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Amalgamation of Private Sector Banks, Directions, 2016

FEMA - DBR.PSBD.No. 96/16.13.100/2015-16 - Dated:- 21-4-2016 - RBI/DBR/2015-16/22 Master Direction DBR.PSBD.No. 96/16.13.100/2015-16 April 21, 2016 Master Direction - In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and pursuant to the Section 44A of the Banking Regulation Act, 1949, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified. CHAPTER - I PR .....

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The principles underlying these Directions would be applicable, as appropriate, to public sector banks. 3. Definitions (i) In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below - a. Private Sector Banks means banks licensed to operate in India under Banking Regulation Act, 1949, other than Urban Co-operative Banks, Foreign Banks and banks licensed under specific Statutes. b. Amalgamated Company means the company which is propo .....

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undernoted situations a. An amalgamation of two banking companies. b. An amalgamation of an NBFC with a banking company. 5. Statutory Provisions a. The Reserve Bank has discretionary powers to approve the voluntary amalgamation of two banking companies under the provisions of Section 44A of the Banking Regulation Act, 1949. b. Voluntary amalgamation of a NBFC with a banking company is governed by sections 232 to 234 of the Companies Act, 2013 in terms of which, the scheme of amalgamation has to .....

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hall be ensured that the Deeds of Covenants as recommended by Ganguly Working Group on Corporate Governance, as per circular DBOD.No.BC.116/08.139.001/2001-02 dated June 20, 2002 have been obtained from all independent and non-executive directors who participate in the said meetings. CHAPTER - III AMALGAMATION BETWEEN TWO BANKING COMPANIES 7. In terms of Section 44A of the Banking Regulation Act, 1949, the draft scheme of amalgamation shall be approved by the shareholders of each banking company .....

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the Boards of Directors of the two banking companies seperately. 9. While according this approval, the Boards of the banks shall give particular consideration to the following matters:- a. The values at which the assets, liabilities and the reserves of the amalgamated company are proposed to be incorporated into the books of the amalgamating company and whether such incorporation will result in a revaluation of assets upwards or credit being taken for unrealized gains. b. Whether due diligence .....

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the shareholding of any individual, entity or group in the amalgamating company will be violative of the Reserve Bank guidelines or require its specific approval. f. The impact of the amalgamation on the profitability and the capital adequacy ratio of the amalgamating company. g. The changes which are proposed to be made in the composition of the board of directors of the amalgamating banking company, consequent upon the amalgamation and whether the resultant composition of the Board will be in .....

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amalgamated banking companies shall submit to the Reserve Bank the information and documents specified in the Schedule to these Directions. CHAPTER III B ENTITLEMENT OF DISSENTING SHAREHOLDERS 12. In terms of Section 44A (3), a dissenting shareholder is entitled, in the event of the scheme being sanctioned by the Reserve Bank, to claim within 3 months from the date of sanction, from the banking company concerned, in respect of the shares held by him in that company, their value as determined by .....

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(b) Detailed computation of such valuation. (c) Where the shares of the amalgamating / amalgamated company are quoted on the stock exchange:- i. Details of the monthly high and low of the quotes on the exchange where the shares are most widely traded together with number of shares traded during the six months immediately preceding the date on which the scheme of amalgamation is approved by the Boards. ii. The quoted price of the share at close on each of the fourteen days immediately preceding .....

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ccording its approval to the scheme, the Board of the banking company shall give consideration to the matters listed in paragraph 9, Chapter III above. 16. In addition, the Board shall examine whether: - a. The NBFC has violated / is likely to violate any of the RBI / SEBI norms and if so, shall ensure that these norms are complied with before the scheme of amalgamation is approved. b. The NBFC has complied with the "Know Your Customer" norms for all the accounts, which will become acc .....

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in the Schedule to these Directions (excluding item 4) and also the information and documents listed in paragraph 13 at Chapter III B above. CHAPTER - V AMALGAMATION OF A BANKING COMPANY WITH AN NBFC 18. The provisions of Chapter IV / IVA above will also apply mutatis mutandis in the cases where a banking company is amalgamated with an NBFC. CHAPTER - VI NORMS FOR BUYING/ SELLING OF SHARES BY PROMOTERS 19. Norms for promoter buying or selling shares directly / indirectly, before, during and aft .....

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circular issued by the Reserve Bank stand repealed: DBOD.No.PSBS.BC.89/16.13.100/2004-05 dated May 11, 2005 on Guidelines for Merger / Amalgamation of Private Sector Banks. 21. All approvals given under the above circular shall be deemed as given under these Directions. SCHEDULE Information and Documents to be furnished along with the Application of Scheme of Amalgamation 1. Draft scheme of amalgamation as placed before the shareholders of the respective companies for approval. 2. Copies of the .....

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at the meeting of shareholders certifying the following: a. A copy of the resolution passed at the meeting; b. The number of shareholders present at the meeting in person or by proxy; c. The number of shareholders who voted in favour of the resolution and the aggregate number of shares held by them; d. The number of shareholders who voted against the resolution and the aggregate number of shares held by them; e. The number of shareholders whose votes were declared as invalid and the aggregate n .....

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amalgamation together with the number of shares held by each of them. 4. Certificates from the concerned officers of the companies giving names of shareholders who have given notice in writing at or prior to the meeting to the banking company that they dissented from the scheme of amalgamation together with the number of shares held by each of them. 5. The names, addresses and occupations of the Directors of the amalgamating company as proposed to be reconstituted after the amalgamation and ind .....

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tely preceding the Appointed Date for amalgamation; (b) financial results, if any, published by each of the banking companies for any period subsequent to the financial statements prepared for the financial year immediately preceding the Appointed Date; (c) pro-forma combined balance sheet of the amalgamating company as it will appear as of the Appointed Date consequent on the amalgamation; (d) computation based on such pro-forma balance sheet of the following : i. Tier I Capital ii. Tier II Cap .....

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