Scheme of Amalgamation :

During the period of moratorium, the Reserve Bank may prepare a scheme of reconstruction or amalgamation. Such a scheme may be prepared by the Reserve Bank due to any one or more of the following aspects: 1. In the public interest, 2. In the interests of the depositors, 3. To secure proper management of the banking company, 4. In the interest of the banking system of the country. As per the various provisions, the scheme of amalgamation would be worked out and implemented. A copy of the draft of the scheme should be sent to the government and also to the banking company (transferee bank) and others concerned with the amalgamation. The Government may sanction with modifications as it may consider necessary, after that the scheme should come into effect from the date of the sanction.

Once the scheme is sanctioned by the Central Government, it would be binding on the banking company, transferee bank and the members, depositor and other creditors and others as per the sanction. The sanction by the Central Government is the conclusive proof that the amalgamation or reconstruction has been carried out with the accordance with the provisions of the relevant sections of the Act. Consequent to amalgamation, the transferee bank should carry on the business as required by the law.

The Central Government may order moratorium on the banking companies on the application of the Reserve Bank. The Reserve Bank may also apply to High Court for winding up of a banking company when the banking company is not able to pay its debts and also in certain other circumstances. The High Court would decide the case based on the merits of the case a moratorium order would be passed. After passing the order the court may appoint a special officer to take over the custody and control of the assets, books, etc of the banking company in the interests of the depositors and customers. During the period of moratorium, the Reserve Bank is not satisfied with the functioning of the bank and in its opinion the affairs of the banking company is being conducted not in the interests of the depositors and customers, the Reserve Bank may apply to the High Court for winding up of the company.