Friday, October 26, 2012

Winding Up of Banking Company

Winding Up of Banking Company

Winding up by High Court
For the process of winding up S. 391, S.392, S.433 and S.583 is not applicable for banking company. As per S. 37 (1) of the Banking Regulation Act the High court can order for winding up of a banking company on basis of following conditions

1. If the banking company is unable to pay its debts; or
2. If an application for its winding up has been made by the Reserve Bank under section 37 or this section.

The Reserve Bank can also make an application under section 38 for the winding up of a banking company if it is directed so to do by an order under clause(b) of sub-section (4) of section 35.

The Reserve Bank may make an application under this section for the winding up of a banking company-
If the banking company has failed to comply with the requirements specified in section 11; or has by reason of the provisions of section 22become disentitled to carry on banking business in India; or has been prohibited from receiving fresh deposits by an order under clause (a) of sub-section (4) of section 35 or under clause (b) of sub-section (3A) or section 42 of the Reserve Bank of India, Act, 1934.
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