CHAPTER
4
INVESTMENT
OF FUNDS, ACCOUNTS AND AUDIT
Funds
of the Financial Corporation.-
Every
Financial Corporation shall have its own fund, and all receipts of the
Financial Corporation shall be carried thereto and all payments by the
Corporation shall be made therefrom.
All
moneys belonging to the fund shall be deposited in the Reserve Bank 2[or
the State Bank of India or a subsidiary bank as defined in the State Bank
of India (Subsidiary Banks) Act, 1959 (38 of 1959)] 3[or in
any of the banks specified in column 2 of the First Schedule to the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970)
4[or
any of the banks specified in column 2 of the First Schedule to the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)]
5[or,
in consultation with the Reserve Bank. in a scheduled bank or a State cooperative
bank].
Investment
of funds.-The Financial Corporation may invest its funds in the securities
of the Central Government or of any State
Government.
Disposal
of profits.-
The
Financial Corporation shall establish a reserve fund.
After
making provision for bad and doubtful debts, depreciation of assets and
all other matters which are usually provided for by banking companies,
the Financial Corporation may out of its net annual profits declare a dividend:Provided
that for so long as the reserve fund is less than the paid-up share capital
of the Financial Corporation and until there has been repaid to the State
Government such sum, if any, as that Government may have paid under guarantee
given in pursuance of section 6, or 6[section 7 or section 8],
the rate of such dividend shall not exceed
the rate guaranteed by the State Government under section 6.
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1.
Ins. by Act 43 of 1985, sec. 21.
2.
Subs. by Act 6 of 1962, sec. 17. for "or with any agency of the Reserve
Bank other than a Government treasury".
3.
Ins. by Act 77 of 1972, sec. 22.
4.
Ins. by Act 43 of 1985, sec. 22.
5.
Subs. by Act 56 of 1956. sec. 18. for "or in a scheduled bank in consultation
with the Reserve Bank".
6.
Subs. by Act 6 of 1962, sec. 18, for "under any guarantee given in pursuance
of sub-section (2) of section 7".
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1[***]
2[Special
reserve fund.-
The
Financial Corporation may establish a special reserve fund, to which shall
be transferred such portion of the dividends accruing to 3[the
State Government, the Reserve Bank and the Development Bank] on the shares
of the Financial Corporation as may be fixed by agreement between 3[the
State Government, the Reserve Bank and the Development Bank];4[***]5[Provided
further that after the specified date this sub-section shall have effect
as if for the words "the State Government, the Reserve Bank and the Development
Bank", the words "the State Government and the Development Bank" have been
substituted except as regards all dividends accruing in respect of any
completed accounting period prior to the specified date].
No
shareholder of the Financial Corporation, other than 3[the State
Government, the Reserve Bank and the Development Bank], shall have any
claim to the special reserve fund.
The
amount standing to the credit of the special reserve fund may be utilised
by the Financial Corporation for only such purposes as are approved by
3[the
State Government, the Reserve Bank and the Development Bank].]
General
meetings.-
A
general meeting (hereinafter referred to as the annual general meeting)
shall be held annually at a place in the State where there is an office
of the Financial Corporation within 6[four months] from the
date on which the annual accounts of the Financial Corporation are closed,
and a general meeting may be convened by the Board at any other time.
The
shareholders present at the annual general meeting shall be entitled to
discuss the annual accounts, the report of the Board on the working of
the Financial Corporation throughout the year and the auditor's report
on the annual balance-sheet and accounts.
Audit.-
7[The
affairs of the Financial Corporation shall be audited by auditors duly
qualified to act as auditors of companies under sub-section (1) of section
226 of the Companies Act.1956 (1 of 1956), who shall be appointed by the
State Government in consultation with the Comptroller and Auditor-General
of India and the Financial
Corporation shall pay to the auditors so appointed such remuneration as
the State Government may fix.]
Every
auditor shall be supplied with a copy of the annual balance-sheet of the
Financial Corporation, and it shall be his duty to examine it, together
with the accounts and vouchers relating thereto, and every auditor shall
have a list delivered to him of all books
kept by the Financial Corporation and shall at all reasonable times have
access to the books, accounts and other documents of the Financial Corporation
and may in relation to such accounts examine any director or officer of
the Financial Corporation.
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1.
Sub-section (3) omitted by Act 77 of 1972, sec. 23.
2.
Ins. by Act 6 of 1962, sec. 19.
3.
Subs. by Act 77 of 1972. sec. 24, for "the State Government and the Reserve
Bank".
4.
The first proviso omitted by Act 43 of 1985. sec. 23.
5.
Ins. by Act 52 of 1975. sec. 36 (w.e.f. 16-2-1976).
6.
Subs. by Act 43 of 1985, sec. 24. for "three months".
7.
Subs. by Act 77 of l972, sec. 25, for sub-section(1).
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The
auditors shall make a report to the shareholders upon the annual balance-sheet
and accounts, and in every such report they shall state whether in their
opinion the balance-sheet is a full and fair balance-sheet containing all
necessary particulars and properly drawn up so as to exhibit a true and
correct view of the state of affairs of the Financial Corporation, and
in case they had called for any explanation or information from the Board,
whether it has been given and whether it is satisfactory.
The
State Government may, in consultation with the Comptroller and Auditor-General
of India, at any time issue directions to the auditors requiring them to
report to it upon the adequacy of measures taken by the Financial Corporation
for the protection of its shareholders and creditors or upon the sufficiency
of their procedure in auditing the affairs of the Financial Corporation
and may enlarge or extend the scope of the auditor direct that a different
procedure in audit be adopted, or direct that any other examination be
made by the auditors, if in its opinion public interest so requires.
The
Financial Corporation shall send a copy of every report of the auditors
to the Comptroller and Auditor-General of India at least one month before
it is placed before the shareholders.
Notwithstanding
anything contained in the preceding sub-sections, the Comptroller and Auditor-General
of India may, either of his own motion or on a request received in this
behalf from a State Government ,
undertake such audit and at such times as he may consider necessary:Provided
that where the State Government is required to make any payment on account
of the guarantee given by it under section 6 or 1[section 7
or section 8], as the case may be, such audit shall be undertaken by the
Comptroller and Auditor-General of India.
Every
audit report under sub-section (6) shall be forwarded to the State Government
and the Government shall cause the same to be laid before the Legislature
of the State.
2[Inspection.-
The
3[Development
Bank] at any time may, with the approval of the Central Government, and
on being directed so to do by that Government shall cause an inspection
to be made by one or more of its officers of the working of any Financial
Corporation and its books and accounts: and the 3[Development
Bank] shall send the report of such inspection to the Central Government
and to the State Government and shall supply a copy thereof to the Financial
Corporation.
It
shall be the duty of every director or every officer of the Financial Corporation
to produce to any officer making an inspection under sub-section (1) all
such books, accounts and other documents in his custody or power and to
furnish him with any statement and information relating to the affairs
of the Financial Corporation as the said officer may require of him within
such time as the said officer may specify.
Notwithstanding
anything contained in the Indian Evidence Act, 1872 (1 of 1872) or in any
other law for the time being in force, no court, tribunal or other authority
shall have power to require the 3[Development Bank] or any of
its officers to produce before such court, tribunal or other authority
the report of the inspection made by it under sub-section (1 ) or any copy
thereof.
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1.
Subs. by Act 6 of 1962, sec. 20, for "sub-section (2) of section 7".
2.
Ins. by Act 56 of 1956, sec. 21.
3.
Subs. by Act 52 of 1975. sec. 37, for "Reserve Bank" (w.e.f. 16-2-1976)
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The
State Government may, after considering any report sent to it under sub-section
(1), give such instructions to the Board as it considers necessary and
it shall be the duty of the Board to comply with such instructions.]
Returns.-
1[The
Financial Corporation shall furnish to the Stale Government, the Development
Bank and the Reserve Bank such statements and returns in such form as the
State Government, the Development Bank or the Reserve Bank may require
from time to time.]
The
Financial Corporation shall furnish 2[to the Stale Government,
the Development Bank and the Reserve Bank] within 3[four months]
of the close of each financial year a statement in the prescribed form
of its assets and liabilities as at the close of that year, together with
a profit and loss account for the year. the auditors' report and a report
of the working of the Financial Corporation during the year and copies
of the said statement, account and reports shall be published in the Official
Gazette and shall also be laid before the Legislature of the State.
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