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    Nidhi Yadav
    The document discusses the winding up process for banking companies in India. Winding up involves closing down a company's business and dissolving it. It generally occurs when a bank's liabilities exceed its assets and it is unable to repay debts. The Reserve Bank of India supervises the winding up of banking companies. There are two types of winding up for banks: by order of the High Court, such as when a bank cannot pay its debts or at the request of the RBI; and voluntary winding up. A liquidator is appointed to oversee the process and ensure protection of customer and creditor interests.

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    Legal

    Uploaded by

    Nidhi Yadav
    21 views2 pages
    The document discusses the winding up process for banking companies in India. Winding up involves closing down a company's business and dissolving it. It generally occurs when a bank's liabilities exceed its assets and it is unable to repay debts. The Reserve Bank of India supervises the winding up of banking companies. There are two types of winding up for banks: by order of the High Court, such as when a bank cannot pay its debts or at the request of the RBI; and voluntary winding up. A liquidator is appointed to oversee the process and ensure protection of customer and creditor interests.

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    The document discusses the winding up process for banking companies in India. Winding up involves closing down a company's business and dissolving it. It generally occurs when a bank's liabilities exceed its assets and it is unable to repay debts. The Reserve Bank of India supervises the winding up of banking companies. There are two types of winding up for banks: by order of the High Court, such as when a bank cannot pay its debts or at the request of the RBI; and voluntary winding up. A liquidator is appointed to oversee the process and ensure protection of customer and creditor interests.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views2 pages

    Legal

    Uploaded by

    Nidhi Yadav
    The document discusses the winding up process for banking companies in India. Winding up involves closing down a company's business and dissolving it. It generally occurs when a bank's liabilities exceed its assets and it is unable to repay debts. The Reserve Bank of India supervises the winding up of banking companies. There are two types of winding up for banks: by order of the High Court, such as when a bank cannot pay its debts or at the request of the RBI; and voluntary winding up. A liquidator is appointed to oversee the process and ensure protection of customer and creditor interests.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    1.

    Introduction

    Banking companies are formed basically for the purpose of providing safe deposit of money to the
    people and to lend money on interest to people who are in need. But due to certain contingencies
    banking companies have to be closed down which is called winding uplil Winding up procedure for
    banking companies is almost similar to those made under Companies Act for the winding up of
    companies in general, but when it is done in case of banking companies, it is to be done under the
    supervision of Reserve Bank of India. Provisions relating to winding up of banking companies have been
    enumerated under Ss. 38 to 44 of Banking Regulation Act, 1949 hereinafter the "Act").

    2. Meaning

    Winding up of a company basically means closing down of its business. After the winding up procedure,
    the company is dissolved. Winding up can happen because of many reasons, the most common of which
    is non-recovery of loans thereby increased liabilities over assets of the Company. During the process of
    winding up of a banking company, all its assets are sold out so as to repay the debts of that bank.

    Winding up of banking companies is generally a very long procedure but it can even be done in a short
    span of time under specific provisions of the Act.

    Reserve Bank of India supervises the winding up procedure for banking companies.

    A liquidator is appointed during the procedure so as to ensure security of interests of the customers and
    other creditors of the banking company.

    3. Classification

    The situations in which winding up of banking companies may happen have been classified under two
    heads:

    1. winding up by order of High Court u/s 38 of the Act

    2. Voluntary winding up

    4. By order of High Court u/s 38

    956. 38 states that High Court can order winding up of a banking company on certain grounds stated
    therein and such grounds do not exclude the application of Ss. 391, 392, 433 and 533 of Companies Act,
    1956. Such provisions of this section are also stated not to be prejudicial to the provisions under S. 37(1)
    of the act. An official liquidator is appointed by the Central Government to undergo the proceedings of
    winding up the provisions relating to which have been discussed under section 38A which has been
    discussed later under heading appointment of liquidator of this article.

    1. 40 further states that any proceeding for winding up of banking company by order of High Court shall
    not be stayed by High Court unless it believes that such banking company will pay of its debts even
    without winding up proceedings.

    Winding up of banking companies by an order of High Court can be done under two grounds stated as
    follows:

    a) Inability to pay debt


    When the banking company comes into a position when it cannot repay its debts; and

    b). Application by RBI S.37i)

    Reserve Bank of India can make an application for winding up of banking company if it is ordered to do
    so u/s 35(4)(b). The grounds of such application are as follows:

     Non-compliance of requirements of S.11 of the Act


     Non-compliance of requirements of S.11 of the Act by the banking company; or
     If the banking company has become disentitled to carry on its business in India u/s 22 of the Act;
    or
     If it has violated any of the provisions under Ss. 35(4)(a) or 42(3A)b) of RBI Act, 1934; or
     Contravenes any other provision of RBI Act, 1934; or
     In the opinion of RBI the banking company is unable to pay its debts; or
     If in opinion of RBI any compromise sanctioned by

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