Section 14: Prohibition of charge on unpaid capital

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 14 — Prohibition of charge on unpaid capital. Prohibits a charge over unpaid share capital; a charge created on that unpaid capital is invalid rather than merely irregular.

Official statute linkedProvision-specific anatomyPractical case + evidence file

Official text: DFS consolidated Act

Statutory structure and provision map

This map is a provision-specific explanation, not a substitute for the exact statutory text.

Core statutory rule

Prohibits a charge over unpaid share capital.

Condition / limitation

a charge created on that unpaid capital is invalid rather than merely irregular.

Source and effective-date control

Apply the wording of Section 14 that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.

Professional application

Explain the prohibition on charging unpaid capital and resulting invalidity; replace generic capital-transaction examples.

Working flow

Identify the bank/entity class, event date and the factual trigger for Prohibition of charge on unpaid capital.

Apply the core Section 14 rule: Prohibits a charge over unpaid share capital.

Test the next condition or limitation: a charge created on that unpaid capital is invalid rather than merely irregular.

Reconcile any amount, period, approval, filing or return mentioned in Section 14 with the supporting record.

Record the conclusion, official source used, effective date and evidence that proves the statutory condition was met or not met.

Evidence / working-paper checklist

Section 14 evidence: current cap table and voting-rights register.
Section 14 evidence: issue/acquisition/charge transaction documents.
Section 14 evidence: RBI approval and conditions where required.
Section 14 evidence: calculation file for capital, ownership, commission, reserve or voting limits.

Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.

Common mistakes to avoid

For Section 14, avoid testing a threshold on one holder while ignoring connected/acting-in-concert holdings.
For Section 14, avoid using face value where the statute uses issue price or another base.
For Section 14, avoid treating corporate-law approval as a substitute for RBI approval.

Related sections inside the Act

Use these links to read Section 14 in its statutory sequence, especially where the provision imports definitions, approvals, appeals, penalties or winding-up consequences from neighbouring sections.

Current-law source control

Source control: Section 14 is anchored to the official DFS consolidated text; later changes require separate Gazette verification.

Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 14 on the event date.

Professional reading note

Professional reading note — Section 14 should be applied as a sequence, not as an isolated heading. Start with the factual trigger

for prohibition of charge on unpaid capital, then test the operative proposition: Prohibits a charge over unpaid share capital. Next confirm the

limiting or interaction point: a charge created on that unpaid capital is invalid rather than merely irregular. The working file should be

capable of showing why the section applies to the relevant bank or person, which statutory version governs the event date, and which

documentary record proves the conclusion. Useful evidence on this page includes Section 14 evidence: current cap table and voting-rights register and Section

14 evidence: issue/acquisition/charge transaction documents. Read the provision in sequence with Section 12B — Regulation of acquisition of shares or voting rights

and Section 13 — Restriction on commission, brokerage, discount, etc. on sale of shares. This method keeps the legal answer tied to

the provision itself while allowing RBI directions, rules and later instruments to be layered on only where their own scope actually applies.

Primary official sources

Department of Financial Services — consolidated Banking Regulation Act, 1949

Disclaimer

This Finin2min page is an educational and professional reference. Banking regulation is fact-, entity- and date-sensitive. Verify the current Act, Gazette amendments and commencement notifications, applicable RBI Rules/directions and the transaction record before acting or filing.