Section 5A of the Banking Regulation Act, 1949: Act to Override Memorandum, Articles, Agreements and Resolutions
Section 5A gives the Banking Regulation Act, 1949 overriding effect over inconsistent provisions in a banking company's memorandum or articles, agreements executed by it, and resolutions passed by the company or its Board of Directors. Any inconsistent private or corporate provision is void to the extent of the inconsistency.
What Section 5A means
Section 5A is an overriding provision. In simple terms, a banking company cannot rely on its constitutional documents, a private agreement, or a corporate resolution to defeat or avoid a requirement imposed by the Banking Regulation Act, 1949.
The section operates "save as otherwise expressly provided in this Act." Therefore, where the Banking Regulation Act itself makes a specific exception or provides a different rule, that express provision will govern.
Text of Section 5A
Section 5A - Act to override memorandum, articles, etc.
Save as otherwise expressly provided in this Act,-
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a banking company, or in any agreement executed by it, or in any resolution passed by the banking company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of the Banking Companies (Amendment) Act, 1959 (33 of 1959); and
(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.
Legal effect of Section 5A
- Statutory priority: the Banking Regulation Act prevails over contrary clauses in the memorandum or articles of a banking company.
- Agreements cannot override the Act: contractual terms inconsistent with the Act cannot be enforced to defeat the statutory requirement.
- Corporate resolutions are subordinate: a resolution of the general meeting or Board of Directors cannot operate contrary to the Act.
- Only the conflicting part becomes void: clause (b) applies to the extent of repugnancy, so the inconsistent portion is displaced rather than necessarily invalidating the entire document.
- Pre-1959 and post-1959 instruments are covered: clause (a) expressly applies whether the relevant instrument or resolution was made before or after commencement of the 1959 amendment.
Why Section 5A is important
Banking is a heavily regulated activity. Section 5A ensures that mandatory requirements enacted by Parliament for banking companies cannot be contracted out of or diluted through internal corporate documents or decisions. The provision therefore reinforces the supremacy of the Banking Regulation Act in matters governed by the Act.
Meaning of key expressions
Memorandum and articles
These are the constitutional documents of a company. For a banking company, they regulate matters such as its objects, internal governance, powers and corporate procedures. Section 5A makes any inconsistent provision in those documents subordinate to the Banking Regulation Act.
Agreement
The section covers an agreement executed by the banking company. If a contractual provision is contrary to the Banking Regulation Act, the statutory provision prevails.
Resolution
A resolution passed either in a general meeting of the banking company or by its Board of Directors is also subject to Section 5A. A resolution cannot lawfully neutralize a mandatory provision of the Act.
Repugnant
In this context, "repugnant" means inconsistent or in conflict with the Banking Regulation Act. Under clause (b), the conflicting provision becomes void to the extent of that inconsistency.
Amendment note
Section 5A was inserted by the Banking Companies (Amendment) Act, 1959 (Act 33 of 1959), section 3, with effect from 1 October 1959.
Official legal sources
For the authoritative statutory text and current consolidated law, readers should verify the Banking Regulation Act, 1949 on official Government of India sources. The Department of Financial Services also publishes the Act and related banking legislation.
- India Code - Central Acts administered by the Department of Financial Services
- Department of Financial Services - Banking Acts and Policies
- Department of Financial Services - Banking
Related provision
Section 5 of the Banking Regulation Act contains important definitions used throughout the Act. Readers examining Section 5A may therefore also refer to Section 5 - Interpretation.
This page is intended as a legal information resource. For an issue involving the application of the Banking Regulation Act to particular facts, the current statutory text, applicable rules, RBI directions and relevant judicial decisions should be examined.