Section 4 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
On the commencement of this Act, the undertaking of every existing bank shall be transferred to, and shall vest in, the corresponding new bank.
Summary
- The entire business structure of an existing bank is transferred completely to a newly formed bank.
- The formal legal term for this total business structure is an undertaking.
- The new bank legally receives and takes full ownership of this undertaking, a process known as vesting.
- This massive transfer of business happens instantly on the exact day the Act commences.
Practical examples
FAQ
1. What exactly is moved from the old bank to the new one?
The entire undertaking of the existing bank is transferred.
2. Who gets control of the existing bank's business?
The business is transferred to and vests in the corresponding new bank.
3. When exactly does this business transfer happen?
It happens immediately on the commencement of the Act.
Test yourself
Q1.Under Section 4 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, what exactly is transferred from the existing banks to the new banks?
Q2.Under Section 4 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, when does the undertaking of an existing bank transfer to the corresponding new bank?
Q3.Under Section 4 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, into which entity does the undertaking of the existing bank vest?
Q4.Under Section 4 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, what legal word is used to describe the new bank taking absolute possession of the transferred undertaking?