#THE INDUSTRIAL DEVELOPMENT BANK (TRANSFER OF UNDERTAKING AND REPEAL) ACT, 2003 
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##ARRANGEMENT OF SECTIONS 

Last updated: 1-7-2021 
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###CHAPTER I 

###PRELIMINARY 

SECTIONS 

1. Short title and commencement. 
2. Definitions. 

###CHAPTER II 

###TRANSFER AND VESTING OF THE UNDERTAKING OF DEVELOPMENT BANK IN COMPANY 

3. Undertaking of Development Bank to vest in Company. 
4. General effect of transfer and vesting of undertaking. 
5. Provisions in respect of officers and other employees of Development Bank. 

###CHAPTER III 

###MISCELLANEOUS 

6. Concession, etc., to be deemed to have been granted to Company. 
7. Tax exemption or benefit to continue to have effect. 
8. Guarantee to be operative. 
9. Shares, bonds and debentures to be deemed to be approved securities. 
10. Act to have overriding effect. 
11. Application of other laws not barred. 
12. Amendment to certain enactments. 
13. Substitution in Acts, rules, regulations or notifications by Company in place of Development 
  Bank. 
14. Power to remove difficulties. 
15. Repeal and saving of Act 18 of 1964. 
THE SCHEDULE. 



#THE INDUSTRIAL DEVELOPMENT BANK (TRANSFER OF UNDERTAKING AND REPEAL) ACT, 2003 

##ACT NO. 53 OF 2003 

[30th December, 2003.] 

An Act to provide for the transfer and vesting of the undertaking of the Industrial Development 
  Bank of India to, and in, the Company to be formed and registered as a Company under the 
  Companies  Act,  1956  to  carry  on  banking  business  and  for  matters  connected  therewith  or 
  incidental thereto and also to repeal the Industrial Development Bank of India Act, 1964. 

  BE it enacted by Parliament in the Fifty-fourth Year of the Republic of India as follows:— 

###CHAPTER I 

###PRELIMINARY 

1. **Short title and commencement.**—(1) This Act may be called the Industrial Development Bank 
(Transfer of Undertaking and Repeal) Act, 2003. 

(2) It shall come into force on such date as the Central Government may, by notification, appoint. 

2. **Definitions.**—In this Act, unless the context otherwise requires,— 

  (a) “appointed  day”  means  such  date  as  the  Central  Government  may,  by  notification,  appoint 
under section 3; 

  (b) “Company”  means  the  Industrial  Development  Bank  of  India  Limited  to  be  formed  and 
registered under the Companies Act, 1956 (1 of 1956); 

  (c) “Development  Bank”  means  the  Industrial  Development  Bank  of  India  established  under 
sub-section (1) of section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964); 

  (d) “notification” means a notification published in the Official Gazette; 

  (e) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India 
Act, 1934 (2 of 1934). 

###CHAPTER II 

###TRANSFER AND VESTING OF THE UNDERTAKING OF DEVELOPMENT BANK IN COMPANY 

3. **Undertaking  of  Development  Bank  to  vest  in  Company.**—(1) On  such  date  as  the  Central 
Government  may,  by  notification,  appoint,  there  shall  be  transferred  to,  and  vest  in,  the  Company,  the 
undertaking of Development Bank. 

(2) Notwithstanding  anything  contained  in  the  Banking  Regulation  Act,  1949  (10  of  1949),  the 
Company referred to in sub-section (1) shall be deemed to be a banking company within the meaning of 
clause (c) of section 5 of the Banking Regulation Act, 1949 and as such shall carryon banking business in 
accordance with the provisions of that Act, [^2]***: 

Provided that such Company shall not be required to— 

  (a) obtain licence under section 22 of the Banking Regulation Act, 1949 (10 of 1949); 

  (b) maintain for a period of five years from the appointed day the percentage of assets required to 
be maintained under section 24 of the said Act. 

[^3][Provided  further  that  the  provisions  of  clause  (a)  to  the  proviso,  shall  cease  to  be  applicable 
immediately  after  the  commencement  of  Part  XIII  of  the  Finance  Act,  2021,  and  from  such 



[^2]. The words “in addition to the business which may be carried on and transacted by the Development Bank” omitted by Act 13 
of 2021, s. 165 (w.e.f. 01-04-2021). 

[^3]. The proviso ins by s. 165, ibid. (w.e.f. 01-04-2021). 



commencement,  the  Company  shall  be  deemed  to  have  obtained  licence  under  section  22  of  the 
Banking Regulation Act, 1949 (10 of 1949).] 

(3) The provisions of the Banking Regulation Act, 1949 (10 of 1949) shall, as far as may be, to the 
extent they are not repugnant to any provision of this Act, apply to such Company. 

(4) Notwithstanding anything contained in the Banking Regulation Act,1949 (10 of 1949), the Central 
Government may, in consultation with the Reserve Bank of India, by notification, direct that any of the 
provisions of that Act specified in the notification— 

  (a) shall not apply to the Company; or 

  (b) shall apply to the Company, only with such exceptions, modifications and the adaptations as 
may be specified in the notification. 

(5) A  copy  of  every  notification  proposed  to  be  issued  under  sub-section  (4),  shall  be  laid  in  draft 
before  each  House  of  Parliament,  while  it  is  in  session,  for  a  total  period  of  thirty  days  which  may  be 
comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
disapproving  the  issue  of  the  notification  or  both  Houses  agree  in  making  any  modification  in  the 
notification,  the  notification  shall  not  be  issued  or,  as  the  case  may  be,  shall  be  issued  only  in  such 
modified form as may be agreed upon by both the Houses. 

4. **General effect of transfer and vesting of undertaking.**—(1) The Central Government, being the 
shareholder of the Development Bank and every other shareholder of the Development Bank immediately 
before the appointed day shall be deemed to be registered on and from the appointed day as a shareholder 
of the Company to the extent of the face value of the shares held by such shareholder. 

(2) The  undertaking  of  the  Development  Bank  which  is  transferred  to,  and  which  vest  in,  the 
Company under section 3 shall be deemed to include all business, assets, rights, powers, authorities and 
privileges  and  all  properties,  movable  and  immovable,  real  and  personal,  corporeal  and  incorporeal,  in 
possession  or  reservation,  present  or  contingent  of  whatever  nature  and  wheresoever  situate  including 
lands, buildings, vehicles, cash balances, deposits, foreign currencies, disclosed and undisclosed reserves, 
reserve fund, special reserve fund, benevolent reserve fund, any other fund, stocks, investments, shares, 
bonds, debentures, security, management of any industrial concern, loans, advances and guarantees given 
to  any  person  or  industrial  concern,  tenancies,  leases  and  book  debts  and  all  other  rights  and  interests 
arising out of such property as were immediately before the appointed day in the ownership, possession or 
power  of  the  Development  Bank  in  relation  to  its  undertaking,  within  or  without  India,  all  books  of 
account,  registers,  records  and  documents  relating  thereto  and  shall  also  be  deemed  to  include  all 
borrowings,  liabilities  and  obligations  of  whatever  kind  within  or  without  India  then  subsisting  of  the 
Development Bank in relation to its respective undertaking. 

(3) All  contracts,  deeds,  bonds,  guarantees,  powers  of  attorney,  other  instruments  and  working 
arrangements subsisting immediately before the appointed day and affecting the Development Bank shall 
cease to have effect or to be enforceable against the Development Bank and shall be of as full force and 
effect against or in favour of the Company in which the undertaking of the Development Bank has vested 
by virtue of this Act and enforceable as fully and effectually as if instead of the Development Bank, the 
Company had been named therein or had been a party thereto. 

(4) Any proceeding or cause of action pending or existing immediately before the appointed day by or 
against the Development Bank in relation to its undertaking may, as from the appointed day, be continued 
and enforced by or against the Company in which the undertaking of the Development Bank has vested 
by virtue of this Act as it might have been enforced by or against the Development Bank if this Act had 
not been enacted and shall cease to be enforceable by or against the Development Bank. 

5. **Provisions in respect of officers and other employees of Development Bank.**—(1) Every officer 
or  other  employee  of  the  Development  Bank  (except  a  director  of  the  Board  or  the  chairman  and 
managing  director  or  any  whole-time  director)  serving  in  the  employment  immediately  before  the 
appointed  day  shall,  in  so  far  as  such  officer  or  other  employee  is  employed  in  connection  with  the 
undertaking which has vested in the Company by virtue of this Act, become, as from the appointed day, 
an  officer  or,  as  the  case  may  be,  other  employee  of  the  Company  and  shall  hold  his  office  or  service 
therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same 
obligations  and  with  the  same  rights  and  privileges as  to leave,  leave  fare  concession,  welfare  scheme, 
medical benefit scheme, insurance, provident fund, other funds, retirement, voluntary retirement, gratuity 
and other benefits as he would have held under the Development Bank if its undertaking had not vested in 
the  Company  and  shall  continue  to  do  so  as  an  officer  or,  as  the  case  may  be,  other  employee  of  the 
Company or until the expiry of a period of six months from the appointed day, if such officer or other 
employee opts not to continue to be the officer or other employee of the Company within such period. 

(2) Where an officer or other employee of the Development Bank opts under sub-section (1) not to be 
in  employment  or  service  of  the  company,  such  officer  or  other  employee  shall  be  deemed  to  have 
resigned. 

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any 
other law for the time being in force, the transfer of the services of any officer or other employee of the 
Development Bank to the Company shall not entitle such officer or other employee to any compensation 
under this Act or under any other law for the time being in force and no such claim shall be entertained by 
any court, tribunal or other authority. 

(4) The officers and other employees who have retired before the appointed day from the service of 
the Development Bank and are entitled to any benefits, rights or privileges shall be entitled to receive the 
same benefits, rights or privileges from the Company. 

(5) The trust of the provident fund or the gratuity fund of the Development Bank and any other bodies 
created  for  the  welfare  of  officers  or  employees  would  continue  to  discharge  their  functions  in  the 
Company  as  was  being  done  hitherto  in  the  Development  Bank  and  any  tax  exemption  granted  to  the 
provident fund or the gratuity fund or pension fund would continue to be applied to the Company. 

(6) Notwithstanding anything contained in this Act or in the Companies Act, 1956 (1 of 1956), or in 
any other law for the time being in force or in the regulations of the Development Bank, no director of the 
Board, chairman and managing director or any whole-time director or any other person entitled to manage 
the whole or substantial part of the business and affairs of the Development Bank shall be entitled to any 
compensation against the Development Bank or the Company for the loss of office or for the premature 
termination of any contract of management entered into by him with the Development Bank. 

###CHAPTER III 

###MISCELLANEOUS 

6. **Concession,  etc.,  to  be  deemed  to  have  been  granted  to  Company.**—With  effect  from  the 
appointed day, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to 
the Development Bank, in connection with the affairs and business of the Development Bank under any 
law for the time being in force shall be deemed to have been granted to the Company. 

7. **Tax exemption or benefit to continue to have effect.**—(1) Where any exemption from, or any 
assessment with respect to, any tax has been granted or made or any benefit by way of set off or carry 
forward  of  any  unabsorbed  depreciation  or  investment  allowance  or  other  allowance  or  loss  has  been 
extended  or  is  available  to  the  Development  Bank  under  the  Income-tax  Act,  1961  (43  of  1961),  such 
exemption, assessment or benefit shall continue to have effect in relation to the Company. 

(2) Where any payment made by the Development Bank is exempted from deduction of tax at source 
under  any  provision  of  the  Income-tax  Act,1961  (43  of  1961),  such  exemption  will  continue  to  be 
available as if the provisions of the said Act made applicable to the Development Bank were operative in 
relation to the Company. 

(3) The transfer and vesting of the undertaking of the Development Bank or any part thereof in terms 
of  section  3  shall  not  be  construed  as  a  transfer  within  the  meaning  of  the  Income-tax  Act,  1961 
(43 of 1961) or any other law for the time being in force. 

8. **Guarantee to be operative.**—Any guarantee given for or in favour of the Development Bank with 
respect  to  any  loan,  lease,  finance  or  other  assistance  shall  continue  to  be  operative  in  relation  to  the 
Company. 

9. **Shares,  bonds  and  debentures  to  be  deemed  to  be  approved  securities.**—Notwithstanding 
anything contained in any other law for the time being in force, the shares, bonds and debentures of the 
Company  shall  be  deemed  to  be  approved  securities  for  the  purposes  of  the  Indian  Trusts  Act,  1882 
(2 of 1882) and the Insurance Act, 1938 (4 of1938). 

10. **Act to have overriding effect.**—The  provisions  of  this  Act  shall  have  effect  notwithstanding 
anything  inconsistent  therewith  contained  in  any  enactment  other  than  this  Act  or  in  any  instrument 
having effect by virtue of any enactment other than this Act. 

11. **Application of other laws not barred.**—The provisions of this Act shall be in addition to, and 
not in derogation of the provisions of any other law for the time being in force. 

12. **Amendment to certain enactments.**—The enactments specified in the Schedule to this Act shall 
be amended in the manner provided therein. 

13. **Substitution in Acts, rules, regulations or notifications by Company in place of Development 
Bank.**—In every Act, rule, regulation or notification in force on the appointed day,— 

  (a) for  the  words  “Industrial  Development  Bank  of  India”,  wherever  they  occur,  the  words 
“Industrial Development Bank of India Limited referred to in clause (b) of section 2 of the Industrial 
Development Bank (Transfer of Undertaking and Repeal) Act, 2003” shall be substituted; 

  (b) for the words “Development Bank”, wherever they occur, the words “Industrial Development 
Bank  of  India  Limited  referred  to  in  clause  (b)  of  section  2  of  the  Industrial  Development  Bank 
(Transfer of Undertaking and Repeal) Act, 2003” shall be substituted; 

  (c) for the words and figures “the Development Bank means the Industrial Development Bank of 
India,  established  under  section  3  of  the  Industrial  Development  Bank  of  India  Act,  1964  (18  of 
1964)”,  the  words,  brackets,  letter  and  figures  “the  Industrial  Development  Bank  of  India  Limited 
referred  to  in  clause  (b)  of  section  2  of  the  Industrial  Development  Bank  (Transfer  of  Undertaking 
and Repeal) Act, 2003” shall be substituted. 

  (d) for  the  words  and  figures  “the  Industrial  Development  Bank  of  India,  established  under 
section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964)”, the words, brackets, 
letter  and  figures  “the  Industrial  Development  Bank  of  India  Limited  referred  to  in  clause  (b)  of 
section 2 of the Industrial Development Bank (Transfer or Undertaking and Repeal) Act, 2003” shall 
be substituted. 

14. **Power to remove difficulties.**—(1)  If  any  difficulty  arises  in  giving  effect to  the  provisions  of 
this Act, the Central Government may, by order published in the Official Gazette, make such provisions 
not  inconsistent  with  the  provisions  of  this  Act  as  may  appear  to  it  to  be  necessary  or  expedient  for 
removing the difficulty: 

  Provided  that  no  such  order  shall  be  made  after  the  expiry  of  three  years  from  the  date  of 
commencement of this Act. 

(2) Every order made under this section shall be laid, as soon as maybe after it is made, before each 
House of Parliament. 

15. **Repeal and saving of Act 18 of 1964.**—(1) On the appointed day, the Industrial Development 
Bank of India Act, 1964, shall stand repealed. 

(2) Notwithstanding the repeal of the Industrial Development Bank of India Act, 1964, the provisions 
of section 30A of the Act so repealed will continue to be applicable in respect of the arrangement entered 
into by the Development Bank with an industrial concern up to the appointed day and the Company will 
be entitled to act upon and enforce the same as fully and effectually as if this Act has not been enacted. 


 
#THE SCHEDULE 

*(See* section 12) 

AMENDMENTS TO CERTAIN ENACTMENTS 

###PART I 

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934 

(2 OF 1934) 

###AMENDMENTS 

1. In section 2, clause (bvii) shall be omitted. 

2. In section 17,— 

  (a) in sub-sections (4G) and (4H), the words “the Development Bank or” shall be omitted; 

  (b) in sub-sections (4-I), (8A) and (12B), the words “the Development Bank” shall be omitted. 

3. In section 42, in sub-section (1), in the Explanation, in clause (c), in sub-clause (ii), the words “or 
from the Development Bank” shall be omitted. 

4. In section 45-I, in clause (bb), in sub-clause (iv), the item (a) shall be omitted. 

5. In section 46C, in sub-section (2), clauses (a) and (b) shall be omitted. 

###PART II 

AMENDMENTS TO THE BANKING REGULATION ACT, 1949 

(10 OF 1949) 

###AMENDMENTS 

1. In section 5, clause (ffa) shall be omitted. 
2. In section 34A, in sub-section (3), the words “the Development Bank” shall be omitted. 
3. In section 36AD, in sub-section (3), the words “the Development Bank,” shall be omitted. 

###PART III 

AMENDMENT TO THE INDUSTRIAL DISPUTES ACT, 1947 

(14 OF 1947) 

###AMENDMENT 

In section 2, in clause (bb), the words “the Industrial Development Bank of India” shall be omitted. 

###PART IV 

AMENDMENTS TO THE SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA ACT, 1989 

(39 OF 1989) 

###AMENDMENTS 

In section 2,— 

  (a) for clause (h), the following clause shall be substituted, namely:— 

     ‘(h)  “industrial  concern  in  the  small  scale  sector”  means  any  concern  engaged  or  to  be 
engaged in,— 

       (i) the manufacture, preservation or processing of goods; 

       (ii) shipping; 

       (iii) mining including development of mines; 

       (iv) the hotel industry; 

       (v) the transport of passengers or goods by road or by water or by air or by ropeway or by 
lift; 

       (vi) the generation, storage or distribution of electricity or any other form of energy; 

       (vii) the  maintenance,  repair,  testing  or  servicing  of  machinery  or  equipment  of  any 
description or vehicles or vessels or motor boats or trailers or tractors; 

       (viii) assembling, repairing or packing any article with the aid of machinery or power; 

       (ix) the setting up of, or development of, an industrial area or an industrial estate; 

       (x) fishing or providing shore facilities for fishing or maintenance thereof; 

       (xi)  providing  special  or  technical  knowledge  or  other  services  for  the  promotion  of 
industrial growth; 

       (xii) providing engineering, technical, financial, management, marketing or other services 
or facilities for industry; 

       (xiii) service industry such as altering, ornamenting, polishing, finishing, oiling, washing, 
cleaning or otherwise treating or adapting any article or substance with a view to its use, sale, 
transport, delivery or disposal; 

       (xiv) providing medical, health or other allied services; 

       (xv) providing services relating to information technology, telecommunication or 
electronics; 

       (xvi) leasing,  sub-leasing  or  giving  on  hire-purchase  of  industrial  plants,  equipments, 
machinery or other assets including vehicles, ships and aircraft; 

       (xvii) such other activity as the Central Government may, having regard to the objects of 
this Act, by notification, specify in this behalf; or 

       (xviii) the  research  and  development  of  any  concept,  technology,  design,  process  or 
product whether in relation to any of the matters aforesaid, including any activities specified 
under  sub-clause  (xvii),  or  any  other  matter  and  which  is  regarded  as  a  small-scale 
undertaking  under  section  11B  of  the  Industries  (Development  and  Regulation)  Act, 1951 
(65 of 1951). 

*Explanation.*—The expression “processing of goods” includes any art or process for producing, 
preparing  or  making  an  article  by  subjecting  any  material  to  a  manual,  mechanical,  chemical, 
electrical or any other like operation.’; 

  (b) after clause (la), the following clauses shall be inserted, namely:— 

     ‘(lb) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of 
India Act, 1934 (2 of 1934); 

     (lc) “scheduled bank” means a bank for the time being included in the Second Schedule to the 
Reserve Bank of India Act, 1934 (2 of 1934);’; 

  (c) clause (q) shall be omitted. 