## Report on Amendment to Banking Regulation Act, 1949 Regarding Kotak Mahindra Bank Limited
**1. Executive Summary:**
This report analyzes a notification (S.O. 3905E) issued by the Ministry of Finance, Department of Financial Services, amending the Banking Regulation Act, 1949. The amendment grants Kotak Mahindra Bank Limited a further exemption from a specific provision of the Act, allowing Shri Uday Kotak, its Managing Director and Chief Executive Officer, to continue serving as a Non-executive Director on the Board of Infrastructure Leasing and Financial Services Limited (IL&FS) until April 2, 2022. This temporary exemption is based on the recommendation of the Reserve Bank of India (RBI).
**2. Introduction:**
The purpose of this report is to provide a detailed overview and analysis of the provided government notification (S.O. 3905E) amending the Banking Regulation Act, 1949, specifically as it pertains to Kotak Mahindra Bank Limited. This analysis is based solely on the information contained within the provided text.
**3. Policy Overview:**
* **Original Policy:** Banking Regulation Act, 1949.
* **Core Objective(s):** The original Act aims to regulate banking companies. From the amendment text, a core objective of Section 10 (1) (c) (i) of the Act is to prevent potential conflicts of interest by restricting bank executives from simultaneously serving as directors in other companies (excluding subsidiaries and certain registered companies).
**4. Background and Rationale:**
This amendment provides a temporary exemption to the Banking Regulation Act, 1949, due to the special circumstances surrounding IL&FS. The rationale for this specific amendment is to allow Shri Uday Kotak to continue serving on the board of IL&FS as a Non-executive Director. It is inferred that his continued presence on the board is deemed beneficial or necessary by the RBI and the Central Government, despite the potential conflict of interest concerns addressed by the original Act. The provided text suggests previous exemptions were granted and are now expiring, necessitating a further extension.
**5. Key Provisions / Changes:**
This notification serves as an amendment. The key changes are:
* **Specific Part of Original Policy Changed:** The amendment specifically addresses subclause (i) of clause (c) of subsection (1) of section 10 of the Banking Regulation Act, 1949.
* **New Rule/Provision:** The notification declares that the aforementioned provision of the Act *shall not apply* to Kotak Mahindra Bank Limited "in so far as it relates to its Managing Director and Chief Executive Officer, Shri Uday Kotak being on the Board of Infrastructure Leasing and Financial Services Limited as its Nonexecutive Director".
* **Difference/Effect of Change:** This amendment provides an exemption, *allowing* Shri Uday Kotak to continue serving as a Non-executive Director on the Board of IL&FS, *despite* the restrictions outlined in Section 10 (1) (c) (i) of the Banking Regulation Act, 1949. This exemption is time-bound, valid "for a further period up to the 2nd day of April, 2022."
**6. Target Audience and Stakeholders:**
The primary stakeholders directly affected by this amendment are:
* Kotak Mahindra Bank Limited, specifically its Managing Director and Chief Executive Officer, Shri Uday Kotak.
* Infrastructure Leasing and Financial Services Limited (IL&FS).
* The Reserve Bank of India (RBI).
* Central Government (Ministry of Finance).
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Central Government (Ministry of Finance) is the issuing authority. The Reserve Bank of India (RBI) plays a crucial role, as the amendment is based on their recommendation.
* **Timelines:** The exemption is valid from October 3, 2021, to April 2, 2022.
* The notification is to be published in the Official Gazette, ensuring its accessibility and legal standing.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcome of this amendment is to allow Shri Uday Kotak to continue contributing to the board of IL&FS as a Non-executive Director for an additional six months. This suggests that his expertise or involvement is considered valuable during this period. The impact of this amendment is primarily on the specific situation of Shri Uday Kotak and the boards of Kotak Mahindra Bank Limited and IL&FS; it maintains the *status quo* for a limited period.
**9. Conclusion:**
The notification (S.O. 3905E) provides a limited-time extension to an existing exemption, allowing the Managing Director and CEO of Kotak Mahindra Bank Limited to serve on the board of IL&FS, despite potential conflicts outlined in the Banking Regulation Act, 1949. This amendment, based on the recommendation of the RBI, highlights the ongoing need for specific exemptions to the Banking Regulation Act to address unique circumstances within the financial sector.
Key Entities Referenced
Banking Regulation Act, 1949: An Act of the Indian Parliament to regulate the banking companies in India.
Companies Act, 1956: An Act of the Indian Parliament concerning Indian companies
Reserve Bank of India: The central bank of India.
Shri Uday Kotak: Managing Director and Chief Executive Officer of Kotak Mahindra Bank Limited.
Kotak Mahindra Bank Limited: A private sector bank in India.
Infrastructure Leasing and Financial Services Limited: An Indian infrastructure development and finance company.
Central Government: The executive branch of the Government of India.
New Delhi: Capital of India
Mayapuri, New Delhi: Location of Government of India Press
Delhi: Location of Controller of Publications
रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. No. D. L.-33004/99
xxxGIDHxxx
सी.जी.-डी.एxलx.x-GअID.-E2xx1x0 92021-229839
CG-DL-E-21092021-229839
ऄसाधारण
EXTRAORDINARY
भाग II—खण्ड 3—ईप-खण्ड (ii)
PART II—Section 3—Sub-section (ii)
प्राजधकार स ेप्रकाजित
PUBLISHED BY AUTHORITY
स.ं 3581] नइ ददल्ली, मगं लिार, जसतम्ब र 21, 2021/भाद्र 30, 1943
No. 3581] NEW DELHI, TUESDAY, SEPTEMBER 21, 2021/BHADRA 30, 1943
जित्त मत्रं ालय
(जित्तीय सिे ाएं जिभाग)
ऄजधसचू ना
नइ ददल्ली, 21 जसतम्बर, 2021
का.अ. 3905(ऄ).—यत:, बैंककारी जिजनयमन ऄजधजनयम, 1949 (1949 का 10) (जजसका आसके पश्चात आस
ऄजधजनयम के रूप म ें ईल्लेख दकया गया ह)ै की धारा 10 की ईप-धारा (1) के खण्ड (ग) का ईप-खंड (i) दकसी बैंककग कंपनी
को ऐसे व्यजि द्वारा प्रबंजधत दकए जाने पर रोक लगाता ह ैजो दकसी ऐसी ऄन्य कंपनी का जनदेिक ह ैजो कंपनी ऄजधजनयम,
1956 (1956 का 1) की धारा 25 के ऄतं गतग दकसी ऄन्य बैंककग कंपनी की ऄनुषगं ी या पंजीकृत कंपनी न हो;
और यत:, ईि ऄजधजनयम की धारा 10 की ईप-धारा (1) के खंड (ग) के ईप-खंड (i) के परंतुक म ें यह ईपबंध
दकया गया ह ै दक ईि ईप-खंड के प्रजतबंध दकसी कंपनी के ऐसे जनदेिक के संबंध म ें तीन माह स े ऄनजधक की ऄस्ट्थायी
ऄिजध ऄथिा भारतीय ररजिग बैंक द्वारा ऄनुमत्त ऐसी ऄिजध, जो नौ माह स ेऄजधक न हो, के जलए लाग ू नहीं होंग;े
और यतः, भारतीय ररजिग बैंक ने श्री ईदय कोटक, प्रबंधक जनदेिक और मख्ु य कायगकारी ऄजधकारी, कोटक महहद्रा
बैंक जलजमटेड को ईि ऄजधजनयम के ईपयुगि ईपबंधों के ऄतं गगत अरंभ म ें तीन माह की ऄिजध के जलए और तत्पश्चात ्
नौ माह की ऄजतररि ऄिजध के जलए, 2 ऄिूबर, 2019 तक आन्रास्ट्रक्चर लीहजग एडं फाआनेंजियल सर्विसेज जलजमटेड के
बोडग म ेंगैर-कायगकारी जनदेिक के पद पर बने रहने की ऄनुमजत दी थी;
और यतः, ईि ऄजधजनयम की धारा 53 भारतीय ररजि ग बकैं की ऄनुिंसा पर केन्द्रीय सरकार को राजपत्र म ें
ऄजधसूचना के द्वारा यह घोषणा करन े की िजि प्रदान करती ह ै दक ईि ऄजधजनयम के कोइ या सभी ईपबंध दकसी बैंककग
कंपनी ऄथिा संस्ट्था ऄथिा बैंककग कंपनी की दकसी श्रणे ी पर सामान्य रूप स े ऄथिा यथा-जनर्ददष्ट दकसी ऐसी ऄिजध के
जलए लाग ू नहीं होंग;े
5336 GI/2021 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
और यतः, केन्द्रीय सरकार न े भारतीय ररजिग बैंक की ऄनुिसं ा पर कोटक महहद्रा बैंक जलजमटेड पर बैंककारी
जिजनयमन ऄजधजनयम, 1949 की धारा 10 की ईप-धारा (1) के खंड (ग) के ईप-खंड (i) के लाग ू होने स े छूट प्रदान दकए
जाने को अिश्यक माना ह,ै जहां तक आसका संबंध श्री ईदय कोटक, प्रबंध जनदेिक एि ं मुख्य कायगकारी ऄजधकारी, कोटक
महहद्रा बैंक जलजमटेड को आन्रास्ट्रक्चर लीहजग एंड फाआनेंजियल सर्विसेज जलजमटेड के बोड ग म ें 3 ऄिूबर, 2019 स े एक िष ग
की ऄजतररि ऄिजध के जलए गरै -कायगकारी जनदेिक के पद पर जनयुि करने स े ह ै तथा आस संबंध म ें 1 ऄिूबर, 2019 को
भारत के राजपत्र के भाग II, खंड 3, ईप-खंड (ii) म ें प्रकाजित 1 ऄक् टूबर, 2019 के का.अ. 3584(ऄ) के माध् यम स े एक
ऄजध सूचना जारी की थी और ईि छूट को तदनतं र 23 जसतम्बर, 2020 को भारत के राजपत्र, भाग II, खंड 3, ईप-खंड (ii)
म ें प्रकाजित 23 जसतम्बर, 2020 के का.अ. 3238(ऄ) के माध्यम स े बढाया गया था तथा ईि के माध्यम स े प्रदत्त छूट 2
ऄिूबर, 2021 को समाप् त हो रही ह;ै
और यत: केंद्रीय सरकार ने भारतीय ररजिग बैंक की जसफाररि पर कोटक महहद्रा बैंक जलजमटेड को दी गइ ईि छूट
को 3 ऄिूबर, 2021 स े छ: माह की ऄिजध के जलए प्रदान करने को अिश् यक माना ह।ै
ऄतः ऄब बैंककारी जिजनयमन ऄजधजनयम, 1949 की धारा 53 की ईपधारा (1) द्वारा प्रदत्त िजियों का प्रयोग
करते हुए, केन्द्रीय सरकार, भारतीय ररजिग बैंक की ऄनुिंसा पर, एतद्द्वारा, यह घोषणा करती ह ै दक ईि ऄजधजनयम की
धारा 10 की ईप-धारा (1) के खंड (ग) के ईप-खंड (i) के ईपबंध कोटक महहद्रा बैंक जलजमटेड पर लागू नहीं होंग,े जहां तक
आसका संबंध कोटक महहद्रा बैंक जलजमटेड के प्रबंध जनदेिक एि ं मुख्य कायगकारी ऄजधकारी श्री ईदय कोटक के आन्रास्ट्रक्चर
लीहजग एंड फाआनेंजियल सर्विसेज जलजमटेड के बोड ग म ें 2 ऄप्रलै , 2022 तक की ऄिजध के जलए गरै -कायगकारी जनदेिक के
पद पर बन े रहन े स े ह।ै
[फा. स.ं 7/129/2019-बीओए-I]
पंकज जैन, ऄपर सजचि
MINISTRY OF FINANCE
(Department of Financial Services)
NOTIFICATION
New Delhi, the 21st September, 2021
S.O. 3905(E).—Whereas sub-clause (i) of clause (c) of sub-section (1) of section 10 of the Banking
Regulation Act, 1949 (10 of 1949) (hereinafter referred to as the said Act) prohibits a banking company to
be managed by any person who is a director of any other company not being a subsidiary of the banking
company or a company registered under section 25 of the Companies Act, 1956 (1 of 1956);
And whereas the proviso to the said sub-clause (i) of clause (c) of sub-section (1) of section 10 of
the said Act provides that the prohibition in the said sub-clause shall not apply in respect of any such
director for a temporary period not exceeding three months or such further period not exceeding nine
months as the Reserve Bank of India may allow;
And whereas the Reserve Bank of India allowed Shri Uday Kotak, Managing Director and Chief
Executive Officer of Kotak Mahindra Bank Limited to be on the Board of Infrastructure Leasing and
Financial Services Limited as its Non-executive Director, initially for a period of three months and
subsequently for a further period of nine months, under the above provisions of the said Act, till the 2nd day
of October, 2019;
And whereas section 53 of the said Act empowers the Central Government, on the recommendation
of the Reserve Bank of India, to declare, by notification in the Official Gazette, that any or all of the
provisions of the said Act shall not apply to any banking company or institution or to any class of banking
companies either generally or for such period as may be specified;
And whereas the Central Government, on the recommendations of the Reserve Bank of India, had
considered it necessary to grant exemption to Kotak Mahindra Bank Limited from application of sub-clause
(i) of clause (c) of sub-section (1) of section 10 of the Banking Regulation Act, 1949 in so far as it relates to
its Managing Director and Chief Executive Officer, Shri Uday Kotak being on the Board of Infrastructure
Leasing and Financial Services Limited as its Non-executive Director, for a further period of one year with[भाग II—खण् ड 3(ii)] भारत का राजपत्र : ऄसाधारण 3
effect from the 3rd day of October, 2019 and issued a notification number S.O. 3584(E), dated the
1st October, 2019, published in the Gazette of India, Part II, Section 3, sub-section (ii), dated the
1st October, 2019, to that effect and further extended the exemption for one year by a subsequent
notification number S.O. 3238(E), dated the 23rd September, 2020, published in the Gazette of India, Part
II, Section 3, sub-section (ii), dated the 23rd September, 2020, and the exemption so granted is expiring on
the 2nd day of October, 2021;
And whereas the Central Government, on the recommendations of the Reserve Bank of India, has
considered it necessary to grant the said exemption to Kotak Mahindra Bank Limited for a further period of
six months with effect from the 3rd day of October, 2021;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section 53 of the Banking
Regulation Act, 1949, the Central Government, on the recommendation of the Reserve Bank of India,
hereby declares that the provisions of sub-clause (i) of clause (c) of sub-section (1) of section 10 of the said
Act shall not apply to Kotak Mahindra Bank Limited in so far as it relates to its Managing Director and
Chief Executive Officer, Shri Uday Kotak being on the Board of Infrastructure Leasing and Financial
Services Limited as its Non-executive Director, for a further period up to the 2nd day of April, 2022.
[F. No. 7/129/2019-BOA-I]
PANKAJ JAIN, Addl. Secy.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.