MISCELLANEOUSCentral

Section 42 of The Small Industries Development Bank of India Act, 1989

(1)The Small Industries Bank shall have free access to all such records of any institution which seeks to avail of any credit facilities from the Small Industries Bank and to all such records of any such person who seeks to avail of any credit facilities from such institution, perusal whereof may appear to the Small Industries Bank to be necessary in connection with the providing of finance or other assistance to such institution or the refinancing of any loan or advance made to such person by the borrowing institution.
(2)The Small Industries Bank may require any institution or person referred to in sub-section (1) to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition.

Summary

The Small Industries Bank has the right to freely access the records of any institution seeking credit facilities from it.
The bank can also access the records of any person seeking credit from that borrowing institution, if the bank thinks it is necessary.
The bank uses this access to check if providing finance to the institution or refinancing a loan made to the person is appropriate.
The bank can demand copies of these records, and the institution or person is legally required to provide them.

Practical examples

1A State Financial Corporation borrows money from the Small Industries Bank. An officer from the Small Industries Bank asks to review the Corporation's internal loan ledgers to ensure the funds are properly managed, and the Corporation must allow this access under Section 42.

2A small bakery gets a loan from a commercial bank, and that commercial bank asks the Small Industries Bank to refinance the loan. The Small Industries Bank requests copies of the bakery's tax returns and equipment receipts, and the bakery is legally bound to provide them.

FAQ

1. Can the Small Industries Bank check my business records even if my loan is with a different local bank?

Yes, if your local bank is seeking to have your loan refinanced by the Small Industries Bank, they have the right to access your records.

2. Do I have to make copies of my files if the bank asks for them?

Yes, the bank can require you to furnish copies of the records, and you are legally bound to comply with that request.

3. Why is the bank allowed to look at these private records?

The bank peruses the records when it appears necessary in connection with providing finance or refinancing a loan or advance.

Test yourself

Q1.Under Section 42 of The Small Industries Development Bank of India Act, 1989, whose records can the Small Industries Bank access?

Q2.Under Section 42 of The Small Industries Development Bank of India Act, 1989, what obligation does a borrowing institution have if the bank requests copies of its records?

Q3.Under Section 42 of The Small Industries Development Bank of India Act, 1989, what is the stated purpose for the bank reviewing a borrower's records?

Q4.Under Section 42 of The Small Industries Development Bank of India Act, 1989, what kind of access is the bank granted to the relevant records?

41PreviousSection 41 Special provisions for enforcement of claims by Small Industries Bank.43NextSection 43 Validity of loan or advance not to be questioned.

←Section 41 Section 43→