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THE RESERVE BANK OF INDIA ACT, 1934

Title : THE RESERVE BANK OF INDIA ACT, 1934

Year : 1934


 
(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.

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1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".

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The capital of the Bank shall be five crores of rupees.]

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1. Substituted by Act 62 of 1948, section 7 and Schedule, for section 4 (w.e.f. 1-1-1949).

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[ Rep. by Act 62 0/1948, section 7 and Schedule (w.e.f. 1-1-1949).]



The Bank shall, as soon as may be, establish offices in Bombay, Calcutta, 1*[Delhi and Madras]2[***] and may establish branches or agencies in any other place in India 3[***] or, with the previous sanction of the 4*[Central Government] elsewhere,

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1.Substituted by Act 11 of 1947, section 5, for "Delhi, Madras and Rangoon"(w.e.f. 1-4-1947).

2.The words "and a branch in London " omitted by Act 24 of 1955, section3 (w.e.f. 8-5-1955).

3.The words "or Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 5 (w.e.f.1-4-1947).

4.Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937,for "Governor-General in Council".

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(1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.

(2) Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank.

2*[(3)Save as otherwise provided in regulations made by the Central Board, the Governor and in his absence the Deputy Governor nominated by him in his behalf, shall also have powers of general superintendence and direction of the affairs and the business of the Bank, and may exercise all powers and do all acts and things which may be exercised or done by the Bank.]]

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1.Substituted by Act 62 of 1948, section 7 and Schedule, for section 7 (w.e.f.1-1-1949).

2.Substituted by Act 32 of 1951, section 5, for sub-section (3) (w.r.e.f.1-1-1949).

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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) One Government official to be nominated by the Central Government.]

(2) The Governor and Deputy Governors shall devote their whole time to the affairs of the Bank, and shall receive such salaries and allowances as may be determined by the Central Board, with the approval of the 4*[Central Government]:

5*[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:]

6*[Provided further that the Central Government may, in consultation with the Bank, appoint a Deputy Governor as the Chairman of the National Bank, on such terms and conditions as that Government may specify.]

(3) A Deputy Governor and the Director nominated under clause (d) of subsection (1) may attend any meeting of the Central Board and take part in its deliberations but shall not be entitled to vote:

7*[Provided that when the Governor is, for any reason, unable to attend any such meeting, a Deputy Governor authorised by him in this behalf in writing may vote for him at that meeting.]

(4) The Governor and a Deputy Governor shall hold office for such term not exceeding five years as the 4 [Central Government] may fix when appointing them, and shall be eligible for re-appointment.

8*[A Director nominated under clause (c) of sub-section (1) shall 9[***] hold office for a period of four years 10*[and 13*[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.] thereafter until his successor shall have been nominated]

A Director nominated under clause (d) of sub-section (1) shall hold office during the pleasure of the 4*[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.

11*[12[***]

(7) A retiring Director shall be eligible for re-nomination.]
 
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1. Substituted by Act, 62 of 1948, section 7 and Schedule, for sub-section (1)(w.e.f. 1-1-1949).

2. Substituted by Act, 18 of 1964, section 38 and Schedule, II, for "three" (w.e.f. 1-7-1964).

3. Substituted by Act 18 of 1964, section 38 and Schedule II, for "six" (w.e.f. 1-7-1964).

4. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937,for "Governor-General in Council".

5. Inserted by Act 35 of 1962, section 2 (w.e.f. 15-9-1962).

6. Inserted by Act 61 of 1981, section 61 and Schedule II (w.e.f. 1-5-1982).

7. Substituted by Act 54 of 1953, section 2, for the proviso (w.e.f. 30-12-1953).

8. Substituted by Act 62 of 1948, section 7 and Schedule for the second paragraph (w.e.f. 1-1-1949).

9. The words, "subject to the provisions of sub-section (6)" omitted by Act 18 of 1964, section 38 and Schedule II (w.e.f. 1-7-1964).

10. Inserted by Act 51 of 1974, section 4 (w.e.f. 13-12-1974).

11.Inserted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

12.Sub-section (6) omitted by Act 18 of 1964, section 38 and Schedule II (w.e.f.1-7-1964).

13. Substituted by the Banking Laws (Amendment) Act, 2012.
 
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(1) A Local Board shall be constituted for each of the four areas specified in the First Schedule and shall consist of five members to be appointed by the Central Government to represent, as far as possible, territorial and economic interests and the interests of cooperative and indigenous banks.

(2) The members of the Local Board shall elect from amongst themselves one person to be the chairman of the Board.

2*[(3) Every member of a Local Board shall hold office for a term of four years and 3*[shall be eligible for reappointment:

Provided
that any such member shall not be appointed for more than two terms, that is, for a maximum period of eight years either continuously or intermittently.]

(4) A Local Board shall advise the Central Board on such matters as may be generally or specifically referred to it and shall perform such duties as the Central Board may delegate to it.]
 
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1. Substituted by Act 62 of 1948, section 7 and Schedule, for section 9 (w.e.f. 1-1-1949).

2. Substituted by Act 51 of 1974, section 5, for sub-section (3) (w.e.f. 13-12-1974).

3. Substituted by the Banking Laws (Amendment) Act, 2012 for the following:-

"thereafter until his successor shall have been appointed and shall be eligible for re-appointment"

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(1) No person may be a Director or a member of a Local Board who-

(a) Is a salaried Government official 1[***] 2[***], or

(b) Is, or at any time has been, adjudicated an insolvent, or has suspended payment or has compounded with his creditors, or

(c) Is fund lunatic or becomes of unsound mind, or

(d) Is an officer or employee of any bank, or

3*[(e) Is a Director of banking company within the meaning of clause (c) of section 5 of the 4*[Banking Regulation Act, 1949 (10 of 1949)], or of a co-operative bank.]

(2) No two persons who are partners of the same mercantile firm, or are Directors of the same private company, or one of whom is the general 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.

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1. The words "or a salaried official of a State in India" omitted by the A.O. 1950.

2. The words "or Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 8 (w.e.f. 1-4-1947).

3. Substituted by Act 23 of 1965, section 3, for clause (e) (w.e.f. 1-3-1966).

4. Substituted by Act 51 of 1974, section 3, for "Banking Companies Act, 1949" (w.e.f. 13-12-1974).

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(1) The 1*[Central Government] may remove from office the Governor, or a Deputy Governor or 2*[any other Director or any member of Local Board]:

3 [***]

4*[(2) A Director nominated under clause (b) or clause (c) of sub-section(l) of section 8 shall cease to hold office if without leave from the Central Board he absents himself from three consecutive meetings of the Board convened under sub-section (1) of section 13.]

(3) The 1*[Central Government] shall remove from office any Director, and the Central Board shall remove from office any member of a Local Board, if such Director or member becomes subject to any of the disqualifications specified in sub-section (1) or sub-section (2) of section 10.

(4) A Director or member of a Local Board removed or 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 5[***] nomination 6[***] as Director or member of a Local Board of any person who is a member of 7*[Parliament or the Legislature 8 [of any State]] shall be void, unless within two months of the date of his 5 [***] nomination 2 [***] he ceases to be such member, and if any Director or member of a Local Board is elected or nominated as a member of 9 [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 1*[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.

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1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".

2. Substituted by Act 32 of 1951, section 6, for "any other Director" (w.e.f. 1-11-1951).

3. The proviso omitted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

4. Substituted by Act 62 of 1948 section 7 and Schedule, for sub-section (2) (w.e.f. 1-1-1949).

5. The word "appointment ," omitted by Act 62 of 1948 section 7 and Schedule (w.e.f. 1-1-1949).

6. The words "or election" omitted by Act 62 of 1948 section 7 and Schedule, (w.e.f. 1-1-1949).

7. Substituted by the A.O. 1950, for "the Central Legislature, a provincial legislature or the Coorg Legislature Council".

8. Substituted by Act 32 of 1951, section 6, for "of a Part A State or a Part C State" (w.e.f. 1-11-1951).

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(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 1*[Central Government] may, after consideration of the recommendations made by the Central Board in this behalf, appoint another person to officiate for him, and such person may, notwithstanding anything contained in clause (d) or sub-section (1) of section10, be an officer of the Bank.

2 [***]

(3) Where any casual vacancy in the office of any member of a Local Board occurs 3 [***]the Central Board may nominate thereto any 4 [***] person recommended by the 5 [other] members of the Local Board.

(4) Where any casual vacancy occurs in the office of a Director other than the vacancies provided for in sub-section(l), the vacancy shall be filled 6*[by the Central Government].

(5) A person nominated 7[***]under this section to fill a casual vacancy shall 8[***] hold office for the unexpired portion of the term of his predecessor.

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1.Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937,for "Governor-General in Council".

2.Sub-section (2) omitted by Act 62 of 1948, section 7 and Schedule (w.e.f.1-1-1949).

3.Certain words omitted by Act 62 of 1948, section 7 and Schedule (w.e.f.1-1-1949).

4.The word "qualified" omitted by Act 62 of 1948, section 7 and Schedule(w.e.f. 1-1-1949).

5.Substituted by Act 62 of 1948, section 7 and Schedule, for "elected"(w.e.f. 1-1-1949).

6.Substituted by Act 62 of 1948, section 7 and Schedule, for certain words (w.e.f.1-1-1949).

7.The words "or elected" omitted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

8.The words "subject to the proviso contained in sub-section (4)"omitted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

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(1) Meetings of the Central Board shall be conveyed by the Governor at least six times in each year and at least once in each quarter.

(2) Any1*[four Directors] may require the Governor to convene a meeting of the Central Board at any time and the Governor shall forthwith convene a meeting accordingly.

(3) The Governor, or 2*[if for any reason, he is unable to attend,] the Deputy Governor authorised by the Governor under the proviso to sub-section (3) of section 8 to vote for him shall preside at meetings of the Central Board, and, in the event of an equality of votes, shall have a second or casting vote.

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1. Substituted by Act 18 of 1964, section 38 and Schedule II, for "three Directors" (w.e.f.1-7-1964).

2. Substituted by Act 24 of 1955, section 5, for "in his absence" (w.e.f. 8-5-1955).

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[Rep. by the Reserve Bank (Transfer of Public Ownership Act, 1948 (62 of 1948), section 7 and Schedule (w.e.f, 1-1-1949).]



[Rep. by the Reserve Bank (Transfer of Public Ownership) Act, 1948 (62 of 1948), section 7 and Schedule (w.e.f. 1-1-1949).]



[Rep. by the Reserve Bank (Transfer of Public Ownership) Act, 1948 (62 of 1948), section 7 and Schedule (w.e.f. 1-1-1949).]



The Bank shall be authorised to carry on and transact the several kinds of business hereinafter specified, namely:-

(1) the accepting of money on deposit without interest from, and the collection of money for, 1[***] the 2*[Central Government].3* [4[***] the 5 [State] Government] 6 [***] 7 [***]local authorities, banks and any other persons:

(2)(a) The purchase, sale and rediscount of bills of exchange and promissory notes, 8 [drawn on 9 [and payable in India]] and arising out of bona fide commercial or trade transaction bearing two or more good signatures, one of which shall be that of a scheduled bank 10*[or a State co-operative bank] 11*[or any financial institution, which is predominantly engaged in the acceptance or discounting of bills of exchange and promissory notes and which is approved by the Bank in this behalf] 12[***] and 13*[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, 8*[drawn 14*[and payable in India]] and bearing two or more good signatures, one of which shall be that of a scheduled bank 14*[or a 5*[(State] co-operative bank] 11*[or any financial institution, which is predominantly engaged in the acceptance or discounting of bills of exchange and promissory notes and which is approved by the Bank in this behalf] and drawn or issued for the purpose of 15*[financing agricultural operations] or the marketing of crops, and maturing within 16*[fifteen months] from the date of such purchase or rediscount, exclusive of days of grace;

17 [***]

18*[(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 cooperative bank or a State financial corporation 6 [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 8*[drawn 14*[and payable in India]] and bearing the signature of a scheduled bank, 19[***] and issued or drawn for the purpose of holding or trading in securities of 20*[the Central Government 12*[or a 5*[State] Government]] 21[***] 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 12[***] of 22*[foreign exchange] 23 [***];

24*[(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;] 25 [***]

26*[(3A) The making to any scheduled bank or State co-operative bank, or loans and advances, against promissory notes or such bank, repayable on demand or on the expiry of fixed periods not exceeding one hundred and eighty days:

Provided that the borrowing bank furnishes a declaration in writing, to the effect that-

(i) It holds bills of exchange arising out of any transaction relating to the export of goods from India of a value not less than the amount of such loans or advances,-

(a) Drawn in India and no any place in any country outside India which is a member of the International Monetary Fund or in any other country notified in this behalf by the Bank in the Gazette of India, and

27*[(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]

28*[(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.]

11*[(3B) the making to any scheduled bank or State co-operative bank or loans and advances repayable on demand or on the expiry of fixed periods not exceeding one hundred and eighty days against promissory notes of such bank:

Provided that the borrowing bank furnished 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 29 [***] local authorities, scheduled banks, 30[31[***] 5*[State] co-operative banks 32*[and State Financial Corporations 33[*]] or loans and advances, repayable on demand or on the expiry of fixed periods not exceeding ninety days, against the security of-

(a) Stocks, funds and securities (other than immovable property) in which a trustee is authorized to invest trust money by any Act of Parliament 34*[of the United Kingdom] or by any law for time being in force in 35*[India] 36 [***];

(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 37*[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 30*[38*[or 5*[State]] cooperative bank], supported by documents of title to goods 39* [such documents having been transferred], assigned, or pledged to any such bank as security for 40 [a loan or advance made] for bona fide commercial or trade transactions, or for the purpose of 15* [financing agricultural operations] or the marketing of crops:

26*[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;]

41*[(4A) the making to any State Financial Corporation 33[***] 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:

42*[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 43*[twice the paid-up share capital] thereof.]]

44*[45*[(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.]

(4B) The making to the Industrial Finance Corporation of India 46 [***] 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 Corporation and guaranteed by the Central Government and maturity within a period not exceeding eighteen months from the date of such loan or advance:

47 [***]

48*[(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;]

49*[(4BBB) the making to the Unit Trust of loans and advances-

(i) Repayable on demand or on the expiry of a fixed period not exceeding ninety days from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; 50[***]

(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;]

51*[(iii) For the purpose of any scheme other than the first unit scheme under the Unit Trust of India Act, 1963 (52 of 1963) on such terms and conditions and against the security of such other property of the Unit Trust as may be specified in this behalf by the Bank;]

52*[(4C) the making to a Warehousing Corporation established under the Agricultural Produce (Development and Warehousing) Corporations Act, 1956 (28 of 1956) of loans and advances,-

(a) Repayable on demand or on the expiry of fixed periods not exceeding ninety days, from the date of such loan or advance, against securities of the Central Government or of any State Government, or

(b) Repayable on the expiry of fixed periods not exceeding eighteen months from the date of such loan or advance, against securities of the Central Government or of any State Government, of any maturity, or against bonds and debentures issued by the corporation to which the loan or advance is made, and guaranteed by the Central or a State Government, and maturing within a period not exceeding eighteen months from the date of such loan or advance:

Provided that the amount of loans and advances granted under clause (b) shall not at any time exceed, in the aggregate, three crores of rupees in the case of the Central Warehousing Corporation and fifty lakhs of rupees in the case of a State Warehousing Corporation;]

53*[(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;]

54*[(4DD) The making to the National Housing Bank of loans and advances arid generally assisting the National Housing Bank in such manner and on such terms as may be determined by the Central Board;]

55*[(4E) The making to the National Bank of loans and advances repayable on demand or on the expiry of fixed period not exceeding eighteen months from the date of making of the loan or advance, either-

(i) Against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or

(ii) On such other terms and conditions as the Bank may specify;]

49*[(4F) Contributing to the initial Capital of the Unit Trust;]

56*[(4G) The making of loans and advances to, and the purchasing of bonds and debentures of, 57[***] 58*[the Exam Bank] 59*[or the Reconstruction Bank] 60*[or the Small Industries Bank] out of the National Industrial Credit (Long Term Operations) Fund established under section 46C;]

54*[(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 57[***] 60*[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;]

61*[(4-I) the making to scheduled banks, 62[***] 58*[the Exam Bank] 63*[the Reconstruction Bank or the Small Industries Bank] the Industrial Finance Corporation and any other financial institution as may, on the recommendation of the Bank, be approved in this behalf by the Central Government of loans and advances repayable on demand or otherwise and against such security and on such other terms and conditions as may be approved in this behalf by the Central Board for the purpose of enabling such banks, or financial institution, as the case may be, to purchase foreign exchange from the Bank for the purpose of financing the import of capital goods or for such other purposes as may be approved by the Central Government;]

58*[(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;]

59*[(4K) The making to the Reconstruction Bank of loans and advances-

(a) Repayable on demand or on the expiry of a fixed period not exceeding ninety days, from the date of such loan or advance against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; or

(b) Against the security of bills of exchange or promissory notes, arising out of bona fide commercial or trade transactions bearing two or more goods signatures and maturing within five years from the date of such loan or advance;]

(5) The making to the 2*[Central Government] 64*[4[***]65*[and 5*[State] Governments]] of advances repayable in each case not later than three months from the date of the making of the advance;

66*[(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;]

105*[(6A) Dealing in derivatives, and, with the approval of the Central Board, in any other financial instrument.

Explanation.-For the purposes of this clause, "derivative" means an instrument, to be settled at a future date, whose value is derived from change in one or a combination of more than one of the following underlying, namely:-

(a) Interest rate,

(b) Price of securities of the Central Government or a State Government or of such securities of a local authority as may be specified in this behalf by the Central Government,

(c) Price of foreign securities,

(d) Foreign exchange rate,

(e) Index of rates or prices,

(f) Credit rating or credit index,

(g) Price of gold or silver coins, or gold or silver bullion, or

(h) Any other variable of similar nature;]

67 [***]

(8) The purchase and sale of securities 68*[of the Central 65*[Government or a 5*[State] Government]] of any maturity or of such securities of a local authority 69[***] as may be specified in this behalf by the 2*[Central Government] on the recommendation of the Central Board:

Provided that securities fully guaranteed as to principal and interest by 64 [any such Government 70*[or authority]] shall be deemed for the purposes of this clause to be securities of such Government 70*[or authority]; 71[***]

72*[(8A) The purchase and sale of shares in, or the capital of 73 [the 74*[75*[National Bank]] 53*[Deposit Insurance Corporation], 76[***], the State Bank 77*[or any other bank 78*[or financial institution] notified by the Central Government in this behalf];]

54*[(8AA) The promoting, establishing, supporting or aiding in the promotion, establishment and support of any financial institution, whether as its subsidiary or otherwise;]

79*[(8B) The keeping of deposits with the State Bank for such specific purposes as may be approved by the Central Government in this behalf;]

(9) The custody of monies, securities and other articles of value, and the collection of the proceeds, whether principal, interest or dividends, of any such securities;

(10) The sale realisation of all property, whether movable or immovable, which may in any way come into the possession of the Bank in satisfaction, or part satisfaction, of any of its claims;

(11) The acting as agent for 1[***] the 2*[Central Government] 80 [or any 5*[State] Government 81[***] or any local authority 82[***] 83*[or the Industrial Finance Corporation of India 84[***] 11 [or any other body corporate which is established or constituted by or under any other law] 10*[or the Government of any such country outside India or 85*[any such person or authority] is 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 86*[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;

87*[(f) 88[***] The issue and management of 89 [***] bonds and debentures;]

90*[(11A) The acting as agent for the Central Government,-

(a) In guaranteeing the due performance by any small-scale industrial concern, approved by the Central Government, of its obligations to any bank or other financial institution in respect of loans and advances made, or other credit facilities provided, to it by such bank or other financial institution and the making as such agent of payments in connection with such guarantee, and

(b) In administering any scheme for subsidising the rate of interest or other charges in relation to any loans or advances made, or other credit facilities provided, by banks or other financial institutions for the purpose of financing or facilitating any export from India and the making as such agent of payments on behalf of the Central Government;]

91*[(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;]

92*[(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;]

105*[(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;].

61*[(12B) The making of loans and advances in foreign currencies to scheduled banks, 62[***], 58*[the Exim Bank], 59*[or 93*[the Reconstruction Bank or the Small Industries Bank]] the Industrial Finance Corporation, any State Financial Corporation and any other financial institution as may, on the recommendation of the Bank, be approved by the Central Government and on such terms and conditions as may be specified by the Central Board in this behalf, against promissory notes of such bank or financial institution, as the case may be:

Provided that the borrowing bank or financial institution, as the case may be, furnishes a declaration in writing to the effect that-

(a) It has made loans and advances in foreign currencies for financing international trade or for the import of capital goods or for such other purposes as may be approved by the Central Government; and

(b) That the amount of loans or advances so made and outstanding at any time will not be less than the outstanding amount of the loans or advances obtained by it from the Bank;]

94*[(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;]

95*[(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 96 [***] other than a scheduled bank 12 [***] or from any person outside India 97 [***] 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:

Provided further that the total amount of such borrowings from persons in India 100 [***] shall not at any time exceed the amount of the 98 [capital] of the Bank;

99 [***]

(15) The making and issue of bank notes subject to the provisions of this Act 100 [***]; 101 [***]

102*[(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;]

103*[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 104 [***]

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1. The words "the Secretary of State" omitted by the A.O. 1948.

2. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor General in Council".

3. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Lientenant Governor(s)".

4. The words "the Federal Railway Authority" omitted by the A.O. 1948.

5. Substituted by the A.O. 1950, for "Provincial".

6. The words "the Government of Burma, the Burma Railway Board" omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

7. The words and letter "Part B States" omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

8. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "drawn on and payable in India".

9. Substituted by Act 11 of 1947, section 11, for "India or Burma and payable in India or Burma" (w.e.f. 1-4-1947).

10. Inserted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

11. Inserted by Act 51 of 1974, section 6 (w.e.f. 13-12-1974).

12. The words "or a Burma scheduled bank" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

13. Substituted by Act 35 of 1962, section 3, for certain words.

14. Substituted by Act 11 of 1947, section 11, for certain words (w.e.f. 1-4-1947).

15. Substituted by Act 51 of 1974, section 6, for "financing seasonal agricultural operations" (w.e.f. 13-12-1974).

16. Substituted by Act 32 of 1951, section 7, for "nine months" (w.e.f. 1-11-1951).

17. Explanation added by Act 54 of 1953, section 3 (w.e.f. 30-12-1953) omitted by Act 23 of 1965, section 4 (w.e.f. 1-3-1966).

18. Inserted by Act 54 of 1953, section 3 (w.e.f. 30-12-1953).

19. The words "or a Burma scheduled bank" omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

20. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "the Government of India or a Lieutenant Governor".

21. Certain words omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

22. Substituted by Act 62 of 1948, section 7 and Schedule, for "sterling" (w.e.f. 1-1-1949).

23. Certain words omitted by Act 24 of 1978, section 4 (w.e.f. 21-7-1978).

24. Substituted by Act 35 of 1962, section 3, for sub-clause (b) (w.e.f. 15-9-1962).

25. Sub-clause (c) omitted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

26. Inserted by Act 35 of 1962, section 3 (w.e.f. 15-9-1962).

27. Substituted by Act 58 of 1968, section 24, for sub-clause (b) (w.e.f. 1-2-1969).

28. Substituted by Act 58 of 1968, section 24, for clause, (ii) (w.e.f. 1-2-1969).

29. The words "Part B States ," omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

30. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "and Provincial Co-operative banks".

31. The words "Burma scheduled banks", omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

32. Substituted by Act 19 of 1957, section 2, for certain words (w.e.f. 8-6-1957).

33. The words "established under the State Financial Corporations Act, 1951 (63 of 1951)" omitted by Act 24 of 1978, section 4 (w.e.f. 21-7-1978).

34. Inserted by the A.O. 1950.

35. Substituted by Act 32 of 1951, section 2, for "the States" (w.e.f. 1-11-1951).

36. The words " or Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

37. Inserted by Act 24 of 1955, section 6 (w.e.f. 8-5-1955).

38. Substituted by Act 11 of 1947, section 11, for "Burma scheduled bank, Provincial Co-operative Bank, or Burma" (w.e.f. 1-4-1947).

39. Substituted by Act 32 of 1951, section 7, for "which have been transferred" (w.e.f. 1-11-1951).

40. Substituted by Act 24 of 1955, section for "a cash credit or overdraft granted" (w.e.f. 8-5-1955).

41. Inserted by Act 14 of 1960, section 2 (w.e.f. 30-4-1960).

42. Substituted by 51 of 1974, section 6, for the proviso (w.e.f. 13-12-1974).

43. Substituted by Act 81 of 1985, section 2, for "ninety per cent, of the paid up share capital" (w.e.f. 1-5-1986).

44. Clauses (4A) and (4B) Inserted by Act 54 of 1953, section 3 (w.e.f. 30-12-1953) clause (4A) renumbered as clause (4AA) by Act 14 of 1960, section 2 (w.e.f. 30-4-1960).

45. Substituted by Act 61 of 1981, section 61 and Schedule II, for clause (4AA) (w.e.f. 12-7-1982).

46. The words "established under the Industrial Finance Corporation Act, 1948 (15 of 1948)" omitted by Act 24 of 1978, section 4 (w.e.f. 21-7-1978).

47. The Proviso omitted by Act 66 of 1988, section 5 (w.e.f. 30-12-1988).

48. Substituted by Act 14 of 1960, section 2, for clause (4BB) (w.e.f. 30-4-1960). Earlier clause (4B) was Inserted by Act 19 of 1957, section 2 (w.e.f. 8-6-1957).

49. Inserted by Act 52 of 1963, section 44 and Schedule II (w.e.f. 1-2-1964).

50. The word "or" omitted by Act 17 of 1966, section 11 (w.e.f. 10-6-1966).

51. Inserted by Act 17 of 1966, section 11 (w.e.f. 10-6-1966).

52. Inserted by Act 28 of 1956, section 55 (w.e.f. 1-8-1956).

53. Inserted by Act 47 of 1961, section 51 and Schedule II (w.e.f. 1-1-1962).

54. Inserted by Act 53 of 1987, section 56 and the Second Schedule (w.e.f. 9-7-1988).

55. Substituted by Act 61 of 1981, section 61 and Schedule II, for clause (4E) (w.e.f. 1-5-1982).

56. Inserted by Act 18 of 1964, section 38 and Schedule II (w.e.f. 1-7-1964).

57. The words "the Development Bank or" omitted by Act 53 of 2003, section 12 and Schedule, Pt. I.

58. Inserted by Act 28 of 1981, section 40 and Schedule II (w.e.f. 1-1-1982).

59. Inserted by Act 62 of 1984, section 71 and Schedule III (w.e.f. 20-3-1985).

60. Inserted by Act 39 of 1989, section 53 and Schedule II (w.e.f. 7-3-1990).

61. Inserted by Act 24 of 1978, section 4 (w.e.f. 21-7-1978).

62. The words "the Development Bank" omitted by Act 53 of 2003, section 12 and Schedule, Pt. I.

63. Substituted by Act 39 of 1989, section 53 and Schedule II, for "or the Reconstruction Bank" (w.e.f. 7-3-1990).

64. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for certain words.

65. Substituted by Act 11 of 1947, section 11, for "Government, a Provincial Government or the Government of Burma" (w.e.f. 1-4-1947).

66. Substituted by Act 32 of 1951, section 7 for clause (6) (w.e.f. 1-11-1951).

67. Clause (7) rep. by Act 2 of 1948, section 2 and Schedule (w.e.f. 5-1-1948).

68. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "of the Government of India or of a Local Government".

69. The words "or such Part B States" omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

70. Substituted by Act 32 of 1951, section7 for "authority or State" (w.e.f. 1-11-1951).

71. Second proviso omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

72. Inserted by Act 23 of 1955, section 52 and Schedule III (w.e.f. 1-7-1955).

73. Inserted by Act 10 of 1963, section 47 and Schedule II (w.e.f. 1-5-1963).

74. Substituted by Act 24 of 1978, section 2, for "Agricultural Refinance Corporation" (w.e.f. 24-7-1978).

75. Substituted by Act 61 of 1981, section 61 and Schedule II, for "Agricultural Refinance and Development Corporation" (w.e.f. 1-5-1982).

76. The words "the Development Bank" Inserted by Act 18 of 1964, section 38 and Schedule II (w.e.f. 1-7-1964) and omitted by Act 53 of 2003, section 12 and Schedule, Pt. I.

77. Substituted by Act 79 of 1956, section 43 and Schedule II, for "or any of its subsidiary banks" (w.e.f. 22-10-1956).

78. Inserted by Act 19 of 1957, section 2 (w.e.f. 8-6-1957).

79. Inserted by Act 38 of 1959, section 64 and Schedule III (w.e.f. 10-9-1959)

80. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "or any Local Government or Local Authority or State in India".

81. The words "or the Government of Burma" omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

82. The words "or any Part B State" omitted by Act 32 of 1951, section 7 (w.e.f. 1-11-1951).

83. Inserted by Act 44 of 1959, section 2 (w.e.f. 8-12-1949).

84. The words "established under the Industrial Corporation Act, 1948 (15 of 1948)" omitted by Act 24 of 1978, section 4 (w.e.f. 24-7-1978).

85. Substituted by Act 51 of 1974, section 6, for "any such person"(w.e.f. 13-12-1974).

86. Inserted by Act 23 of 1947, section 3 (w.e.f. 18-4-1947).

87. Inserted by Act 44 of 1949, section 2.

88. The words "in respect of the aforesaid Corporation" omitted by Act 51 1974, section 6 (w.e.f. 13-12-1974).

89. The word "its" omitted by Act 51 of 1974, section 6 (w.e.f. 13-12-1974).

90. Substituted by Act 58 of 1968, section 24, for clause (11A) (w.e.f. 1-2-1969). Earlier clause (11A) was Inserted by Act 14 of 1960, section 2 (w.e.f. 30-4-1960).

91. Substituted by Act 24 of 1978, section 4, for clause (12) (w.e.f. 21-7-1978).

92. Substituted by Act 24 of 1978, section4, for clause (12A) (w.e.f. 21-7-1978).

93. Substituted by Act 39 of 1989, section 53 and Schedule II, for "the Reconstruction Bank" (w.e.f. 7-3-1990).

94. Substituted by Act 24 of 1978, section 4, for clause (13) (w.e.f. 21-7-1978).

95. Inserted by Act 44 of 1973, section 2 (retrospectly).

96. The words "or Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

97. The words "and Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

98. Substituted by Act 32 of 1951, section 7, for "share capital" (w.e.f. 1-11-1951).

99. Clause (14A) Inserted by Act 79 of 1956, section 43 and Schedule II (w.e.f. 22-10-1956) and omitted by Act 38 of 1959, section 64 and Schedule III (w.e.f. 1-10-1959).

100. The words " and the making and issue of Burma notes in accordance with the law of Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

101. The word "and" omitted by Ordinance 47 of 1945, section 6.

102. Substituted by Act 23 of 1955, section 52 and Schedule III, for clause (15A) (w.e.f. 1-7-1955).

103. Inserted by Act 58 of 1968, section 24 (w.e.f. 1-2-1969).

104. The words "and the law of Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 11 (w.e.f. 1-4-1947).

105. Inserted by Reserve Bank of India (Amendment) Act, 2006 (26 of 2006), w.e.f. 9th January, 2007.

-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



1[***]When, in the opinion of the 2*[Bank] 3[***] a special occasion has arisen making it necessary or expedient that action should be taken 4* [under this section] for the purposes of regulating credit in the interests of Indian 5[***] trade, commerce, industry and agricultural, the Bank may, notwithstanding any limitation contained in 6[***]section 17,-

7*[(1)Purchase, sell or discount any bill of exchange or promissory note though such bill or promissory note is not eligible for purchase or discount by the Bank under that section; or]

8*[***]

9*[(3)Make loans or advances to-

(a) A State co-operative bank, or

(b) On the recommendation of a State co-operative bank, to a cooperative society registered within the area in which the State cooperative bank operates, or

(c) Any other person,repayable on demand or on the expiry of the fixed periods, not exceeding ninety days, on such terms and conditions as the Bank may consider to be sufficient.]

10 [***]

11 [***]

18A - 12* Validity of loan or advance not to be questioned

Notwithstanding anything to the contrary contained in any other law for the time being in force,-

(a) The validity of any loan or advance granted by the Bank in pursuance of the provisions of this Act shall not be called in question merely on the ground of non-compliance with the requirements of such other law as aforesaid or of any resolution, contract, memorandum, articles of association or other instrument:

Provided that nothing in this clause shall render valid any loan or advance obtained by any company or co-operative society where such company or co-operative society is not empowered by its memorandum to obtain loans or advances;

(b) Where a loan or advance has been granted under clause (3A) or under clause (3B) or section 17 or a loan or advance granted under clause (3) of section 18 by the Bank to any person has been applied by such person, wholly or in part, in making a loan or advance to any borrower, any sum received-

(i) By the borrowing bank on account of bills of exchange in respect of which the declaration under clause (i) of the proviso to clause (3A) of section 17 has been furnished or in repayment or realisation of the outstanding loans and advances referred to in clause (ii) of the said proviso or in the proviso to clause (3B) of the said section or

(ii) By the borrowing bank or any other person in repayment or realisation of loans and advances granted to a borrower out of funds obtained by it or by him from the Bank under section 18,shall be utilised only for the repayment by the borrowing bank or other person, as the case may be, of the amounts due to be repaid by it or by him to the Bank, and shall be held by it or by him in trust for the Bank, until such time as the amounts are so repaid.]

---------------------------------------------------------------------------------------------------------------------------------------------------------

1.The brackets and figure "(1)" omitted by Act 51 of 1974, section 7(w.e.f. 13-12-1974).

2.Substituted by Act 32 of 1951, section 8, for "Central Board" (w.e.f.1-1-1949).

3.Certain words omitted by Act 62 of 1948, section 7 and Schedule (w.e.f.1-1-1949).

4.Substituted by Act 51 of 1974, section 7, for "under this sub-section"(w.e.f. 13-12-1974).

5.The words "or Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 12 (w.e.f.1-4-1947).

6.Certain words omitted by Act 51 of 1974, section 7 (w.e.f. 13-12-1974).

7.Substituted by Act 51 of 1974, section 7, for the clause (1) (w.e.f.13-12-1974).

8.Clause (2) omitted by Act 24 of 1978, section 5 (w.e.f. 21-7-1978).

9.Substituted by Act 51 of 1974, section 7 for the clause (3) (w.e.f. 13-12-1974).

10.The proviso omitted by Act 62 of 1948, section 7 and Schedule (w.e.f. 1-1-1949).

11.Sub-section (2) omitted by Act 51 of 1974, section 7 (w.e.f. 13-12-1974).

12. Inserted by Act 51 of 1974, section 8 (w.e.f. 13-12-1974).

---------------------------------------------------------------------------------------------------------------------------------------------------------



Save as otherwise provided in sections 17, 18,1*[42] and 45, the Bank may not-

(1) Engage in trade or otherwise have a direct interest in any commercial, industrial or other undertaking except such interest as it may in any way acquire in the course of the satisfaction of any of its claims:- 

provided that all such interests shall be disposed of at the earliest possible moment;

2*[(2) Purchase the shares of any banking company or of any other company, or grant loans upon the security of any such shares;]

(3) Advance money on mortgage of, or otherwise on the security of, immovable property or documents of title relating thereto, or become the owner of immovable property, except so far as is necessary for its own business premises and residences for its officers and servants;

(4) Make loans or advances;

(5) Draw or accept bills payable otherwise than on demand;

(6) Allow interest on deposits or current accounts.

--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Inserted by Act 38 of 1956, section 2 (w.e.f. 6-10-1956).

2. Substituted by Act 32 of 1951, section 9, for clause (2) (w.e.f. 1-11-1951).

--------------------------------------------------------------------------------------------------------------------------------------------------------
Last updated on September, 2016

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