In the discharge of its functions, the Board shall be guided by such instructions on questions of policy as may be given to it by the State Government ⁴[in consultation with ⁵[[and after obtaining the advice of,] the 6[Development Bank]].
If any dispute arises between the State Government and the Board as to whether a question is or is not a question of policy, the decision of the State Government shall be final.
If the Board fails to carry out the instructions on the question of policy laid down by the State Government ⁷[under sub-section (1) of this section or the instructions given to the Board under sub-section (4) of section 37A]. the State Government shall have the power to supersede the Board and appoint a new Board in its place to function until a properly constituted Board is set up, and the decision to the State Government as to the grounds for superseding the Board shall not be questioned in any court.

⁸[The Financial Corporation shall not, except as otherwise required by this Act or any other law for the time being in force, divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage, customary among bankers, necessary or appropriate for the Financial Corporation to divulge such information.

1. Subs. by Act 43 of 1985. sec. 25. for sub-section (1) and (2).
2. Subs. by Act 52 of 1975, sec. 3. for certain words (w.e.f. 16-2-1976).
3. Subs. by Act 56 of 1956, sec. 22. for "three months".
4. Ins. by Act 56 of 1956. sec. 23.
5. Ins. by Act 77 of 1972. sec. 26.                                                       
6. Subs. by Act 52 of 1975. sec. 37. for "Reserve Bank" (w.e.f. 16-2-1976).
7. Subs. by Act 52 of 1975. sec 38. for certain words.
8. Ins by Act 48 of 1983. sec. 6.       
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The Financial Corporation may, for the purpose of efficient discharge of its functions under this Act, collect from, or  furnish to-

the Central Government;
the State Bank of India constituted under section 3 of the State Bank of India Act. 1955 (23 of 1955), any subsidiary bank within the meaning of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act. 1980 (40 of 1980) any other scheduled bank, any State co-operative bank or the Development Bank.

such credit information or other information as it may consider useful for the purpose, in such manner and at such time as it may think fit.
Explanation.-For the purposes of this sub-section, the expression "credit information" shall have the same meaning as in clause 

of section 45A of the Reserve Bank of India Act. 1934 (2 of 1934) subject to the modification that the banking company referred to therein shall mean a bank referred to in clause (b) of this sub-section.]

¹[Every director, auditor, officer or other employee of the Financial Corporation shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the Schedule.]

Every director shall be indemnified by the Financial Corporation against all losses and expenses incurred by him in the discharge of his duties except such as are caused by Ins own wilful act or default.
A director shall not be responsible for any other director or for any officer or other employee of the Financial Corporation or for any loss or expenses resulting to the Financial Corporation by the insufficiency or deficiency of value of or title to any property or security acquired or taken on behalf of the Financial Corporation or by anything done in good faith in the execution of the duties of his office or in relation thereto.

No suit, prosecution or other legal proceeding shall lie against any person appointed as director, administrator, managing agent or manager by the Financial Corporation in pursuance of section 27 or section 32A for anything which is in good faith done or intended to be done by him as such director, administrator, managing agent or manager.]

Whoever, in any bill of lading, warehouse receipt or other document given to the Financial Corporation, whereby security is given or is purported to be given to the Financial Corporation for any accommodation granted by it under tins Act, wilfully makes any false statement or knowingly permits any false statement to be made shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to two thousand rupees, or with both. 
Whoever, without the consent in writing of the Financial Corporation, use the name of the Financial Corporation in any prospectus or advertisement shall be punishable with imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

No court shall take cognizance of any offence punishable under this Act otherwise than on a complaint in writing signed by an officer of the Financial Corporation authorized by the Board in this behalf.

⁶[Delegation of powers.-The Board may, by general or special order, delegate to the managing director or to any other officer of the Financial Corporation "⁷[or to any committee appointed under section 21] subject to such conditions and limitations, if any, as may be specified in the order such of its powers and duties under this Act as it may deem necessary.]

⁸[Reports to the Board.-

The minutes of every meeting of the committee appointed under section 21 shall, after confirmation thereof at the next meeting of the committee, laid before the Board at the next following meeting of the Board.
Every action taken by the managing director and any other officer of the Financial Corporation shall, as soon as may be after it is taken by them, be reported to the Board. ]

Liquidation of Financial Corporation.-No provision of law relating to the winding up of companies or corporations shall apply to 
the Financial Corporation, and the Financial Corporation shall not be placed in liquidation, save by order of the State Government and in such manner as it may direct. 

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1. Subs. by Act 43 of 1985, sec. 26. for "Indian Income-tax Act, 1922 (11 of 1922)".
2. Subs. by Act 6 of 1962, sec. 22. for certain words.
3. Subs. by Act 6 of 1962, sec. 22. for "or bonds".
4. Subs. by Act 48 of 1952, sec. 3 and Sch. II. for "its".
5. Subs. by Act 6 of 1962. sec. 22, for "declared to he income-tax free".
6. Ins. by Act 6 of 1962, sec. 23.
7. Ins. by Act 43 of 1985, sec. 27.
8. Ins. by Act 43 of 1985, sec. 28.
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Power to apply Act to certain financial institutions in existence at commencement of Act.-

The Central Government may by notification in the Official Gazette, direct that all or any of the provisions of this Act shall, subject to such exceptions and restrictions as may be specified, apply to ¹[any institution established by a State Government) which has for its object the financing of industrial concerns, and on the issue of such notification, the institution shall be deemed to be a Financial Corporation established by the State Government for the State within the meaning of this Act, and the provisions of this Act shall become applicable thereto according to the tenor of the notification : ²[Provided that no notification shall be issued under this sub-section in respect of any institution unless a request is made in that behalf by the State Government concerned.]
Any notification issued under sub-section (1) may suspend the operation of any enactment applicable to any such institution immediately before the issue of the notification.

Where a Financial Corporation has been established for any State ⁴[and one or more other States not served in whole or in part by a Financial Corporation] desires that the Financial Corporation ⁵[should serve the needs of those States or of any area therein], and the States, after consultation with the ⁶[Development Bank], enter into an agreement which is published in the Official Gazettes of each of those States, then the Financial Corporation shall, on the issue of a notification in the Official Gazette by the Central Government, serve the needs of those States ⁶[or, as the case may be, of the area therein] in terms of the agreement ⁷[and any Financial Corporation or any State may enter into separate or successive agreements as aforesaid with one another or with other Financial Corporations of States and in relation to different areas of the States].
⁷[Any agreement entered into under sub-section (1) may be modified or rescinded by mutual agreement between the parties thereto and every such mutual agreement shall also provide for the apportionment of assets and liabilities].
An inter-State agreement among the participating States may, as far as may be, make all such provisions as are referred to in sub-section (2) of section 3A.

Power of State Government to make rules.-The State Government may ⁸[by notification in the Official Gazette,] make rules
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1. Subs. by Act 43 of 1985, sec. 29, for certain words.
2. Ins. by Act 43 of 1985, sec. 29.
3. Ins. by Act 56 of 1956, sec. 24.
4. Subs. by Act 77 of 1972. sec. 27. for "and any other Slate".
5. Subs. by Act 77 of 1972, sec. 27, for "should serve its needs".                   '
6. Subs. by Act 52 of 1975. sec. 37 (w.e.f. 16-2-1976)
7. Ins. by Art 77 of 1972, sec. 27.
8. Ins. by Act 4 of 1986, sec. 2 and Sch. (w.e.f. 15-5-1986).
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not inconsistent will) the provisions of this Act to give effect to the provisions of this Act and in particular, such rules may provide for the limitation on the voting rights of a shareholder and the manner in which such voting rights may be exercised and where there is any inconsistency between the rules and the regulations made under this Act, the rules shall prevail.

Power of Board to make regulations.-

The Board may, after consultation with the ¹[Development Bank] and with the previous sanction of the State Government, make regulations not inconsistent with this Act and the rules made there under to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.
In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for-

the holding and conduct of elections under this Act, including the final decision on doubts or disputes regarding the validity of elections :
the manner in which, and the conditions subject to which, the first allotment of the shares of the Financial Corporation shall be made :
the manner in which, and the conditions subject to which, the shares of the Financial Corporation may be held and transferred and generally all matters relating to the rights and duties of shareholders : 
the manner in which general meetings shall be convened, the procedure to be followed thereat and the manner in which voting rights may be exercised :
the calling of meetings of the Board, and of the Executive Committee, fees for attending meetings thereof and the conduct of business thereat :
the manner and terms of issue and repayment of bonds and debentures by the Financial Corporation :
the conditions which the Financial Corporation may impose in granting loans or advances :
²[* * *]
the forms of returns and statements required under this Act :
the duties and conduct of officers, other employees, advisers and agents of the Financial Corporation :
the establishment and maintenance of provident or other benefit funds for employees of the Financial Corporation :
the taking over of the management of any industrial concern on a breach of its agreement with the Financial Corporation :
the appointment of ³[committees] for the purposes of this Act, ⁴[fees for attending meetings thereof and the conduct of business thereat]; and
generally, the efficient conduct of the affairs of the Financial Corporation.

1. Subs. by Act 52 of 1975, sec. 37, for "Reserve Bank" (w.e.f. 16-2-1976).
2. Clause (h) omitted by Act 43 of 1985, sec. 30.
3. Subs. by Act 43 of 1985, sec. 30. for certain words.                               
4. Ins. by Act 56 of 1956. sec. 25.
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¹[All regulations made under this section shall be published in the Official Gazette and any such regulation shall have effect from such earlier or later date as may be specified in the regulations.]
²[Laying of rules and regulations before State Legislature.-Every rule made under section 47 and every regulation made under section 48 shall be laid, as soon as may be after it is made, before the State Legislature.]

³[Power to remove difficulty.—If any difficulty arises in giving effect to the provisions of this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975 (52 of 1975), the Central Government may, by order, do anything, not inconsistent with such provisions, for the purpose of removing the difficulty : Provided that no such order shall be made after the expiration of three years from the commencement of the said Amendment Act.]