Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977
Act No. IX of 1977
[9th January, 1977]
An Act to provide for the establishment of a Federal Bank for Cooperatives and
regulation of Cooperative Banking.
Whereas it is expedient to provide for the establishment of a Federal Bank for Cooperatives and Regulation of Cooperative Banking, and for matters ancillary thereto;
And whereas the Provincial Assemblies of the North-West Frontier Province, the Punjab and Sind and Parliament, exercising the powers of the Provincial Assembly of Baluchistan under Article 234 of the Constitution of the Islamic Republic of Pakistan, have passed resolutions under Article 144 of the Constitution to the effect that Parliament may be law regulate the matter of cooperative banking;
It is hereby enacted as follows: —
1. Short title extent and commencement. — (1) This Act may be called the Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977.
(2) It extends to the whole of Pakistan and also applies to the business of the Bank transacted outside Pakistan and to persons conducting such business.
(3) It shall come into force at once and shall be deemed to have taken effect on the 9th day of October, 1976.
2, Definitions. — In this Act, unless there is anything repugnant in the subject or context, —
(a) “approved securities” means securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Trusts Act, 1882 and such other securities as the Federal Government may, by notification in the official Gazette, declare to be approved securities for purposes of this Act;
(b) “Bank” means the Federal Bank for Cooperatives established under section 5;
(c) “Board” means the Board of Directors constituted under section 9;
(d) “Chairman” means the Chairman of the Board;
(e) “Cooperative Bank” means a ‘banking society’ as defined in the Explanation to sub-section (2) of section 7 of the Cooperative Societies Act, 1925 other than a Provincial Cooperative Bank.
(f) “Cooperative Society” means a society registered in Pakistan under any law for the time being in force relating to registration of cooperative societies and a “primary cooperative society” means such a society of which no other society is a member;
(g) “borrower” means a person who has obtained a loan from the Bank or a Provincial Cooperative Bank and includes a surety or an indemnifier, but does not include the Federal Government or a provincial Government;
(h) “demand liabilities” means liabilities which are to be met on demand and “time liabilities”” means liabilities which are not demand liabilities;
(i) “Director” means a Director for the time being of the Board;
(j) “District judge” includes, in respect of areas where a District Judge does not have unlimited pecuniary jurisdiction in original civil suits, a High Court exercising original civil jurisdiction;
(k) “family members” in relation to a person means his spouse, dependent lineal ascendants and descendents and dependent brothers and sisters;
(l) “loan” include an advance, a cash credit, an overdraft, a packing credit, a bill discounted and purchased, letter of credit or any other financial accommodation or engagement provided by the Bank or a Provincial Cooperative Bank to a borrower;
(m) “Managing Director” means Managing Director of the Bank and includes any person for the time being discharging the functions of the Managing Director;
(n) “multi-unit cooperative society” means a cooperative society to which the Multi-Unit Cooperative Societies Act, 1942 applies and which —
(i) is not a banking society as defined in the Explanation to sub-section (2) of section 7 of the Cooperative Societies Act, 1925; and
(ii) does not use as a part of its name the word “Bank” or “Banking” or any of its derivatives;
(o) “prescribed” means prescribed by rules;
(p) “Provincial Cooperative Bank” means a cooperative society the primary object of which is to make loans to the cooperative societies which are its members and which is notified, for the purposes of this Act, to the Bank by the Provincial Government of the Province within which the cooperative society is registered or, until cooperative society is so notified, any one of the following, namely: —
(i) the Baluchistan Provincial Cooperative Bank Ltd;
(ii) the Frontier Provincial Cooperative Bank Ltd;
(iii) the Punjab Provincial Cooperative Bank Ltd;
(iv) the Sind Provincial Cooperative Bank Ltd;
(q) “regulation” means a regulation made under this Act;
(r) “rule” means a rule made under this Act;
(s) “scheduled bank” has the same meaning as in the State Bank of Pakistan Act, 1956;
(t) “State Bank” means the State Bank of Pakistan established under the State Bank of Pakistan Act, 1956.
3. Act to override other laws. — (1) Except as provided in sub-section (2), this Act shall have effect notwithstanding anything contained in the Banks (Nationalization) Act, 1974, or any other law, excepting the State Bank of Pakistan Act, 1956, and the Banking Companies Ordinance 1962, as amended by this Act, for the time being in force or any instrument having effect by virtue of any law or any agreement, contract, award or memorandum or articles of association or other instrument.
(2) Nothing in —
(a) section 36 of the State Bank of Pakistan Act, 1956, shall apply to the Chairman or a Director, other than the Managing Director;
(b) clause (iv) of sub-section (1) of section 14 of the Banking Companies Ordinance, 1962 shall apply to shares of the Bank held by the State Bank.
(c) section 27, section 28, clause (b) of sub-section (6) of section 40, clause (c) of sub-section (1) of section 42, Parts III and IV, or section 89 of the Banking Companies Ordinance, 1962 shall apply to the Bank;
(d) clause (c) of sub-section (1), or sub-section (2), (3), (4) and (5) of section 11, sub-section (3) of section 14, sections 15, 15-A, 15-B, 15-C or 20 sub-section (3) or (6) of section 25, sub-section (4) or (5) of section 40, or section 41-A, 41-B, 41-C, or 83 of the Banking Companies Ordinance, 1962 shall apply to the Chairman or a Director other than the Managing Director.
4. Power to exempt, and suspend operation of Act, in certain cases. — The Federal Government may, by notification in the official Gazette, and subject to such conditions as may be specified in the notification, exempt the Bank from, or suspend the application to the Bank of, all or any of the provisions of this Act, either generally or for such period as may be so specified.
5. Establishment of the Bank. — (1) As soon as may be after the coming into force of this Act, the Federal Government shall take steps to establish, in accordance with the provisions of this Act, a bank to be called “The Federal Bank for Cooperatives” to carry out the purposes of this Act.
(2) The Bank shall be a body corporate having perpetual succession and a common seal, with Powers to acquire, own, hold and dispose of any Property, and shall be the name assigned to it by sub-section (1) sue and be sued.
(3) The Bank shall be deemed to be a banking company for the purposes of the State Bank of Pakistan Act, 1956 the Banking Companies Ordinance, 1962 and any other law for the time being in force relating to banking companies, excepting the Banks (Nationalization) Act, 1974.
6. Share capital. — (1) The initial share capital of the Bank shall be twenty crores of rupees divided into two thousand fully paid up shares of the nominal value of one hundred thousand rupees each and shall be fully subscribed by the Federal Government, the Provincial Government and the State Bank of Pakistan in the following manner: —
(a) Federal Government. Rs. 2.00 crores.
(b) State Bank. Rs.15.00 crores.
(c) Government of the Punjab. Rs. 1.00 crores.
(d) Government of Sind. Rs. 1.00 crores.
(e) Government of N.W.F.P. Rs. 0.50 crores.
(f) Government of Baluchistan. Rs. 0.50 crores
(2) The share capital may be increased from time to time by a resolution of the Board with the approval of the Federal Government, and the capital so increased shall be fully subscribed by the Federal Government, the Provincial Governments and the State Bank of Pakistan.
7. Offices and branches. — (1) The head office of the Bank shall be at Islamabad.
(2) The Bank shall establish one Regional Office in each Province and may establish Offices, Branches and Agencies at such places as the Board may think fit.
8. Direction and superintendence. — The general direction and superintendence of the affairs and business of the Bank shall vest in a Board of Directors constituted in accordance with section 9, which may exercise all such powers and do all such acts and things as may be exercised or done by the Bank, subject to the provisions of this Act.
9. Board. — (1) The Board shall consist of —
(a) the Chairman;
(b) all the directors for the time being of the Central Board of Directors of the State Bank;
(c) the Managing Director;
(d) two directors to be nominated by the Federal Government of whom one shall be an officer of the Ministry of the Government of Pakistan concerned with the subject of cooperatives and the other a non-official; and
(e) two directors from each Province to be nominated by the Federal Government on the recommendation of each Provincial Government, of whom one shall be a non-official.
(2) The Governor for the time being of the State Bank shall be the Chairman of the Board.
(3) Unless the Federal Government otherwise directs in any case, a non-official Director referred to in clause (d) or clause (c) of sub-section (1) shall hold office for a period of three years and shall, subject to the provisions of this Act be eligible for re-appointment:
Provided that such a Director shall not hold office for more than six consecutive years, and in computing the period of six years, any break of less than three years in continuity of office shall be disregarded.
(4) A Director referred to in clause (b) of sub-section (1) and an officer who is nominated Director under clause (d) or clause (e) of that sub-section, shall hold office during the pleasure of the Federal Government.
(5) No act or proceeding of the Board shall be invalid by reason only of the existence of any vacancy in, or defect in the constitution of the Board.
10. Managing Director. — (1) The Managing Director shall be appointed by the Federal Government on such terms and conditions as the Federal Government may determine and shall hold office during the pleasure of the Federal Government.
(2) Subject to sub-section (1), the Managing Director may, by writing under his hand addressed to the Federal Government, resign his office.