Quiz on RBI Act 1934

Section 3 establishes the RBI as a body corporate with perpetual succession and a common seal.

The statute is titled the Reserve Bank of India Act, 1934.

India Code identifies the Ministry of Finance and its Department of Financial Services for the RBI Act.

Section 3 states that the RBI is a body corporate with perpetual succession and a common seal and may sue and be sued in its name.

Section 4 concerns the capital of the Bank.

Section 6 covers offices, branches and agencies.

Section 7 deals with management, including general superintendence and direction by the Central Board and specified Central Government powers.

Section 8 addresses Central Board composition and directors‘ terms.

Section 9 covers Local Boards.

Section 10 specifies disqualifications of directors and Local Board members.

Section 11 addresses removal from and vacation of office.

Section 12 deals with casual vacancies and absences.

Section 13 concerns meetings of the Central Board.

Section 17 lists business that the RBI may transact.

Section 18 deals with direct discount powers.

Section 19 sets out restrictions on the business the RBI may undertake.

Section 20 concerns the RBI‘s obligation to transact Central Government business.

Section 21 addresses the RBI‘s right to transact Central Government business in India.

Section 21A concerns State Government banking business by agreement.

Section 22 provides the RBI‘s sole right to issue bank notes in India, subject to the Act.

Section 23 provides for the Issue Department.

Section 24 concerns denominations of bank notes.

Section 25 deals with the design, form and material of bank notes, including the statutory approval process.

Section 26 deals with the legal tender character of bank notes.

The consolidated RBI Act lists Section 26A as ‘Certain bank notes to cease to be legal tender‘. It should not be cited as Section 26(2) in this question.

Section 27 concerns reissue of bank notes.

Section 28 addresses notes lost, stolen, mutilated or imperfect and the limits on claims for their value.

Section 29 concerns exemption of bank notes from stamp duty.

Section 31 restricts the issue of specified bills of exchange, hundis or promissory notes payable to bearer on demand, subject to statutory exceptions.

Section 33 specifies assets of the Issue Department.

Section 34 concerns liabilities of the Issue Department.

Section 38 addresses the Central Government‘s obligation relating to rupee coin and bank notes as specified in the Act.

Section 42 deals with cash reserves of scheduled banks maintained with the RBI.

The definition of scheduled bank is linked to inclusion in the Second Schedule.

The Banking Laws (Amendment) Act, 2025 amended Section 42 so that ‘fortnight‘ means the first to fifteenth or sixteenth to the last day of each calendar month, both inclusive.

Section 43 is titled ‘Publication of consolidated statement by the Bank‘.

Section 50 deals with auditors of the RBI.

Section 51 is titled ‘Appointment of special auditors by Government‘.

Section 58 gives the Central Board power to make regulations consistent with the Act, subject to statutory requirements.

Section 58C deals with offences by companies under the Act.

Section 58B contains penalty provisions for specified contraventions and defaults under the Act.

Section 58G provides a specific penalty mechanism concerning certain NBFC contraventions or defaults, subject to the Act.

Section 45ZA deals with determination and notification of the inflation target.

Section 45ZB provides for constitution and composition of the Monetary Policy Committee.

The RBI Governor is the ex officio Chairperson of the MPC.

The MPC consists of six members: three RBI members and three appointed by the Central Government.

Section 45ZB provides for three members appointed by the Central Government.

Section 45ZB states that the MPC determines the policy rate required to achieve the inflation target.

Section 45ZA provides for determination of the inflation target once every five years.

The amended preamble identifies price stability, while keeping the objective of growth in mind, as the primary objective of monetary policy.

Section 45B is titled ‘Power of Bank to collect credit information‘; Section 45A contains definitions for that chapter.

Section 45C is titled ‘Power to call for returns containing credit information‘.

Section 45D concerns the procedure for furnishing credit information to banking companies.

Section 45E is titled ‘Disclosure of information prohibited‘.

Section 45JA concerns the RBI‘s power to determine policy and issue directions; Section 45L separately concerns specified financial institutions.

Section 45-IA provides for registration and minimum net owned fund requirements for covered NBFCs.

Section 45-IC concerns a reserve fund to be created by NBFCs covered by the provision.

Section 45-IB is titled ‘Maintenance of percentage of assets‘; it should not be narrowly described only as a general liquid-assets provision.

Section 45Q gives Chapter IIIB overriding effect over inconsistent provisions to the extent stated in the section.

Section 45W provides specified powers to regulate transactions in derivatives, money market instruments, securities and related instruments.

Section 45U contains definitions for Chapter IIID, which addresses derivatives and specified financial instruments; it is not the MPC chapter‘s definitions section.

Chapter III-F is titled ‘Monetary Policy‘ and includes provisions on implementing MPC decisions, publication, monetary policy reports, failure to maintain the inflation target and rule-making.

Section 28A addresses the issue of special bank notes and special one-rupee notes in certain cases.

Section 43A is titled ‘Protection of action taken in good faith‘ and appears after Section 43 in the Act.

Section 39 deals with the obligation to supply different forms of currency.

Section 40 concerns transactions in foreign exchange.

Section 37 is titled ‘Suspension of assets requirements as to foreign securities‘.

Section 30 concerns the Central Government‘s power to supersede the Central Board, subject to the statutory conditions.

Section 18A is titled ‘Validity of loan or advance not to be questioned‘.

Section 26A addresses certain bank notes ceasing to be legal tender.

The Banking Laws (Amendment) Act, 2025 replaced ‘seven days‘ with ‘five days‘ and changed the reference from alternate Friday to the last day of each fortnight.

CRR is the cash reserve that scheduled banks maintain with the RBI as required under the applicable law and directions.

Section 42(6)(a) contains the statutory conditions relating to inclusion of banks in the Second Schedule.

Section 22A addresses non-applicability of certain provisions to digital form of bank notes.

Section 45J concerns regulation or prohibition of prospectuses or advertisements soliciting deposits of money.

Section 45N concerns inspection of covered non-banking institutions and financial institutions under the Act.

Section 45MB concerns the RBI‘s power to prohibit acceptance of deposits and alienation of assets.

Section 45MC concerns the RBI‘s power to file a winding-up petition.

Section 45MAA concerns the RBI‘s power to take action against auditors under Chapter IIIB.

Section 58A concerns protection for actions taken in good faith; it is not the Central Government‘s general rule-making provision.

Section 45K addresses collection of information from non-banking institutions as to deposits and the power to give directions.

Section 45M addresses the duty of non-banking institutions to furnish statements and other information required by the RBI.

Section 58E concerns cognizance of offences. Sections 59–61 are repealed in the consolidated text.

Section 58D is titled ‘Application of section 58B barred‘.

Section 58F concerns the application of a fine imposed by a court under the Act.

Section 58G is titled ‘Power of Bank to impose fine‘ and sets out the circumstances and limits specified in the Act.

Section 49 is titled ‘Publication of Bank rate‘.

Section 47 concerns allocation of surplus profits.

Section 48 provides for the Bank‘s exemption from income-tax and super-tax as stated in the Act.

Section 45 concerns appointment of agents; Section 44 is omitted in the consolidated Act.

Section 45ZK concerns publication of decisions of the Monetary Policy Committee.

Section 45ZL addresses publication of the proceedings of Monetary Policy Committee meetings.

Section 45ZC addresses eligibility and selection of members appointed by the Central Government.

Section 45ZD concerns terms and conditions of appointment of MPC members.

Section 45ZE addresses removal of MPC members.

Section 45ZF concerns vacancies and related matters not invalidating MPC proceedings.

Section 45ZG addresses the Secretary to the MPC.

Section 45ZH concerns information for MPC members.

Section 45ZI concerns meetings of the MPC.

Section 45ZJ sets out steps to be taken to implement the MPC‘s decision.