Section 7 in The State Bank Of India (Subsidiary Banks) Act, 1959
7. Issued Capital of new Banks.
(1)On the appointed day, the issued capital of a new bank shall consist of such amount, divided into fully paid-up shares of hundred rupees each, as the State Bank may, with the approval of the Reserve Bank, fix.(1A)[ Notwithstanding anything contained in sub-section (1), the issued capital of a new bank shall, consist of such amount as the State Bank may, [in consultation with the Reserve Bank and with the approval of the Central Government] [Inserted by Act 30 of 2007 (w.e.f. 18.6.2007) ], fix, and shall be divided into fully paid-up shares of such denomination in accordance with sub-section (2) of section 6](2)All shares in the issued capital of a new bank shall, on the appointed day, stand allotted to the State Bank.(3)The State Bank shall, as soon as may be, after the determination, if any, by the Tribunal, of the amount of compensation payable in respect of an existing bank, consider whether any increase in, or reduction of, the issued capital of the corresponding new bank as fixed under sub-section (1), by way of adjustment, or transfer from, or to, the reserves of such bank, or in any other manner, is necessary or expedient and may, thereafter with the approval of the Reserve Bank, direct that bank to increase or reduce its issued capital.(4)[ A new bank may from time to time, [with the approval of the State Bank and the Central Government in consultation with the Reserve Bank] [Substituted by Act 30 of 2007 (w.e.f. 18.6.2007) ], increase, whether by [public issue or rights issue] [Substituted by Act 17 of 2011.]or by preferential allotment or private placement in accordance with the procedure as may be prescribed, its issued capital by issue of equity or preference shares.(5)The issued capital of a new bank shall consist of equity shares or equity and preference shares:Provided that the issue of preference shares shall be in accordance with the guidelines framed by the Reserve Bank specifying the class of preference shares, the extent of issue of each class of such preference shares (whether perpetual or irredeemable or redeemable) and the terms and conditions subject to which, each class of preference shares may be issued](6)[ A new bank may, [with the approval of the State Bank and the Central Government in consultation with the Reserve Bank] [Inserted by Act 30 of 2007 (w.e.f. 18.6.2007) ], increase from time to time by way of issuing bonus shares to existing equity shareholders, its issued capital in such manner as the State Bank, [in consultation with the Reserve Bank and with the approval of the Central Government] [Substituted by Act 17 of 2011.], direct.(7)No increase or reduction in the issued capital of a new bank shall be made in such a manner that the State Bank holds at any time less than fifty-one per cent. of the issued capital consisting of equity shares of new bank.(8)A new bank may accept the money in respect of shares issued towards increase in issued capital in instalments, make calls and forfeit unpaid shares and re-issue them, in the manner as may be prescribed]
