BANKING SERVICE COMMISSION ACT 1984

THE BANKING SERVICE COMMISSION ACT, 1984

ACT No. 44 OF 1984

2nd June, 1984

An Act to provide for the establishment of a Commission, for therecruitment and selection of officers for appointment to services and posts inpublic sector banks and for matters connected therewith or incidental thereto.

Be it enacted by Parliament inthe Thirty–fifth Year of the Republicof India as follows: –

CHAPTER I

PRELIMINARY

1.Short title and commencement: (1) This Act may be called theBanking Service Commission Act, 1984.

(2) It shall come into force onsuch date as the Central Government may, by notification, appoint and differentdates may be appointed for different provisions of this Act.

2.Definitions: In this Act, unless thecontext otherwise requires,–

(a) "banking company"has the meaning assigned to it in the Banking Regulation Act, 1949(10 of 1949);

(b) "Chairman" meansthe Chairman of the Commission;

(c) "Commission"means the Banking Service Commission, established under sub–section (1)of section 3;

(d) "grade", inrelation to a public sector bank, means a grade for officers as specified inthe rules or, as the case may be, the regulations of the bank;

(e) "junior managementgrade", in relation to a public sector bank, means the lowest grade of officersin that bank;

(f) "member" means amember of the Commission but does not include the Chairman;

(g) "notification"means a notification published in the Official Gazette;

(h) "officer" meansan officer of any grade;

(i) "prescribed"means prescribed by rules made under this Act;

(j) "public sectorbank" means,–

(i) a corresponding new bankspecified in the First Schedule to the Banking Companies (Acquisition andTransfer to undertakings) Act, 1970(5 of 1970);

(ii) a Corresponding new bankspecified in the First Schedule to the Banking Companies (Acquisition andTransfer of Undertakings) Act, 1980(40 of 1980);

(iii) the State Bank of IndiaConstituted under the State Bank of India Act, 1955(23 of 1955);

(iv) a subsidiary bank asdefined in the State Bank of India(Subsidiary Banks) Act, 1959(38 of 1959);

(k) "regulation"means a regulation made under this Act;

(l) "Reserve Bank"means the Reserve Bank of India,Constituted under the Reserve Bank of India Act, 1934(2 of 1934);

(m) "Secretary" meansthe Secretary of the Commission;

(n) "vacancy"includes a newly created post which has not been filled in.

CHAPTER II

BANKING SERVICE COMMISSION

3.Establishment of theCommission: (1) Witheffect from such date as the Central Government may, by notification specify inthis behalf, there shall be established for the purposes of this Act, aCommission, to be called the Banking Service Commission.

(2) The Commission shall be abody corporate having perpetual succession and a common seal with power toacquire, hold and dispose of property and to contract, and may be the said namesue and be sued.

(3) The Head office of theCommission shall be at Delhior at such other place as the Central Government may, by notification, specify.

4.Appointment and terms ofoffice of Chairman and members: (1) The Central Government shall, by notification, appoint aperson to be the Chairman of the commission and not more than eight otherpersons to be members of the commission:

Provided that at least onemember shall be from amongst persons belonging to be Scheduled Castes or theScheduled Tribes.

(2) The Chairman and membersshall be persons, who, in the opinion of the Central Government, are men ofability, integrity and standing and have special knowledge of, or practicalexperience in, financial, economic or business administration or in theadministration of Government or in any other matter which would render suchpersons suitable for appointment as Chairman or member:

Provided that as nearly as maybe one–half of the members shall be persons who, on the date of theirrespective appointments, have had such experience for not less than ten yearsin a banking company or in any public sector bank or Reserve Bank or in aninstitution wholly or substantially owned by the Reserve Bank or a publicfinancial institution.

Explanation. I: For thepurposes of this section and of section 5,–

(a) each of the followinginstitutions shall be deemed to be a public financial institution, namely:–

(i) the Industrial Credit andInvestment Corporation of India Limited, a company formed and registered underthe Companies Act, 1956(1 of 1956);

(ii) the IndustrialReconstruction Corporation of India Limited, a company formed and registeredunder the Companies Act, 1956(1 of 1956);

(iii) the Industrial FinanceCorporation of India,established under section 3 of the Industrial Finance Corporation Act, 1948(15of 1948);

(iv) the Industrial DevelopmentBank of India, established under section 3 of the Industrial Development Bankof India Act, 1964(18 of 1964);

(v) the Export–ImportBank of India, established under section 3 of the Export–Import Bank ofIndia Act, 1981(28 of 1981);

(vi) the National Bank forAgriculture and Rural Development, established under section 3 of the NationalBank for Agriculture and Rural Development Act, 1981(61 of 1961);

(vii) the Life InsuranceCorporation of India,established under section 3 of the Life Insurance Corporation Act, 1956(31 of1956);

(viii) the Unit Trust of India,established under section 3 of the Unit Trust of India Act, 1963(52 of 1963);

(ix) any other financialinstitution which is declared by the Central Government, by notification, to bea public financial institution;

(b) an institution shall bedeemed to be substantially owned by the Reserve Bank if, in the capital of suchinstitution, that Bank has not less than forty percent share.

Explanation II: For thepurposes of this section and section 17, the expressions "ScheduledCastes" and "Scheduled Tribes" and shall have the meaningsrespectively assigned to them in article 366 of the Constitution.

(3) The Chairman or any membershall hold office for a term of five years from the date on which he entersupon his office or until he attains the age of sixty–five years,whichever is earlier:

Provided that –

(a) the Chairman or any membermay, by writing under his hand addressed to the Central Government, resign hisoffice;

(b) the Chairman or any membermay be removed from his office in the manner provided by this Act.

(4) The other terms andconditions of service of the Chairman and members shall be such as may beprescribed.

(5) If the office of theChairman becomes vacant or if the Chairman is unable to discharge his functionsowing to absence, illness or any other cause, such member of the Commission asthe Central Government may, by order, specify, shall discharge the functions ofthe Chairman up to the date on which a new Chairman is appointed or, as thecase may be, the Chairman resumes his duties.

5.Prohibition as to holdingoffices by Chairman or member on ceasing to be such Chairman or member: A person who holds office asChairman or member shall, on his ceasing to hold such office by reason of theexpiration of his term or otherwise, he ineligible for re–appointment inthe Commission or for employment under the Government of India or of any Stateor in the Reserve bank or in any institution wholly or substantially owned bythe Reserve Bank or in any public sector bank or any banking company or in apublic financial institution:

Provided that a member to whomthis section applies, shall be eligible for appointment as Chairman, but shallnot be eligible for any other employment.

6.Removal and suspension ofChairman or the members from office in certain circumstances: (1) The Central Government mayremove from office the Chairman or any member, who –

(a) is adjudged an insolvent,or

(b) is convicted of an offenceinvolving moral turpitude, or

(c) is, in the opinion of theCentral Government, unfit to continue in office by reason of infirmity of mindor body, or

(d) engages, during the term ofoffice, in any paid employment outside the duties of his office, or

(e) has acquired such financialor other interest as is likely to affect prejudicially his functioning as the Chairmanor a member, or

(f) has so abused his positionas to render his continuance in office undesirable.

(2) Notwithstanding anythingcontained in sub–section (1), the Chairman or any member shall not beremoved from office on the ground specified in clause (d) or clause (e) orclause (f) of that sub–section unless the matter has been referred to anInquiry Officer appointed under sub–section (3) and such officer has,after an inquiry, held in accordance with such procedure as the CentralGovernment may specify in this behalf, reported that the member ought, on suchgrounds, to be removed.

(3) For the purpose of holdingan inquiry under sub–section (2), the Central Government may, by order,appoint, as an Inquiry Officer, a person who is holding or has held the officeof a Judge of the Supreme Court or of any High Court.

(4) The Central Government maysuspend from office the Chairman or any member in respect of whom a referencehas been made to an Inquiry Officer under sub–section (2), pending suchinquiry.

(5) The terms and conditions ofservice of any Inquiry Officer appointed under sub–section (3) shall besuch as the Central Government may, by order, specify.

7.Power of Commission toconstitute Committees: (1) The Commission may, in such manner and subject to suchconditions and restrictions as maybe prescribed, constitute one or morecommittees consisting wholly of its members or partly of its members and partlyof other persons and delegate to any committee so constituted such of thefunctions and powers of the Commission as may be specified in the rules made bythe Central Government:

Provided that the Commissionmay constitute any committee either with, or without, the Chairman as one ofthe members of such committee.

(2) The sitting fee and travellingallowance payable to persons, other than the Chairman and members for attendingany meeting of the committee, shall be such as may be prescribed.

8.Secretary and others staff ofthe Commission: (1) TheCommission may, with the previous sanction of the Central Government, appoint aSecretary for the efficient discharge of its functions under this Act.

(2) The terms and conditions ofservice of the Secretary shall be such as may be prescribed.

(3) Subject to such regulationsas may be made in this behalf, the Commission may appoint such other employeesas it may think necessary for the efficient discharge of its functions underthis Act on such terms and conditions as the Commission may, having regard tothe terms and conditions of service of the comparable posts in the CentralGovernment, determine with the previous sanction of the Central Government.

9.Authentication of orders andother instruments of the Commission: (1) All orders and instruments issued by theCommission shall be authenticated by the signature of the Secretary or anyother employee of the Commission authorised by the Chairman in this behalf.

(2) Orders or instrumentsissued by the Commission and authenticated in accordance with the provisions ofsub–section (1) shall be evidence of the matters recorded therein andshall be admissible in evidence notwithstanding anything contained in theIndian Evidence Act, 1872, or in any other law for the time being in force.

CHAPTER III

FUNCTIONS OF THE COMMISSION

10.Duty of Commission to holdcompetitive examinations or make selections for appointment to posts in publicsector banks: It shallbe the duty of the Commission to conduct examinations or to make selections orboth for appointments in public sector banks for filling vacancies in–

(a) posts of officers requiredto be filled by direct recruitment;

(b) posts of officers of andabove the rank of Assistant General Manager or of its equivalent rank requiredto be filled by promotion; and

(c) such other posts as theCentral Government may, by notification, specify.

11.Calling for applications andconduct of examinations or selections: (1) The Commission shall call for applications fromsuch category of persons and in such manner as may be specified in theregulations and conduct examinations or make selections or both having regardto the requirement of section 17 and the vacancies communicated to it undersection 12 :

Provided that such examinationsor selections or both shall be made in accordance with the principles specifiedin the regulations.

(2) The fee payable on anapplication under sub–section (1) shall be such as may be specified byregulations and such fee shall not exceed eighty rupees.

12.Duty of public sector banksto communicate to the Commission of number of vacancies: (1) It shall be the duty ofevery public sector bank to communicate to the Commission –

(a) twenty–five percentof the estimated total number of vacancies in the junior management gradein the general category,

(b) all other vacancies inposts of officers required to be filled by direct recruitment,

(c) vacancies in posts ofofficers of and above the rank of Assistant General Manager or of itsequivalent rank required to be filled by promotion,

and such communication shall besent in respect of all such vacancies which are likely to occur during theunexpired portion of the year in which this section comes into force, as soonas may be after such commencement and in respect of all such vacancies as arelikely to occur during each subsequent year, as soon as may be after thecommencement of such year:

Provided that in relation tojunior management grade in the general category, the Central Government may, ifit is of opinion that it is necessary so to do in the interests of the publicsector banks, by notification, raise the percentage of vacancies to becommunicated to the Commission to thirty–three and one–thirdpercent

(2) Communications of vacanciesreferred to in sub–section (1) shall be made in such form and in suchmanner as may be specified in the regulations.

Explanation: For thepurposes of this section, "junior management grade in the generalcategory", in relation to a public sector bank, means all categories ofposts in the junior management grade as specified in the rules or, as the casemay be, the regulations of the bank other than such categories of posts as theCentral Government may, having regard to the nature of such posts, declare, bynotification, to be posts of a technical category.

13.Cases in which Commissionmay Not be consulted: It shall not be necessary to consult the Commission in regard tothe selection of a person–

(a) for appointment to a postin the junior management grade on compassionate grounds or other specialgrounds (in pursuance of the scheme framed by a public sector bank inconsultation with the Commission and with the previous sanction of the CentralGovernment) ;

(b) if the person appointed isnot likely to hold the post for a period of more than one year, and it isnecessary in the interests of the public sector bank to make the appointmentimmediately and reference to the Commission will cause undue delay:

Provided that –

(i) such appointment is made inthe manner specified by the Commission by regulation and is reported to theCommission as soon as it is made;

(ii) if the appointmentcontinues beyond a period of six months, a fresh estimate as to the period forwhich the person appointed is likely to hold the post shall be made andreported to the Commission; and

(iii) if such estimateindicates that the person appointed is likely to hold the post for a period formore than one year from the date of appointment, the Commission shallimmediately be consulted in regard to the filling of the post.

14.Duty of Commission to makerecommendation: It shallbe the duty of the commission to make, on the basis of the results ofexaminations conducted or on the basis of the selection made by it or, as thecase may be, on the basis of both, recommendations to each public sector bankin such manner as may be specified by regulations for appointments to fill thevacancies communicated to it by such bank under section 12.

15.Communicated vacancies to befilled only on the recommendation of the Commission: (1) Notwithstanding anythingto the contrary contained in any award, settlement or agreement, or in anyjudgement, decree or order of any court or tribunal or other authority or inany other law in force for the time being, appointments to all the vacanciesrequired to be communicated to the Commission under section 12 shall, on orfrom such date as the Commission may notify in respect of each public sectorbank, be as the Commission may notify in respect of each public sector bank, bemade by such public sector bank only on the recommendation of the Commission,except where consultation with the commission is not necessary under this Act.

(2) If, in any year, thecommission is unable to make recommendation for appointment to all thevacancies communicated to it by a public sector bank under section 12, or ifthe public sector bank is unable, in any year to make appointments on the basisor recommendations made by the Commission, the vacancies may be carried forwardto the subsequent year, to be filled in the said manner:

Provided that the public sectorbank may, in consultation with the Commission, fill such vacancies temporarilyin such manner and for such period as the Commission may, by regulations,specify.

16.Power of Central Governmentto entrust other advisory functions to the Commission: The Commission shall dischargesuch functions of an advisory nature as the Central Government may, bynotification, entrust to it.

17.Reservation of posts forcandidates belonging to Scheduled Castes and Scheduled Tribes and othercategories of persons: The Central Government may, by order, direct that in relation toevery public sector bank, reservations in favour of the Scheduled Castes,Scheduled Tribes and other categories of persons shall be made in such mannerand to such extent as it may specify:

Provided that in giving anydirection as aforesaid, the Central Government shall have due regard to thereservation of posts made for the Scheduled Castes, Scheduled Tribes and othercategories of persons in relation to recruitment to the services of theGovernment and to the general need, and special requirements, of such publicsector bank.

18.Fund of the Commission: (1) The Commission shall haveits own Fund and all the receipts of the Commission shall be credited to theFund and all payments by the Commission shall be made therefrom.

(2) All moneys belonging to theFund shall be deposited in such banks or invested in such manner as theCommission may, subject to any general or special order made by the CentralGovernment in this behalf, decide.

(3) The Commission may spend suchsums as it thinks fit for performing its functions under this Act and such sumsshall be treated as expenditure payable out of the Fund of the Commission.

19.Payment to the Commission: (1) The Central Governmentmay, subject to any rules that may be made in this behalf, direct every publicsector bank to pay to the Commission such fee as it may determine and theaggregate amount of the fee so determined shall not exceed the expensesincurred by the Commission.

(3) For the purpose of meetingthe expenditure of the Commission, the Central Government may, be general orspecial order, direct the payment by every public sector bank of an advance ofsuch amount as it may specify and the advance so made shall be appropriated oradjusted in such manner as may be prescribed.

Explanation: Theexpressions "demand liabilities" and "time liabilities"shall have the meanings respectively assigned to them in the Banking RegulationAct, 1949(10 of 1949).

20.Budget of the Commission: The Commission shall prepare,in such form and at such time each year as may be prescribed, a budget inrespect of the year next ensuring showing the estimated receipts andexpenditure, and submit the same to the Central Government for approval.

21.Accounts and audit: (1) The Commission shallmaintain proper accounts and other relevant records and prepare an annualstatement of accounts for such period, in such form, at such time and in suchmanner as may, be prescribed.

(2) The accounts of theCommission shall be audited by a person who is qualified to act as an auditorof a company under section 226 of the Companies Act, 1956(1 of 1956), and theauditor shall receive such remuneration

(3) In conducting the audit,the auditor shall have the same rights and duties as are possessed by an auditorof a company as if the Commission were a company within the meaning of thecompanies Act, 1956(1 of 1956).

22.Annual report: The Commission shall prepareonce every year, in such form and at such time as may be prescribed, an annualreport giving a full account of its activities during the previous year, andcopies thereof along with copies of its annual accounts and auditor’s reportshall be forwarded to the Central Government and that Government shall causethe same to be laid before both Houses of Parliament.

CHAPTER IV

MISCELLANEOUS

23.Obligation as to secrecy: The Chairman and members andthe Secretary or other employment of the Commission, and every member of anycommittee constituted under sub–section (1) of section 7, shall maintainstrictest secrecy regarding the affairs of the Commission and shall notdivulge, directly or indirectly, any information of a confidential nature to amember of the public unless compelled to do so by any judicial or otherauthority or unless instructed to do so by a superior officer in the dischargeof his duties.

24.Chairman, members, etc., tobe public servants: The Chairman and members and the Secretary or other employees ofthe Commission, and every member of any committee constituted under sub–section(1) of section 7 shall be deemed to be a public servant within the meaning ofsection 21 of the Indian Penal Code.

25.Certain defects Not toinvalidate acts or proceedings: (1) All acts done by the Chairman and members and the members ofany committee constituted under sub–section (1) of section 7, acting ingood faith, shall, notwithstanding any defect in their appointment orprocedure, be valid.

(2) No act or proceeding of theCommission or of any committee thereof shall be invalid merely on the ground ofthe existence of any vacancy therein or defect in the constitution of thecommission or the Committee, as the case, may be.

26.Protection of actions takenin good faith: No suit,prosecution or other legal proceedings shall lie against the Central Governmentor the Commission or any committee constituted under sub–section (1) ofsection 7 or any member of the Commission or of such committee or the Chairmanor Secretary or other employee of the Commission for anything which is in goodfaith done or intended to be done under this Act or any rule made thereunder.

27.Commission Not liable to betaxed: Notwithstanding anythingcontained in the Income–tax Act, 1961(43 of 1961), or any otherenactment for the time being in force relating to income–tax, surtax or anyother tax on income, profits or gains, the commission shall not be liable topay any tax or surtax in respect of –

(a) any income profits or gainsaccruing or arising out of the Fund of the Commission or any amount received inthat Fund; and

(b) any income, profits orgains derived, or any amount received, by the Commission.

28.Delegation of powers: The Commission may, by generalor special order, delegate to the Chairman, any member, Secretary or anyemployee of the Commission, subject to such conditions and limitations, if any,as may be specified therein, such of its powers and duties under this Act as itmay deem fit.

29.Amendment of Act 14 of 1947: For the purposes of theIndustrial Disputes Act, 1947, the Central Government shall be deemed to be theappropriate Government in relation to an industrial dispute concerning thecommission and the definition of "appropriate Government" in that Actshall have effect accordingly.

30.Returns and information: (1) The Commission shallfurnish to the Central Government such returns or other information withrespect to its properties or activities as the Central Government may, fromtime to time, require.

(2) The Commission may, for thepurpose of enabling it top discharge its functions under this Act, call uponany public sector bank to give such statement or furnish such particulars asthe Commission may deem fit and every such bank shall comply with the same.

31.Power to make rules: (1) The Central Governmentmay, by notification, make rules for carrying out the provisions of this Act.

(2) In particular, and withoutprejudice to the generality of the foregoing powers, such rules may provide forall or any of the following matters, namely: –

(a) the terms of conditions ofservice of the Chairman and members;

(b) the sitting fee andtravelling allowance payable to persons, other than the Chairman and members,for attending any meeting of the committee, under sub–section (2) ofsection 7;

(c) the terms and conditions ofservice of the Secretary under sub–section (2) of section 8;

(d) the category of persons forwhom any vacancy or percentage of vacancies in a public sector bank may bereserved by the Central Government;

(e) the procedure fordetermination of the fee to be paid by every public sector bank to Commissionunder section 19;

(f) the form in which and thetime within which the Commission shall prepare and submit its budget to theCentral Government under section 20;

(g) the period for which, theform and manner in which and the time within which the Commission shall prepareits annual statement of accounts under sub–section (1) of section 21;

(h) the form and manner inwhich and the date by which the Commission shall prepare an annual reportgiving a full account of its activities during the previous year and submittingthe same to the Central Government under section 22;

(i) any other matter which isto be, or may be, prescribed.

32.Power to make regulations: (1) The Commission may, withthe previous approval of the Central Government, by notification, makeregulations, not, inconsistent with the provisions of this Act, or the rulesmade thereunder, to provide for all matters for which provision is necessary orexpedient for the purpose of giving effect to the provisions of this Act.

(2) Without prejudice to thegenerality of the foregoing power, such regulations may provide for all or anyof the following matters, namely:–

(a) the matters referred to insub–section (3) of section 8;

(b) the manner in which, andthe category of persons from whom, applications may be called for appearing atexaminations, selections or tests held by the Commission under sub–section(1) of the section 11;

(c) the principles inaccordance with which candidates shall be selected for different posts underthe proviso to sub–section (1) of section 11;

(d) the fee payable bycandidates intending to appear at examinations, selections or tests conductedby the Commission under sub–section (2) of section 11;

(e) the form and manner inwhich communication of vacancies under sub–section (2) of section 12shall be made;

(f) the manner in whichappointments may be made to fill any vacancy without consulting the Commission;

(g) the manner in which andperiod for which appointments may be made to fill vacancies in relation towhich the Commissioner is unable to make a recommendation;

(h) the number of places andtime at which the Commission shall conduct examinations or tests forrecruitment to different posts;

(i) generally for the efficientconduct of the affairs of the Commission.

33.Rules and regulations to belaid before Parliament: Every rule and every regulation made under this Act shall belaid, as soon as may be after it is made, before each House of Parliament,while it is in session, for a total period of thirty days which may be comprisein one session or in two or more successive sessions, and if, before the expiryof the session, immediately following the session or the successive sessionsaforesaid, both Houses agree in making any modification in the rule orregulation, as the case may be, or both Houses agree that he rule orregulation, as the Case may be, should not be made, the rule or regulationshall thereafter have effect only in such modified form or be of no effect, asthe case may be; so, however, that any such modification or annulment shall bewithout prejudice to the validity of anything previously done under that ruleor regulation.

34.Power to remove difficulty: If any difficulty arises ingiving effect to the provisions of this Act, the Central Government may, byorder, do anything, not inconsistent with such provisions, for the purposes ofremoving the difficulty:

Provided that no such ordershall be made after the expiration of three years from the date on which thisAct receives the assent of the President.

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