Section 42(6) in The Reserve Bank of India Act, 1934
(6)The Bank shall, save as hereinafter provided, by notification in the Gazette of India,—(a)direct the inclusion in the Second Schedule of any bank not already so included which carries on the business of banking in India and which—(i)has a paid-up capital and reserve of an aggregate value of not less than five lakhs or rupees, and(ii)satisfies and Bank that its affairs are not being conducted in a manner detrimental to the interests of its depositors, and(iii)is a State co-operative bank or a company as defined in section 3 of the Companies Act, 1956 (1 of 1956), or an institution notified by the Central Government in this behalf or a corporation or a company incorporated by or under any law in force in any place outside India;(b)direct the exclusion from that Schedule of any scheduled bank,—(i)the aggregate value of whose paid-up capital and reserves becomes at any time less than five lakhs of rupees, or(ii)which is, in the opinion of the Bank after making an inspection under section 35 of the Banking Regulation Act, 1949 (10 of 1949), conducting its affairs to the detriment of the interests of its depositors, or(iii)which goes into liquidation or otherwise ceases to carry on banking business:Provided that the Bank may, on application of the scheduled bank concerned and subject to such conditions, if any, as it may impose, defer the making of a direction under sub-clause (i) or sub-clause (ii) of clause(b) for such period as the Bank consider reasonable to give the scheduled bank an opportunity of increasing the aggregate value of its paid-up capital and reserves to not less than five lakhs of rupees or, as the case may be, of removing the defects in the conduct of its affairs;(c)alter the description in that Schedule whenever any scheduled bank changes its name.Explanation.— In this sub-section the expression “value” means the real or exchangeable value and not the nominal value which may be shown in the boods of the bank concerned; and if any dispute arises in computing the aggregate value of the paid-up capital and reserves of a bank, a determination thereof by the Bank shall be final for the purposes of this sub-section.
