Section 25 in The State Bank Of India (Subsidiary Banks) Act, 1959
25. Composition of the Board of Directors.
(1)Subject to the provisions of sub-section (2), the Board of Directors of a subsidiary bank shall consist of the following:--(a)[ the Chairman for the time being of the State Bank, ex officio or an official of the State Bank or of the subsidiary bank nominated by him as Chairman, [in consultation with the Reserve Bank and with the approval of the Central Government] [Substituted by Act 30 of 2007 (w.e.f. 18.6.2007) ]](aa)[ the managing director appointed under sub-section (1) of section 29, or under section 32;] [Inserted by Act 48 of 1973, Section 28 (w.e.f. 1-7-1974)](b)[ one director, possessing necessary expertise and experience in the matters relating to regulation or supervision of commercial banks, [to be nominated by the Central Government on the recommendation of the Reserve Bank] [Substituted by Act 30 of 2007 (w.e.f. 18.6.2007) ]](c)not more than five directors to be nominated by the State Bank of whom not more than three shall be officers of that bank;[Provided that any nomination of a director made by the State Bank under this clause shall, except in so far as it relates to an office of that bank, be in consultation with the Central Government.] [Inserted by Act 66 of 1988, Section 18 (w.e.f. 30-12-1988)](ca)[ one director, from among the employees of the subsidiary bank, who are workmen, to be appointed by the Central Government in the manner provided in the rules made under this Act; [Inserted by Act 48 of 1973, Section 28 (w.e.f. 1-7-1974)](cb)one director, from among such of the employees of the subsidiary bank as are not workmen, to be appointed by the Central Government in the manner provided in the rules made under this Act;][(d) not more than three directors to be elected in the following manner, namely:- [Substituted by Act 30 of 2007 (w.e.f. 18.6.2007) ](i)if the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than one per cent. of the total issued capital, and equal to or less than sixteen per cent. of such capital, one director to be elected, in the prescribed manner, by such shareholders and two directors shall be nominated by the State Bank, or(ii)if the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than sixteen per cent. of the total issued capital and equal to or less than thirty-two per cent. of such capital, two directors to be elected in the prescribed manner by such shareholders and one director shall be nominated by the State Bank, or(iii)if the total amount of holdings of the shareholders (other than the State Bank) of a subsidiary bank is more than thirty-two per cent. of the total issued capital, all the three directors to be elected, in the prescribed manner, by such shareholders:Provided that in case, the total amount of holdings of the shareholders of a subsidiary bank (other than the State Bank) is not more than one per cent. of the total issued capital, all three directors shall be nominated by the State Bank and such directors shall, for the purposes of this Act, be deemed to be directors elected under this clause.Explanation. - For the purposes of this sub-section, the total amount of holdings of the shareholders (other than the State Bank) whose names are on the register of shareholders of the subsidiary bank three months before the date fixed for election of directors shall be taken into account](e)a director, if any to be nominated by the Central Government [* * * *] [Certain words omitted by Act 66 of 1988, Section 18 (w.e.f. 30-12-1988).](2)Notwithstanding anything contained in clause (d) of sub-section (1), on the first constitution of the Board of Directors, the directors referred to in the said clause shall be appointed by the State Bank and the directors so appointed shall, for the purposes of this Act, be deemed to have been elected within the meaning of the said clause.[* * *] [Sub-section (3) omitted by Act 30 of 2007 (w.e.f. 18.6.2007) ](4)An officer of [* *] [The words[the Reserve Bank or] omitted by Act 30 of 2007 (w.e.f. 18.6.2007) ] the State Bank may be nominated as a director of a subsidiary bank by virtue of his office.(5)The directors nominated under sub-section (2) shall retire at the expiry of one year after the appointed day.(6)Any nomination or appointment of a director made by the State Bank under this Act shall, except in so far it relates to an officer of that bank, be [in consultation with the Central Government] [Substituted by Act 17 of 2011.].[25-A. Fit and proper status of an elected director [New section inserted by Act 30 of 2007 (w.e.f. 18.6.2007) ]. - (1) The Directors to be elected under clause (d) of sub-section (1) of section 25 shall-(a)have special knowledge or practical experience in respect of one or more of the following matters, namely:-(i)agricultural and rural economy,(ii)banking,(iii)co-operation,(iv)economics,(v)finance,(vi)law,(vii)small-scale industry,(viii)any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the subsidiary bank;(b)represent the interests of depositors; or(c)represent the interests of farmers, workers and artisans.(2)Without prejudice to the provisions of sub-section (1) and notwithstanding anything to the contrary contained in this Act or in any other law for the time being in force, no person shall be eligible to be elected as director under clause (d) of sub-section (1) of section 25 unless he is a person having fit and proper status based upon track record, integrity and such other criteria as the Reserve Bank may notify from time to time in this regard.(3)The Reserve Bank may also specify in the notification issued under sub-section (2), the authority to determine the fit and proper status, the manner of such determination, the procedure to be followed for such determinations and such other matters as may be considered necessary or incidental thereto.(4)Where the Reserve Bank is of the opinion that any director of a subsidiary bank elected under clause (d) of sub-section (1) of section 25 does not fulfil the requirements of sub-sections (1) and (2), it may, after giving to such director and the subsidiary bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall co-opt any other person fulfilling the requirements of the said sub-sections as a director in place of the person so removed till a director is duly elected by the shareholders of the subsidiary bank in the next annual general meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the subsidiary bank as a director.
