3. Undertaking of Development Bank to vest in Company.—(1) On such date as the Central
Government may, by notification, appoint, there shall be transferred to, and vest in, the Company, the
undertaking of Development Bank.
(2) Notwithstanding anything contained in the Banking Regulation Act, 1949 (10 of 1949), the
Company referred to in sub-section (1) shall be deemed to be a banking company within the meaning of
clause (c) of section 5 of the Banking Regulation Act, 1949 and as such shall carry on banking business in
accordance with the provisions of that Act, 2***:
Provided that such Company shall not be required to—
(a) obtain licence under section 22 of the Banking Regulation Act, 1949 (10 of 1949);
(b) maintain for a period of five years from the appointed day the percentage of assets required to
be maintained under section 24 of the said Act.
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[Provided further that the provisions of clause (a) to the proviso, shall cease to be applicable
immediately after the commencement of Part XIII of the Finance Act, 2021 (13 of 2021), and from such
1. 2nd July, 2004, vide notification No. S.O. 769(E) dated 2nd July, 2004, see Gazette of India, Extraordinary, Part II, sec. 3(ii).
2. The words “in addition to the business which may be carried on and transacted by the Development Bank” omitted by Act 13
of 2021, s. 165 (w.e.f. 01-04-2021).
3. The proviso ins by s. 165, ibid. (w.e.f. 01-04-2021).
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commencement, the Company shall be deemed to have obtained licence under section 22 of the Banking
Regulation Act, 1949 (10 of 1949).]
(3) The provisions of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, to the
extent they are not repugnant to any provision of this Act, apply to such Company.
(4) Notwithstanding anything contained in the Banking Regulation Act,1949 (10 of 1949), the Central
Government may, in consultation with the Reserve Bank of India, by notification, direct that any of the
provisions of that Act specified in the notification—
(a) shall not apply to the Company; or
(b) shall apply to the Company, only with such exceptions, modifications and the adaptations as
may be specified in the notification.
(5) A copy of every notification proposed to be issued under sub-section (4), shall be laid in draft
before each House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both Houses agree in
disapproving the issue of the notification or both Houses agree in making any modification in the
notification, the notification shall not be issued or, as the case may be, shall be issued only in such
modified form as may be agreed upon by both the Houses.
4. General effect of transfer and vesting of undertaking.—(1) The Central Government, being the
shareholder of the Development Bank and every other shareholder of the Development Bank immediately
before the appointed day shall be deemed to be registered on and from the appointed day as a shareholder
of the Company to the extent of the face value of the shares held by such shareholder.
(2) The undertaking of the Development Bank which is transferred to, and which vest in, the
Company under section 3 shall be deemed to include all business, assets, rights, powers, authorities and
privileges and all properties, movable and immovable, real and personal, corporeal and incorporeal, in
possession or reservation, present or contingent of whatever nature and wheresoever situate including
lands, buildings, vehicles, cash balances, deposits, foreign currencies, disclosed and undisclosed reserves,
reserve fund, special reserve fund, benevolent reserve fund, any other fund, stocks, investments, shares,
bonds, debentures, security, management of any industrial concern, loans, advances and guarantees given
to any person or industrial concern, tenancies, leases and book debts and all other rights and interests
arising out of such property as were immediately before the appointed day in the ownership, possession or
power of the Development Bank in relation to its undertaking, within or without India, all books of
account, registers, records and documents relating thereto and shall also be deemed to include all
borrowings, liabilities and obligations of whatever kind within or without India then subsisting of the
Development Bank in relation to its respective undertaking.
(3) All contracts, deeds, bonds, guarantees, powers of attorney, other instruments and working
arrangements subsisting immediately before the appointed day and affecting the Development Bank shall
cease to have effect or to be enforceable against the Development Bank and shall be of as full force and
effect against or in favour of the Company in which the undertaking of the Development Bank has vested
by virtue of this Act and enforceable as fully and effectually as if instead of the Development Bank, the
Company had been named therein or had been a party thereto.
(4) Any proceeding or cause of action pending or existing immediately before the appointed day by or
against the Development Bank in relation to its undertaking may, as from the appointed day, be continued
and enforced by or against the Company in which the undertaking of the Development Bank has vested
by virtue of this Act as it might have been enforced by or against the Development Bank if this Act had
not been enacted and shall cease to be enforceable by or against the Development Bank.
5. Provisions in respect of officers and other employees of Development Bank.—(1) Every officer
or other employee of the Development Bank (except a director of the Board or the chairman and
managing director or any whole-time director) serving in the employment immediately before the
appointed day shall, in so far as such officer or other employee is employed in connection with the
undertaking which has vested in the Company by virtue of this Act, become, as from the appointed day,
an officer or, as the case may be, other employee of the Company and shall hold his office or service
therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same
obligations and with the same rights and privileges as to leave, leave fare concession, welfare scheme,
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medical benefit scheme, insurance, provident fund, other funds, retirement, voluntary retirement, gratuity
and other benefits as he would have held under the Development Bank if its undertaking had not vested in
the Company and shall continue to do so as an officer or, as the case may be, other employee of the
Company or until the expiry of a period of six months from the appointed day, if such officer or other
employee opts not to continue to be the officer or other employee of the Company within such period.
(2) Where an officer or other employee of the Development Bank opts under sub-section (1) not to be
in employment or service of the company, such officer or other employee shall be deemed to have
resigned.
(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any
other law for the time being in force, the transfer of the services of any officer or other employee of the
Development Bank to the Company shall not entitle such officer or other employee to any compensation
under this Act or under any other law for the time being in force and no such claim shall be entertained by
any court, tribunal or other authority.
(4) The officers and other employees who have retired before the appointed day from the service of
the Development Bank and are entitled to any benefits, rights or privileges shall be entitled to receive the
same benefits, rights or privileges from the Company.
(5) The trust of the provident fund or the gratuity fund of the Development Bank and any other bodies
created for the welfare of officers or employees would continue to discharge their functions in the
Company as was being done hitherto in the Development Bank and any tax exemption granted to the
provident fund or the gratuity fund or pension fund would continue to be applied to the Company.
(6) Notwithstanding anything contained in this Act or in the Companies Act, 1956 (1 of 1956), or in
any other law for the time being in force or in the regulations of the Development Bank, no director of the
Board, chairman and managing director or any whole-time director or any other person entitled to manage
the whole or substantial part of the business and affairs of the Development Bank shall be entitled to any
compensation against the Development Bank or the Company for the loss of office or for the premature
termination of any contract of management entered into by him with the Development Bank.