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CS Professional · Banking and Insurance - Laws and Practice · Control over Organization of Banks

A scheme for amalgamating Ganga Bank Ltd with Yamuna Bank Ltd, prepared by the RBI under Section 45, has been sanctioned by the Central Government. Which statement is correct?

Sanction by the Central Government is conclusive evidence that all requirements of Section 45 for the amalgamation have been complied with. The scheme also binds members, depositors, creditors and employees and overrides contrary laws and agreements.

  1. AThe sanction is conclusive evidence that all requirements of the section relating to the amalgamation were complied withCorrect
  2. BThe sanction can be challenged in every court for procedural lapses by the RBI
  3. CThe scheme binds only the banks and not depositors
  4. DThe scheme binds the banks but does not override agreements or other laws

Explanation

Section 45(7A) makes the Central Government's sanction conclusive evidence of compliance. Section 45(8) binds members, depositors, creditors and employees too, and Section 45(14) gives the scheme overriding effect over other laws and agreements, ruling out the other options.

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