Sections 10C and 10D of the Banking Regulation Act, 1949

Qualification shares, RBI-appointed directors and overriding effect of appointments or removals | Reviewed 13 September 2026

Sections 10C and 10D of the Banking Regulation Act, 1949 form part of the statutory framework governing the management of banking companies. Section 10C removes the requirement of holding qualification shares for specified senior office-holders and certain directors. Section 10D gives overriding effect to specified appointments or removals made under Sections 10A, 10B and 10BB, notwithstanding inconsistent laws, contracts, memoranda or articles of association.

In brief: Section 10C prevents the whole-time chairman, managing director and an RBI-appointed director under Section 10A from being disqualified merely because they do not hold qualification shares. Section 10D ensures that appointments or removals under Sections 10A, 10B or 10BB take effect despite contrary private arrangements or other legal provisions, and excludes a claim for compensation for loss or termination of office in such cases.

Section 10C: Chairman and certain directors not required to hold qualification shares

Section 10C addresses the requirement of holding qualification shares in a banking company. The statutory rule applies to the chairman of the Board of directors appointed on a whole-time basis or a managing director of a banking company, by whomsoever appointed, and to a director appointed by the Reserve Bank of India under Section 10A.

Statutory text of Section 10C

A chairman of the Board of directors who is appointed on a whole-time basis or a managing director of a banking company (by whomsoever appointed) and a director of a banking company (appointed by the Reserve Bank under section 10A) shall not be required to hold qualification shares in the banking company.

Meaning and effect of Section 10C

A qualification share is a share that a company may otherwise require a director or office-holder to possess as a condition connected with holding office. Section 10C creates a specific statutory exemption for the office-holders identified in the provision. In practical terms, their appointment or continuance in office cannot be made dependent on acquiring qualification shares merely because such a requirement appears in the banking company's internal governance documents.

The provision should be read with Section 10A, which concerns the composition of the Board and persons having professional or other experience, and Section 10B, which governs management by a whole-time chairman.

Section 10D: Sections 10A and 10B to override other laws, contracts and company documents

The official heading of Section 10D refers to Sections 10A and 10B. The operative text, however, also expressly includes Section 10BB. Section 10BB concerns the Reserve Bank's power to appoint a whole-time chairman or managing director of a banking company in the circumstances specified by that provision.

Statutory text of Section 10D

Any appointment or removal of a director, chairman of the Board of directors who is appointed on a whole-time basis or managing director in pursuance of section 10A or section 10B or section 10BB shall have effect and any such person shall not be entitled to claim any compensation for the loss or termination of office, notwithstanding anything contained in any law or in any contract, memorandum or articles of association.

Meaning and effect of Section 10D

Section 10D is an overriding provision. Its use of a non-obstante formulation means that an appointment or removal falling within the section takes effect even where another law, a private contract, the memorandum of association or the articles of association contains an inconsistent provision.

The section also provides that a person whose office is lost or terminated through an appointment or removal covered by Section 10D is not entitled to claim compensation for that loss or termination of office. The provision is therefore directed both to the effectiveness of the statutory management action and to the consequences of displacement from office.

Important drafting point: The heading of Section 10D continues to mention Sections 10A and 10B, while the text of the provision expressly contains the words "or section 10BB". For accuracy, the heading and the operative text should not be conflated.

Important amendment notes

  • Section 10C was substituted by Act 1 of 1984, Section 19, with effect from 15 February 1984.
  • In Section 10C, the present reference to a whole-time chairman or managing director reflects the substitution made by Act 20 of 1994, Section 4, with effect from 31 January 1994.
  • In Section 10D, the expression covering the director, whole-time chairman or managing director reflects the substitution made by Act 20 of 1994, Section 5, with effect from 31 January 1994.
  • The reference to Section 10BB in Section 10D was inserted by Act 1 of 1984, Section 20, with effect from 15 February 1984.

Official source

The consolidated central legislation should be checked on the official India Code website for authoritative statutory text and amendment history.

India Code: Banking Regulation Act, 1949

This page is an explanatory legal information article. In case of any discrepancy, refer to the official text of the Act and applicable notifications or judicial decisions.