Section 29A of the Banking Regulation Act, 1949
Power in respect of associate enterprises: Section 29A empowers the Reserve Bank of India to obtain information concerning associate enterprises of a banking company and to cause inspection of such enterprises in the circumstances provided by the Act.
What Section 29A covers
Section 29A is a supervisory provision. It extends the Reserve Bank of India's access to information beyond the banking company itself where the business or affairs of an associate enterprise may be relevant for the purposes of the Banking Regulation Act, 1949.
In practical terms, the provision deals with three connected matters: information and statements relating to associate enterprises, inspection of an associate enterprise and its books of account, and application of the inspection-related provisions contained in sub-sections (2) and (3) of Section 35.
Text of Section 29A - Power in respect of associate enterprises
(1) The Reserve Bank may, at any time, direct a banking company to annex to its financial statements or furnish to it separately, within such time and at such intervals as may be specified by the Reserve Bank, such statements and information relating to the business or affairs of any associate enterprise of the banking company as the Reserve Bank may consider necessary or expedient to obtain for the purpose of this Act.
(2) Notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), the Reserve Bank may, at any time, cause an inspection to be made of any associate enterprise of a banking company and its books of account jointly by one or more of its officers or employees or other persons along with the Board or authority regulating such associate enterprise.
(3) The provisions of sub-sections (2) and (3) of Section 35 shall apply mutatis mutandis to the inspection under this section.
Meaning of "associate enterprise" under Section 29A
The Explanation to Section 29A provides an inclusive definition. In relation to a banking company, an associate enterprise includes an enterprise which:
- is a holding company or a subsidiary company of the banking company;
- is a joint venture of the banking company;
- is a subsidiary company or a joint venture of the holding company of the banking company;
- controls the composition of the Board of directors or other body governing the banking company;
- exercises, in the opinion of the Reserve Bank, significant influence on the banking company in taking financial or policy decisions; or
- is able to obtain economic benefits from the activities of the banking company.
Key effect of Section 29A
The section supports consolidated banking supervision by allowing the RBI to look at relevant entities connected with a banking company, rather than restricting supervisory information and inspection only to the banking company. This is important where ownership, control, joint ventures, significant influence or economic benefits create links that may affect the banking company or its regulatory position.
Information power under sub-section (1)
The RBI may require a banking company to provide statements and information about the business or affairs of an associate enterprise. The RBI may specify both the time for furnishing the information and the intervals at which it is to be supplied.
Inspection power under sub-section (2)
The RBI may cause an inspection of an associate enterprise and its books of account. The statutory text contemplates a joint inspection involving RBI officers, employees or other persons along with the Board or authority regulating the associate enterprise.
Connection with Section 35
Sub-section (3) applies the relevant provisions of Section 35(2) and Section 35(3) to an inspection under Section 29A, with the necessary changes required by the context.
Legislative note
Section 29A was inserted by Section 9 of Act 4 of 2013 with effect from 18 January 2013.
For the authoritative and updated statutory text, refer to the official India Code version of the Banking Regulation Act, 1949.