Section 46 of SFC Act : Section 46: Power To Apply Act To Certain Financial Institutions In Existence At Commencement Of Act

Explanation using Example

Imagine that the state of Xanadu has set up an institution named "Xanadu Industrial Finance Agency" (XIFA) to provide financial assistance to local industrial businesses. However, XIFA is not initially subject to the State Financial Corporations Act, 1951, which provides a regulatory framework for financial corporations. The State Government of Xanadu believes that applying the provisions of this Act to XIFA would enhance its functioning and enable it to access certain benefits and operate under a standardized legal framework.

Consequently, the State Government requests the Central Government to bring XIFA under the purview of the State Financial Corporations Act, 1951. The Central Government agrees and issues a notification in the Official Gazette, specifying that certain provisions of the Act will now apply to XIFA, along with any exceptions and restrictions deemed necessary for the institution's unique context.

Following this notification, XIFA is deemed to be a Financial Corporation as per the Act, which means it must now adhere to the applicable provisions, such as those related to capital structure, management, and operations. Additionally, the notification has the power to suspend any previous enactments that were governing XIFA, ensuring there is no legal conflict in its operations post-notification.