 1956 within Section 39. Because company law has since been recast under the Companies Act, 2013, the interaction between these provisions in a live matter should be examined with the applicable savings, transitional provisions and the facts of the winding-up proceeding. This page therefore preserves the statutory wording rather than replacing those references.

Official source

For the authoritative Central Act compilation and current section listing, see the Banking Regulation Act, 1949 on India Code.

Last reviewed: 13 September 2026.