RESERVE BANK OF INDIA ACT, 1934
(1) This Act may be called the Reserve Bank of India Act, 1934."
1[(2) It extends to the whole of India 2[3[***]].]
(3) This section shall come into force at once, and the remaining provisions of this Act shall come into force on such date or dates4 as the 5[Central Government] may, by notification in the Gazette of India, appoint.
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1. Subs. by the A.O. 1950, for sub-section (2).
2. Subs. by Act 32 of 1951, sec. 3, for “Part B states”.
3. The words “Except the State of Jammu and Kashmir” omitted by Act 62 of 1956, sec. 2 and Sch. (w.e.
In this Act, unless there is anything repugnant in the subject or context,—
1[***]
2[(aii)] “the Bank” means the Reserve Bank of India constituted by this Act;
3[(aiii)] “Bank for International Settlements” means by body corporate established with the said name under the law of Switzerland in pursuance of an agreement dated the 20th January, 1930, signed at the Hague;]
(b) “the Central Board” means the Central Board of Directors of the Bank;
4[***]
5[6[(bvi)] “Deposit Insurance Corporation” means the Deposit Insurance Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of 1961);]
&
(1) A bank to be called the Reserve Bank of India shall be constituted for the purposes of taking over the management of the currency from the 5[Central Government] and of carrying on the business of banking in accordance with the provisions of this Act."
(2) The Bank shall be a body corporate by the name of the Reserve Bank of India, having perpetual succession and a common seal, and shall by the said name sue and be sued.
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1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
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The capital of the Bank shall be five crores of rupees.]
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1. Subs. by Act 62 of 1948, sec. 7 and Sch., for section 4 (w.e.f. 1-1-1949).
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[ Rep. by Act 62 of 1948, sec. 7 and Sch. (w.e.f. 1-1-1949).]"
The Bank shall, as soon as may be, establish offices in Bombay, Calcutta, 1[Delhi and Madras] 2[***] and may establish branches or agencies in any other place in India 3[***] or, with the previous sanction of the 4[Central Government] elsewhere,
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1. Subs. by Act 11 of 1947, sec. 5, for “Delhi, Madras and Rangoon”(w.e.f. 1-4-1947).
2. The words “and a branch in London ” omitted by Act 24 of 1955, sec. 3 (w.e.f. 8-5-1955).
3. The words “or Burma” ins. by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, sec. 5 (w.e.f. 1-4-1947).
4. Subs. by the India and
(1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest."
(2) Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank.
2[(3) Save as otherwise provided in regulations made by the Central Board, the Governor and in his absence the Deputy Governor nominated by him in his behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank.]]
3[(1) The Central Board shall consist of the following Directors, namely\:—"
(a) a Governor and 2[not more than four] Deputy Governors to be appointed by the Central Government;
(b) four Directors to be nominated by the Central Government, one from each of the four Local Boards as constituted by section 9;
(c) 3[ten] Directors to be nominated by the Central Government; and
(d) one Government official to be nominated by the Central Government.]
(2) The Governor and Deputy Governors shall devote their whole time to the affairs of the Bank, and shall receive such salaries and allowances as may be determined by the Central Board, with the approval of the 4[Central Government]:
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(1) A Local Board shall be constituted for each of the four areas specified in the First Schedule and shall consist of five members to be appointed by the Central Government to represent, as far as possible, territorial and economic interests and the interests of co-operative and indigenous banks."
(2) The members of the Local Board shall elect from amongst themselves one person to be the chairman of the Board.
2[(3) Every member of a Local Board shall hold office for a term of four years and thereafter until his successor shall have been appointed and shall be eligible for re-appointment.]
(4) A Local Board shall advise the Central Board on such matters as may be generally or specifically referred to it and shall perform such duties as the Central Board may delegate to it.]
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(1) No person may be a Director or a member of a Local Board who—"
(a) is a salaried Government official 1[***] 2[***], or
(b) is, or at any time has been, adjudicated an insolvent, or has suspended payment or has compounded with his creditors, or
(c) is fund lunatic or becomes of unsound mind, or
(d) is an officer or employee of any bank, or
3[(e) is a Director of banking company within the meaning of clause (c) of section 5 of the 4[Banking Regulation Act, 1949 (10 of 1949)], or of a co-operative bank.]
(2) No two persons who are partners of the same mercantile firm, or are Directors of the same private company, or one of whom is the general ag
(1) The 5[Central Government] may remove from office the Governor, or a Deputy Governor or 6[any other Director or any member of Local Board]\:"
3[***]
4[(2) A Director nominated under clause (b) or clause (c) of sub-section(l) of section 8 shall cease to hold office if without leave from the Central Board he absents himself from three consecutive meetings of the Board convened under sub-section (1) of section 13.]
(3) The 1[Central Government] shall remove from office any Director, and the Central Board shall remove from office any member of a Local Board, if such Director or member becomes subject to any of the disqualifications specified in sub-section (1) or sub-section (2) of section 10.
(4) A Director or member of a Local Board removed or ce
(1) If the Governor or a Deputy Governor by infirmity or otherwise is rendered incapable of executing his duties or is absent on leave or otherwise in circumstances not involving the vacation of his appointment, the 6[Central Government] may, after consideration of the recommendations made by the Central Board in this behalf, appoint another person to officiate for him, and such person may, notwithstanding anything contained in clause (d) or sub-section (1) of section 10, be an officer of the Bank."
2[***]
(3) Where any casual vacancy in the office of any member of a Local Board occurs 3[***], the Central Board may nominate thereto any 4[***] person recommended by the 5[other] members of the Local Board.
(4) Where any casual vacancy occurs in the office of a Director other than the vacancies
(1) Meetings of the Central Board shall be conveyed by the Governor at least six times in each year and at least once in each quarter."
(2) Any 1[four Directors] may require the Governor to convene a meeting of the Central Board at any time and the Governor shall forthwith convene a meeting accordingly.
(3) The Governor, or 2[if for any reason, he is unable to attend,] the Deputy Governor authorised by the Governor under the proviso to sub-section (3) of section 8 to vote for him shall preside at meetings of the Central Board, and, in the event of an equality of votes, shall have a second or casting vote.
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1. Subs. by Act 18 of 1964, sec. 38 and Sch. II, for “three Direc
[Rep. by the Reserve Bank (Transfer of Public Ownership Act, 1948 (62 of 1948), sec. 7 and Sch. (w.e.f. 1-1-1949).]"
[Rep. by the Reserve Bank (Transfer of Public Ownership) Act, 1948 (62 of 1948), sec. 7 and Sch. (w.e.f. 1-1-1949).]"
[Rep. by the Reserve Bank (Transfer of Public Ownership) Act, 1948 (62 of 1948), sec. 7 and Sch. (w.e.f. 1-1-1949).]"
The Bank shall be authorised to carry on and transact the several kinds of business hereinafter specified, namely:—
(1) the accepting of money on deposit without interest from, and the collection of money for, 1[***] the 2[Central Government]. 3[4[***] the 5[State] Government] 6[***] 7[***] local authorities, banks and any other persons:
(2) (a) the purchase, sale and rediscount of bills of exchange and promissory notes, 8[drawn on 9[and payable in India]] and arising out of bona fide commercial or trade transaction bearing two or more good signatures, one of which shall be that of a scheduled bank 10[or a State co-operative bank] 11[or any financial institution, which is predominantly engaged in the acceptance or discounting of bills of exchange and promissory notes and which is approved by the Bank in this behalf] 12[
1[***] When, in the opinion of the 2[Bank] 3[***] a special occasion has arisen making it necessary or expedient that action should be taken 4[under this section] for the purposes of regulating credit in the interests of Indian 5[***] trade, commerce, industry and agricultural, the Bank may, notwithstanding any limitation contained in 6[***] section 17,—
7[(1) purchase, sell or discount any bill of exchange or promissory note though such bill or promissory note is not eligible for purchase or discount by the Bank under that section; or]
8[***]
9[(3) make loans or advances to—
(a) a State co-operative bank, or
(b) on the recommendation of a State co-operative
Notwithstanding anything to the contrary contained in any other law for the time being in force,—"
(a) the validity of any loan or advance granted by the Bank in pursuance of the provisions of this Act shall not be called in question merely on the ground of non-compliance with the requirements of such other law as aforesaid or of any resolution, contract, memorandum, articles of association or other instrument:
Provided that nothing in this clause shall render valid any loan or advance obtained by any company or co-operative society where such company or co-operative society is not empowered by its memorandum to obtain loans or advances;
(b) where a loan or advance has been granted under clause (3A) or under clause (3B) or section 17 or a loan or advance granted under clause (3)
Save as otherwise provided in sections 17, 18, 1[42] and 45, the Bank may not—
(1) engage in trade or otherwise have a direct interest in any commercial, industrial or other undertaking except such interest as it may in any way acquire in the course of the satisfaction of any of its claims: provided that all such interests shall be disposed of at the earliest possible moment;
2[(2) purchase the shares of any banking company or of any other company, or grant loans upon the security of any such shares;]
(3) advance money on mortgage of, or otherwise on the security of, immovable property or documents of title relating thereto, or become the owner of immovable property, except so far as is necessary for its own business premises and residences for its officers and servants;
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The Bank shall undertake to accept monies for account of 1[2[***]] the Central Government 3[***] and to make payments up to the amount standing to the credit of 4[its account], and to carry out 5[its exchange], remittance and other banking operations, including the management of the public debt 6[of the Union].
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1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for certain words.
2. The words “ the Secretary of State” omitted by the A.O. 1950.
3. The words “and the Governments of Part A States” omitted by Act 37 of 1956,
sec. 104 (w.e.f. 1-11-1956).
4. Subs. by Act 37 of
(1) Any agreement made under section 21 or section 21A between the Bank and the Government of a State specified in the Explanation below and in force immediately before the 1st day of November, 1956, shall, as from that day have effect as if it were an agreement made on that day under section 21A between the Bank and the Government of the corresponding State subject to such modifications, if any, being of a character not affecting the general operation of the agreement, as may be agreed upon between the Bank and the Government of the corresponding State, or in default of such agreement, as may be made therein by order of the Central Government."
Explanation.—In this sub-section “corresponding State” means,—
(a) in relation to the agreement between the Bank and the State of Andhra, the State of Andhra Pradesh;
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(1) The 1[Central Government] 2[***] shall entrust the Bank, on such conditions as may be agreed upon, with all 3[its] money, remittance, exchange and banking transaction in India, and, in particular, shall deposit free of interest all 3[its] cash balances with the Bank:
Provided that nothing in this sub-section shall prevent the 4[Central Government] 5[***] from carrying on money transactions at places where the Bank has no branches or agencies, and the 4[Central Government] 6[***] may hold at such places such balances as 7[it] may require.
(2) The 4[Central Government] 8[***] shall entrust the Bank, on such conditions as may be agreed upon, with the management of the public debt and with the issue of any new loans.
(3) In the event of any failure to reach agreement on the conditions referr
(1) The Bank may by agreement with the Government of any 2[***] State 3[***] undertake—
(a) all its money, remittance, exchange and banking transactions in India, including in particular, the deposit, free of interest, of all its cash balances with the Bank; and
(b) the management of the public debt of, and the issue of any new loans by, that State.
(2) Any Agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.]
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1. Ins. by Act 32 of 1951, sec. 12 (w.e.f. 1-11-1951).
2. The words “Part B” omitted by Act 37 of 1956, sec. 104 (w.e.f. 1-11-1956)
(1) The Bank shall have the sole right to issue bank notes in 1[India], and may, for a period which shall be fixed by the 2[Central Government] on the recommendation of the Central Board, issue currency notes of the Government of India supplied to it by the 2[Central Government], and the provisions of this Act applicable to bank notes shall, unless a contrary intention appears, apply to all currency notes of the Government of India issued either by the 2[Central Government] or by the Bank in like manner as if such currency notes were bank notes, and references in this Act to bank notes shall be construed accordingly."
(2) On and from the date on which this Chapter comes into force the 2[Central Government] shall not issue any currency notes.
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(1) The issue of bank notes shall be conducted by the Bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department, and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department as hereinafter defined in section 34.
(2) The Issue Department shall not issue bank notes to the Banking Department or to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by this Act to form part of the Reserve.
1[***]
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1. Sub-section (3) omitted by Act 11 of 1947, sec. 13 (w.e.f. 1-4-1947). Earlier sub-section (3) was inserted by the India and B
(1) Subject to the provisions of sub-section (2) bank notes shall be of the denominational value to two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees, as the Central Government may, on the recommendation of the Central Board, specify in this behalf."
(2) The Central Government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue of bank notes of such denominational values as it may specify in this behalf.]
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1. Subs. by Act 58 of 1968, sec. 25, for section 24. (w.e.f. 1-2-1
The design, form the material of bank notes shall be such as may be approved by the 1[Central Government] after consideration of the recommendations made by the Central Board."
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1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
(1) Subject to the provisions of sub-section (2), every bank note shall be legal tender at any place in 1[India] in payment, or on account for the amount expressed therein, and shall be guaranteed by the 2[Central Government].
(2) On recommendation of the Central Board the 2[Central Government] may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender 3[save at such office or agency of the Bank and to such extent as may be specified in the notification].
4[***]
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1. Subs. by Act 32 of 1951, sec. 2, for “the States” (w.e.f. 1-11-1951).
Notwithstanding anything contained in section 26, no bank note of the denominational value of five hundred rupees, one thousand rupees or ten thousand rupees issued before the 13th day of January, 1946, shall be legal tender in payment or on account for the amount expressed therein.]"
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1. Ins. by Act 62 of 1956, sec. 2 and Sch. (w.e.f. 1-11-1956).
The Bank shall not re-issue bank notes which are torn, defaced or excessively spoiled.
1[***] Notwithstanding anything contained in any enactment or rule of law to the contrary, no person shall of right be entitled to recover from the 2[Central Government] or the Bank, the value of any lost, stolen, mutilated or imperfect currency note of the Government of India or bank note:
Provided that the Bank may, with the previous sanction of the 2[Central Government], prescribed the circumstances in and the conditions and limitations subject to which the value of such currency notes or bank notes may be refunded as of grace and the rules made under this proviso shall be laid on the table 3[***] of 4[Parliament].
5[***]
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1. The brackets and figure “(1)” omitted by Act 11 of 1947, sec. 15 (
(1) For the purpose of controlling the circulation of bank notes without India, the Bank may, notwithstanding anything contained in any other provision of this Act, issue bank notes of such design, form and material as may be approved under sub-section (3) (hereinafter in this section referred to as special bank notes) of the denominational values of five rupees, ten rupees and one hundred rupees."
(2) For the purpose of controlling the circulation of Government of India one rupee notes without India, the Central Government may, notwithstanding anything contained in any other provision of this Act or in the Currency Ordinance, 1940, (Ord. 4 of 1940) issue Government of India notes of the denominational value of one rupee of such design, form and material as may be adopted under sub-section (3) (hereinafter in this section referred to as special one rupee notes).
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The Bank shall not be liable to the payment of any stamp duty under the Indian Stamp Act, 1899 (2 of 1899) in respect of bank notes 1[***] issued by it.
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1. The words “or Burma notes” omitted by Act 11 of 1947, sec. 16 (w.e.f. 1-4-1947). Earlier the words “or Burma notes” were inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937.
(1) If in the opinion of the 1[Central Government] the Bank fails to carry out any of the obligations imposed on it by or under this Act 2[***] 3[the Central Government] may, by notification in the Gazette of India, declare the Central Board to be superseded, and thereafter the general superintendence and direction of the affairs of the Bank shall be entrusted to such agency as the 1[Central Government] may determine, and such agency may exercise the powers and do all acts and things which may be exercised or done by the Central Board under this Act.
(2) When action is taken under this section the 1[Central Government] shall cause a full report of the circumstances leading to such action and of the action taken to be laid before 4[Parliament] at the earliest possible opportunity and in any case within three months from the issue of the notification superseding the Board.
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1[(1)] No person in 2[India] other than the Bank, or, as expressly authorized by this Act the 3[Central Government] shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person:
Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person’s account with a banker, shroff or agent.
4[(2) Notwithstanding anything contained in the Negotiable Instruments Act, 1881, (26 of 1881) no person in 2[India] other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument.
[Rep. by the Reserve Bank of India (Amendment) Act, 1974 (51 of 1974), sec. 9 w.e.f. 13-12-1974).]
(1) The assets of the Issue Department shall consist of gold coin, gold bullion, 1[foreign securities], rupee coin and rupee securities to such aggregate amount as is not less than the total of the liabilities of the Issue Department as hereinafter defined."
2[(2) The aggregate value of the gold coin, gold bullion and foreign securities held as assets and the aggregate value of the gold coin and gold bullion so held shall not at any time be less than two hundred crores of rupees and one hundred and fifteen crores of rupees, respectively.]
3[(3) The remainder of the assets shall be held in rupee coin, Government of India rupee securities of any maturity, promissory notes drawn by the National Bank for any loans or advances under clause (4E) of section 17 and such bills of exchange and promissory notes payable in India as are eligible for
(1) The Liabilities of the Issue Department shall be an amount equal to the total of the amount of the currency notes of the Government of India and bank notes for the time being in circulation.
1[***]
2[***]
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1. Sub-section (2) omitted by Act 55 of 1963, sec 2 (w.e.f. 1-2-1964).
2. Sub-section (3) omitted by Act 11 of 1947, sec. 19 (w.e.f. 1-4-1947). Earlier sub-section (3) was inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937.
[Rep. by Act 62 of 1948, sec.7 and Sch. (w.e.f. 1-1-1949).]
[Rep. by Act 55 of 1963, sec. 3 (w.e.f. 1-2-1964).]
Notwithstanding anything contained in the foregoing provisions, the Bank may, with the previous sanction of the Central Government, for periods not exceeding six months in the first instance, which may, with the like sanction, be extended from time to time by period not exceeding three months at a time, hold as assets foreign securities of less amount in value than that required by sub-section (2) of section 33:
2[***]
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1. Subs. by Act 38 of 1956, sec. 4, for section 37 (w.e.f. 6-10-1956).
2. Proviso omitted by Act 48 of 1957, sec. 3 (w.e.f. 31-10-1957).
The 9[Central Government] shall undertake not 10[***] to put into circulation any rupees, except through the Bank, 1[***] and the Bank shall undertake not to dispose of rupee coin other-wise than for the purposes of circulation 2[***]."
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1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
2. The words “to re-issue any rupee coin delivered under section 36 nor” omitted by Act 55 of 1963, sec. 4 (w.e.f. 1-2-1964).
3. The words “and as provided in that section” omitted by Ordinance 4 of 1940, sec. 3.
4. The words “or by delivery to the Central
(1) The Bank shall issue rupee coin on demand in exchange for bank notes and currency notes of the Government of India and shall issue currency notes or bank notes on demand in exchange for coin which is legal tender under the Indian Coinage Act, 1906 (3 of 1906)."
(2) The Bank shall, in exchange for currency notes or bank notes of 1[two] rupees or upwards, supply currency notes or bank notes of lower value or other coins which are legal tender under the Indian Coinage Act, 1906 (3 of 1906), in such quantities as may, in the opinion of the Bank, be required for circulation; and the 2[Central Government] shall supply such coins to the Bank on demand. If the 2[Central Government] at any time fails to supply such coins, the Bank shall be released from its obligations to supply them to the public.
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The Bank shall sell to or buy from any authorized person who makes a demand in that behalf at its office in Bombay, Calcutta, Delhi or Madras 2[or at such or its branches as the Central Government may, by order determine]. foreign exchange at such rates of exchange and on such conditions as the Central Government may from time to time by general or special order determine, having regard so far as rates of exchange are concerned to its obligations to the International Monetary Fund:
Provided that no person shall be entitled to demand to buy or sell foreign exchange of a value less than two lakhs of rupees.
Explanation.—In the section “authorized person” means a person who is entitled by or under the 3[Foreign Exchange Regulation Act, 1973 (46 of 1973)] to buy, or as the case may be, sell, the foreign exchange to which his demand relates.
[Rep. by Act 11 of 1947, sec. 22 (w.e.f. 1-4-1947).]]"
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1. Ins. by the India and Burma (Burma Monetary Arrangements) Order, 1937.
1[(1) Every bank included in the Second Schedule shall maintain with the Bank an average daily balance the amount of which shall not be less than 2[such per cent. of the total of the demand and time liabilities in India of such bank as shown in the return referred to in sub-section (2), as the Bank may from time to time, having regard to the needs of securing the monetary stability in the country, notify in the Gazette of India].
3[***]
Explanation.—For the purposes of this section,—
(a) “average daily balance” shall mean the average of the balances held at the close of business of each day 4[of a fortnight];
5[(b) “fortnight” shall mean the period from Saturday to the second following Friday, both days inclusive;]
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The Bank shall cause to be published each 2[fortnight] a consolidated statement showing the aggregate liabilities and assets of all the scheduled banks together, based on the returns and information received under this Act or any other law for the time being in force.]
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1. Subs. by Act 51 of 1974, sec. 12, for section 43 (w.e.f. 13-12-1974).
2. Subs. by Act 1 of 1984, sec. 7, for “week” (w.e.f. 29-3-1985).
(1) No suit or other legal proceeding shall lie against the Bank or any of its officers for anything which is in good faith done or intended to be done in pursuance of section 42 or section 43 6[or in pursuance of the provisions of Chapter IIIA]."
(2) No suit or other legal proceeding shall lie against the Bank or any of its officers for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of section 42 or section 43 2[or in pursuance of the provisions of Chapter IIIA].]
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1. Ins. by Act 54 of 1953, sec. 7 (w.e.f. 30-12-1953).
2. Ins. by Act 35 of 1962, sec. 5 (w.e.f. 15-9-1962).
[Rep. by the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), sec. 7 (w.e.f. 1-3-1966).]"
[Rep. by the Reserve Bank of India (Amendment) Act,1974, sec.22 (w.e.f. 13-12-1974).]
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* Section 45P ins. by Act 55 of 1963, sec. 5 (w.e.f. 1-12-1964).
[Rep. by the Reserve Bank of India (Amendment )Act, 1974, (51 of 1974). sec. 22 (w.e.f. 13-12-1974).]
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* Section 45N-O ins. by Act 55 of 1963, sec. 5 (w.e.f. 1-12-1964).
The Bank, on being satisfied that it is necessary so to do, may declare by notification in the Official Gazette that any or all of the provisions of this Chapter shall not apply to a non-banking institution or a class of non-banking institutions or a non-banking financial company or to any class or non-banking financial companies either generally or for such period as may be specified, subject to such conditions, limitations or restrictions as it may think fit to impose.]"
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1. Ins. by Act 23 of 1997, sec. 7 (w.r.e.f. 9-1-1997).
It shall be the duty or every non-banking institution to furnish the statements, information or particulars called for, and to comply with any direction given to it, under the provisions of this Chapter.
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* Section 45M ins. by Act 55 of 1963, sec. 5 (w.e.f. 1-12-1964).
(1) If the Bank is satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do, it may—
(a) require financial institutions either generally or any group of financial institutions or financial institution in particular, to furnish to the Bank in such form, at such intervals and within such time, such statements, information or particulars relating to the business of such financial institutions or institution, as may be specified by the Bank by general or special order;
(b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.
(2) Without prejudice to the generality of the power vested i
(1) The Bank may at any time direct that every non-banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements information or particulars relating to or connected with deposits received by the non-banking institution, as may be specified by the Bank by general or special order."
(2) Without prejudice to the generality of the power vested in the Bank under sub-section (1), the statements, information or particulars to be furnished under sub-section (1), may relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods for which, and the rates of interest and other terms and conditions on which, they are received.
(3) The Bank may, if it considers necessary in the public interest so to do, give directions to non-banking institutions ei
(1) If the Bank is satisfied that, in the public interest or to regulate the financial system of the country to its advantage or to prevent the affairs of any non-banking financial company being conducted in manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of the non-banking financial company, it is necessary or expedient so to do, it may determine the policy and give directions to all or any of the non-banking financial companies relating to income recognition, accounting standards, making of proper provision for bad and doubtful debts, capital adequacy based on risk weights for assets and credit conversion factors for off balance-sheet items and also relating to deployment of funds by a non-banking financial company or a class of non-banking financial companies or non-banking financial companies generally, as the case may be, and such non-banking financial companies shall b
(1) Every non-banking financial company shall create a reserve fund the transfer therein a sum not less than twenty per cent of its net profit every year as disclosed in the profit and loss account and before any dividend is declared."
(2) No appropriation of any sum from the reserve fund shall be made by the non-banking financial company except for the purpose as may be specified by the Bank from time to time and every such appropriation shall be reported to the Bank within twenty-one days from the date of such withdrawal:
Provided that the Bank may, in any particular case and for sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit or condone any delay in making such report.
(3) Notwithstanding anything contained in sub-section (1), the
The provisions of this Chapter shall not apply to the State Bank or a banking company as defined in section 5 of the 1[Banking Regulation Act, 1949] (10 of 1949) or 2[a corresponding new bank as defined in clause (da) of section 5 of the Act or a subsidiary bank as defined in State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959)] or 3[a Regional Rural Bank or a co-operative bank or a primary agricultural credit society or a primary credit society]:
Provided that for the purposes of this Chapter, the 4[Tamil Nadu Industrial Investment Corporation Limited] shall not be deemed to be a banking company.
—————
1. Subs. by Act 51 of 1974, sec. 3, for “Banking Companies Act 1949” (w.e.f. 13-12-1974).
&nb
[Rep. by the Reserve Bank of India (Amendment) Act, 1974 (51 of 1974), sec. 15 (w.e.f. 13-12-1974).]
----------------------
* Section 45G ins. by Act 35 of 1962, sec. 6 (w.e.f. 15-9-1962).
No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of the provisions of this Chapter."
----------------------
* Section 45F ins. by Act 35 of 1962, sec. 6 (w.e.f. 15-9-1962).
(1) Any credit information contained in any statement submitted by a banking company under section 45C or furnished by the Bank to any banking company under section 45D, shall be treated as confidential and shall not, except for the purposes of this Chapter, be published or otherwise disclosed.
(2) Nothing in this section shall apply to—
(a) the disclosure by any banking company, with the previous permission of the Bank, of any information furnished to the Bank under section 45C;
(b) the publication by the Bank, if it considers necessary in the public interest so to do, of any information collected by it under section 45C, in such consolidated form as it may think fit without disclosing the name of any banking company or its borrowers;
&n
(1) A banking company may, in connection with any financial arrangement entered into or proposed to be entered into by it, with any person, make an application to the Bank in such form as the Bank may specify requesting it to furnish the applicant with such credit information as may be specified in the application."
(2) On receipt of an application under sub-section (1), the Bank shall, as soon as may be, furnish the applicant with such credit information relating to the matters specified in the application, as may be in its possession:
Provided that the information so furnished shall not disclose the names of the banking companies which have submitted such information to the Bank.
(3) The Bank may in respect of each application levy such fees, not exceeding twenty-five rupees, as it may dee
(1) For the purpose of enabling the Bank to discharge its functions under this Chapter, it may at any time direct any banking company to submit to it such statements relating to such credit information and in such form and within such time as may be specified by the Bank from time to time.
(2) A banking company shall, notwithstanding anything to the contrary contained in any law for the time being in force on in any instrument regulating the constitution thereof or in any agreement executed by it, relating to the secrecy of its dealings with its constituents, be bound to comply with any direction issued under sub-section (1).
----------------------
* Section 45C ins. by Act 35 of 1962, sec. 6 (w.e.f. 15-9-1962).
The Bank may—"
(a) collect, in such manner as it may think fit, credit information from banking compaines; and
(b) furnish such information to any banking company in accordance with the provisions of section 45D.
----------------------
* Section 45B ins. by Act 35 of 1962, sec. 6 (w.e.f. 15-9-1962).
(1) Unless otherwise directed by the Central Government with reference to any place, the Bank may, having regard to public interest, convenience of banking, banking development and such other factors which in its opinion are relevant in this regard, appoint the National Bank, or the State Bank, or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of undertakings) Act, 1970 (5 of 1970), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), as its agent at all places, or at any place in India for such purposes as the Bank may specify.
(2) When any bank is appointed by the Bank as its agent under sub-section (1) to receive on behalf of
In this Chapter, unless the context otherwise requires,—
(a) “banking company’ means a banking company as defined in section 5 of the 1[Banking Regulation Act, 1949] (10 of 1949) and includes the State Bank of India, 2[any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), any corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), and any other financial institution notified by the Central Government in this behalf];
(b) “borrower” means any person to whom any credit limit has been sanctioned by any banking company, whether availed of or not, and includes—
(i) in the case of a company or corporation, its subsidiaries;
&nbs
It shall be the duty of every director or member or other body for the time being vested with the management of the affairs of the agencies referred to in section 45W to comply with the directions given by the Bank and to submit the information or statement or particulars called for under that section.]
—————
* Section 45X ins. by Act 26 of 2006, sec. 4 (w.e.f. 9-1-2007).
(1) The Bank may, in public interest, or to regulate the financial system of the country to its advantage, determine the policy relating to interest rates or interest rate products and give directions in that behalf to all agencies or any of them, dealing in securities, money market instruments, foreign exchange, derivatives, or other instruments of like nature as the Bank may specify from time to time:
Provided that the directions issued under this sub-section shall not relate to the procedure for execution or settlement of the trades in respect of the transactions mentioned therein, on the Stock Exchanges recognised under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
(2) The Bank may, for the purpose of enabling it to regulate agencies referred to in sub-section (1), call for any information, statement or o
(1) Notwithstanding anything contained in the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or any other law for the time being in force, transactions in such derivatives, as may be specified by the Bank from time to time, shall be valid, if at least one of the parties to the transaction is the Bank, a scheduled bank, or such other agency falling under the regulatory purview of the Bank under the Act, the Banking Regulation Act, 1949 (10 of 1949), the Foreign Exchange Management Act, 1999 (42 of 1999), or any other Act or instrument having the force of law, as may be specified by the Bank from time to time.
(2) Transactions in such derivatives, as had been specified by the Bank from time to time, shall be deemed always to have been valid, as if the provisions of sub-section (1) were in force at all material times.
&
For the purposes of this Chapter,—
(a) “derivative” means an instrument, to be settled at a future date, whose value is derived from change in interest rate, foreign exchange rate, credit rating or credit index, price of securities (also called “underlying”), or a combination of more than one of them and includes interest rate swaps, forward rate agreements, foreign currency swaps, foreign currency-rupee swaps, foreign currency options, foreign currency-rupee options or such other instruments as may be specified by the Bank from time to time;
(b) “money market instruments” include call or notice money, term money, repo, reverse repo, certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity up to one year as the Bank may specify from time to time;
&n
(1) Any court having jurisdiction to issue a search warrant under the Code of Criminal Procedure, 1973 (2 of 1974), may, on an application by an officer of the bank or of the State Government authorised in this behalf stating his belief that certain documents relating to acceptance of deposits in contravention of the provisions of section 45S are secreted in any place within the local limits of the jurisdiction of such court, issue a warrant to search for such documents.
(2) A warrant issued under sub-section (1) shall be executed in the same manner and shall have the same effect as a search warrant issued under the Code of Criminal Procedure, 1973 (2 of 1974).
----------------------
* Section 45T ins. by Act 1 of 1984, sec. 10 (w.e.f. 15-2-1984).
(1) No person, being an individual or a firm or an unincorporated association of individuals shall, accept any deposit—
(i) if his or its business wholly or partly includes any of the activities specified in clause (c) of section 45-I; or
(ii) if his or its principal business is that of receiving of deposits under any scheme or arrangement or in any other manner or lending in any manner:
Provided that nothing contained in this sub-section shall apply to the receipt of money by an individual by way of loan from any of his relatives or to the receipt of money by a firm by way of loan from the relative or relatives of any of the partners.
(2) Where any person referred to in sub-section (1) holds any deposit on the Ist day of April, 1997 which is
The words and expressions used in this Chapter and defined in Chapter IIIB shall have the meanings respectively assigned to them therein.
----------------------
* Section 45R ins. by Act 1 of 1984, sec. 10 (w.e.f. 15-2-1984).
The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
----------------------
* Section 45Q ins. by Act 55 of 1963, sec. 5 (w.e.f. 1-12-1964).
(1) The Bank shall establish and maintain a Fund to be known as the National Housing Credit (Long Term Operations) Fund to which shall be credited every year such sums of money as it may consider necessary."
(2) The amount in the said Fund shall be applied by the Bank only to the following objects namely:—
(a) the making to the National Housing Bank of loans and advances for the purpose of any business of the National Housing Bank;
(b) the purchasing of bonds and debentures issued by the National Housing Bank.]
---------------------------
1. Ins. by Act 53 of 1987, sec. 56 and the Second Schedule (w.e.f. 9-7-1988).
The 1[Central Government] shall transfer to the Bank rupee securities to the value of five crores of rupees to be allocated by the Bank to the Reserve Fund.
---------------------------
1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
(1) The Bank shall establish and maintain a Fund to be known as the National Industrial Credit (Long Term Operations) Fund to which shall be credited—
(a) an initial sum of ten crores of rupees by the Bank;
(b) such further sums of money as the Bank may contribute every year:
Provided that the annual contribution during each of the five years commencing with the year ending on the 30th day of June, 1965 shall not be less than five crores of rupees:
Provided further that the Central Government may, if the circumstances so require, authorise the Bank to reduce the said sum of five crores of rupees in any year.
(2) The amount in the said fund shall be applied by the Bank only to the followin
The Bank shall contribute every year such sums of money as it may consider necessary and feasible to do so, to the National Rural Credit (Long Term Operations) Fund and the National Rural Credit (Stabilisation) Fund established and maintained by the National Bank under sections 42 and 43, respectively, of the National Bank for Agriculture and Rural Development Act, 1981.]
---------------------------
1. Subs. by Act 61 of 1981, sec. 61 and Sch. II, for sections 46A and 46B (w.e.f. 12-7-1982).
After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation fund 2[and for all other matters for which] provision is to be made by or under this Act or which are usually provided for by bankers, the balance, of the profits shall be paid to the Central Government.]"
------------------------
1. Subs. by Act 62 of 1948, sec. 7 and Sch., for section 47 (w.e.f. 1-1-1949).
2. Subs. by Act 24 of 1955, sec. 8, for “and such other contingencies as”.
(1) Notwithstanding anything contained in the 1[Income-tax Act, 1961 (43 of 1961)] or any other enactment for the time being in force relating to income-tax or super-tax, the bank shall not be liable to pay income-tax or super-tax on any of its income, profits or gains.
2[***]
--------------------------
1. Subs. by Act 24 of 1978, sec. 8, for “Indian Income -tax Act, 1922” (w.e.f. 21-7-1978).
2. The proviso and sub-section (2) omitted by Act 62 of 1948, sec. 7 and Sch. (w.e.f. 1-1-1949).
The Bank shall make public from time to time the standard rate at which it is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase under this Act."
(1) Not less than two auditors shall be appointed, and their remuneration fixed, by the Central Government.
(2) The auditors shall hold office for such term not exceeding one year as the Central Government may fix while appointing them, and shall be eligible for re-appointment.]
-----------------------------
1. Subs. by Act 62 of 1948, sec. 7 and Sch., for section 50 (w.e.f. 1-1-1949).
Without prejudice to anything contained in section 50, the 6[Central Government] may at any time appoint the 7[Comptroller and Auditor-General] 8[***] to examine and report upon the accounts of the Bank."
---------------------------
1. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
2. Subs. by Act 32 of 1951, sec. 18, for “Auditor General” (w.e.f. 1-11-1951).
3. The words “or such auditors as it thinks fit” omitted by Act 62 of 1948, sec. 7 and Sch. (w.e.f. 1-1-1949).
(1) Every auditor shall be supplied with a copy of the annual balance-sheet, and it shall be his duty to examine the same, together with the accounts and vouchers relating thereto; and every auditor shall have a list delivered to him of all books kept by the Bank, and shall at all reasonable time have access to the books, accounts and other documents of the Bank, and may at the expense of the Bank 9[***], employ accountants or other person to assist him in investigating such accounts, and may, in relation to such accounts, examine any Director or officer of the Bank."
(2) The auditors shall make a report 2[***] to the 3[Central Government] 4[***] upon the annual balance-sheet and accounts, and in every such report they shall state whether, in their opinion, the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit
(1) The Bank shall prepare and transmit to the 1[Central Government] a weekly account of the Issue Department and of the Banking Department in 2[such] form as the 1[Central Government] may, by notification in the Gazette of India, prescribe. The 1[Central Government] shall cause these accounts to be 3[published in the Gazette of India at such intervals and in such modified form as it may deem fit].
(2) The Bank shall also, within two months from the date on which the annual accounts of the Bank are closed, transmit to the 1[Central Government] a copy of the annual accounts signed by the Governor, the Deputy Governors and the Chief Accounting Officer of the Bank, and certified by the auditors, together with a report by the Central Board on the working of the Bank throughout the year, and the 1[Central Government] shall cause such accounts and report to be published in the Gazette o
The Bank may maintain expert staff to study various aspects of rural credit and development and in particular it may\:—"
(a) tender expert guidance and assistance to the National Bank;
(b) conduct special studies in such areas as it may consider necessary to do so for promoting integrated rural development.]
-------------------------------------
1. Subs. by Act 61 of 1981, sec. 61 and Sch. II, for section 54 (w.e.f. 1-5-1982).
1[(1) The Bank may, notwithstanding anything contained in any law, or in any agreement, for the time being in force, depute any member of its staff for such period as it may think fit,—"
(a) to any institution which is wholly or substantially owned by the Bank;
(b) to the Development Bank, so, however, that no such deputation shall continue after the expiration of thirty months from the commencement of section 5 of the Public Financial Institutions Laws (Amendment) Act, 1975;
(c) to the Unit Trust, so, however, that no such deputation shall continue after the expiration of thirty months from the date notified by the Central Government under sub-section (1) of section 4A of the Unit Trust of India Act, 1963 (52 of 1963);
and thereupon the p
[Rep. by the Reserve Bank (Transfer to Public Ownership) Act, 1948 (62 of 1948), sec. 7 and Sch. (w.e.f. 1-1-1949).]"
[Rep. by the Reserve Bank (Transfer to Public Ownership) Act, 1948 (62 of 1948), sec. 7 and Sch. (w.e.f. 1-1-1949).]"
(1) Nothing in the 1[Companies Act, 1956 (1 of 1956)] shall apply to the Bank and the Bank shall not be placed in liquidation save by order of the 2[Central Government] and in such manner as 3[it may direct]."
4[***]
---------------------------
1. Subs. by Act 19 of 1957, sec. 5, for “Indian Companies Act, 1913 (7 of 1913)”.
2. Subs. by the India and Burma (Burma Monetary Arrangements) Order, 1937, for “Governor-General in Council”.
3. Subs. by India and Burma (Burma Monetary Arrangements) Order, 1937, for “he may direct.”
4. Sub-section (2) omitted by Act 62 of 1948, sec. 7 and Sch
(1) The Central Board may, with the previous sanction of the 4[Central Government], 5[by notification in the Official Gazette,] make regulations consistent with this Act to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of this Act."
(2) In particular without prejudice to the generality of the foregoing provision, such regulations may provide for all or any of the following matters, namely:—
3[***]
(f) the manner in which the business of the Central Board shall be transacted, and the procedure to be followed at meetings thereof;
(g) the conduct of business of Local Boards and the delegation to such Boards of powers and functions;
&
(1) Notwithstanding anything contained in section 58B, if the contravention or default of the nature referred to in section 58B is committed by a non-banking financial company, the Bank may impose on such non-banking financial company—"
(a) a penalty not exceeding five thousand rupees; or
(b) where the contravention or default is under sub-section (4A) or clause (a) or clause (aa) of sub-section (5) of section 58B, a penalty of five lakh rupees or twice the amount involved in such contravention or default, where the amount is quantifiable, whichever is more; and where such contravention or default is a continuing one, further penalty which may extend to twenty-five thousand rupees for every day, after the first, during which the contravention or default continues.
(2) For the purpose of
A Court imposing any fine under this Act may direct that the whole or any part thereof shall be applied in, or towards payment of, the costs of the proceedings.]
—————
* Section 58F ins. by Act 51 of 1974, sec. 26 (w.e.f. 13-12-1974).
(1) No court shall take cognizance of any offence punishable under this Act except upon a complaint in writing made by an officer of the Bank, generally or specially authorised in writing in this behalf by the Bank, and no court other than that of a Metropolitan Magistrate or a Judicial Magistrate of the first class or a court superior thereto shall try any such offence:
1[Provided that in respect of any offence punishable under sub-section (5A) of section 58B, a complaint in writing may also be made by an officer of the State Government, generally or specially authorised in writing in this behalf by that Government.]
(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) a Magistrate may, if he see reason so to do, dispense with the personal attendance of the officer of the Bank filing the complaint,
Nothing contained in section 58B shall apply to, or in respect of, any matter dealt with in section 42.
—————
* Section 58D ins. by Act 51 of 1974, sec. 26 (w.e.f. 13-12-1974).
(1) Where a person committing a contravention or default referred to in section 58B is a company, every person who, at the time the contravention or default was committed. was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention or default and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention or default was committed without his knowledge or that he had exercised all due diligence to prevent the contravention or default.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the s
(1) Whoever in any application, declaration, return, statement, information or particulars made, required or furnished by or under or for the purposes of any provisions of this Act, or any order, regulation or direction made or given thereunder or in any prospectus or advertisement issued for or in connection with the invitation by any person, of deposits of money from the public wilfully makes a statement which is false in any material particular knowing it to be false or wilfully omits to make a material statement shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine.
(2) If any person fails to produce any book, account or other document or to furnish any statement, information or particulars which, under this Act or any order, regulation or direction made or given thereunder, it is his duty to produce or furnish or to a
(1) No suit, prosecution or other legal proceeding shall lie against the Central Government or the Bank or any other person in respect of anything which is in good faith done or intended to be done under this Act or in pursuance of any order, regulation or direction made or given thereunder."
(2) No suit or other legal proceeding shall lie against the Central Government or the Bank for any damage caused or likely to be caused by anything which is in good faith done or intended to be done under this Act or in pursuance of any order, regulation or direction made or given thereunder.]
--------------------------
1. Ins. byAct 51 of 1974, sec. 26 (w.e.f. 13-12-1974).
[Rep. by the Repealing and Amending Act, 1937 (20 of 1937, sec. 3 and Sch. II.]"
[Rep. by the Repealing and Amending Act, 1937 (20 of 1937, sec. 3 and Sch. II.]
[Rep. by the Repealing and Amending Act, 1937 (20 of 1937, sec. 7 and Sch. II.]"
1[***]
—————
1. Section 20A (Transaction of business for British Military Administration, Burma) which was temporarily inserted by Ordinance 19 of 1945 has been omitted owing to the repeal of the Ordinance by Act 11 of 1947, sec. 27 (w.e.f. 1-4-1947).
The Reserve Bank of India Act, 1934 (RBI Act, 1934) is the foundational legislation that established the Reserve Bank of India (RBI) as the central banking authority in India. It delineates the powers, functions, and responsibilities of the RBI, including currency issuance, monetary policy regulation, and supervision of banking and financial institutions. The Act aims to ensure monetary stability, regulate credit, and protect depositors’ interests, serving as a key instrument in India's financial governance.
The Act empowers the RBI to regulate banking institutions, issue currency notes, manage reserves, and oversee financial stability. Key provisions include the establishment of the RBI, the issuance of currency (Section 22), regulation of banking activities, and the imposition of penalties for violations (Sections 58B, 58C, 58G). It also provides the RBI with authority to give directions to banking and non-banking financial institutions, including the power to prohibit acceptance of deposits and to wind up non-compliant institutions.
The section's scope encompasses all banking and financial institutions operating in India, including scheduled banks, non-banking financial companies (NBFCs), and unincorporated bodies receiving deposits. It extends to regulating the acceptance of deposits, issuance of currency, and the conduct of banking business. The Act also overlaps with other laws like the Banking Regulation Act, 1949, and the Companies Act, 1956, creating a comprehensive regulatory framework.
Violations of provisions under the RBI Act, such as accepting deposits without RBI approval, engaging in illegal banking activities, or contravening directions, attract penalties including monetary fines, imprisonment (up to two years for contraventions of Section 45S), and confiscation of assets. The Act empowers the RBI to impose monetary penalties for non-compliance and to initiate legal proceedings for offences committed by individuals and entities.
Establishment - The RBI was constituted under Section 3 of the RBI Act, 1934, as a statutory body with a central role in monetary and banking regulation. [Source: "The Reserve Bank of India Act, 1934."]
Authority - The RBI has exclusive authority to issue currency notes (Section 22) and regulate banking activities, including the power to give directions under Sections 35A, 36, and 45-IA. [Source: "Sections 22, 35A, 36, 45-IA."]
Regulation of Non-Banking Institutions - The Act's Chapter III-B (Section 45-IA) empowers RBI to regulate NBFCs, including registration, minimum net owned funds, and restrictions on accepting deposits. [Source: "Section 45-IA."]
Overriding Effect - Section 45Q explicitly states that the provisions of Chapter IIIB override any inconsistent law, including State laws, ensuring central regulation prevails. [Source: "Section 45Q."]
Power to Prohibit - The RBI can prohibit acceptance of deposits, impose restrictions, and wind up non-compliant institutions, as per Sections 45MB, 45-IA, and 58G. [Source: "Section 45MB, 58G."]
Penalties - Contravention of provisions, such as accepting deposits without approval, can lead to penalties including imprisonment (up to two years) and fines. [Source: "Section 58B, 58C, 58G."]
Winding Up - The RBI can file petitions for winding up non-compliant NBFCs under Section 45-MC, with the Court appointing provisional liquidators. [Source: "Section 45-MC; "Company Petition."]
Jurisdiction - Offences under the Act are deemed to be committed at the place of the registered or principal place of business of the entity. [Source: "Offences by companies."]
Legal Immunity - The Act provides the RBI with broad powers to regulate and supervise, and its directions are binding, with penalties for non-compliance. [Source: "Section 45-IA, 58G."]
Legislative Competence - The Supreme Court has upheld the constitutional validity of the RBI Act, 1934, emphasizing its role in economic stability and monetary regulation. [Source: "Kanta Mehta v. Union of India."]
Overlap with State Laws - The Act's provisions, especially Chapter III-B, are designed to operate notwithstanding conflicting State laws, as per Section 45Q. [Source: "Section 45Q."]
Control over Deposits - The RBI's power to regulate deposits extends to prohibiting acceptance of deposits from unlicensed entities, and the failure to comply attracts penalties. [Source: "Section 45S."]
Prohibition & Restrictions - The RBI can prohibit entities from accepting deposits or engaging in banking-like activities if they violate the Act, with penalties including fines and imprisonment. [Source: "Section 45MB, 58G."]
Legislative Intent - The Act aims to protect depositors, ensure financial stability, and prevent malpractices by unregulated entities, as clarified in judicial pronouncements. [Source: "Delhi Cloth Mills case, Velayudhan Achari."]
Power to Impose Penalties - The RBI can impose monetary penalties for violations, which can extend to substantial amounts, including fines up to Rs. 10 lakh or more for specific violations. [Source: "Section 58G."]
Enforcement & Legal Proceedings - The Act authorizes the RBI to initiate proceedings, including filing winding-up petitions, and to enforce penalties through courts. [Source: "Section 45-MC."]
Protection of Depositors - The primary objective remains the protection of public deposits, especially from unregulated financial establishments engaged in fraudulent schemes. [Source: "Tamil Nadu Act, 1997."]
Legal Validity & Judicial Support - The Supreme Court and High Courts have consistently upheld the constitutionality of the RBI Act, 1934, and its provisions for effective regulation. [Source: "Full Bench of Bombay High Court, Delhi High Court."]
Amendments & Expansion - The Act has been amended over time (notably in 1963, 1997, 2016) to expand the scope of regulation, including virtual currencies, payment systems, and derivatives. [Source: "Various Amendments."]
Scope of Power - The RBI's powers include issuing directions, regulating payment systems, and controlling the issuance and circulation of currency, all aimed at maintaining monetary stability. [Source: "Section 3, 22, 35A."]
Legislative & Constitutional Backing - The Act’s provisions are supported by constitutional entries (Entry 44 of List I), emphasizing the central authority’s role in monetary regulation. [Source: "Full Bench judgments."]
Penalties & Offences - The Act prescribes strict penalties for violations, including imprisonment, fines, and confiscation, ensuring deterrence against malpractices. [Source: "Section 58B, 58C."]
Legal & Policy Overlap - The Act operates in tandem with other legislations like the Banking Regulation Act, 1949, and Companies Act, 1956, forming a comprehensive regulatory framework. [Source: "Judicial decisions."]
Judicial Review & Limitations - Courts have upheld the broad powers of the RBI, noting that judicial review is limited to legality and procedural fairness, not policy decisions. [Source: "Judicial pronouncements."]
In conclusion, the Reserve Bank of India Act, 1934, is a comprehensive statute that confers wide-ranging powers on the RBI to regulate currency, banking, and financial institutions. Its provisions are constitutionally valid, serve the public interest, and are supported by judicial authority, ensuring the stability and integrity of India's monetary system. The Act’s scope extends to penalizing violations, regulating non-banking financial companies, and overriding conflicting laws to achieve financial stability and protect depositors.
1[The first schedule
(See section 9)
2[1. The Western Area shall consist of the States of Goa, Gujarat, Madhya Pradesh and Maharashtra and the Union Territories of Dadra and Nagar Haveli, and Daman and Diu.
2. The Eastern Area shall consist of the States of Arunachal Pradesh, Assam, Bihar, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Sikkim, Tripura and West Bengal and the Union territories of Andaman and Nicobar Islands.]
3. The Northern Area shall consist of the States of Jammu and Kashmir, 3[Punjab, Haryana,] 4[Himachal Pradesh], Rajasthan and Uttar Pradesh and the Union territories of 5[Chandigarh] 6[and Delhi].
4. The Southern area shall consi
1The second schedule
[See section 42 and section 2 (e)]
Abhyudaya Co-operative Bank Ltd., Bombay.
Adhiyaman Grama Bank, Dharamapuri (Tamil Nadu).
Ahmednagar Sahakari Bank ltd., Mumbai (1998)
Ajodhia Bank, Fyzabad.
Akola Gramin Bank, Akola (Maharashtra).
Akola Janta Commercial Co-operative Bank Ltd., Akola (Maharashtra). (w.e.f. 22-5-1999).
Alaknanda Gramin Bank, Pauri (Uttar Pradesh).
Akola Janta Commercial Co-operative Bank Ltd., Akola (Maharashtra).
[Rep. by Act 23 of 1955, sec. 52 and Sch. III (w.e.f. 1-7-1955)].
[Rep. by Act 62 of 1948, sec. 7 and Sch. (w.e.f. 1-1-1949)]
[Rep. by the India and Burma (Burma Monetary Arrangements Order, 1937.]
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