Reserve Bank of India Act 1934 PDF

RESERVE BANK OF INDIA ACT, 1934 (As amended by the Finance Act, 2022) Disclaimer: Though the Reserve Bank of India has taken efforts to ensure the accuracy of the text as well as the footnotes of the Act, it will not be responsible in any way if any inadvertent mistake has...

RESERVE BANK OF INDIA ACT, 1934 (As amended by the Finance Act, 2022) Disclaimer: Though the Reserve Bank of India has taken efforts to ensure the accuracy of the text as well as the footnotes of the Act, it will not be responsible in any way if any inadvertent mistake has crept in into the document. Any person relying on this document would be doing so at his own risk and the Reserve Bank would not be responsible for any consequences that may ensue such reliance. If any doubt occurs or discrepancy found, the reader is advised to refer to the Gazette copy of the relevant text. Any suggestion for correction or modification is however definitely welcome.  TABLE OF CONTENTS CHAPTER I - PRELIMINARY 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. Increase and reduction of share capital. 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 to 16. [General meetings. First constitution of the Central Board. First constitution of Local Board.] 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. 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. 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 of 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. 2 31. Issue of demand bills and notes. 32. [Penalty.] 33. Assets of the Issue Department. 34. Liabilities of the Issue Department. 35. [Initial assets and liabilities.] 36. [Method of dealing with fluctuations in rupee coin assets.] 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. 41. [Obligation to buy sterling.] 41A. [Obligation to provide remittance between India and Burma.] 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. [Power to require returns from co-operative banks.] 45. Appointment of Agents. CHAPTER III-A 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. [Penalties.] CHAPTER III-B PROVISIONS RELATING TO NON-BANKING INSTITUTIONS RECEIVING DEPOSITS AND FINANCIAL INSTITUTIONS 45H. Chapter IIIB not to apply in certain cases. 45I. Definitions. 45IA. Requirement of registration and net owned fund. 45IB. Maintenance of percentage of assets. 45IC. Reserve fund. 45ID. Power of Bank to remove directors from office. 45IE. 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. 3 45MA. Powers and duties of auditors. 45MAA.Powers 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 unauthorized person. 45NAA. Power in respect of group companies 45NB. Disclosure of information. 45NC. Power of Bank to exempt. 45O. [Penalties.] 45P. [Cognizance of offence.] 45Q. Chapter IIIB to override other laws. 45QA. Power of Company Law Board to offer repayment of deposit. 45QB. Nomination by depositors. CHAPTER III-C PROHIBITION 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 III-D REGULATION OF TRANSACTIONS IN DERIVATIVES, MONEY MARKET INSTRUMENTS, SECURITIES, ETC. 45U. Definitions. 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 III-E JOINT MECHANISM 45Y. Joint Mechanism. CHAPTER III-F 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 4 45ZH. Information for Monetary Policy Committee Members 45ZI. 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 (Stabilization) Fund. 46B. [Repealed] 46C. National Industrial Credit (Long Term Operations) Fund. 46D. National Housing Credit (Long Term Operations) Fund. 47. Allocation of surplus profits. 48. Exemption of Bank from income-tax and super-tax. 49. Publication of bank rate. 50. Auditors. 51. Appointment of special auditors by Government. 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 and 56. [Reports by the Bank. Power to require declaration as to ownership of registered shares.] 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 to 61. [Amendment of Act 3 of 1906. Repeals, Amendment of section 11, Act 7 of 1913.] THE FIRST SCHEDULE THE SECOND SCHEDULE 5  LIST OF AMENDING ACTS, ORDINANCES, REGULATIONS AND ADAPTATION ORDERS 1. The India and Burma (Burma Monetary Arrangements) Order, 1937. 2. The Repealing and Amending Act, 1937 (20 of 1937). 3. The Reserve Bank of India (Amendment) Act, 1940 (9 of 1940). 4. The Reserve Bank of India (Second Amendment) Act, 1940 (13 of 1940). 5. The Currency Ordinance, 1940 (Ord. 4 of 1940). 6. The Reserve Bank of India (Third Amendment) Act, 1940 (38 of 1940). 7. The Reserve Bank of India (Amendment) Ordinance, 1941 (Ord. 3 of 1941). 8. The International Monetary Fund and Bank Ordinance, 1945 (Ord. 47 of 1945). 9. The Reserve Bank of India (Amendment) Act, 1946 (23 of 1946). 10. The Reserve Bank of India (Amendment) Act, 1947 (11 of 1947). 11. The Reserve Bank of India (Second Amendment) Act, 1947 (23 of 1947). 12. The Repealing and Amending Act, 1947 (2 of 1948). 13. The Indian Independence (Adaptation of Central Acts and Ordinances) Order, 1948. 14. The Reserve Bank (Transfer to Public Ownership) Act, 1948 (62 of 1948). 15. The Banking Companies Act, 1949 (10 of 1949). 16. The Repealing and Amending Act, 1949 (40 of 1949). 17. The Reserve Bank of India (Amendment) Act, 1949 (44 of 1949). 18. The Adaptation of Laws Order, 1950. 19. The Reserve Bank of India (Amendment) Act, 1951 (32 of 1951). 20. The Reserve Bank of India (Amendment and Miscellaneous provisions) Act, 1953 (54 of 1953). 21. The Andhra (Adaptation of Laws on Union Subjects) Order, 1954. 22. The State Bank of India Act, 1955 (23 of 1955). 23. The Reserve Bank of India (Amendment) Act, 1955 (24 of 1955). 24. The Agricultural Produce (Development and Warehousing) Corporations Act, 1956 (28 of 1956). 25. The States Reorganisation Act, 1956 (37 of 1956). 26. The Reserve Bank of India (Amendment) Act, 1956 (38 of 1956). 27. The Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956). 28. The State Bank of Hyderabad Act, 1956 (79 of 1956). 6 29. The Adaptation of Laws (No.3) Order, 1956. 30. The Reserve Bank of India (Amendment) Act, 1957 (19 of 1957). 31. The Reserve Bank of India (Second Amendment) Act, 1957 (48 of 1957). 32. The Reserve Bank of India (Amendment) Act, 1959 (14 of 1959). 33. The Banking Companies (Amendment) Act, 1959 (33 of 1959). 34. The State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959). 35. The Reserve Bank of India (Amendment) Act, 1960 (14 of 1960). 36. The Repealing and Amending Act, 1960 (58 of 1960). 37. The Bombay Reorganisation (Adaptation of Laws on Union Subjects) Order, 1961. 38. The Deposit Insurance Corporation Act, 1961 (47 of 1961). 39. The Goa, Daman and Diu (Currency and Coinage) Regulation, 1962 (Reg. 6 of 1962). 40. The Reserve Bank of India (Amendment) Act, 1962 (35 of 1962). 41. The Agricultural Refinance Corporation Act, 1963 (10 of 1963). 42. The Unit Trust of India Act, 1963 (52 of 1963). 43. The Banking Laws (Miscellaneous Provisions) Act, 1963 (55 of 1963). 44. The Pondicherry (Laws) Regulation, 1963 (Reg. 7 of 1963). 45. The Industrial Development Bank of India Act, 1964 (18 of 1964). 46. The Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965). 47. The State of Nagaland (Adaptation of Laws on Union Subjects) Order, 1965. 48. The Unit Trust of India (Amendment) Act, 1966 (17 of 1966). 49. The Banking Laws (Amendment) Act, 1968 (58 of 1968). 50. The Punjab Reorganisation and Delhi High Court (Adaptation of Laws on Union Subjects) Order, 1968. 51. The Assam Reorganisation (Meghalaya) Act, 1969 (55 of 1969). 52. The Madras State (Alteration of Name) (Adaptation of Laws on Union Subjects) Order, 1970. 53. The Agricultural Refinance Corporation (Amendment) Act, 1971 (39 of 1971). 54. The North-Eastern Areas (Reorganisation) Act, 1971 (81 of 1971). 55. The State of Himachal Pradesh (Adaptation of Laws on Union Subjects) Order, 1973. 56. The Reserve Bank of India (Amendment) Act, 1973 (44 of 1973). 57. The North-Eastern Areas (Reorganisation) (Adaptation of Laws on Union Subjects) Order, 1974. 7 58. The Mysore State (Alteration of Name) (Adaptation of Laws on Union Subjects) Order, 1974. 59. The Laccadive, Minicoy and Amindivi Islands (Alteration of Name) Adaptation of Laws Order, 1974. 60. The Reserve Bank of India (Amendment) Act, 1974 (51 of 1974). 61. The Public Financial Institutions Laws (Amendment) Act, 1975 (52 of 1975). 62. The Regional Rural Banks, Act, 1976 (21 of 1976). 63. The Deposit Insurance Corporation (Amendment and Miscellaneous Provisions) Act, 1978 (21 of 1978). 64. The Reserve Bank of India (Amendment) Act, 1978 (24 of 1978). 65. The Export-Import Bank of India Act, 1981 (28 of 1981). 66. The National Bank for Agricultural and Rural Development Act, 1981 (61 of 1981). 67. The Banking Laws (Amendment) Act, 1983 (1 of 1984). 68. The Industrial Reconstruction Bank of India Act, 1984 (62 of 1984). 69. The Banking Laws (Amendment) Act, 1985 (81 of 1985). 70. The National Housing Bank Act, 1987 (53 of 1987). 71. The Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988). 72. The Small Industries Development Bank of India Act, 1989 (39 of 1989). 73. The Reserve Bank of India (Amendment) Act, 1991 (8 of 1991). 74. The Reserve Bank of India (Second Amendment) Act, 1991 (9 of 1991). 75. The Reserve Bank of India (Amendment) Act, 1997 (23 of 1997). 76. The Information Technology Act, 2000. 77. Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No. 53 of 2003) 78. Credit Information Companies (Regulation) Act, 2005 (Act No. 30 of 2005) 79. Reserve Bank of India (Amendment) Act, 2006 (Act No. 26 of 2006). 80. Securities and Insurance Laws (Amendment and Validation) Act, 2010 (Act No. 26 of 2010). 81. Coinage Act, 2011 (Act No. 11 of 2011). 82. The Factoring Regulation Act, 2011 (Act No. 12 of 2012). 83. The Banking Laws (Amendment) Act, 2012 (Act No. 4 of 2013). 84. Finance Act, 2016 (Act No. 28 of 2016). 8 85. Finance Act, 2017 (7 of 2017) 86. Finance Act, 2018 (13 of 2018) 87. Banning of Unregulated Deposit Schemes Act, 2019 (21 of 2019) 88. Finance (No. 2) Act, 2019 (23 of 2019) 89. International Financial Services Centres Authority Act, 2019 (50 of 2019) 90. National Bank of Financing Infrastructure and Development Act, 2021 (17 of 2021) 91. Finance Act, 2022 (Act 6 of 2022) 9  LIST OF ABBREVIATIONS USED A. O. 1948 Indian Independence (Adaptation of Central Acts and Ordinances) Order, 1948. A. O. 1950 Adaptation of Laws Order, 1950. Cl. Clause. G. G. in C. Governor-General in Council. G. of I Government of India. Govt. Government. Ins. Inserted. L. G. Local Government. M. O. 1937. India and Burma (Burma Monetary Arrangements) Order, 1937, Part III, Para I and Sch. III. Ord. Ordinance. P. Page. Pt. Part. Reg. Regulation. Rep. Repealed. S. Section. Sch. Schedule. Subs. Substituted. w. e. f. With effect from. 10  RESERVE BANK OF INDIA ACT, 19341 [Act No. 2 of 1934] [6th March 1934] PREAMBLE 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: - 11. For Statement of Objects and Reasons, see Gazette of India, 1933, Pt. V, p. 160; and for Report of Select Committee, see ibid., pp. 197-207. 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 Sch. I (w.e.f.1-7-1965) and to the whole of the union territory of Lakshadweep by Reg. 8 of 1965, s.3 and Sch. to the State of Sikkim: vide Notification No. S. D. 208(E), dated 16-5-1975. Extraordinary, pt II Sec 3 (ii) P1213 and come 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. 2Substituted by the A.O. 1948 for “British India”. 3Paragraphs 2 and 3 of the Preamble substituted vide Finance Act, 2016 and notified by S.O. 2214(E), w.e.f. 27.06. 2016. Prior to the substitution, the paragraphs read as under: "And whereas in the present disorganisation of the monetary systems of the world it is not possible to determine what will be suitable as a permanent basis for the Indian monetary system; But whereas it is expedient to make temporary provision on the basis of the existing monetary system, and to leave the question of the monetary standard best suited to India to be considered when the international monetary position has become sufficiently clear and stable to make it possible to frame permanent measures;". 11  CHAPTER I PRELIMINARY 1. Short title, extent and commencement. (1) This Act may be called the Reserve Bank of India Act, 1934. 1 [(2) It extends to the whole of India 2[* * *]. (3) This section shall come into force at once, and the remaining provisions of this Act shall come into force on such date or dates3 as the 4[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, – 5 [* * * * * * * * * *] 6 [(aii)] “the Bank” means the Reserve Bank of India constituted by this Act; 7 [(aiii) “Bank for International Settlements” means the 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;] 8 [(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; 9 [(bva) "Consumer Price Index" means the Consumer Price Index Combined published by the Government of India from time to time;] 10 [* * * * * ***** 1 Subs. by the A. O. 1950, for sub-section (2). 2 The words “except the State of Jammu and Kashmir” omitted by Act 62 of 1956, s.2 and Sch. (w.e.f. 1-11-1956). 3 Ss. 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, see ibid., 1935, Pt. I. P. 538. 4 Subs. by the M. O. 1937, for “G. G. in C”. 5 Cls. (a) and (ai) omitted by Act 61 of 1981, s.61 and Sch. II (w.e.f. 12-7-1982). 6 Cls (a) and (aa) re-lettered as cls. (a-i) and (a-ii) respectively by Act 23 of 1965, s.2 (w.e.f. 1-3-1966). 7 Ins. by Act 51 of 1974, s.2. 8 Clause (aiv) inserted by the Finance Act, 2022 (Act 6 of 2022), section 125. 9 Added vide Finance Act, 2016, and notified by S.O. 2214(E), w.e.f. 27.06. 2016. 10 Cls. (bi), (bii), (biii), (biv), (bv) and (bviii) omitted by Act 61 of 1981, s.61 and Sch.II (w.e.f. 12-7-1982). 12  ***** ***** * * * * *] [ [(bvi)] “Deposit Insurance Corporation” means the Deposit Insurance 1 2 Corporation established under section 3 of the Deposit Insurance Corporation Act, 1961;] 3[ *****] 4 [*****] 5 [(bviiia) “Exim Bank” means the Export-Import Bank of India established under the Export-Import Bank of India Act, 1981;] 6 [(bix) “foreign currency” and “foreign exchange” have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1973; (c) “Industrial Finance Corporation” means the Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948;] 7 [(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;] 8 [(ca) “International Development Association” means the “Association” referred to in the International Development Association (Status, Immunities and Privileges) Act, 1960; (cb) “International Finance Corporation” means the “Corporation” referred to in the International Finance Corporation (Status, Immunities and Privileges) Act, 1958; (cc) “International Monetary Fund” and “International Bank for Reconstruction and Development” mean respectively the “International Fund” 1 Ins. by Act 47 of 1961, s.51 and Sch.II (w.e.f. 1-1-1962). 2 Cls (bbb) and (bbbb) re-lettered as cls. (bvi) and (bvii) respectively by Act 23 of 1965, s.2 (w.e.f. 1-3-1966). 3 Clause (bvii) omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003 ), Sec. 1. 4 Cls. (bi), (bii), (biii), (biv), (bv) and (bviii) omitted by Act 61 of 1981, s.61 and Sch.2 (w.e.f. 12-7-1982). 5 Ins. by Act 28 of 1981, s.40 and Sch.II, (w.e.f. 1-1-1982). 6 Subs. by Act 24 of 1978, s.3, for cl. (c) w.e.f. 21-7-1978). 7 Added vide Finance Act, 2016, and notified by S.O. 2214(E), w.e.f. 27.06. 2016. 8 Ins. by Act 51 of 1974, s.2. 13  and the “International Bank”, referred to in the International Monetary Fund and Bank Act, 1945;] 1 [(cci) "Monetary Policy Committee" means the Committee constituted under sub-section (1) of section 45ZB;] 2 [(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;] 3 [(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;] 4 (cccc) “National Housing Bank” means the National Housing Bank established under section 3 of the National Housing Bank Act, 1987; 5 [(cccci) "Policy Rate" means the rate for repo-transactions under sub-section (12AB) of section 17;] 6 [* * * * * ***** ***** ***** * * * * *] 7 [(cv) “Reconstruction Bank” means the Industrial Reconstruction Bank of India established under section 3 of the Industrial Reconstruction Bank of India, Act, 1984;] (d) “rupee coin” means 8[* * *] rupees which are legal tender 9[in 10 [India]] under the provisions of the 11[Coinage Act, 2011]; 1[* * *] 1 Added vide Finance Act, 2016, , and notified by S.O. 2214(E), w.e.f. 27.06. 2016. 2 Ins. by Act 61 of 1981, s.61 and Sch.II (w.e.f. 12-7-1982). 3 Ins. by the National Bank for Financing Infrastructure and Development Act, 2021 (Act 17 of 2021) 4 Ins. by Act 53 of 1987 (w.e.f. 9-7-1988). 5 Added vide Finance Act, 2016, , and notified by S.O. 2214(E), w.e.f. 27.06. 2016. 6 Cls. (ci), (cia), (cii), (ciii), (civ) and (f) omitted by s.61 and Sch.II, Act 61 of 1981 (w.e.f. 12-7-1982). 7 Ins. by Act 62 of 1984, s. 71 and Sch.III (w.e.f. 20-3-1985). 8 The word “silver” omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 9 Ins. by the M. O. 1937. 10 Subs. by Act 32 of 1951, s.2, for “the States” (w.e.f. 1-11-1951). 11 Substituted by Act 11of 2011, section 2 for “the Indian Coinage Act, 1906” (w.e.f. 28.03.2012). 14  (e) “scheduled bank” means a bank included in the Second Schedule; 2 [(ea) “Sponsor Bank” means a Sponsor Bank as defined in the Regional Rural Banks Act, 1976;] [ [(eb)] “State Bank” means the State Bank of India constituted under the 3 4 State Bank of India Act, 1955;] 5 [(el) “Small Industries Bank” means the Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989”.] 6 [* * * * *] 7 [(fi) “State Financial Corporation” means any State Financial Corporation established under the State Financial Corporations Act 1951;] 8 [* * * * *] 9 [(g) “Unit Trust” means the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963;] 10 [(h) “agricultural operations”, “central co-operative bank”, “co-operative society”, “crops”, “marketing of crops”, “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; (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;] CHAPTER II INCORPORATION, 11[CAPITAL], MANAGEMENT AND BUSINESS 3. Establishment and incorporation of Reserve Bank. 1 The word “and” omitted by the M. O. 1937. 2 Ins. by Act 21 of 1976, s.33 (w.e.f. 26-9-1975). 3 Ins. by Act 23 of 1955, s.52 and Sch.III (w.e.f. 1-7-1955). formerly cl. (ee) ins. by the A. O. 1950 was omitted by Act 32 of 1951, s.4 (w.e.f. 1-11-1951). 4 Cl. (ei) re-lettered as cl. (eb) by Act 21 of 1976 s.33 (w.e.f. 26-9-1975). 5 Ins. by Act. 39 of 1989. 6 Cls. (ci), (cia), (cii), (ciii), (civ) and (f) omitted by s.61 and Sch.II, of Act 61 of 1981 (w.e.f. 12-7- 1982). 7 Ins. by Act 24 of 1978, s.3 (w.e.f. 21-7-1978). 8 Cls. (f) to (k) ins. by the M. O. 1937, omitted by Act 11 of 1947, s.2 (w.e.f. 1-4-1947) and cl. (g) ins. by Act 32 of 1951, s.4 (w.e.f. 1-11-1951) omitted by Act 62 of 1956, s.2 and Sch. (w.e.f. 1-11-1956). 9 Ins. by Act 52 of 1963, s.44 and Sch.II (w.e.f. 1-2-1964). 10 Ins. by Act 61 of 1981, s.61 and Sch.II (w.e.f. 12-7-1982). 11 Subs. by Act. 62 of 1948, s.7 and Sch., for “SHARE CAPITAL” (w.e.f. 1-1-1949). 15  (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 1[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. 2 [4. Capital of the Bank. The capital of the Bank shall be five crores of rupees.] 5. [Increase and reduction of share capital.] [Rep. by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949)]. 6. Offices, branches and agencies. The Bank shall, as soon as may be, establish offices in Bombay, Calcutta, 3[Delhi and Madras] 4[* * *] and may establish branches or agencies in any other place in India 5[* * *] or, with the previous sanction of the 6[Central Government], elsewhere. 7 [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. 8 [(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 this 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.] 1 Subs. by the M. O. 1937, for “G. G. in C.”. 2 Subs. by Act 62 of 1948, s.7 and Sch., for the original section (w.e.f. 1-1-1949). 3 Subs. by Act 11 of 1947, s.5, for “Delhi, Madras and Rangoon” (w.e.f. 1-4-1947). 4 The words “and a branch in London” omitted by Act 24 of 1955, s.3. 5 The words “or Burma” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.5 (w.e.f. 1-4-1947). 6 Subs. by the M. O. 1937, for “G. G. in C.”. 7 Subs. by Act 62 of 1948, s.7 and Sch., for the original section (w.e.f. 1-1-1949). 8 Subs. by Act 32 of 1951, s.5, for the former sub-section (w.e.f. 1-1-1949). 16 8. Composition of the Central Board, and term of office of Directors. 1 [(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) 4[two Government officials] 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]: 6 [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:] 7 [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 sub- section (1) may attend any meeting of the Central Board and take part in its deliberations but shall not be entitled to vote: 8 [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.] 1 Subs. by Act 62 of 1948, s.7 and Sch., for the former Sub-section (w.e.f. 1-1-1949). 2 Subs. by Act 18 of 1964, s.38 and Sch.II, for “three” (w.e.f. 1-7-1964). 3 Subs. by Act 18 of 1964, s.38 and Sch.II, for “six” (w.e.f. 1-7-1964). 4 Subs. by Act 12 of 2012, s.35 and Sch., for “one Government official” (w.e.f. 1-2-2012). 5 Subs. by the M.O. 1937, for “G. G. in C.”. 6 Ins. by Act 35 of 1962, s.2. 7 Ins. by Act. 61 of 1981, s.61 and Sch.II (w.e.f. 12-7-1982). 8 Subs. by Act 54 of 1953, s.2, for the proviso. 17  (4) The Governor and a Deputy Governor shall hold office for such term not exceeding five years as the 1[Central Government] may fix when appointing them, and shall be eligible for re-appointment. 2 [A Director nominated under clause (c) of sub-section (1) shall 3[* * *] hold office for a period of four years 4[and] 5[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 the 6[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 Director shall not be appointed for more than two terms, that is, for a maximum period of eight years either continuously or intermittently. 1 Subs. by M. O. 1937 for “G. G. in C.”. 2 Subs. by Act 62 of 1948, s.7 and Sch., for the second paragraph (w.e.f. 1-1-1949). 3 The words, brackets and figure “subject to the provisions of sub-section (6)” omitted by Act 18 of 1964, s.38 and Sch.II (w.e.f. 1-7-1964). 4 Ins. by Act 51 of 1974, s.4. 5 Subs. by Act 4 of 2013, s. 17 and Sch., for the words “thereafter until his successor shall have been nominated” (w.e.f. 18-1-2013). 6 Subs. by M. O. 1937 for “G. G. in C.”. 7 Ins. by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 8 Sub-section (6) omitted by Act 18 of 1964, s.38 and Sch.II (w.e.f. 1-7-1964). 9 Subs. by Act 62 of 1948, s.7 and Sch., for s.9 (w.e.f. 1-1-1949). 10 Subs. by Act 51 of 1974, s.5, for sub-section (3). 11 Subs. by Act 4 of 2013, s. 17 and Sch., for the words “thereafter until his successor shall have been appointed and shall be eligible for re-appointment” (w.e.f. 18-1-2013). 18  (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) 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 found lunatic or becomes of unsound mind, or (d) is an officer or employee of any bank, or 3 [(e) is a Director of a banking company within the meaning of clause (c) of section 5 of the 4[Banking Regulation Act, 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 5[Central Government] may remove from office the Governor, or a Deputy Governor or 6[any other Director or any member of a Local Board]. 7 [*****] 8 [(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 1 The words “or a salaried official of a State in India” omitted by the A. O. 1950. 2 The words “or Burma” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.8 (w.e.f. 1-4-1947). 3 Subs. by Act 23 of 1965, s.3 for the original cl. (e) (w.e.f. 1-3-1966). 4 Subs. by Act 51 of 1974, s.3 for “Banking Companies Act, 1949”. 5 Subs. by the M. O. 1937, for “G. G. in C.”. 6 Subs. by Act 32 of 1951, s.6, for “any other Director” (w.e.f. 1-11-1951). 7 The proviso omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 8 Subs. by s.7 and Sch., Act 62 of 1948, for the former sub-section (2) (w.e.f. 1-1-1949). 19  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 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 2[* * *] nomination 3[* * *] as Director or member of a Local Board of any person who is a member of 4[Parliament or the Legislature 5[of any State]] shall be void, unless, within two months of the date of his 6[* * *] nomination 7[* * *], he ceases to be such member, and, if any Director or member of a Local Board is elected or nominated as a member of 8[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 9[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 10[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) of sub-section (1) of section 10, be an officer of the Bank. 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. 1 Subs. by the M. O. 1937, for “G. G. in C.”. 2 The word “appointment” omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 3 The words “or election” omitted by s.7 and Sch., Act 62 of 1948 (w.e.f. 1-1-1949). 4 Subs. by the A. O. 1950, for certain words. 5 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). 6 The word “appointment” omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 7 The words “or election” omitted by s.7 and Sch., Act 62 of 1948 (w.e.f. 1-1-1949). 8 Subs. by the A.O. 1950, for “any such Legislature or Council”. 9 Subs. by the M. O. 1937, for “G. G. in C.”. 10 Subs. by the M. O. 1937, for “G. G. in C.”. 11 Sub-section (2) omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 20  (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 convened 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 authorized by the Governor under the proviso to subsection (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. to 16. [General meetings. First constitution of the Central Board. First constitution of Local Board.] [Rep. by the Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949).] 17. Business which the Bank may transact. The Bank shall be authorized 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 10[Central Government], 11[12[* * *] the 1[State] Governments 2[* * *] 3[* * *] local authorities, banks and any other persons; 1 The words “otherwise than by the occurrence of a vacancy in the office of a Director, elected by the Local Board” omitted by s.7 and Sch., Act 62 of 1948, (w.e.f. 1-1-1949). 2 The word “qualified” omitted by s.7 and Sch., Act 62 of 1948 (w.e.f. 1-1-1949). 3 Subs. by s.7 and Sch., Act 62 of 1948, for “elected” (w.e.f. 1-1-1949). 4 Subs. by s.7 and Sch., Act 62 of 1948, for certain words (w.e.f. 1-1-1949). 5 The words “or elected” omitted by s.7 and Sch., Act 62 of 1948, (w.e.f. 1-1-1949). 6 The words “subject to the proviso contained in sub-section (4)” omitted by s.7 and Sch., Act 62 of 1948 w.e.f. 1-1- 1949). 7 Subs. by Act 18 of 1964, s.38 and Sch.II, for “three Directors” (w.e.f. 1-7-1964). 8 Subs. by Act 24 of 1955, s.5, for “in his absence”. 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. 21  4 [(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, 5 [drawn on 6[and payable in India]] and arising out of bona fide commercial or trade transactions bearing two or more good signatures, one of which shall be that of a scheduled bank 7[or a State co-operative bank] 8[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] 9 [* * *] and 10[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, 11 [drawn 12[and payable in India]] and bearing two or more good signatures, one of which shall be that of a scheduled bank 13[or a 14[State] co-operative bank 15[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 16[financing agricultural operations] or the marketing of crops, and maturing within 17[fifteen months] from the date of such purchase or rediscount, exclusive of days of grace; 18 [* * * * *] 19 [(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 1 Subs. by the A. O. 1950, for “provincial”. 2 The words “the Government of Burma, the Burma Railway Board” omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 3 The words and letter “Part B States” omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 4 Inserted by the Finance Act, 2018. 5 Subs. by the M. O. 1937, for “drawn on and payable in India”. 6 Subs. by Act 11 of 1947, s.11, for “India or Burma and payable in India or Burma” (w.e.f. 1-4-1947). 7 Ins. by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 8 Ins. by Act 51 of 1974. s.6. 9 The words “or a Burma scheduled bank” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 10 Subs. by Act 35 of 1962, s.3, for certain words. 11 Subs. by the M. O. 1937, for “drawn on and payable in India”. 12 Subs. by Act 11 of 1947, s.11, for “India or Burma and payable in India or Burma” (w.e.f. 1-4-1947). 13 Subs. by Act 11 of 1947, S.11 for certain words (w.e.f. 1.4.1947). 14 Subs. by the A. O. 1950, for “Provincial”. 15 Ins. by Act 51 of 1974, s.6. 16 Subs. by Act 51 of 1974, s.6 for “financing seasonal agricultural operations”. 17 Subs. by the Act 32 of 1951, s.7, for “nine months” (w.e.f. 1-11-1951). 18 Explanation added by Act 54 of 1953, s.3 omitted by Act 23 of 1965, s.4 (w.e.f. 1-3-1966). 19 Ins. by Act 54 of 1953, s.3. 22  1 [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 2 [drawn 3[and payable in India]] and bearing the signature of a scheduled bank, 4[* * *] and issued or drawn for the purpose of holding or trading in securities of 5[the Central Government 6[or a 7[State] Government]] 8[* * *] 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 9[* * *] of 10 [foreign exchange] 11[* * *]. 12 [(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;] 13 [* * * * *] 1 Ins. by Act 51 of 1974, s.6. 2 Subs. by the M. O. 1937, for “drawn and payable in India”. 3 Subs. by the Act 11 of 1947, s.11, for certain words (w.e.f. 1-4-1947). 4 The words “or a Burma scheduled bank” omitted by s.11 Act 11 of 1947. (w.e.f. 1-4-1947). 5 Subs. by the M. O. 1937, for “the Government of India or a L. G.” 6 Subs. by the Act 11 of 1947, s.11, for certain words (w.e.f. 1-4-1947). 7 Subs. by the A. O. 1950, for “Provinicial”. 8 The words “or such securities of Part B States as may be specified in this behalf by the Central Government on the recommendation of Central Board” omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 9 The words “and Burma scheduled banks”, ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 10 Subs. by Act 62 of 1948, s.7 and Sch., for “sterling” (w.e.f. 1-1-1949). 11 Certain words omitted by Act 24 of 1978, s.4 (w.e.f. 21-7-1978). 12 Subs. by Act 35 of 1962 s.3 for Sub-clause (b). 13 Sub-clause (c) omitted by Act 62 of 1948 s.7 and Sch. (w.e.f. 1-1-1949). 23  1 [(3A) the making to any scheduled bank or State co-operative bank, of loans and advances, against promissory notes of 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 on 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 2 [(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] 3 [(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;]] 4 [(3B) the making to any scheduled bank or State co-operative bank of 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 5[* * *] local authorities, scheduled banks 6[7[* * *] 8[State] co- operative banks 9[and State Financial Corporations 10[* * *]] of loans and advances, repayable on demand or on the expiry of fixed periods not exceeding ninety days, against the security of – 1 Ins. by Act 35 of 1962 s.3. 2 Subs. by Act 58 of 1968, s.24, for sub-clause (b) (w.e.f. 1-2-1969). 3 Subs. by s.24, of Act 58 of 1968 for cl. (ii) (w.e.f. 1-2-1969). 4 Ins. by Act 51 of 1974, s.6. 5 The words and letter “Part B States” omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 6 Subs. by the M. O. 1937, for “and Provincial co-operative banks”. 7 The words “Burma scheduled banks” omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 8 Subs. by the A. O. 1950, for “Provincial”. 9 Subs. by Act 19 of 1957, s.2, for “State Financial Corporations established under the State Financial Corporations Act, 1951), (63 of 1951), and the principal currency authority of Ceylon”. 10 Certain words omitted by Act 24 of 1978, s.4 (w.e.f. 21-7-1978). 24  (a) stocks, funds and securities (other than immovable property) in which a trustee is authorized to invest trust money by any Act of Parliament 1[of the United Kingdom] or by any law for the 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]; 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” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 4 Ins. by Act 24 of 1955, s.6. 5 Subs. by the M. O. 1937, for “or a Provincial co-operative bank”. 6 Subs. by Act 11 of 1947, s.11, for certain words (w.e.f. 1-4-1947). 7 Subs. by A. O. 1950, for “Provisional”. 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”. 10 Subs. by Act 51 of 1974, s.6, for “financing seasonal agricultural operations”. 11 Ins. by Act 35 of 1962, s.3. 12 Ins. by Act 14 of 1960. s.2. 13 Certain words 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 former proviso. 15 Subs. by Act No.81 of 1985, s.2 for certain words (w.e.f. 1-5-1986). 25  1 [(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;] 2 [(4B) the making to the Industrial Finance Corporation of India 3[* * *] 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 of any maturity or against bonds and debentures issued by the said Corporation and guaranteed by the Central Government and maturing within a period not exceeding eighteen months from the date of such loan or advance: 4 [* * * * *] 5 [(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]; 6 [(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 1 Subs. by Act 61 of 1981, s.61 and Sch.II, for cl. (4AA) (w.e.f. 12-7-1982). 2 Ins. by Act 54 of 1953, s.3. 3 Certain words omitted by Act 24 of 1978, s.4 (w.e.f. 21-7-1978). 4 Proviso omitted by Act No.66 of 1988, s.5 (w.e.f. 30-12-88). 5 Subs. by Act 14 of 1960, s.2 for cl.(4BB) which was ins. by Act 19 of 1957, S.2. 6 Ins. by Act 52 of 1963, s.44 and Sch.II (w.e.f. 1-2-1964). 26  is authorised to invest trust money by any law for the time being in force in India; 1[* * *] (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]; 2 [(iii) for the purpose of any scheme other than the first unit scheme under the Unit Trust of India Act, 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]]; 3 [(4C) the making to a Warehousing Corporation established under the Agricultural Produce (Development and Warehousing) Corporations Act, 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]; 4 [(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]; 5 [(4DD) the making to the National Housing Bank of loans and advances and generally assisting the National Housing Bank in such manner and on such terms as may be determined by the Central Board]; 6 [(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- 1 The word “or” omitted by Act 17 of 1966, s.11 (w.e.f. 10-6-1966). 2 Ins. by s.11, Act 17 of 1966. (w.e.f. 10-6-1966). 3 Ins. by Act 28 of 1956, s.55 (w.e.f. 1-8-1956). 4 Ins. by Act 47 of 1961, s.51 and Sch.II (w.e.f. 1-1-1962). 5 Ins. by Act 53 of 1987, s.56 and Second Schedule (w.e.f. 9-7-1988). 6 Subs. by Act 61 of 1981, s.61 and Sch.II, for cl. (4E) (w.e.f. 12-7-1982). 27  (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]; 1 [(4F) contributing to the initial capital of the Unit Trust]; 2 [(4G) the making of loans and advances to, and the purchasing of bonds and debentures of, 3[****] 4[the Exim Bank] 5[or the Reconstruction Bank] 6[or the Small Industries Bank] 7[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; 8 [(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 9[*****] 10[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[****] 13[the Exim Bank] 14[or the Reconstruction Bank or the Small Industries Bank], the Industrial Finance Corporation, 15[the National Bank for Financing Infrastructure and Development or other development financial institution] and any other financial institution as 1 Ins. by Act 52 of 1963. s.44 and Sch.II (w.e.f. 1-2-1664). 2 Ins. by Act 18 of 1964, s.38 and Sch.II (w.e.f. 1-7-1964). 3 The words “the Development Bank or” omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003), Sec. 2(a). 4 Ins. by Act 28 of 1981, s.40 and Sch.II (w.e.f. 1-1-1982). 5 Ins. by Act 62 of 1984, s.71 and Sch.III (w.e.f. 20-3-1985). 6 Ins. by Act 39 of 1989. 7 Ins. by the National Bank for Financing Infrastructure and Development Act, 2021 (Act 17 of 2021) 8 Ins. by Act 53 of 1987, s.56 and the Second Schedule (w.e.f. 9-7-1988). 9 The words “the Development Bank or” omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003), Sec. 2(a). 10 Ins. by Act 39 of 1989. 11 Ins. by Act 24 of 1978, s.4 (w.e.f. 21-7-1978). 12 The words “the Development Bank” omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003), Sec. 2(b). 13 Ins. by Act 28 of 1981, s.40 and Sch.II (w.e.f. 1-1-1982). 14 Ins. by Act 39 of 1989. 15 Ins. by the National Bank for Financing Infrastructure and Development Act, 2021 (Act 17 of 2021) 28  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]; 1 [(4J) the making to the Exim 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 good signatures and maturing within five years from the date of such loan or advance;] 2 [(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 good signatures and maturing within five years from the date of such loan or advance]; 3 [(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 1 Ins. by Act. 28 of 1981, s.40 and Sch.II (w.e.f. 1-1-1982). 2 Ins. by Act. 62 of 1984, s.71 and Sch.III (w.e.f. 20-3-1985). 3 Ins. by the National Bank for Financing Infrastructure and Development Act, 2021 (Act 17 of 2021) 29  good signatures and maturing within five years from the date of such loan or advance;] (5) the making to the 1[Central Government] 2[3[* * *] 4[and 5[State Governments]] of advances repayable in each case not later than three months from the date of the making of the advance; 6 [(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]; 7 [(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 underlyings, 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]; 8 [* * * * * * *] (8) the Purchase and sale of securities 9[of the Central 10[Government or a 1[State] Government]] of any maturity or of such securities of a local authority 2[* * *] as 1 Subs. by the M.O. 1937, for “G. G. in C”. 2 Subs., M.O. 1937, for certain words. 3 The words “the Federal Railway Authority” omitted by the A. O. 1948. 4 Subs. by Act 11 of 1947, s.11, for certain words (w.e.f. 1-4-1947). 5 Subs. by the A. O. 1950, for “Provincial”. 6 Subs. by Act 32 of 1951, s.7, for cl. (6) (w.e.f. 1-11-1951). 7 Ins. by sec. 2 of the RBI (Amendment) Act, 2006 (Act No. 26 of 2006) (w.e.f. 9.1.2007). 8 Cl. (7) rep. by Act 2 of 1948, s.2 and Sch. 9 Subs. by the M. O. 1937, for “of the G. of I or of a L. G.”. 10 Subs. by Act, 11 of 1947 s.11 for certain words (w.e.f. 1-4-1947). 30  3 may be specified in this behalf by the [Central Government] on the recommendation of the Central Board: Provided that securities fully guaranteed as to principal and interest by 4[any such Government 5[or authority]] shall be deemed for the purposes of this clause to be securities of such government 6[or authority]; 7 [* * * * * * *] 8 [(8A) the purchase and sale of shares in, or the capital of 9[the 10[National Bank] 11 [the Deposit Insurance Corporation], 12[*****], the State Bank 13[or any other bank 14[or financial institution] notified by the Central Government in this behalf]]; 15 [(8AA) the promoting, establishing, supporting or aiding in the promotion, establishment and support of any financial institution, whether as its subsidiary or otherwise;] 16 [(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 and 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 17[* * *] the 18[Central Government] 19[or any 20[State] Government 21[* * *] or any local authority 22[* * *] 1[or the Industrial Finance 1 Subs. by the A. O. 1950, for “Provincial”. 2 The words and letter “or such Part B States” omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 3 Subs. by the M. O. 1937 for “G. G. in C.”. 4 Subs. by the M. O. 1937 for certain words. 5 Subs. by s.7, M. O. 1937, for “authority or State” (w.e.f. 1-11-1951). 6 Subs. by s.7, M. O. 1937, for “authority or State” (w.e.f. 1-11-1951). 7 Second proviso omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 8 Ins. by Act 23 of 1955, s.52 and Sch.III (w.e.f. 1-7-1955). 9 Ins. By Act 10 of 1963, s. 47 and Sch. II (w.e.f. 1-5-1963). 10 Sub. By Act 61 of 1981, s. 61 and Sch. II, for “Agricultural Refinance and Development Corporation” (w.e.f. 12-7- 1982). 11 Ins. by Act 47 of 1961, s.51 and Sch. II (w.e.f. 1-1-1962). 12 The words “the Development Bank” omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003), Sec. 2(b). 13 Subs. by Act 79 of 1956, s.43 and Sch.II for “or any of its subsidiary banks” (w.e.f. 22-10-1956). 14 Ins. by Act 18 of 1957, s.2. 15 Ins. by Act 53 of 1987 (w.e.f. 9-7-1988). 16 Ins. by Act 38 of 1959, s.64 and Sch. III (w.e.f. 10-9-1959). 17 The words “the Secretary of State” omitted by the A. O. 1948. 18 Subs. by the M. O. 1937, for “G. G. in C”. 19 Subs. M. O. 1937, for certain words. 20 Subs. by the A. O. 1950, for “Provincial”. 21 The words “or the Government of Burma; omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 22 The words and letter “or any Part B State” omitted by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 31  Corporation of India 2[* * *] 3[or any other body corporate which is established or constituted by or under any other law] 4[or the Government of any such country outside India or 5[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 6[or foreign exchange]; (b) the purchase, sale, transfer and custody of bills of exchange, securities or shares in any company; (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; 7 [(f)8[* * *] the issue and management of 9[* * *] bonds and debentures]; 10 [(11A) the acting as agent for the Central Government, – 11 [*** (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;] 12 [(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;] 1 Ins. by Act 44 of 1959, s.2. 2 Certain words omitted by Act 24 of 1978, s.4 (w.e.f. 21-7-1978). 3 Ins. by Act 51 of 1974, s.6. 4 Ins. by Act 32 of 1951, s.7 (w.e.f. 1-11-1951). 5 Subs. by Act 51 of 1974, s.6 for “any such person”. 6 Ins. by Act 23 of 1947, s.3. 7 Ins. by Act 44 of 1949, s.2. 8 The words “in respect of the aforesaid Corporation” omitted by Act 51 of 1974, s.6. 9 The word “its” omitted by s.6, Act 51 of 1974. 10 Subs. by Act 58 of 1968, s.24, for cl. (11A) (w.e.f. 1-2-1969). Original cl. (11A) was ins. by Act 14 of 1960, s.2. 11 Sub-clause (a) of clause (11A) omitted by Act 21 of 1978, s.9. Before the omission, clause (a) read as under: “(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”. 12 Subs. by Act 24 of 1978, s.4, for cl, (12) (w.e.f. 21-7-1978). 32  1 [(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]; 2 [(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; (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]; 3 [(12B) the making of loans and advances in foreign currencies to scheduled banks, 4[****] 5[the Exim Bank], 6[the Reconstruction Bank or the Small Industries Bank], the Industrial Finance Corporation, 7[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 1 Subs. by Act 24 of 1978, s.4, for cl. 12A (w.e.f. 21-7-1978). 2 Ins. by sec. 2 of the RBI (Amendment) Act, 2006 (Act No. 26 of 2006) (w.e.f. 9.1.2007). 3 Ins. by s.4, Act 24 of 1978 (w.e.f. 21-7-1978). 4 The words “the Development Bank” omitted by the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (Act No.53 of 2003), Sec. 2(b). 5 Ins. by Act 28 of 1981, s.40 and Sch.II (w.e.f. 1-1-1982). 6 Ins. by Act 39 of 1989. 7 Ins. by the National Bank for Financing Infrastructure and Development Act, 2021 (Act 17 of 2021) 33  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;] 1 [(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]; 2 [(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 3[* * *] other than a scheduled bank 4[* * *] or from any person outside India 5[* * *] 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 Subs. by Act 24 of 1978, s.4 for cl. (13) (w.e.f. 21-7-1978). 2 Ins. by Act 44 of 1973, s.2 (retrospectively). 3 The words “or Burma” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11, (w.e.f. 1-4-1947). 4 The words “or a Burma Scheduled Bank” ins. by the M. O. 1937, omitted by s.11, Act 11 of 1947 (w.e.f. 1-4-1947). 5 The words “and Burma” ins. by the M. O. 1937, omitted by s.11, Act 11 of 1947 (w.e.f. 1-4-1947). 34  Provided further that the total amount of such borrowing 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 purpose of regulating credit in the interests of Indian 13[* * *] trade, commerce, industry and agriculture, 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 [* * * * *] 1 Ibid. 2 Subs. by Act 32 of 1951, s.7, for “share capital” (w.e.f. 1-11-1951). 3 Cl. (14A) Ins. by Act 79 of 1956, s.43 and Sch.II (w.e.f. 22-10-1956), omitted by Act 38 of 1959, s.64 and Sch.III (w.e.f. 1-10-1959). 4 The words “and the making and issue of Burma notes in accordance with the law of Burma” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 5 The word “and” omitted by ordinance 47 of 1945, s.6. 6 Subs. by Act 23 of 1955, s.52 and Sch.III for cl. (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” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.11 (w.e.f. 1-4-1947). 9 The brackets and figure “(1)” omitted by Act 51 of 1974, s.7. 10 Subs. by Act 32 of 1951, s.8 for “Central Board” (w.e.f. 1-1-1949). 11 Certain words omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 12 Subs. by Act 51 of 1974, s.7, for “under this sub-section”. 13 The words “or Burma” ins. by the M. O. 1937, omitted by Act 11 of 1947, s.12 (w.e.f. 1-4-1947). 14 Certain words omitted by Act 51 of 1974, s.7. 15 Subs. by s.7, Act 51 of 1974, for the former clause. 16 Cl. 2 omitted by Act 24 of 1978, s.5 (w.e.f. 21-7-1978). 35  1 [(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 co-operative society registered within the area in which the State co-operative bank operates, or (c) any other person, repayable on demand or on the expiry of fixed periods, not exceeding ninety days, on such terms and conditions as the Bank may consider to be sufficient.] 2 [* * * * * * *] 3 [* * * * * * *] 4 [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) of 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 borrowers, 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, 1 Subs. by s.7, Act 51 of 1974, for the former clause. 2 The proviso omitted by Act 62 of 1948, s.7 and Sch. (w.e.f. 1-1-1949). 3 Sub-section (2) omitted by Act 51 of 1974, s.7. 4 Ins. by s. 8, Act 51 of 1974. 36  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, 1 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; (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 3[* * *] the Central Government 4[* * *] and to make payments up to the amount standing to the credit 1 Ins. by Act 38 of 1956, s.2 (w.e.f. 6-10-1956). 2 Subs. by Act 32 of 1951, s.9, for cl. (2) (w.e.f. 1-11-1951). 3 Subs. by the M.O. 1937 for certain words. 4 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). 37  of 1[its account], and to carry out 2[its exchange], remittance and other banking operations, including the management of the public debt 3[of the Union]. 4 [* * * *] 21. Bank to have the right to transact Government business in India. (1) Th