Banking Regulation Act, 1949

Section 44A: Procedure for Amalgamation of Banking Companies

Section 44A of the Banking Regulation Act, 1949 lays down the statutory route for a voluntary amalgamation of one banking company with another. The process requires approval by the shareholders of each banking company and sanction by the Reserve Bank of India (RBI), and it protects dissenting shareholders by providing a statutory right to claim the value of their shares as determined by RBI.

Current regulatory position: RBI issued revised category-specific directions on voluntary amalgamation on November 28, 2025. For commercial banks, the applicable framework is the Reserve Bank of India (Commercial Banks - Voluntary Amalgamation) Directions, 2025. Separate 2025 directions apply to Small Finance Banks, Payments Banks, Local Area Banks and Rural Co-operative Banks, as applicable.
Shareholder approvalA draft amalgamation scheme must be separately placed before the shareholders of each banking company and approved by the statutory majority.
RBI sanctionAfter the requisite shareholder approval, the scheme must be submitted to RBI. The amalgamation becomes binding when RBI sanctions it by a written order.
Dissenting shareholdersA qualifying dissenting shareholder can claim the value of the shares as determined by RBI when sanctioning the scheme.
Transfer and dissolutionRBI sanction transfers the property and liabilities in accordance with the sanctioned scheme, and RBI may direct dissolution of the amalgamated banking company.
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Meaning and scope of Section 44A

The opening words of Section 44A contain a non-obstante clause: the provision operates notwithstanding anything contained in any other law for the time being in force. Its central purpose is to prescribe a special statutory mechanism for amalgamation between banking companies, with RBI exercising the sanctioning function.

For this purpose, a scheme of amalgamation is the document setting out the terms on which the business of one banking company is to be combined with or transferred to another. Under the current RBI regulatory framework, the boards, shareholders, valuation process, financial position, governance and regulatory compliance of the participating banks form part of RBI's examination of a voluntary amalgamation proposal.

Procedure under Section 44A

  1. Prepare the draft scheme: The terms of amalgamation are set out in a draft scheme.
  2. Place the scheme before shareholders separately: The shareholders of each banking company must consider the scheme at a meeting called for that purpose.
  3. Obtain the statutory majority: The resolution must be passed by a majority in number representing two-thirds in value of the shareholders present in person or by proxy.
  4. Give and publish notice: Notice must be given in accordance with the articles of association and published at least once a week for three consecutive weeks in at least two newspapers circulating in the relevant locality or localities, including one in a language commonly understood there.
  5. Submit the approved scheme to RBI: The scheme is sent to RBI for sanction together with the information and documents required under the applicable RBI directions.
  6. RBI considers sanction: If RBI sanctions the scheme by written order, it becomes binding on the banking companies concerned and their shareholders.
  7. Implement transfer and dissolution: Property and liabilities transfer as provided by Section 44A and the sanctioned scheme. RBI may also direct dissolution of the banking company that ceases to function after amalgamation.

Section 44A - statutory text

The following is presented for convenient reference. For authoritative use, consult the current text published on India Code and applicable RBI directions.

44A. Procedure for amalgamation of banking companies.

(1) Notwithstanding anything contained in any law for the time being in force, no banking company shall be amalgamated with another banking company, unless a scheme containing the terms of such amalgamation has been placed in draft before the shareholders of each of the banking companies concerned separately, and approved by a resolution passed by a majority in number representing two-thirds in value of the shareholders of each of the said companies, present either in person or by proxy at a meeting called for the purpose.

(2) Notice of every such meeting as is referred to in sub-section (1) shall be given to every shareholder of each of the banking companies concerned in accordance with the relevant articles of association indicating the time, place and object of the meeting, and shall also be published at least once a week for three consecutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the banking companies concerned are situated, one of such newspapers being in a language commonly understood in the locality or localities.

(3) Any shareholder, who has voted against the scheme of amalgamation at the meeting or has given notice in writing at or prior to the meeting to the company concerned or to the presiding officer of the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the scheme being sanctioned by the Reserve Bank, to claim from the banking company concerned, in respect of the shares held by him in that company, their value as determined by the Reserve Bank when sanctioning the scheme and such determination by the Reserve Bank as to the value of the shares to be paid to the dissenting shareholder shall be final for all purposes.

(4) If the scheme of amalgamation is approved by the requisite majority of shareholders in accordance with the provisions of this section it shall be submitted to the Reserve Bank for sanction and shall, if sanctioned by the Reserve Bank by an order in writing passed in this behalf, be binding on the banking companies concerned and also on all the shareholders thereof.

(5) [Omitted.]

(6) On the sanctioning of a scheme of amalgamation by the Reserve Bank, the property of the amalgamated banking company shall, by virtue of the order of sanction, be transferred to and vest in, and the liabilities of the said company shall, by virtue of the said order, be transferred to, and become the liabilities of, the banking company which under the scheme of amalgamation is to acquire the business of the amalgamated banking company, subject in all cases to the provisions of the scheme as sanctioned.

(6A) Where a scheme of amalgamation is sanctioned by the Reserve Bank under the provisions of this section, the Reserve Bank may, by a further order in writing, direct that on such date as may be specified therein the banking company which by reason of the amalgamation will cease to function shall stand dissolved, and the direction takes effect notwithstanding anything to the contrary contained in any other law.

(6B) Where the Reserve Bank directs dissolution of the amalgamated banking company, it transmits a copy of the order to the Registrar before whom the banking company has been registered, and on receipt of the order the Registrar strikes off the name of the company.

(6C) An order under sub-section (4) is conclusive evidence that the requirements of Section 44A relating to amalgamation have been complied with. Certified copies of the RBI order and the sanctioned scheme are admissible in legal proceedings to the same extent as the originals.

(7) The foregoing provisions do not affect the statutory power referred to in sub-section (7), subject to consultation with the Reserve Bank. The text of the enactment continues to contain its historical reference to section 396 of the Companies Act, 1956; users should consult the current official text and applicable company-law framework when dealing with this provision.

Important: Section 44A should be distinguished from Section 45 of the Banking Regulation Act, which deals with RBI applying for suspension of business and preparation of a scheme of reconstruction or amalgamation in the circumstances specified there. Section 44A is the principal provision for voluntary amalgamation between banking companies.

RBI directions on voluntary amalgamation

RBI's regulatory directions supplement the statutory requirements of Section 44A. On November 28, 2025, RBI issued separate voluntary amalgamation directions for different categories of banks. A proposal should therefore be checked against the direction applicable to the category of the participating banking entities, in addition to Section 44A itself.

For commercial banks, the 2025 directions apply to banking companies as defined in Section 5(c) of the Banking Regulation Act, excluding categories for which RBI has issued separate directions. The regulatory process addresses board approval, shareholder approval, the documents and financial information to accompany the application, RBI sanction and the rights of dissenting shareholders.

Official legal and regulatory sources

India Code - Banking Regulation Act, 1949

Reserve Bank of India - official website

RBI - Master Direction on amalgamation of private sector banks (legacy reference)

Related provisions

For nearby provisions on voluntary winding up, compromise or arrangement, RBI-led reconstruction and special provisions relating to banking companies, use the related links in the sidebar.