10B. Banking company to be managed by whole time chairman. —(1) Notwithstanding anything contained in any law for the time being in force or in any contract to the contrary, every banking company in existence on the commencement of the Banking Regulation (Amendment) Act, 1994 (20 of 1944), or which comes into existence thereafter shall have one of its directors, who may be appointed on a whole-time or a part-time basis, as chairman of its board of directors, and where he is appointed on a whole-time basis, as chairman of its board of directors, he shall be entrusted with the management of the whole of the affairs of the banking company :

Provided that the chairman shall exercise his powers subject to the superintendence, control and direction of the board of directors.

(1A) Where a chairman is appointed on a part-time basis, —

(i) such appointment shall be with the previous approval of the Reserve Bank and be subject to such conditions as the Reserve Bank may specify while giving such approval;

(ii) the management of the whole of the affairs of such banking company shall be entrusted to a managing director who shall exercise his powers subject to the superintendence, control and direction of the board of directors.

(2) Every chairman of the board of directors who is appointed on a whole-time basis and every managing director of a banking company shall be in the whole-time employment of such company and shall hold office for such period, not exceeding five years, as the board of directors may fix, but shall, subject to the provisions of this section, be eligible for re-election of reappointment:

Provided that nothing in this sub-section shall be construed as prohibiting a chairman from being a director of a subsidiary of the banking company or a director of a company registered under section 25 of the Companies Act, 1956 (1 of 1956).

(3) Every person holding office on the commencement of section 3 of the Banking Laws (Amendment) Act, 1968 (58 of 1968), as managing director of a banking company shall—

(a) if there is a chairman of its board of directors, vacate office on such commencement, or

(b) if there is no chairman of its board of directors, vacate office on the date on which the chairman of its board of directors is elected or appointed in accordance with the provisions of this section.

(4) Every chairman who is appointed on a whole-time basis and every managing director of a banking company appointed under sub-section (1A) shall be person who has special knowledge and practical experience of—

(a) the working of a banking company, or of the State Bank of India or any subsidiary bank or a financial institution, or

(b) financial, economic or business administration :

Provided that a person shall be disqualified for being a chairman who is appointed on a whole time basis or a managing director, if be—

(a) is a director of any company other than a company referred to in the proviso to sub-section (2), or

(b) is a partner of any firm which carries on any trade, business or industry, or

(c) has substantial interest in any other company or firm, or

(d) is a director, manager, managing agent, partner or proprietor of any trading, commercial or industrial concern, or

(e) is engaged in any other business or vocation.

(5) A chairman of the board of directors appointed on a whole-time basis or a managing director of a banking company may, by writing, under his hand addressed to the company, resign his office.

(5A) A chairman of the board of directors appointed on a whole-time basis or a managing director whose term of office has come to an end, either by reason of his resignation or by reason of expiry of the period of his office, shall, subject to the approval of the Reserve Bank, continue in office until his successor assumes office.

(6) Without prejudice to the provisions of section 36AA where the Reserve Bank is of opinion that any person who, is, or has been elected to be, the chairman of the board of directors who is appointed on a whole-time basis or the managing director of a banking company is not a fit and proper person to hold such office, it may, after giving to such person and to the banking company a reasonable opportunity of being heard by order in writing, require the banking company to elect or appoint any other person as the chairman of the board of directors who is appointed on a whole-time basis or the managing director and if, within a period of two months from the date of receipt of such order, the banking company fails to elect or appoint a suitable person as the chairman of the board of directors who is appointed on a whole-time basis or the managing director, the Reserve Bank may, by order, remove the first-mentioned person from the office of the chairman of the board of directors who is appointed on a whole-time basis or the managing director of the banking company and appoint a suitable person in his place whereupon the person so appointed shall be deemed to have been duly elected or appointed, as the case may be, as the chairman of the board of directors who is appointed on a whole-time basis or the managing director of such banking company and any person elected or appointed as chairman on a whole-time basis or managing director under this sub-section shall hold office for the residue of the period of office of the person in whose place he has been so elected or appointed.

(7) The banking company and any person against whom an order of removal is made under sub-section (6) may, within thirty days from the date of communication to it or to him of the order, prefer an appeal to the Central Government and the decision of the Central Government thereon, and subject thereto, the order made by the Reserve Bank under sub-section (6), shall be final and shall not be called into question in any court.

(8) Notwithstanding anything contained in this section, the Reserve Bank may, if in its opinion it is necessary in the public interest so to do, permit the chairman of the board of directors who is appointed on a whole-time basis or the managing director to undertake such part-time honorary work as is not likely to interfere with his duties as such chairman or managing director.

(9) Notwithstanding anything contained in this section, where a person appointed on a whole-time basis, as chairman of the board of directors or the managing director dies or resigns or is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise in circumstances not involving the vacation of his office, the banking company may, with the approval of the Reserve Bank, make suitable arrangements for carrying out the duties of chairman or managing director for a total period not exceeding four months.