SECTION 3 TO 5 SBI ACT 1955 incorporation of sbi

Amica Genus

7 Jan 202313:12

Summary

TLDRThe video script discusses the Statement of India Act 1955, focusing on the establishment and functions of the State Bank of India. It covers the bank's transition from the Imperial Bank, the authorized capital, issued capital, and the role of the RBI. The script also touches on the corporate body status of the bank, the power to acquire assets, and the central government's control over the issued capital.

Takeaways

📚 The video discusses the Statement of India Act 1955, highlighting its importance for local actors and the lack of videos on YouTube about it.
🏦 The script explains the transition from the Imperial Bank to the State Bank of India, emphasizing the merger process and the establishment of the new bank.
📖 It provides an overview of the Act, starting with the basic introduction and moving towards the detailed sections, aiming to cover up to section 35.
🛡️ The video mentions the role of the government securities and the World Bank in the context of the Imperial Bank's functions before its merger.
📜 Section 345 is highlighted as crucial for understanding the operational aspects of the establishment of the State Bank.
🏢 The script details the establishment of the State Bank, including the acquisition of all banking activities and the liabilities of the Imperial Bank.
💼 The role of the central government and the creation of a corporate body with perpetual succession and a common seal are discussed in relation to the State Bank.
📈 The authorized capital is discussed, with the script mentioning an initial amount of ₹5000 crores, divided into shares of various denominations.
📊 The script explains the issued capital in the context of the State Bank's establishment, detailing the distribution of shares and the potential for future increases.
📝 The video outlines the rights and permissions of the central board and the RBI, including the ability to reduce or increase the number of shares with the necessary approvals.
🏛️ The final sections of the script touch upon the issued capital of the State Bank, the composition of equity and preference shares, and the guidelines set by the RBI.

Q & A

What is the main topic of the video script?
-The main topic of the video script is the discussion of the Statement of India Act 1955, which is an important act for local actors, and its implications on banking activities.
What does the video script discuss about the Imperial Bank in the context of the State Bank of India Act 1955?
-The script discusses the transition of the Imperial Bank's activities and liabilities to the newly established State Bank of India (SBI) under the State Bank of India Act 1955.
What is the significance of Section 345 mentioned in the script?
-Section 345 is significant as it outlines the operational aspects of the State Bank of India Act 1955, detailing how the functions of the Imperial Bank are carried out by the State Bank of India.
What is the role of the Central Board as mentioned in the script?
-The Central Board is responsible for the management of the State Bank of India, and it has the power to acquire immovable or movable land for the bank's purposes.
What does the term 'Authorized Capital' refer to in the context of the video script?
-In the context of the video script, 'Authorized Capital' refers to the maximum amount of capital that the State Bank of India is permitted to raise, which is mentioned as ₹5000 crores.
How is the Authorized Capital divided in the script?
-The Authorized Capital is divided into shares of various denominations, such as 10, 10, and 5000, with a full-paid value as specified by the Reserve Bank of India.
What is the role of the Central Government in the reduction or division of shares as per the script?
-The Central Government has the power to reduce or divide the shares of the State Bank of India, but it requires the prior approval of the Reserve Bank of India.
What does Section 5 of the Act discuss according to the script?
-Section 5 of the Act discusses the issued capital of the State Bank of India, which is specified as 5 crores, 62 lakhs, and 6250 thousand.
What is the significance of the shares that the Imperial Bank held before the establishment of the State Bank of India?
-The shares that the Imperial Bank held are transferred to the Reserve Bank of India upon the establishment of the State Bank of India, as per the script.
What are the types of shares issued by the State Bank of India as mentioned in the script?
-The script mentions that the State Bank of India issues both equity shares and preference shares, with the terms and conditions specified by the Reserve Bank of India.
What is the minimum percentage of issued capital that the Central Government must hold according to the script?
-According to the script, the Central Government must hold at least 51% of the issued capital of the State Bank of India.

Outlines

00:00

🏦 Introduction to the State Bank of India Act 1955

The video script begins by introducing the State Bank of India Act 1955, highlighting its importance for local actors. The speaker, presumably a student from Kurukshetra University, discusses the Act's significance and the lack of educational content on YouTube about it. The video aims to provide a basic introduction to the Act, covering sections 3 to 5. The speaker explains the transition from the Imperial Bank to the State Bank of India, detailing how the bank's functions and liabilities were transferred to the State Bank. The focus is on understanding the establishment, functions, and the role of the State Bank in relation to the government and the central bank.

05:03

📈 Authorized Capital and Central Board's Powers

This paragraph delves into the concept of authorized capital, explaining that the State Bank of India Act 1955 stipulates an authorized capital of ₹5000 crores, divided into fully paid-up shares of denominations of ₹10, ₹50, and ₹100. The speaker discusses the Central Government's ability to reduce or divide these shares, which requires prior approval from the Reserve Bank of India (RBI). The role of the Central Board in managing the shares is also highlighted, emphasizing that any changes to the authorized capital must be approved by the RBI. The paragraph further clarifies that the Central Board can increase or reduce the number of shares, but such actions are subject to RBI approval.

10:03

💼 Issued Capital and Central Government's Role

The speaker continues by discussing the issued capital of the State Bank of India, which is detailed in Section 5 of the Act. It is mentioned that the issued capital is divided into 5,62,50,000 shares. The video script explains that the shares issued by the State Bank are divided among the shares of the Imperial Bank and the RBI. The Central Government is noted to have a minimum of 51% of the issued capital, with the ability to increase this percentage without the need for prior approval from the RBI. The speaker also touches on the concept of bonus shares, explaining that the Central Government can issue bonus shares to the equity shareholders, which can be in the form of cash or other assets.

Mindmap

Keywords

💡Imperial Bank

The Imperial Bank was a financial institution that preceded the State Bank of India (SBI). In the context of the video, it represents the original entity that was succeeded by SBI, inheriting its assets, liabilities, and business operations. This transition is a key part of the video's explanation of the State Bank of India Act, 1955.

💡State Bank of India (SBI)

SBI is the new entity formed by merging the Imperial Bank's operations as per the State Bank of India Act, 1955. The video discusses how SBI took over the functions of the Imperial Bank, including its banking activities and business transactions. The establishment of SBI marked a significant shift in India's banking landscape.

💡Section 3

Section 3 of the State Bank of India Act, 1955, deals with the establishment and incorporation of SBI. It explains how the new bank inherits the business and obligations of the Imperial Bank. The video uses this section to explain the transition process and the legal framework for SBI's creation.

💡Authorized Capital

Authorized capital refers to the maximum amount of capital that a company is allowed to issue as stated in its constitutional documents. In the context of the video, Section 4 specifies SBI's authorized capital as ₹5000 crore, divided into shares. This capital structure is fundamental to understanding SBI's financial foundation.

💡Issued Capital

Issued capital is the portion of authorized capital that has been offered and taken up by shareholders. Section 5 of the video explains that on the day SBI was established, its issued capital was ₹5 crore 62 lakh and 6250 thousand. This indicates the initial financial stake and shareholder structure of the bank.

💡Section 4

Section 4 of the State Bank of India Act, 1955, addresses the authorized capital of SBI. It outlines the total authorized capital and the process for issuing shares. The video details how this capital is divided into shares and the regulatory controls on increasing or decreasing this capital with RBI's approval.

💡Preference Shares

Preference shares are a type of stock with preferential rights over common shares, often concerning dividends and assets in liquidation. The video mentions these shares in the context of SBI's capital structure, explaining how they are issued and governed by RBI guidelines, and their role in enhancing SBI's financial stability.

💡Corporate Body

A corporate body refers to an entity recognized by law as having legal rights and responsibilities. In the video, SBI is established as a corporate body with perpetual succession and a common seal, meaning it can continue indefinitely and can sue or be sued in its name. This legal framework is crucial for SBI's operations and governance.

💡Section 5

Section 5 of the State Bank of India Act, 1955, deals with the issued capital of SBI. It specifies the initial issued capital amount and the division of this capital into shares. The video explains how these shares are managed and the implications for SBI's financial structure and shareholder distribution.

💡Bonus Shares

Bonus shares are additional shares given to existing shareholders without any extra cost, based on the number of shares already owned. The video discusses how the central government can issue bonus shares to increase SBI's issued capital, highlighting a method to enhance shareholder value and expand the bank's financial base.

Highlights

Introduction to the Statement of India Act 1955, an important act for local actors.

Discussion on the lack of videos on YouTube about this act, despite its significance.

Explanation of the transition from the Imperial Bank to the State Bank of India.

Clarification on the establishment of the State Bank and its operational functions as per Section 345.

Details on the liabilities and business carried out by the Imperial Bank before its transition.

The role of the State Bank in taking over the business and loans of the Imperial Bank.

Mention of the Central Board and its perpetual succession and common seal.

The corporate body created by the Central Government for the State Bank.

Authority of the State Bank to acquire both immovable and movable land as per Section 3.

The authorized capital of the State Bank, discussed in Section 4, amounting to ₹5000 crores.

Provisions for the Central Government to reduce or divide the shares of the State Bank.

The need for RBI's approval for any changes in the capital structure of the State Bank.

Introduction of the issued capital in Section 5, detailing the amount and division of shares.

The distribution of shares from the Imperial Bank to the State Bank as per the provisions.

The role of the Central Board in modifying the terms and conditions of preference shares.

The minimum 51% of issued capital that the Central Government must retain.

Conditions under which the Central Government can issue additional shares without RBI's permission.

The ability of the Central Board to increase the issued capital from time to time.

Final thoughts on the incorporation and share capital of the State Bank, emphasizing the technical terms and the need for careful review.