Reserve Bank of India Act 1934 PDF

THE RESERVE BANK OF INDIA ACT, 1934 _________ ARRANGEMENT OF SECTIONS _________ CHAPTER I...

THE RESERVE BANK OF INDIA ACT, 1934 _________ ARRANGEMENT OF SECTIONS _________ CHAPTER I PRELIMINARY SECTIONS 1. Short title, extent and commencement. 2. Definitions. CHAPTER II INCORPORATION, CAPITAL, MANAGEMENT AND BUSINESS 3. Establishment and incorporation of Reserve Bank. 4. Capital of the Bank. 5. [Omitted.]. 6. Offices, branches and agencies. 7. Management. 8. Composition of the Central Board, and term of office of Directors. 9. Local Boards, their constitution and functions. 10. Disqualifications of Directors and members of Local Boards. 11. Removal from and vacation of office. 12. Casual vacancies and absences. 13. Meetings of the Central Board. 14. [Omitted.]. 15. [Omitted.]. 16. [Omitted.]. 17. Business which the Bank may transact. 18. Power of direct discount. 18A. Validity of loan or advance not to be questioned. 19. Business which the Bank may not transact. CHAPTER III CENTRAL BANKING FUNCTIONS 20. Obligation of the Bank to transact Government business. 20A. [Omitted.]. 21. Bank to have the right to transact Government business in India. 21A. Bank to transact Government business of States on agreement. 21B. Effect of agreements made between the Bank and certain States before the 1st November, 1956. 22. Right to issue bank notes. 22A. Non-applicability of certain provisions to digital form of bank notes. 23. Issue Department.  Subject to verification and confirmation by the Department. 1 SECTIONS 24. Denominations of notes. 25. Form of bank notes. 26. Legal tender character of notes. 26A. Certain bank notes to cease to be legal tender. 27. Re-issue notes. 28. Recovery of notes lost, stolen, mutilated or imperfect. 28A. Issue of special bank notes and special one rupee notes in certain cases. 29. Bank exempt from stamp duty on bank notes. 30. Powers of Central Government to supersede Central Board. 31. Issue of demand bills and notes. 32. [Omitted.]. 33. Assets of the Issue Department. 34. Liabilities of Issue Department. 35. [Omitted.]. 36. [Omitted.]. 37. Suspension of assets requirements as to foreign securities. 38. Obligations of Government and the Bank in respect of rupee coin. 39. Obligation to supply different forms of currency. 40. Transactions in foreign exchange. 41A. [Omitted.]. 42. Cash reserves of scheduled banks to be kept with the Bank. 43. Publication of consolidated statement by the Bank. 43A. Protection of action taken in good faith. 44. [Omitted.]. 45. Appointment of agents. CHAPTER IIIA COLLECTION AND FURNISHING OF CREDIT INFORMATION 45A. Definitions. 45B. Power of Bank to collect credit information. 45C. Power to call for returns containing credit information. 45D. Procedure for furnishing credit information to banking companies. 45E. Disclosure of information prohibited. 45F. Certain claims for compensation barred. 45G. [Omitted.]. CHAPTER III B PROVISIONS RELATING TO NON-BANKING INSTITUTIONS RECEIVING DEPOSITS AND FINANCIAL INSTITUTIONS 45H. Chapter IIIB not to apply in certain cases. 2 SECTIONS 45-I. Definitions. 45-IA. Requirement of registration and net owned fund. 45-IB. Maintenance of percentage of assets. 45-IC. Reserve fund. 45-ID. Power of Bank to remove directors from office. 45-IE. Supersession of Board of directors of non-banking financial company (Other than Government Company). 45J. Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money. 45JA. Power of Bank to determine policy and issue directions. 45K. Power of Bank to collect information from non-banking institutions as to deposits and to give directions. 45L. Power of Bank to call for information from financial institutions and to give directions. 45M.Duty of non-banking institutions to furnish statements, etc., required by Bank. 45MA. Powers and duties of auditors. 45MAA. Power to take action against auditors. 45MB. Power of Bank to prohibit acceptance of deposit and alienation of assets. 45MBA. Resolution of non-banking financial company. 45MC. Power of Bank to file winding up petition. 45N. Inspection. 45NA. Deposits not to be solicited by unauthorised person. 45NAA. Power in respect of group companies. 45NB. Disclosure of information. 45NC. Power of Bank to exempt. 45-O. [Omitted.]. 45P. [Omitted.]. 45Q. Chapter IIIB to override other laws. 45QA. Power of Company Law Board to offer repayment of deposit. 45QB. Nomination by depositors. CHAPTER IIIC PROHINITION OF ACCEPTANCE OF DEPOSITS BY UNINCORPORATED BODIES 45R. Interpretation. 45S. Deposits not to be accepted in certain cases. 45T. Power to issue search warrants. CHAPTER IIID REGULATION OF TRANSACTIONS IN DERIVATIVES, MONEY MARKET INSTRUMENTS, SECURITIES, ETC. 45U. Definitions. 3 SECTIONS 45V. Transactions in derivatives. 45W. Power to regulate transactions in derivatives, money market instruments, etc. 45X. Duty to comply with directions and furnish information. CHAPTER IIIE JOINT MECHANISM 45Y. Joint Mechanism. CHAPTER IIIF MONETARY POLICY 45Z. Provisions of this Chapter to override other provisions of Act. 45ZA. Inflation target. 45ZB. Constitution of Monetary Policy Committee. 45ZC. Eligibility and selection of Members appointed by Central Government. 45ZD. Terms and conditions of appointment of Members of Monetary Policy Committee. 45ZE. Removal of Members of Monetary Policy Committee. 45ZF. Vacancies, etc., not to invalidate proceedings of Monetary Policy Committee. 45ZG. Secretary to Monetary Policy Committee. 45ZH. Information for Monetary Policy Committee Members. 45Z-I. Meetings of Monetary Policy Committee. 45ZJ. Steps to be taken to implement decision of Monetary Policy Committee. 45ZK. Publication of decisions. 45ZL. Publication of proceedings of meeting of Monetary Policy Committee. 45ZM. Monetary Policy Report. 45ZN. Failure to maintain inflation target. 45ZO. Power to make rules. CHAPTER IV GENERAL PROVISIONS 46. Contribution by Central Government to the Reserve Fund. 46A. Contribution to National Rural Credit (Long Term Operations) Fund and National Rural Credit (Stabilisation) Fund. 46C. National Industrial Credit (Long Term Operations) Fund. 46D. National Housing Credit (Long Term Operations) Fund. 47. Allocation of surplus profits. 48. Exemption of Banks from income-tax and super-tax. 49. Publication of Bank rate. 50. Auditors. 51. Appointment of special auditors by Government. 4 SECTIONS 52. Powers and duties of auditors. 53. Returns. 54. Rural Credit and Development. 54A. Delegation of powers. 54AA. Power of Bank to depute its employees to other institutions. 55. [Omitted.]. 56. [Omitted.]. 57. Liquidation of the Bank. 57A. Powers of Bank not to apply to International Financial Services Centre. 58. Power of the Central Board to make regulations. 58A. Protection of action taken in good faith. CHAPTER V PENALTIES 58B. Penalties. 58C. Offences by companies. 58D. Application of section 58B barred. 58E. Cognizance of offences. 58F. Application of fine. 58G. Power of Bank to impose fine. 59. [Repealed.]. 60. [Repealed.]. 61. [Repealed.]. THE FIRST SCHEDULE. THE SECOND SCHEDULE. THE THIRD SCHEDULE.—[Omitted.]. THE FOURTH SCHEDULE.—[Omitted.]. THE FIFTH SCHEDULE.—[Repealed.]. 5  THE RESERVE BANK OF INDIA ACT, 1934 ACT NO. 2 OF 19341 [6th March, 1934.] An Act to constitute a Reserve Bank of India. WHEREAS it is expedient to constitute a Reserve Bank for India to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in 2[India] and generally to operate the currency and credit system of the country to its advantage; 3 [AND WHEREAS it is essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy; AND WHEREAS the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth; AND WHEREAS the monetary policy framework in India shall be operated by the Reserve Bank of India;] It is hereby enacted as follows:— CHAPTER I PRELIMINARY 1. Short title, extent and commencement.—(1) This Act may be called the Reserve Bank of India Act, 1934. 4 [(2) It extends to the whole of India 5***.] (3) This section shall come into force at once, and the remaining provisions of this Act shall come into force on such date or dates6 as the 7[Central Government] may, by notification in the Gazette of India, appoint. 2. Definitions.—In this Act, unless there is anything repugnant in the subject or context,— 8 * * * * * 9 [(aii)] “the Bank” means the Reserve Bank of India constituted by this Act; 10 [(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;] 11 [(aiv) “bank note” means a bank note issued by the Bank, whether in physical or digital form, under section 22;] (b) “the Central Board” means the Central Board of Directors of the Bank;  Subject to verification and confirmation by the Department. 1. For the functioning of the Reserve Bank in or in relation to Burma, after the separation of that country from India, see the M.O. 1937. This Act was extended to Berar by Act 4 of 1941; to Goa, Daman and Diu by Reg. 6 of 1962; to Dadra and Nagar Haveli by Reg. 6 of 1963, s. 2 and Schedule I (w.e.f. 1-7-1965) and to Lakshadweep by Reg. 8 of 1965, s. 3 and Schedule to the State of Sikkim: vide Notification No. S.O. 208 (E), dated 15-5-1975, Extraordinary, Pt. II, s. 3 (ii), p. 1213 and came into force in Sikkim (w.e.f. 14-8-1976); vide Notification No. S.O. 547 (E), dated 13-8-1976. This Act has been supplemented by Act 28 of 1964. 2. Subs. by the A.O. 1948, for “British India”. 3. Subs. by 28 of 2016, s. 220, for paragraphs 2 and 3 (w.e.f. 27-6-2016). 4. Subs. by the A.O. 1950, for sub-section (2). 5. The words “except the State of Jammu and Kashmir” omitted by Act 62 of 1956, s. 2 and the Schedule (w.e.f. 1-11-1956). 6. Sections 2 to 19, 47, 50 to 52, 55 to 58 and 61 were brought into force on 1st January, 1935,see Gazette of India, 1934, Pt. I, p. 1369, and the other sections on 1st April, 1935, seeibid., 1935, Pt. I, p. 538. 7. Subs. by the M.O. 1937, for “G.G. in C”. 8. Clauses (a) and (ai) omitted by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 9. Clause (aa) re-lettered as clause (aii) by Act 23 of 1965, s. 2 (w.e.f. 1-3-1966). 10. Ins. by Act 51 of 1974, s. 2 (w.e.f. 13-12-1974). 11. Ins. by Act 6 of 2022, s. 125 (w.e.f. 30-3-2022). 6  1 * * * * * 2 [(bva) “Consumer Price Index” means the Consumer Price Index Combined published by the Government of India from time to time;] [ [(bvi)] “Deposit Insurance Corporation” means the Deposit Insurance Corporation established 3 4 under section 3 of the Deposit Insurance Corporation Act, 1961 (47 of 1961);] 5 * * * * * 6 * * * * * 7 [(bviiia)“Exim Bank” means the Export-Import Bank of India established under the Export- Import Bank of India Act, 1981 (28 of 1981);] 8 [(bix) “foreign currency” and “foreign exchange” have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1973(46 of 1973); (c) “Industrial Finance Corporation” means the Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948 (15 of 1948);] 2 [(ci) “inflation” means the year wise change in monthly Consumer Price Index expressed in terms of percentage; (cii) “inflation target” means the inflation target determined in accordance with sub-section (1) of section 45ZA;] 9 [(ca) “International Development Association” means the “Association” referred to in the International Development Association (Status, Immunities and Privileges) Act, 1960 (32 of 1960); (cb) “International Finance Corporation” means the “Corporation” referred to in the International Finance Corporation (Status, Immunities and Privileges) Act, 1958 (42 of 1958); (cc) “International Monetary Fund” and “International Bank for Reconstruction andDevelopment" means respectively the “International Fund” and the “International Bank”, referred to in the International Monetary Fund and Bank Act, 1945;] 2 [(cci) “Monetary Policy Committee” means the Committee constituted under sub-section (1) of section 45ZB;] 10 [ccc) “National Bank” means the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);] 11 [(ccci) “National Bank for Financing Infrastructure and Development” means the Institution established under section 3 of the National Bank for Financing Infrastructure and Development Act, 2021; (cccii) “other development financial institution” means a development financial institution licensed under section 29 of the National Bank for Financing Infrastructure and Development Act, 2021;] 12 [(cccc) “National Housing Bank” means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987);] 2 [(cccci) “Policy Rate” means the rate for repo-transactions under sub-section (12AB) of section 17;] 13 * * * * * 1. Clauses (bi), (bii), (biii), (biv) and (bv) omitted by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). Earlier these clauses were substituted by Act 23 of 1965, s. 2, for clause (bb) (w.e.f. 1-3-1966). 2. Ins. by Act 28 of 2016, s. 221 (w.e.f. 27-6-2016). 3. Ins. by Act 47 of 1961, s. 2 and the Second Schedule (w.e.f. 1-1-1962). 4. Clause (bbb) re-lettered as clause (bvi) thereof by Act 23 of 1965, s. 2 (w.e.f. 1-3-1966). 5. Clause (bvii) omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). 6. Clause (bviii) omitted by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 7. Ins. by Act 28 of 1981, s. 40 and the Second Schedule (w.e.f. 1-1-1982). 8. Subs. by Act 24 of 1978, s. 3, for clause (c) (w.e.f. 21-7-1978). 9. Ins. by Act 51 of 1974, s. 2 (w.e.f. 13-12-1974). 10. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 11. Ins. by Act 17 of 2021, s. 47 and the Second Schedule (w.e.f. 19-4-2021). 12. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988). 13. Clauses (ci), (cia), (cii), (ciii), (civ), (cv) omitted by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 7  [(cv) “Reconstruction Bank” means the Industrial Reconstruction Bank of India established 1 under section 3 of the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984);] (d) “rupee coin” means 2*** rupees which are legal tender 3[in 4[India]] under the provisions of the Indian Coinage Act, 1906 (3 of 1906);5*** (e) “scheduled bank” means a bank included in the Second Schedule; [(el) “Small Industries Bank” means the Small Industries Development Bank of India established 6 under section 3 of the Small Industries Development Bank of India Act, 1989 (39 of 1989);] [(ea) “Sponsor Bank” means a Sponsor Bank as defined in the Regional Rural Banks Act, 1976 7 (21 of 1976);] [ [(eb)] “State Bank” means the State Bank of India constituted under the State Bank of India 8 9 Act, 1955 (23 of 1955);] 10 * * * * * [(fi) “State Financial Corporation” means any State Financial Corporation established under the 11 State Financial Corporations Act, 1951 (63 of 1951);] 12 * * * * * [(g) “Unit Trust” means the Unit Trust of India established under section 3 of the Unit Trust of 13 India Act, 1963 (52 of 1963);] [(h) “agricultural operations”, “central co-operative bank”, “co-operative society”, “crops”, 14 “marketing of corps”, “pisciculture”, “regional rural bank” and “State co-operative bank” shall have the meanings respectively assigned to them in the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981); (i) “co-operative bank”, “co-operative credit society”, “director”, “primary agricultural credit society”, “primary co-operative bank” and “primary credit society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949).] CHAPTER II INCORPORATION, 15[CAPITAL], MANAGEMENT AND BUSINESS 3. Establishment and incorporation of Reserve Bank.—(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 16 [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. 1. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985). 2. The word “silver” omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 3. Ins. by the M.O. 1937. 4. Subs. by Act 32 of 1951, s. 2, for “the States” (w.e.f. 1-11-1951). 5. The word “and” omitted by the M.O. 1937. 6. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990). 7. Ins. by Act 21 of 1976, s. 33 (w.e.f. 26-9-1975). 8. Ins. by Act 23 of 1955, s. 52 and the Third Schedule (w.e.f. 1-7-1955). Earlier clause (ee) inserted by the A.O. 1950 which was later omitted by Act 32 of 1951, s. 4 (w.e.f. 1-11-1951). 9. Clause (ee) re-lettered as clause (eb) thereof by Act 21 of 1976, s. 33 (w.e.f. 26-9-1975). 10. Clause (f) omitted by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 11. Ins. by Act 24 of 1978, s. 3 (w.e.f. 21-7-1978). 12. Clauses (f) to (k) omitted by Act 11 of 1947, s. 2 (w.e.f. 1-4-1947) which was earlier inserted by the M.O. 1937. 13. Ins. by Act 52 of 1963, s. 44 and the Second Schedule (w.e.f. 1-2-1964). Earlier clause (g) was inserted by Act 32 of 1951, s. 4 (w.e.f. 1-11-1951) which was later omitted by Act 62 of 1956, s. 2 and the Schedule (w.e.f. 1-11-1956). 14. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 15. Subs. by Act 62 of 1948, s. 7 and the Schedule, for “SHARE CAPITAL” (w.e.f. 1-1-1949). 16. Subs. by the M.O. 1937, for “G.G. in C.”. 8  1 [4. Capital of the Bank.—The capital of the Bank shall be five crores of rupees.] 5. [Increase and reduction of share capital.]—Omitted by the Reserve Bank (Transfer to Public Ownership)Act,1948 (62 of1948), s. 7 and the Schedule (w.e.f. 1-1-1949). 6. Offices, branches and agencies.—The Bank shall, as soon as may be, establish offices in Bombay, Calcutta, 2[Delhi and Madras] 3*** and may establish branches or agencies in any other place in India 4*** or, with the previous sanction of the 5[Central Government] elsewhere. 6 [7. Management.—(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. 7 [(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.]] 8. Composition of the Central Board, and term of office of Directors.—8[(1) The Central Board shall consist of the following Directors, namely:— (a) a Governor and 9 [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) 10[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 5[Central Government]: 11 [Provided that the Central Board may, if in its opinion it is necessary in the public interest so to do, permit the Governor or a Deputy Governor to undertake, at the request of the Central Government or any State Government, such part-time honorary work, whether related to the purposes of this Act or not, as is not likely to interfere with his duties as Governor or Deputy Governor, as the case may be:] 12 [Provided further that the Central Government may, in consultation with the Bank, appoint a Deputy Governor as the Chairman of the National Bank, on such terms and conditions as that Government may specify.] (3) A Deputy Governor and the Director nominated under clause (d) of subsection (1) may attend any meeting of the Central Board and take part in its deliberations but shall not be entitled to vote: 1. Subs. by Act 62 of 1948, s. 7 and the Schedule, for section 4 (w.e.f. 1-1-1949). 2. Subs. by Act 11 of 1947, s. 5, for “Delhi, Madras and Rangoon” (w.e.f. 1-4-1947). 3. The words “and a branch in London” omitted by Act 24 of 1955, s. 3 (w.e.f. 8-5-1955). 4. The words “or Burma” omitted by Act 11 of 1947, s. 5 (w.e.f. 1-4-1947) which was earlier inserted by the M.O. 1937. 5. Subs. by the M.O. 1937, for “G.G. in C.”. 6. Subs. by Act 62 of 1948, s. 7 and the Schedule, for section 7 (w.e.f. 1-1-1949). 7. Subs. by Act 32 of 1951, s. 5, for sub-section (3) (w.r.e.f. 1-1-1949). 8. Subs. by Act 62 of 1948, s. 7 and the Schedule, for sub-section (1) (w.e.f. 1-1-1949). 9. Subs. by Act 18 of 1964, s. 38 and the Second Schedule, for “three” (w.e.f. 1-7-1964). 10. Subs. by s. 38 and the Second Schedule, ibid., for “six” (w.e.f. 1-7-1964). 11. Added by Act 35 of 1962, s. 2 (w.e.f. 15-9-1962). 12. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982). 9  1 [Provided that when the Governor is, for any reason, unable to attend any such meeting, a Deputy Governor authorised by him in this behalf in writing may vote for him at that meeting.] (4) The Governor and a Deputy Governor shall hold office for such term not exceeding five years as the 2[Central Government] may fix when appointing them, and shall be eligible for re-appointment. 3 [A Director nominated under clause (c) of sub-section (1) shall 4*** hold office for a period of four years 5[and 6[shall be eligible for reappointment: Provided that any such Director shall not be appointed for more than two terms, that is, for a maximum period of eight years either continuously or intermittently.]]] A Director nominated under clause (d) of sub-section (1) shall hold office during the pleasure of 2 the [Central Government.] (5) No act or proceeding of the Board shall be questioned on the ground merely of the existence of any vacancy in, or any defect in the constitution of, the Board. 7 8 [* * * * * (7) A retiring Director shall be eligible for re-nomination.] 9 [9. Local Boards, their constitution and functions.—(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. 10 [(3) Every member of a Local Board shall hold office for a term of four years and 11[shall be eligible for reappointment: Provided that any such member shall not be appointed for more than two terms, that is, for a maximum period of eight years either continuously or intermittently].] (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.] 10. Disqualifications of Directors and members of Local Boards.—(1) No person may be a Director or a member of a Local Board who— (a) isa salaried Government official 12*** 13***, 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 1. Subs. by Act 54 of 1953, s. 2, for the proviso (w.e.f. 30-12-1953). 2. Subs. by the M.O. 1937, for “G.G. in C.”. 3. Subs. by Act 62 of 1948, s. 7 and the Schedule, for second paragraph (w.e.f. 1-1-1949). 4. The words, brackets and figure “subject to the provisions of sub-section (6)” omitted by Act 18 of 1964, s. 38 and the Second Schedule (w.e.f. 1-7-1964). 5. Ins. by Act 51 of 1974, s. 4 (w.e.f. 13-12-1974). 6. Subs. by Act 4 of 2013, s. 17 and the Schedule, for “thereafter until his successor shall have been nominated” (w.e.f. 18-1-2013). 7. Added by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 8. Sub-section (6) omitted by Act 18 of 1964, s. 38 and the Second Schedule (w.e.f. 1-7-1964). 9. Subs. by Act 62 of 1948, s. 7 and the Schedule, for section 9 (w.e.f. 1-1-1949). 10. Subs. by Act 51 of 1974, s. 5, for sub-section (3) (w.e.f. 13-12-1974). 11. Subs. by Act 4 of 2013, s. 17 and the Schedule, for “thereafter until his successor shall have been appointed and shall be eligible for reappointment” (w.e.f. 18-1-2013). 12. The words “or a salaried official of a State in India” omitted by the A.O. 1950. 13. The words “or Burma” omitted by Act 11 of 1947, s. 8 (w.e.f. 1-4-1947). Earlier inserted by the M.O. 1937. 10  1 [(e) is a Director of banking company within the meaning of clause (c) of section 5 of 2 the [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 agent of or holds a power of procuration from the other, or from a mercantile firm of which the other is a partner, may be Directors or members of the same Local Board at the same time. (3) Nothing in clause (a), clause (d) or clause (e) of sub-section (1) shall apply to the Governor, or to a Deputy Governor or to the Director nominated under clause (d) of sub-section (1) of section 8. 11. Removal from and vacation of office.—(1) The 3[Central Government] may remove from office the Governor, or a Deputy Governor or 4[any other Director or any member of a Local Board]: 5 * * * * * 6 [(2) A Director nominated under clause (b) or clause (c) of sub-section(1) 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 3[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 ceasing to hold office under the foregoing sub-sections shall not be eligible for re-appointment either as Director or as member of a Local Board until the expiry of the term for which his appointment was made. (5) The 7 *** nomination 8 *** as Director or member of a Local Board of any person who is a member of 9[Parliament or the Legislature 10[of any State]] shall be void, unless within two months of the date of his 7*** nomination 8*** he ceases to be such member, and if any Director or member of a Local Board is elected or nominated as a member of 11[Parliament or any such Legislature], he shall cease to be a Director or member of the Local Board as from the date of such election or nomination, as the case may be. (6) A Director may resign his office to the 3[Central Government], and a member of a Local Board may resign his office to the Central Board, and on the acceptance of the resignation the office shall become vacant. 12. Casual vacancies and absences.—(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 3[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 section10, be an officer of the Bank. 12 * * * * * 1. Subs. by Act 23 of 1965, s. 3, for clause (e) (w.e.f. 1-3-1966). 2. Subs. by Act 51 of 1974, s. 3, for “Banking Companies Act, 1949” (w.e.f. 13-12-1974). 3. Subs. by the M.O. 1937, for “G.G. in C.”. 4. Subs. by Act 32 of 1951, s. 6, for “any other Director” (w.e.f. 1-11-1951). 5. The proviso omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 6. Subs. by s. 7 and the Schedule, ibid., for sub-section (2) (w.e.f. 1-1-1949). 7. The word “appointment” omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 8. The words “or election” omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 9. Subs. by the A.O. 1950, for certain words. 10. Subs. by Act 32 of 1951, s. 6, for “of a Part A State or a Part C State” (w.e.f. 1-11-1951). 11. Subs. by the A.O. 1950, for “any such Legislature or Council”. 12. Sub-section (2) omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 11  (3) Where any casual vacancy in the office of any member of a Local Board occurs 1*** the Central Board may nominate thereto any 2*** person recommended by the 3[other] members of the Local Board. (4) Where any casual vacancy occurs in the office of a Director other than the vacancies provided for in sub-section(1), the vacancy shall be filled 4[by the Central Government]. (5) A person nominated 5***under this section to fill a casual vacancy shall 6*** hold office for the unexpired portion of the term of his predecessor. 13. Meetings of the Central Board.—(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 7[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 8[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. 14. [General meetings].—Omitted by the Reserve Bank (Transfer to Public Ownership) Act, 1948 (62 of 1948), s. 7 and the Schedule (w.e.f. 1-1-1949). 15. [First constitution of the Central Board].—Omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 16. [First constitution of local board].—Omitted by s.7 and the Schedule, ibid. (w.e.f. 1-1-1949). 17. Business which the Bank may transact.—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, 9*** the [Central Government], 11 [12 *** the 13 [State] Government 14 ***] 15 *** local authorities, banks 10 and any other persons: 16 [(1A) The accepting of money as deposits, repayable with interest, from banks or any other person under the Standing Deposit Facility Scheme, as approved by the Central Board, from time to time, for the purposes of liquidity management;] (2) (a) the purchase, sale and rediscount of bills of exchange and promissory notes, 17[drawn 18 on [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 19[or a State co-operative bank] 20[or any financial institution, which is predominantly engaged in the acceptance or discounting 1. The words “otherwise than by the occurrence of a vacancy in the office of a Director elected by the Local Board” omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 2. The word “qualified” omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 3. Subs. by s. 7 and the Schedule, ibid., for “elected” (w.e.f. 1-1-1949). 4. Subs. by s. 7 and the Schedule, ibid., for certain words (w.e.f. 1-1-1949). 5. The words “or elected” omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 6. The words, brackets and figure “subject to the proviso contained in sub-section (4)” omitted by s. 7 and the Schedule, ibid. (w.e.f. 1-1-1949). 7. Subs. by Act 18 of 1964, s. 38 and the Second Schedule, for “three Directors” (w.e.f. 1-7-1964). 8. Subs. by Act 24 of 1955, s. 5, for “in his absence” (w.e.f. 8-5-1955). 9. The words “the Secretary of State” omitted by the A.O. 1948. 10. Subs. by the M.O. 1937, for “G.G. in C.”. 11. Subs. by the M.O. 1937, for “L.G.’s”. 12. The words “the Federal Railway Authority” omitted by the A.O. 1948. 13. Subs. by the A.O. 1950, for “Provincial”. 14. The words “the Government of Burma, the Burma Railway Board,” omitted by Act 11 of 1947, s 11 (w.e.f. 1-4-1947). 15. The words and letter “Part B States” omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 16. Ins. by Act 13 of 2018, s. 135 (w.e.f. 28-3-2018). 17. Subs. by the M.O. 1937, for “drawn on and payable in India”. 18. Subs. by Act 11 of 1947, s. 11, for “India or Burma and payable in India or Burma” (w.e.f. 1-4-1947). 19. Ins. by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 20. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974). 12  of bills of exchange and promissory notes and which is approved by the Bank in this behalf] 1*** and 2[maturing,— (i) in the case of bills of exchange and promissory notes arising out of any such transaction relating to the export of goods from India, within one hundred and eighty days, and (ii) in any other case, within ninety days, from the date of such purchase or rediscount exclusive of days of grace;] (b) the purchase, sale and rediscount of bills of exchange and promissory notes, 3[drawn 4[and payable in India]] and bearing two or more good signatures, one of which shall be that of a scheduled bank 5[or a 6[State] co-operative bank] 7[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] and drawn or issued for the purpose of 8[financing agricultural operations] or the marketing of crops, and maturing within 9 [fifteen months] from the date of such purchase or rediscount, exclusive of days of grace; 10 * * * * * 11 [(bb) the purchase, sale and rediscount of bills of exchange and promissory notes drawn and payable in India and bearing two or more good signatures, one of which shall be that of a State co- operative bank or a State financial corporation 7[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], and drawn or issued for the purpose of financing the production or marketing activities of cottage and small-scale industries approved by the Bank and maturing within twelve months from the date of such purchase or rediscount, exclusive of days of grace, provided that the payment of the principal and interest of such bills of exchange or promissory notes is fully guaranteed by the State Government;] (c) the purchase, sale and rediscount of bills of exchange and promissory notes 3[drawn 12[and payable in India]] and bearing the signature of a scheduled bank, 13*** and issued or drawn for the purpose of holding or trading in securities of 14 [the Central Government 15 [or a 6[State] Government]] 16*** and maturing within ninety days from the date of such purchase or rediscount, exclusive of days of grace; (3) (a) the purchase from and sale to scheduled banks 17*** of 18[foreign exchange] 19***; 1. The words “or a Burma scheduled bank” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947), which were inserted by M.O. 1937. 2. Subs. by Act 35 of 1962, s. 3, for “maturing within ninety days from the date of such purchase or re-discount, exclusive of days of grace” (w.e.f. 15-9-1962). 3. Subs. by M.O. 1937, for “drawn and payable in India”. 4. Subs. by Act 11 of 1947, s. 11, for “either in India or in Burma and payable either in India or in Burma” (w.e.f. 1-4-1947). 5. Subs. by s. 11, ibid., for “a Burma scheduled bank, a provincial co-operative bank, or a Burma co-operative bank” (w.e.f. 1-4-1947). 6. Subs. by the A.O. 1950, for “Provincial”. 7. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974). 8. Subs. by s. 6, ibid.,for “financing seasonal agricultural operations” (w.e.f. 13-12-1974). 9. Subs. by Act 32 of 1951, s. 7, for “nine months” (w.e.f. 1-11-1951). 10. The Explanation omitted by Act 23 of 1965, s. 4 (w.e.f. 1-3-1966). Earlier added by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953). 11. Ins. by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953). 12. Subs. by Act 11 of 1947, s. 11, for “either in India or Burma and payable either in India or in Burma” (w.e.f. 1-4-1947). 13. The words “or a Burma scheduled bank” omitted by s. 11, ibid. (w.e.f. 1-4-1947). 14. Subs. by the M.O. 1937, for “the Government of India or a L.G.”. 15. Subs. by Act 11 of 1947, s. 11, for “or a Provincial Government” (w.e.f. 1-4-1947). 16. The words “or such securities of Part B States as may be specified in this behalf by the Central Government on the recommendation of the Central Board” omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 17. The words “and Burma scheduled banks” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was earlier inserted by M.O. 1937. 18. Subs. by Act 62 of 1948, s. 7 and the Schedule, for “sterling” (w.e.f. 1-1-1949). 19. The words “in amounts of not less than the equivalent of one lakh of rupees” omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 13  1 [(b) the purchase sale and rediscount of bills of exchange (including treasury bills) drawn in or on any place in any country outside India which is a member of the International Monetary Fund and maturing,— (i) in the case of bills of exchange arising out of any bona fide transaction relating to the export of goods from India, within one hundred and eighty days, and (ii) in any other case, within ninety days, from the date of such purchase or rediscount: Provided that no such purchase, sale or rediscount shall be made in India except with a scheduled bank or a State co-operative bank;] 2 * * * * * 3 [(3A) the making to any scheduled bank or State co-operative bank, or loans and advances, against promissory notes or such bank, repayable on demand or on the expiry of fixed periods not exceeding one hundred and eighty days: Provided that the borrowing bank furnishes a declaration in writing, to the effect that— (i) it holds bills of exchange arising out of any transaction relating to the export of goods from India of a value not less than the amount of such loans or advances,— (a) drawn in India and no any place in any country outside India which is a member of the International Monetary Fund or in any other country notified in this behalf by the Bank in the Gazette of India, and 4 [(b) maturing not later than one hundred and eighty days from the date of the loan or advance, and it will, so long as any part of such loans and advances remains unpaid, continue to hold such bills of exchange of a value not less than the amount of such loans or advances outstanding for the time being; or] 5 [(ii) it has granted a pre-shipment loan or advance to an exporter or any other person in India in order to enable him to export goods from India, the amount of the loan or advance drawn and outstanding at any time being not less than the outstanding amount of the loan or advance obtained by the borrowing bank from the Bank.]] 6 [(3B) the making to any scheduled bank or State co-operative bank or loans and advances repayable on demand or on the expiry of fixed periods not exceeding one hundred and eighty days against promissory notes of such bank: Provided that the borrowing bank furnishes a declaration in writing to the effect that it has made loans and advances for bona fide commercial or trade transactions or for financing agricultural operations or the marketing of crops or for other agricultural purposes as set out in the declaration and the said declaration includes such other particulars as may be required by the Bank;] (4) the making to 7 *** local authorities, scheduled banks 8 [, 9 *** 10 [State] co-operative banks 11[and State Financial Corporations 12***]] or loans and advances, repayable on demand or on the expiry of fixed periods not exceeding ninety days, against the security of— 1. Subs. by Act 35 of 1962, s. 3, for sub-clause (b) (w.e.f. 15-9-1962). 2. Sub-clause (c) omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 3. Ins. by Act 35 of 1962, s. 3 (w.e.f. 15-9-1962). 4. Subs. by Act 58 of 1968, s. 24, for sub-clause (b) (w.e.f. 1-2-1969). 5. Subs. by s. 24, ibid., for clause (ii) (w.e.f. 1-2-1969). 6. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974). 7. The words and letter “Part B States” omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 8. Subs. by the M.O. 1937, for “and Provincial co-operative banks”. 9. The words “Burma scheduled banks” omitted by Act 11 of 1947, s. 11 (w.e.f 1-4-1947). 10. Subs. by the A.O. 1950, for “Provincial”. 11. Subs. by Act 19 of 1957, s. 2, for certain words (w.e.f. 8-6-1957). 12. The words and figures “established under the State Financial Corporations Act, 1951” omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 14  (a) stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any Act of Parliament 1[of the United Kingdom] or by any law for time being in force in 2[India] 3***; (b) gold or silver or documents of title to the same; (c) such bills of exchange and promissory notes as are eligible for purchase or rediscount by the Bank 4[or as are fully guaranteed as to the repayment of the principal and payment of interest by a State Government]; (d) promissory notes of any scheduled bank 5[6[or 7[State]] co-operative bank], supported by documents of title to goods 8[such documents having been transferred], assigned, or pledged to any such bank as security for 9 [a loan or advance made] for bona fide commercial or trade transactions, or for the purpose of 10[financing agricultural operations] or the marketing of crops: 11 [Provided that loans and advances made against the security of bills of exchange and promissory notes arising out of any transaction relating to the export of goods from India shall be repayable on demand or on the expiry of fixed periods not exceeding one hundred and eighty days;] 12 [(4A) the making to any State Financial Corporation 13***, of loans and advances repayable on the expiry of fixed periods not exceeding eighteen months from the date of such loan or advance, against securities of the Central Government or of any State Government, of any maturity, or against bonds and debentures issued by that Corporation and guaranteed by the State Government concerned and maturing within a period not exceeding eighteen months from the date of such loan or advance: 14 [Provided that the previous approval of the State Government shall be obtained for the borrowing by the State Financial Corporation and the amount of loans and advances granted to that Corporation under this clause shall not, at any time, exceed in the aggregate 15[twice the paid-up share capital] thereof;]] 16 17 [ [(4AA)] the making of annual contributions to the National Rural Credit (Long Term Operations) Fund and the National Rural Credit (Stabilisation) Fund established under sections 42 and 43, respectively, of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981);] 18 [(4B) the making to the Industrial Finance Corporation of India 19*** of loans and advances,— (a) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date of such loan or advance, against securities of the Central Government or of any State Government; or 1. Ins. by the A.O. 1950. 2. Subs. by Act 32 of 1951, s. 2 for “the States” (w.e.f. 1-11-1951). 3. The words “or Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937. 4. Ins. by Act 24 of 1955, s. 6 (w.e.f. 8-5-1955). 5. Subs. by the M.O. 1937, for “or a Provincial co-operative bank”. 6. Subs. by Act 11 of 1947, s. 11, for “Burma scheduled bank, provincial co-operative bank or Burma” (w.e.f. 1-4-1947). 7. Subs. by the A.O. 1950, for “Provincial”. 8. Subs. by Act 32 of 1951, s. 7, for “which have been transferred” (w.e.f. 1-11-1951). 9. Subs. by Act 24 of 1955, s. 6, for “a cash credit or overdraft granted” (w.e.f. 8-5-1955). 10. Subs. by Act 51 of 1974, s. 6, for “financing seasonal agricultural operations” (w.e.f. 13-12-1974). 11. Added by Act 35 of 1962, s. 3 (w.e.f. 15-9-1962). 12. Ins. by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960). 13. The words and figures “established under the State Financial Corporations Act, 1951” omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 14. Subs. by Act 51 of 1974, s. 6, for the proviso (w.e.f. 13-12-1974). 15. Subs. by Act 81 of 1985, s. 2, for “ninety per cent. of the paid-up share capital” (w.e.f. 1-5-1986). 16. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for clause (4AA) (w.e.f. 12-7-1982). 17. Clause (4A) renumbered and re-lettered as clause (4AA) thereof by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960). Earlier it was inserted by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953). 18. Ins. by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953). 19. The words and figures “established under the Industrial Finance Corporation Act, 1948” omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 15  (b) repayable on the expiry of fixed periods not exceeding eighteen months from the date of such loan or advance, against securities of the Central Government of any maturity or against bonds and debentures issued by the Corporation and guaranteed by the Central Government and maturity within a period not exceeding eighteen months from the date of such loan or advance; 1 * * * * *] 2 [(4BB) the making to any financial institution notified by the Central Government in this behalf, of loans and advances,— (a) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date of such loan or advance, against the securities of the Central Government or of any State Government, or (b) repayable on the expiry of fixed periods not exceeding eighteen months from the date of such loan or advance, against securities of the Central Government or of any State Government, of any maturity, or against bonds and debentures issued by that financial institution and guaranteed by the Central Government or any State Government, and maturing within a period not exceeding eighteen months from the date of such loan or advance: Provided that the amount of loans and advances granted to a financial institution under sub- clause (b) shall not, at any time, exceed in the aggregate sixty per cent.of the paid-up share capital thereof;] 3 [(4BBB) the making to the Unit Trust of loans and advances— (i) repayable on demand or on the expiry of a fixed period not exceeding ninety days from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; 4*** (ii) repayable on demand or within a period of eighteen months from the date of such loan or advance against the security of the bonds of the Unit Trust issued with the approval of and guaranteed by the Central Government;] 5 [(iii) for the purpose of any scheme other than the first unit scheme under the Unit Trust of India Act, 1963 (52 of 1963) on such terms and conditions and against the security of such other property of the Unit Trust as may be specified in this behalf by the Bank;] 6 [(4C) the making to a Warehousing Corporation established under the Agricultural Produce (Development and Warehousing) Corporations Act, 1956 (28 of 1956) of loans and advances,— (a) repayable on demand or on the expiry of fixed periods not exceeding ninety days, from the date of such loan or advance, against securities of the Central Government or of any State Government, or (b) repayable on the expiry of fixed periods not exceeding eighteen months from the date of such loan or advance, against securities of the Central Government or of any State Government, of any maturity, or against bonds and debentures issued by the corporation to which the loan or advance is made, and guaranteed by the Central or a State Government, and maturing within a period not exceeding eighteen months from the date of such loan or advance: Provided that the amount of loans and advances granted under clause (b) shall not at any time exceed, in the aggregate, three crores of rupees in the case of the Central Warehousing Corporation and fifty lakhs of rupees in the case of a State Warehousing Corporation;] 1. The proviso omitted by Act 66 of 1988, s. 5 (w.e.f. 30-12-1988). 2. Subs. by Act 14 of 1960, s. 2, for clause (4BB) (w.e.f. 30-4-1960). Earlier inserted by Act 19 of 1957, s. 2 (w.e.f. 8-6-1957). 3. Ins. by Act 52 of 1963, s. 44 and the Second Schedule (w.e.f. 1-2-1964). 4. The word “or” omitted by Act 17 of 1966, s. 11 (w.e.f. 10-6-1966). 5. Ins. by s. 11, ibid. (w.e.f. 10-6-1966). 6. Ins. by Act 28 of 1956, s. 55 (w.e.f. 1-8-1956). 16  1 [(4D) the making to the Deposit Insurance Corporation of loans and advances; and generally assisting the Corporation in such manner and on such terms as may be determined by the Central Board;] 2 [(4DD) the making to the National Housing Bank of loans and advances arid generally assisting the National Housing Bank in such manner and on such terms as may be determined by the Central Board;] 3 [(4E) the making to the National Bank of loans and advances repayable on demand or on the expiry of fixed period not exceeding eighteen months from the date of making of the loan or advance, either— (i) against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or (ii) on such other terms and conditions as the Bank may specify;] 4 [(4F) contributing to the initial Capital of the Unit Trust;] 5 [(4G) the making of loans and advances to, and the purchasing of bonds and debentures of, 6 *** 7 [the Exim Bank] 8 [or the Reconstruction Bank] 9 [or the Small Industries Bank 10 [or the National Bank for Financing Infrastructure and Development or other development financial institution]] out of the National Industrial Credit (Long Term Operations) Fund established under section 46C;] 2 [(4GG) the making of loans and advances to, and the purchasing of bonds and debentures of, the National Housing Bank out of the National Housing Credit (Long Term Operations) Fund established under section 46D;] (4H) the making to 6*** 9[or the Small Industries Bank] of loans and advances— (a) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or (b) against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transactions bearing two or more good signatures and maturing within five years from the date of such loan or advance;] 11 [(4-I) the making to scheduled banks, 12*** 7[the Exim Bank] 13[the Reconstruction Bank or the Small Industries Bank] the Industrial Finance Corporation 10[the National Bank for Financing Infrastructure and Development or other development financial institution] and any other financial institution as may, on the recommendation of the Bank, be approved in this behalf by the Central Government of loans and advances repayable on demand or otherwise and against such security and on such other terms and conditions as may be approved in this behalf by the Central Board for the purpose of enabling such banks, or financial institution, as the case may be, to purchase foreign exchange from the Bank for the purpose of financing the import of capital goods or for such other purposes as may be approved by the Central Government;] 7 [(4J) the making to the Exim Bank of loans and advances— 1. Ins. by Act 47 of 1961, s. 51 and the Second Schedule (w.e.f. 1-1-1962). 2. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988). 3. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for clause (4E) (w.e.f. 12-7-1982). 4. Ins. by Ac 52 of 1963, s. 44 and the Second Schedule (w.e.f. 1-2-1964). 5. Ins. by Act 18 of 1964, s. 38 and the Second Schedule (w.e.f. 1-7-1964). 6. The words “the Development Bank or” omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). 7. Ins. by Act 28 of 1981, s. 40 and the Second Schedule (w.e.f. 1-1-1982). 8. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985). 9. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990). 10. Ins. by Act 17 of 2021, s. 47 and the second Schedule (w.e.f. 19-4-2021). 11. Ins. by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 12. The words “the Development Bank” omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). 13. Subs. by Act 39 of 1989, s. 53 and the Second Schedule, for “or the Reconstruction Bank” (w.e.f. 7-3-1990). 17  (a) repayable on demand or on the expiry of a fixed period not exceeding ninety days, from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or (b) against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transactions bearing two or more good signatures and maturing within five years from the date of such loan or advance;] 1 [(4K) the making to the Reconstruction Bank of loans and advances— (a) repayable on demand or on the expiry of a fixed period not exceeding ninety days, from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or (b) against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transactions bearing two or more goods signatures and maturing within five years from the date of such loan or advance;] 2 [(4L) the making to the National Bank for Financing Infrastructure and Development or other development financial institution of loans and advances— (a) repayable on demand or on the expiry of a fixed period not exceeding ninety days, from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or (b) against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transactions bearing two or more good signatures and maturing within five years from the date of such loan or advance;] (5) the making to the 3 [Central Government] 4 [ 5 *** 6 [and 7 [State] Governments]] of advances repayable in each case not later than three months from the date of the making of the advance; 8 [(6) the issue of demand drafts, telegraphic transfers and other kinds of remittances made payable at its own offices or agencies, the purchase of telegraphic transfers, and the making, issue and circulation of bank post bills;] 9 [(6A) dealing in derivatives, and, with the approval of the Central Board, in any other financial instrument. Explanation.—For the purposes of this clause, “derivative” means an instrument, to be settled at a future date, whose value is derived from change in one or a combination of more than one of the following underlying, namely:— (a) interest rate, (b) price of securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government, (c) price of foreign securities, (d) foreign exchange rate, (e) index of rates or prices, (f) credit rating or credit index, (g) price of gold or silver coins, or gold or silver bullion, or (h) any other variable of similar nature;] 10 * * * * * 1. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985). 2. Ins. by Act 17 of 2021, s. 47 and the Second Schedule (w.e.f. 19-4-2021). 3. Subs. by the M.O. 1937, for “G.G. in C.”. 4. Subs. by ibid., for certain words. 5. The words “the Federal Railway Authority” omitted by the A.O. 1948. 6. Subs. by Act 11 of 1947, s. 11, for “Provincial Governments, the Government of Burma and the Burma Railway Board” (w.e.f. 1-4-1947). 7. Subs. by the A.O. 1950, for “Provincial”. 8. Subs. by Act 32 of 1951, s. 7, for clause (6) (w.e.f. 1-11-1951). 9. Ins. by Act 26 of 2006, s. 2 (w.e.f. 9-1-2007). 10. Clause (7) repealed by Act 2 of 1948, s. 2 and the Schedule (w.e.f. 5-1-1948). 18  (8) the purchase and sale of securities 1[of the Central 2[Government or a 3[State] Government]] of any maturity or of such securities of a local authority 4*** as may be specified in this behalf by the 5[Central Government] on the recommendation of the Central Board: Provided that securities fully guaranteed as to principal and interest by 6 [any such Government 7[or authority]] shall be deemed for the purposes of this clause to be securities of such Government 7[or authority]; 8 * * * * * 9 10 11 12 [(8A) the purchase and sale of shares in, or the capital of [the [National Bank],] [the Deposit Insurance Corporation], 13***, the State Bank 14[or any other bank 15[or financial institution] notified by the Central Government in this behalf];] 16 [(8AA) the promoting, establishing, supporting or aiding in the promotion, establishment and support of any financial institution, whether as its subsidiary or otherwise;] 17 [(8B) the keeping of deposits with the State Bank for such specific purposes as may be approved by the Central Government in this behalf;] (9) the custody of monies, securities and other articles of value, and the collection of the proceeds, whether principal, interest or dividends, of any such securities; (10) the sale realisation of all property, whether movable or immovable, which may in any way come into the possession of the Bank in satisfaction, or part satisfaction, of any of its claims; (11) the acting as agent for 18*** the 5[Central Government] 19[or any 3[State] Government 20*** or any local authority 21***] 22[or the Industrial Finance Corporation of India 23***] 24[or any other body corporate which is established or constituted by or under any other law] 25[or the Government of any such country outside India or 26[any such person or authority] as may be approved in this behalf by the Central Government] in the transaction of any of the following kinds of business, namely:— (a) the purchase and sale of gold or silver 27[or foreign exchange]; (b) the purchase, sale, transfer and custody of bills of exchange, securities or shares in any company; 1. Subs. by the M.O. 1937, for “of the G. of I or of a L.G.”. 2. Subs. by Act 11 of 1947, s. 11, for “Government, a Provincial Government or the Government of Burma” (w.e.f. 1-4-197). 3. Subs. by the A.O. 1950, for “Provincial”. 4. The words and letter “or such Part B States” omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 5. Subs. by the M.O. 1937, for “G.G. in C.”. 6. Subs., ibid., for “the G. of I., a L.G., a local authority or State in India”. 7. Subs. by Act 32 of 1951, s. 7, for “authority or State” (w.e.f. 1-11-1951). 8. The second proviso omitted by s. 7, ibid. (w.e.f. 1-11-1951). 9. Ins. by Act 23 of 1955, s. 52 and the Third Schedule (w.e.f. 1-7-1955). 10. Ins. by Act 10 of 1963, s. 47 and the Second Schedule (w.e.f. 1-5-1963). 11. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for “Agricultural Refinance and Development Corporation” (w.e.f. 12-7-1982). 12. Ins. by Act 47 of 1961, s. 51 and the Second Schedule (w.e.f. 1-1-1962). 13. The words “the Development Bank” omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). 14. Subs. by Act 79 of 1956, s. 43 and the Second Schedule, for “or any of its subsidiary banks” (w.e.f. 22-10-1956). 15. Ins. by Act 19 of 1957, s. 2 (w.e.f. 8-6-1957). 16. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988). 17. Ins. by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 10-9-1959). 18. The words “the Secretary of State” omitted by the A.O. 1948. 19. Subs., ibid., for certain words. 20. The words “or the Government of Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947). 21. The words and letter “or any Part B State” omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 22. Ins. by Act 44 of 1949, s. 2. 23. The words “established under the Industrial Finance Corporation Act, 1948 (15 of 1948)” omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 24. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974). 25. Ins. by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951). 26. Subs. by Act 51 of 1974, s. 6, for “any such person” (w.e.f. 13-12-1974). 27. Added by Act 23 of 1947, s. 3 (w.e.f. 18-4-1947). 19  (c) the collection of the proceeds, whether principal, interest or dividends, of any securities or shares; (d) the remittance of such proceeds, at the risk of the principal, by bills of exchange payable either in India or elsewhere; (e) the management of public debt; 1 [(f) 2*** the issue and management of 3*** bonds and debentures;] 4 [(11A) the acting as agent for the Central Government,— 5 [(a) in guaranteeing the due performance by any small-scale industrial concern, approved by the Central Government, of its obligations to any bank or other financial institution in respect of loans and advances made, or other credit facilities provided, to it by such bank or other financial institution and the making as such agent of payments in connection with such guarantee, and] (b) in administering any scheme for subsidising the rate of interest or other charges in relation to any loans or advances made, or other credit facilities provided, by banks or other financial institutions for the purpose of financing or facilitating any export from India and the making as such agent of payments on behalf of the Central Government;] 6 [(12) the purchase and sale of gold or silver coins and gold and silver bullion and foreign exchange and the opening of a gold account with the principal currency authority of any foreign country or the Bank for International Settlements or any international or regional bank or financial institution formed by such principal currency authority or authorities or by the Government of any foreign country;] 7 [(12A) the purchase and sale of securities issued by the Government of any country outside India or by any institution or body corporate established outside India and expressed to be payable in a foreign currency or any international or composite currency unit, being in the case of purchase by the Bank securities maturing within a period of ten years from the date of purchase: Provided that in the case of securities of an institution or body corporate, the repayment of principal and payment of interest in respect of such securities shall be guaranteed by the Government of the country concerned;] 8 [(12AA) lending or borrowing of securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities; (12AB) dealing in repo or reverse repo: Provided that lending or borrowing of funds by way of repo or reverse repo shall not be subject to any limitation contained in this section. Explanation.—For the purposes of this clause,— (a) “repo” means an instrument for borrowing funds by selling securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities, with an agreement to repurchase the said securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed; 1. Ins. by Act 44 of 1949, s. 2. 2. The words “in respect of the aforesaid Corporation” omitted by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974). 3. The word “its” omitted by s. 6, ibid. (w.e.f. 13-12-1974). 4. Subs. by Act 58 of 1968, s. 24, for clause (11A) (w.e.f. 1-2-1969). Earlier it was inserted by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960). 5. Restored by Act 81 of 1985, s. 12 (w.e.f. 1-5-1986). Earlier sub-clause (a) omitted by Act 21 of 1978, s. 9 (date to be notified). 6. Subs. by Act 24 of 1978, s. 4, for clause (12) (w.e.f. 21-7-1978). 7. Subs. by s. 4, ibid., for clause (12A) (w.e.f. 21-7-1978). 8. Ins. by Act 26 of 2006, s. 2 (w.e.f. 9-1-2007). 20  (b) “reverse repo” means an instrument for lending funds by purchasing securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government or foreign securities, with an agreement to resell the said securities on a mutually agreed future date at an agreed price which includes interest for the funds lent;] 1 [(12B) the making of loans and advances in foreign currencies to scheduled banks, 2*** 3[, the Exim Bank], 4[or 5[the Reconstruction Bank or the Small Industries Bank]] the Industrial Finance Corporation 6[the National Bank for Financing Infrastructure and Development or other development financial institution,] any State Financial Corporation and any other financial institution as may, on the recommendation of the Bank, be approved by the Central Government and on such terms and conditions as may be specified by the Central Board in this behalf, against promissory notes of such bank or financial institution, as the case may be: Provided that the borrowing bank or financial institution, as the case may be, furnishes a declaration in writing to the effect that— (a) it has made loans and advances in foreign currencies for financing international trade or for the import of capital goods or for such other purposes as may be approved by the Central Government; and (b) that the amount of loans or advances so made and outstanding at any time will not be less than the outstanding amount of the loans or advances obtained by it from the Bank;] 7 [(13) the opening of an account with an office outside India of any bank, including a bank incorporated in India or the making of an agency agreement with, and the acting as an agent or correspondent of, any bank incorporated outside India, or the principal currency authority of any country under the law for the time being in force in that country or any international or regional bank or financial institution formed by such principal currency authorities or foreign governments, and the investing of the funds of the Bank in the shares and securities of any such international or regional bank or financial institution or of any other foreign institution as may be approved by the Central Board in this behalf;] 8 [(13A) participation in any arrangement for the clearing and settlement of any amounts due from, or to, any person or authority on account of the external trade of India with any other country or group of countries or of any remittances to, or from, that country or group of countries, including the advancing, or receiving, of any amount in any currency in connection therewith, and, for that purpose, becoming, with the approval of the Central Government, a member of any international or regional clearing union of central banks monetary or other authorities, or being associated with any such clearing arrangements, or becoming a member of any body or association formed by central banks, monetary or other similar authorities, or being associated with the same in any manner;] (14) the borrowing of money for a period not exceeding one month for the purposes of the business of the Bank, and the giving of security for money so borrowed: Provided that no money shall be borrowed under this clause from any person in India 9*** other than a scheduled bank 10*** or from any person outside India 11*** other than a bank which is the principal currency authority of any country under the law for the time being in force in that country: 1. Ins. by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978). 2. The words “the Development Bank” omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004). 3. Ins. by Act 28 of 1981, s. 40 and the Second Schedule (w.e.f. 1-1-1982). 4. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985). 5. Subs. by Act 39 of 1989, s. 53 and the Second Schedule, for “the Reconstruction Bank” (w.e.f. 7-3-1990). 6. Ins. by Act 17 of 2021, s. 47 and the Second Schedule (w.e.f. 19-4-2021). 7. Subs. by Act 24 of 1978, s. 4, for clause (13) (w.e.f. 21-7-1978) which was inserted by the M.O. 1937. 8. Ins. by Act 44 of 1973, s. 2 (w.r.e.f. 15-9-1973). 9. The words “or Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which were earlier inserted by the M.O. 1937. 9. The words “or a Burma scheduled bank” omitted by s. 11, ibid. (w.e.f. 1-4-1947) which were earlier inserted by the M.O. 1937. 10. The words “and Burma” omitted by s. 11, ibid. (w.e.f. 1-4-1947). 21  Provided further that the total amount of such borrowings from persons in India 1*** shall not at any time exceed the amount of the 2[capital] of the Bank; 3 * * * * * (15) the making and issue of bank notes subject to the provisions of this Act 4***; 5*** 6 [(15A) the exercise of powers and functions and the performance of duties entrusted to the Bank under this Act or under any other law for the time being in force;] 7 [15B) the providing of facilities for training in banking and for the promotion of research, where, in the opinion of the Bank, such provision may facilitate the exercise by the Bank of its powers and functions, or the discharge of its duties;] (16) generally, the doing of all such matters and things as may be incidental to or consequential upon the exercise of its powers or the discharge of its duties under this Act 8***. 18. Power of direct discount.—9***When, in the opinion of the 10[Bank] 11***, a special occasion has arisen making it necessary or expedient that action should be taken 12[under this section] for the purposes of regulating credit in the interests of Indian 13*** trade, commerce, industry and agricultural, the Bank may, notwithstanding any limitation contained in 14*** section 17,— 15 [(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] 16 * * * * * 17 [(3) make loans or advances to— (a) a State co-operative bank, or (b) on the recommendation of a State co-operative bank, to a cooperative society registered within the area in which the State cooperative bank operates, or (c) any other person, repayable on demand or on the expiry of the fixed periods, not exceeding ninety days, on such terms and conditions as the Bank may consider to be sufficient.] 18 * * * * * 19 * * * * * 1. The words “and Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947). 2. Subs. by Act 32 of 1951, s. 7, for “share capital” (w.e.f. 1-11-1951). 3. Clause (14A) omitted by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 1-10-1959) which was inserted by Act 79 of 1956, s. 43 and the Second Schedule (w.e.f. 22-10-1956). 4. The words “and the making and issue of Burma notes in accordance with the law of Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937. 5. The word “and” omitted by Ordinance 47 of 1945, s. 6. 6. Subs. by Act 23 of 1955, s. 52 and the Third Schedule for clause (15A) (w.e.f. 1-7-1955). 7. Ins. by Act 58 of 1968, s. 24 (w.e.f. 1-2-1969). 8. The words “and the law of Burma” omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937. 9. The brackets and figures “(1)” omitted by Act 51 of 1974, s. 7 (w.e.f. 13-12-1974). 10. Subs. by Act 32 of 1951, s. 8, for “Central Board” (w.e.f. 1-11-1951). 11. Certain words omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 12. Subs. by Act 51 of 1974, s. 7, for “under this sub-section” (w.e.f. 13-12-1974). 13. The words “or Burman” omitted by Act 11 of 1947, s. 12 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937. 14. The words, brackets, letters and figures “sub-clauses (a) and (b) of clause (2) or sub-clause (a) or (b) of clause (3) or clause (4) of” omitted by Act 51 of 1974, s. 7 (w.e.f. 13-12-1974). 15. Subs. by s. 7, ibid., for clause (1) (w.e.f. 13-12-1974). 16. Clause (2) omitted by Act 24 of 1978, s. 5 (w.e.f. 21-7-1978). 17. Subs. by Act 51 of 1974, s. 7, for clause (3) (w.e.f. 13-12-1974). 18. The proviso omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949). 19. Sub-section (2) omitted by Act 51 of 1974, s. 7 (w.e.f. 13-12-1974). 22  1 [18A. Validity of loan or advance not to be questioned.—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) of section 18 by the Bank to any person has been applied by such person, wholly or in part, in making a loan or advance to any borrower, any sum received— (i) by the borrowing bank on account of bills of exchange in respect of which the declaration under clause (i) of the proviso to clause (3A) of section 17 has been furnished or in repayment or realisation of the outstanding loans and advances referred to in clause (ii) of the said proviso or in the proviso to clause (3B) of the said section, or (ii) by the borrowing bank or any other person in repayment or realisation of loans and advances granted to a borrower out of funds obtained by it or by him from the Bank under section 18, shall be utilised only for the repayment by the borrowing bank or other person, as the case may be, of the amounts due to be repaid by it or by him to the Bank, and shall be held by it or by him in trust for the Bank, until such time as the amounts are so repaid.] 19. Business which the Bank may not transact.—Save as otherwise provided in sections 17, 18,2 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; 3 [(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; (4) make loans or advances; (5) draw or accept bills payable otherwise than on demand; (6) allow interest on deposits or current accounts. CHAPTER III CENTRAL BANKING FUNCTIONS 20. Obligation of the Bank to transact Government business.—The Bank shall undertake to accept monies for account of 4[5*** the Central Government 6***] and to make payments up to the amount standing to the credit of 7[its account], and to carry out 8[its exchange], remittance and other banking operations, including the management of the public debt 9[of the Union]. 1. Ins. by Act 51 of 1974, s. 8 (w.e.f. 13-12-1974). 2. Ins. by Act 38 of 1956, s. 2 (w.e.f. 6-10-1956). 3. Subs. by Act 32 of 1951, s. 9, for clause (2) (w.e.f. 1-1-1951). 4. Subs. by the M.O. 1937, for certain words. 5. The words “the Secretary of State” omitted by the A.O. 1950. 6. The words and letter “and the Governments of Part A States” omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956). 7. Subs. by s. 104, ibid., for “their accounts respectively” (w.e.f. 1-11-1956). 8. Subs. by s. 104, ibid., for “their exchange” (w.e.f. 1-11-1956). 9. Ins. by s. 104, ibid. (w.e.f. 1-11-1956). 23  20A. [Transaction of business for British Military Administration, Burma].—Omitted to the repeal of the Ordinance by Act 11 of 1947 which was earlier temporarily inserted by Ordinance 19 of 1945. 21. Bank to have the right to transact Government business in India.—(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 transactions 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 1[Central Government] 4*** from carrying on money transactions at places where the Bank has no branches or agencies, and the 1[Central Government] 2*** may hold at such places such balances as 5[it] may require. (2) The 1[Central Government] 6*** 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 referred to in this section the 1[Central Government] shall decide what the conditions shall be. 7 [(4) Any agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.] 8 * * * * * 9 [21A. Bank to transact Government business of States on agreement.—(1) The Bank may by agreement with the Government of any 10*** State 11*** 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.] 12 [21B. Effect of agreements made between the Bank and certain States before the 1st November, 1956.—(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; 1. Subs. by the M.O. 1937, for “G.G. in C. 2. The words “and the State Governments” omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956). 3. Subs. by s. 104, ibid., for “their” (w.e.f. 1-11-1956). 4. The words “or any State Government” omitted by s. 104, ibid. (w.e.f. 1-11-1956). 5. Subs. by s. 104, ibid., for “they” (w.e.f. 1-11-1956). 6. The words “and each State Government” omitted by s. 104, ibid. (w.e.f. 1-11-1956). 7. Subs. by s. 104, ibid. for sub-section (4) (w.e.f. 1-11-1956). 8. Sub-section (5) omitted by s. 104, ibid. (w.e.f. 1-11-1956) which was inserted by Act 32 of 1951, s. 3 (w.e.f. 1-11-1951). 9. Ins. by Act 32 of 1951, s. 12 (w.e.f. 1-11-1951). 10. The word and letter “Part B” omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956). 11. The words “(including the autonomous State of Meghalaya)” omitted by Act 81 of 1971, s. 72 (w.e.f. 21-1-1972) which was earlier inserted by Act 55 of 1969, s. 75 (w.e.f. 2-4-1970). 12. Ins. by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956). 24  (b) in relation to the agreement between the Bank and any other Part A State as it existed before the 1st day of November, 1956, the State with the same name; and (c) in relation to the agreement between the Bank and the Part B State of Mysore or Travancore- Cochin as it existed before the 1st day of November, 1956, the State of Mysore of Kerala respectively. (2) Any agreement made under section 21A between the Bank and the Government of the Part B State of Hyderabad, Madhya Bharat or Saurashtra shall be deemed to have terminated on the 31st day of October, 1956.] 22. Right to issue bank notes.—(1) The Bank shall have the sole right to issue bank notes in [India], and may, for a period which shall be fixed by the 2 [Central Government] on the 1 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. 3 [22A. Non-applicability of certain provisions to digital form of bank notes.—Nothing contained in sections 24, 25, 27, 28 and 39 shall apply to the bank notes issued in digital form by the Bank.] 23. Issue Department.—(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. 4 * * * * * 5 [24. Denominations of notes.—(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.] 25. Form of bank notes.—The design, form the material of bank notes shall be such as may be approved by the 2[Central Government] after consideration of the recommendations made by the Central Board. 26. Legal tender character of notes.—(1) Subject to the provisions of subsection (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 6[save at such office or agency of the Bank and to such extent as may be specified in the notification]. 1. Subs. by Act 32 of 1951, s. 2, for “the States” (w.e.f. 1-11-1951). 2. Subs. by the M.O. 1937, for “G.G. in C.”. 3. Ins. by Act 6 of 2022, s. 125 (w.e.f. 30-3-2022). 4. Sub-section (3) omitted by Act 11 of 1947, s. 13 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937. 5. Subs. by Act 58 of 1968, s. 25, for section 24 (w.e.f. 1-2-1969). 5. Subs. by Act 32 of 1951, s. 13, for “save at an office or agency of the Bank” (w.e.f. 1-11-1951). 25  1 * * * * * 2 [26A. Certain bank notes to cease to be legal tender.—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.] 27. Re-issue notes.—The Bank shall not re-issue bank notes which are torn, defaced or excessively spoiled. 28. Recovery of notes lost, stolen, mutilated or imperfect.— 3 *** Notwithstanding anything contained in any enactment or rule of law to the contrary, no person shall of right be entitled to recover from the 4[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 4[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 5*** of 6[Parliament]. 7 * * * * * 8 [28A. Issue of special bank notes and special one rupee notes in certain cases.—(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). (3) The design, form and material of the special bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by the Governor and of the special one rupee notes shall be such as the Central Governmen