PEOPLE'S BANK ACT

Arrangement of Sections

1. Short title.

2. Establishment of the People's Bank.

3. Seal of the Bank.

4. Purposes of the Bank.

5. Powers of the Bank.

6. Principal place of business and branches and agencies of the Bank.

7. Management of affairs and business of the Bank.

8. Board of Directors.

9. General body of the Bank.

10. The Chairman of the Board.

11. Director to disclose his interest in any loan or other accommodation to be considered by the Board.

12. Capital.

13. Sale of shares.

14. Liability of a shareholder.

15. Sums to be granted or lent by Government to the Bank.

16. Commencement of business by the Bank.

17. Powers of the Permanent Secretary until commencement of business by the Bank.

18. Acts commenced by the Permanent Secretary may be continued by the Board.

19. Building Fund.

20. The Bank to raise money the issue of debentures for granting medium-term and long-term loans.

21. Government guarantee.

22. General Reserve and Special Reserve.

23. Dissolution of the co-operative Federal Bank of Ceylon, Limited.

24. Power of Minister to dissolve a co-operative Bank.

25. Deposit of money and obtaining of long-term or medium-term loans by co-operative societies.

26. Loans, overdrafts and other accommodation to be granted only in certain circumstances.

27. Power of the Board to inspect valuation rolls of local rating or taxing authority.

28. Registered address of borrower.

29. Default of payment and penal Interest in case of default.

29A. Action by Board where default is made.

29B. Authorisation of Manager to take possession of mortgaged property.

29C. Procedure where Manager is appointed.

29D. Authorisation of sale of mortgaged property.

29E. Where borrower is dead.

29F. Notice of resolution.

29G. Notice of sale.

29H. Payment before sale.

29J. Upset price.

29K. Default in respect of one of several loans on same property.

29L. Recovery of expenses and costs incurred by the Bank.

29M. Payment of excess.

29N. Certificate of sale.

29P. Order for delivery of possession.

29Q. Cancellation of sale.

29R. Resale by the Bank.

29S. Limit of retention of property by the Bank.

29T. Meaning of property.

30. Repealed.

31. Repealed.

32. Delegation of powers and duties of the Board.

33. Accounts.

34. Audit.

35. Documents to be transmitted to the Minister and the Minister in charge of the subject of Finance to be laid before Parliament.

36. Power of certain officers of the Bank to examine the books and accounts of any co-operative society to which, and of any other person to whom, a loan has been granted by the Bank.

37. The Board's powers to recommend to the Commissioner of co-operative Development the dissolution and liquidation of a co-operative society which, on the examination of its affairs under section 36, is found to be insolvent.

38. Offences.

39. Punishment for offences.

40. Offences by body of persons.

41. Repealed.

42. The Bank to be deemed to be a suitable person to manage and administer the affairs of certain co-operative societies.

42A. Minister to give directions.

43. Regulations.

44. This Act to have effect notwithstanding the provisions of the co-operative societies Law.

45. The provisions of the Companies Ordinance only to apply to the Bank if they are made applicable by Order of the Minister.

46. Omitted.

47. Omitted.

48. Interpretation.

43 of 1973,

25 of 1978,

29 of 1961,

11 of 1963,

18 of 1965,

16 of 1969,

61 of 1980,

43 of 1982,

32 of 1986,

1386-18-2005

AN ACT to provide for the establishment of the people's bank and to dissolve the Co-operative Federal Bank of Ceylon, Ltd, and to provide for matters connected with or incidental to the matters aforesaid.

[Date of Commencement: 30th May, 1961]

1. Short title.

This Act may be cited as the People's Bank Act.

2. Establishment of the People's Bank.

(1) There shall be established a bank which shall be called the People's Bank (hereafter in this Act referred to as the Bank) and which shall consist of the persons who are for the time being shareholders of the Bank.

(2) The Bank shall by the name assigned to it by subsection (1) be a body corporate and shall have perpetual succession and a common seal and may sue and be sued in such name.

3. Seal of the Bank.

(1) The seal of the Bank shall be judicially noticed and shall be in the custody of the Board of Directors of the Bank.

(2) The seal of the Bank may be altered in such manner as may be determined by the Bank.

4. Purposes of the Bank.

The purposes of the Bank shall be:

(1) to develop and assist–

(a) the co-operative Movement of Sri Lanka;

(b) Rural Banking;

(c) Agriculture; and

(d) Industry; and

(2) to carry on the business of a –

(a) Commercial Bank;

(b) Pawn broker; and

(c) Merchant Bank.

[S 4 subs by s 2 of Act 32 of 1986.]

5. Powers of the Bank.

(1) In carrying out its purposes, the Bank may exercise, perform and do all or any of the following powers, acts and things, subject however to the restrictions, qualifications and limitations set out in subsection (3) and (4) of this section—

(a) to establish, carry on, develop and extend in Sri Lanka and elsewhere the business of banking within all its branches and departments;

(b) to grant short-term, medium-term and long-term loans, overdrafts, advance and other accommodations;

(c) —

(i) to open, maintain and manage current, deposit savings and other accounts;

(ii) to discount, buy, sell and deal in bills of exchange, promissory notes, hoondies, poorjas, coupons, drafts, bills of lading warrants, debentures, certificates, scrip and other instruments and securities, whether transferable or negotiable or not transferable or not negotiable;

(iii) to grant and issue letters of credit and circular notes;

(iv) to buy, sell and deal in bullion and specie and engage in operations in exchange;

(v) to negotiate loans and advances, to receive money, securities and valuables on deposit, or for safe custody, or otherwise;

(vi) to collect and transmit money and securities;

(d) to manage property and transact any kind of agency business which is normally transacted by bankers;

(e) to borrow or raise money in such manner as the Bank shall think fit, and to secure the repayment of any money borrowed, raised or owing by mortgage, charge or lien upon the whole or any part of the bank's property or assets whether present or future including its uncalled capital, and also by a similar mortgage, charge or lien to secure and guarantee the performance by the bank of any obligation or liability it may undertake;

(f) to lend and advance money, securities and property or give credit to such persons, firms or companies and on such terms as may seem expedient and either with or without security, and if with security, upon such security and with such conditions;'.8 may from time to time be deemed to be advisable;

(g) to buy, sell, invest, underwrite, deal in and dispose of stocks, shares, debentures, mortgages, bonds, or securities issued or guaranteed by the Government of Sri Lanka or by any company or corporation registered or having its principal place of business in Sri Lanka:

Provided, however, that the Bank. shall not enter into any transaction affecting the stocks, shares, debentures, mortgages, bonds or securities issued or guaranteed by any such company or corporation except on the recommendation of the General Manager of the Bank and with the approval of the Directors of the Bank given by a resolution passed by not less than three-fifths of such Directors at a meeting of them at which anyone of them who, or whose wife or dependent child, is a Director or shareholder of that company or corporation shall not be present during the consideration of the resolution and shall not vote on the resolution—

(h) to purchase, take on lease or in exchange, hire, or otherwise acquire any immovable or movable property and any rights or privileges;

(i) to mortgage, pledge, sell, give on lease or otherwise dispose of any immovable or movable property;

(j) to enter into any arrangement for sharing profits, union of interest, co-operation, joint venture, reciprocal concession or otherwise with any person or company carrying on or engaged in any business or transaction which the Bank is authorised to carryon or engage in;

(k) to undertake and execute any trust, the undertaking where of may seem desirable, and also to undertake the office of executor, administrator, receiver, treasurer, or registrar, and to keep for any company, Government, authority or body, any register relating to any stocks, funds, shares or securities, or to undertake any duties in relation to the registration of transfers, the issue of certificates, or otherwise;

(l) to establish and support or aid in the establishment and support of associations, institutions, trusts, provident funds, schemes for the providing of pensions and of guarantee and other funds and conveniences calculated to benefit employees or ex-employees of the Bank or the dependents, heirs of such persons and to grant pensions and allowances, and to make payments towards insurance, and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public general or useful object;

(m) to construct buildings, on any land belonging to or taken on lease by the bank, and to improve, manage, develop, exchange, lease, mortgage, dispose of, sell, turn to account or otherwise deal with all or any pan of the property and rights of the bank;

(n) to do all or any of the above things in Sri Lanka or outside Sri Lanka as principals, agents, contractors, trustees or otherwise and by or through trustees, agents or otherwise either by itself or in conjunction with others;

(o) to take or agree to take all such things and proceedings as may seem expedient for the purpose of upholding and supporting the credit of the bank, and to obtain and justify public confidence and to avert or minimise financial disturbances which might affect the bank;

(p) to facilitate the registration or recognition of such Bank in any country outside Sri Lanka;

(q) to give any guarantee or indemnity and to enter into any arrangements with any Government or any local authority in order to obtain any rights, concessions and privileges which are necessary for the exercise of its powers by the Bank;

(r) to form any company for carrying on any business the Bank is permitted to engage in, or for assisting or developing any business, or for enhancing the value of any property of the Bank, and to acquire and, undertake the business of, purchase any interest in, or acquire or hold shares of stock in, any company having objects similar to those for which the bank is authorised to form any company;

(s) to employ such officers and servant as may be necessary for carrying out the work of the Bank;

(t) to make rules in respect of the conditions of service and for the disciplinary control of the officers and servants of the Bank;

(u) to enter into contracts;

(v) to carry on the business of a pawnbroker subject to such conditions as may be prescribed;

(w) to provide technical assistance to any person to whom the Bank grants any loan, overdraft, advance or other accommodation and to undertake or sponsor the training of persons in assessing the value of land and the creditworthiness of borrowers, in assaying gold, in banking and in finance;

(x) to guarantee loans raised or to be raised by industrial, and agricultural enterprises from approved credit institutions;

(y) to acquire and undertake the whole or any part of the banking and discount business of any person or company carrying on business which the Bank is authorised to carry on:

Provided, however, that the above-mentioned powers shall be exercised subject to the approval of at least four Directors ‘of the Bank given after considering the written observations of the General Manager of the Bank, and with the prior written approval of the Minister;

(z) to sell, dispose of the entire undertaking of the Bank or any part thereof, for such consideration as the Bank may think fit, and in particular for shares, debentures or securities of any other bank or to amalgamate the Bank's business with that of any other Bank:

Provided, however, that the above-mentioned powers shall be exercised subject to the approval of at least four Directors of the Bank given after considering the written observations of the General Manager of the Bank and with the prior written approval of the Minister;

(aa) to engage in hire-purchase business receive discounts, commissions and other remunerations; and

(bb) to do all things incidental or conducive to achieve all or any of its objects, or necessary or for the exercise of its powers.

(2) The provisions of subsection (1) shall not, except where the context expressly so requires, be in any way limited or restricted by reference to, or inference from the provisions contained in any other paragraph or any power therein specified, and the powers thereby conferred shall not be deemed merely subsidiary or auxiliary to the powers mentioned in subsection (1) but the bank shall, except when the context expressly requires otherwise, have full powers to exercise all or any of the powers conferred by any paragraph of subsection (1) within Sri Lanka or in any country outside Sri Lanka.

(3) The funds of the Bank shall not be carried on subject to the following restrictions and qualifications—

(a) the funds of the Bank shall neither be expended in the purchase of or dealing in its own shares, nor shall such funds be lent upon the security of its own shares.

(b) no loan, overdraft, advance or other accommodation shall be granted by the Bank on the guarantee of an employee of the Bank to any person except to another employee of the Bank.

(4) All the powers contained in subsections (1) and (2) shall be read and construed subject to the restrictions and qualifications set out in subsection (3), and in case of conflict or inconsistency the provisions of subsection (3) of this section shall prevail.

(5) The Pawnbrokers Ordinance shall not apply to the Bank when the Bank carries on the business of a pawnbroker.

[S 5 subs by s 2 of Act 32 of 1986.]

6. Principal place of business and branches and agencies of the Bank.

The bank shall have its principal place of business in Colombo and may have such branches and agencies as may be necessary for the proper conduct of the business of the Bank.

7. Management of affairs and business of the Bank.

(1) The general supervision, control and administration of the affairs and business of the Bank shall be vested in the Board of Directors of the Bank (hereafter in this Act referred to as the Board).

(2) The Board may exercise all or any of the powers of the Bank.

8. Board of Directors.

(1) The Board shall consist of ten Directors appointed by the Minister, two of whom shall be nominated by the Minister in charge of the subject of co-operatives.

[S 8(1) subs by s 2 of Act 61 of 1980.]

(2) A person shall be disqualified for being appointed or continuing as a Director if he—

(a) is a Member of Parliament; or

(b) is under any law in force in Sri Lanka, found or declared to be of unsound mind; or

(c) is a person who, having been declared an insolvent or bankrupt under any law in force in Sri Lanka or in any other country, is an undischarged insolvent or bankrupt; or

(d) is convicted of an offence involving moral turpitude and punishable with imprisonment for a term of not less than six months; or

(e) is a Director or employee of a Commercial Bank other than the Bank.

(3) Any Director may resign from office by letter in that behalf addressed to the Minister.

(4) The Minister may, by Order published in the Gazette, remove a Director from office without assigning a reason therefor and such removal shall not be called in question in any court. A Director in respect of whom an Order is made under this subsection shall be deemed to have vacated office on the date of publication of that Order in the Gazette.

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