The Bank shall undertake to accept monies for account of 1 [2 [***]] the Central Government 3 [***] and to make payments up to the amount standing to the credit of 4 [its account], and to carry out 5 [its exchange], remittance and other banking operations, including the management of the public debt 6 [of the Union].
7 [***]
_______________________
1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for certain words.
2. The words " the Secretary of State" omitted by the A.O. 1950.
3. The words "and the Governments of Part A States" omitted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
4. Substituted by Act 37 of 1956, section104, for "their account respectively" (w.e.f. 1-11-1956).
5. Substituted by Act 37 of 1956, section104, for "their exchange" (w.e.f. 1-11-1956).
6. Inserted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
7. Section 20A (Transaction of business for British Military Administration, Burma) which was temporarily Inserted by Ordinance 19 of 1945 has been omitted owing to the repeal of the Ordinance by Act 11 of 1947, section 27 (w.e.f. 1-4-1947).
Section 21 - Bank to have the right to transact Government business in India
(1) The 1 [Central Government] 2 [***] shall entrust the Bank, on such conditions as may be agreed upon, with all 3 [its] money, remittance, exchange and banking transaction in India, and, in particular, shall deposit free of interest all 4 [its] cash balances with the Bank:
Provided that nothing in this sub-section shall prevent the 4 [Central Government] 5 [***] from carrying on money transactions at places where the Bank has no branches or agencies, and the 4 [Central Government] 2 [***] may hold at such places such balances as 6 [it] may require.
(2) The 4 [Central Government] 7 [***] shall entrust the Bank, on such conditions as may be agreed upon, with the management of the public debt and with the issue of any new loans.
(3) In the event of any failure to reach agreement on the conditions referred to in this section the 4 [Central Government] shall decide what the conditions shall be.
8 [(4) Any agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.]
9 [***]
_____________________
1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
2. The words "and the State Governments" omitted by Act 37 of 1956, section 104, (w.e.f. 1-11-1956).
3. Substituted by Act 37 of 1956, section 104, for "their" (w.e.f. 1-11-1956).
4. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
5. The words "or any State Government" omitted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
6. Substituted by Act 37 of 1956, section 104, for "they" (w.e.f. 1-11-1956).
7. The words "and each State Government" omitted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
8. Substituted by Act 37 of 1956, section 104, for sub-section (4) (w.e.f. 1-11-1956).
9. Sub-section (5) Inserted by Act 32 of 1951, section 11 (w.e.f. 1-11-1951) and omitted by Act 37 of 1956, section 10 (w.e.f. 1-11-1956).
Section 21A - Bank to transact Government business of States on agreement
1 [21A. Bank to transact Government business of States on agreement
(1) The Bank may by agreement with the Government of any 2 [***] State 3 [***] undertake-
(a) all its money, remittance, exchange and banking transactions in India, including in particular, the deposit, free of interest, of all its cash balances with the Bank; and
(b) the management of the public debt of, and the issue of any new loans by, that State.
(2) Any Agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.]
________________________
1. Inserted by Act 32 of 1951, section 12 (w.e.f. 1-11-1951).
2. The words "Part B" omitted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
3. The words "(including the autonomous State of Meghalaya)" Inserted by Act 54 of 1969, section 75 and omitted by Act 81 of 1971, section 72 (w.e.f. 21-1-1972).
Section 21B - Effect of agreements made between the Bank and certain States before the 1st November, 1956
1 [21B. Effect of agreements made between the Bank and certain States before the 1st November, 1956
(1) Any agreement made under section 21 or section 21A between the Bank and the Government of a State specified in the Explanation below and in force immediately before the 1st day of November, 1956, shall, as from that day have effect as if it were an agreement made on that day under section 21A between the Bank and the Government of the corresponding State subject to such modifications, if any, being of a character not affecting the general operation of the agreement, as may be agreed upon between the Bank and the Government of the corresponding State, or in default of such agreement, as may be made therein by order of the Central Government.
Explanation.-In this sub-section "corresponding State" means,-
(a) in relation to the agreement between the Bank and the State of Andhra, the State of Andhra Pradesh;
(b) in relation to the agreement between the Bank and any other Part A State as it existed before the 1st day of November, 1956, the State with the same name; and
(c) in relation to the agreement between the Bank and the Part B State of Mysore or Travancore-Cochin as it existed before the 1st day of November, 1956, the State of Mysore of Kerala respectively.
(2) Any agreement made under section 21A between the Bank and the Government of the Part B State of Hyderabad, Madhya Bharat or Saurashtra shall be deemed to have terminated on the 31st day of October, 1956.]
________________________
1. Inserted by Act 37 of 1956, section 104 (w.e.f. 1-11-1956).
Section 22 - Right to issue bank notes
(1) The Bank shall have the sole right to issue bank notes in 1 [India], and may, for a period which shall be fixed by the 2 [Central Government] on the recommendation of the Central Board, issue currency notes of the Government of India supplied to it by the 2 [Central Government], and the provisions of this Act applicable to bank notes shall, unless a contrary intention appears, apply to all currency notes of the Government of India issued either by the 2 [Central Government] or by the Bank in like manner as if such currency notes were bank notes, and references in this Act to bank notes shall be construed accordingly.
(2) On and from the date on which this Chapter comes into force the 2 [Central Government] shall not issue any currency notes.
_______________________
1. Substituted by Act 32 of 1951, section 2, for "the States" (w.e.f. 1-11-1951).
2. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
Section 23 - Issue Department
(1) The issue of bank notes shall be conducted by the Bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department, and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department as hereinafter defined in section 34.
(2) The Issue Department shall not issue bank notes to the Banking Department or to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by this Act to form part of the Reserve.
1[***]
________________________
1. Sub-section (3) Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section13 (w.e.f. 1-4-1947).
Section 24 - Denominations of notes
1[24. Denominations of notes
(1) Subject to the provisions of sub-section (2) bank notes shall be of the denominational value to two rupees, five rupees,ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees, as the Central Government may, on the recommendation of the Central Board, specify in this behalf.
(2) The Central Government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue of bank notes of such denominational values as it may specify in this behalf.]
________________________
1. Substituted by Act 58 of 1968, section 25, for section 24. (w.e.f. 1-2-1969).
Section 25 - Form of bank notes
The design, form the material of bank notes shall be such as may be approved by the1[Central Government] after consideration of the recommendations made by the Central Board.
________________________
1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
Section 26 - Legal tender character of notes
(1) Subject to the provisions of subsection (2), every bank note shall be legal tender at any place in 1 [India] in payment, or on account for the amount expressed therein, and shall be guaranteed by the 2 [Central Government].
(2) On recommendation of the Central Board the 2 [Central Government] may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender 3 [save at such office or agency of the Bank and to such extent as may be specified in the notification].
4 [***]
________________________
1. Substituted by Act 32 of 1951, section 2, for "the States" (w.e.f. 1-11-1951).
2. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
3. Substituted by Act 32 of 1951, section 13, for "save at an offie or agency of the Bank" (w.e.f. 1-11-1951).
4. Sub-section (3) Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 14 (w.e.f. 1-4-1947).
Section 26A - Certain bank notes to cease to be legal tender
1[26A. Certain bank notes to cease to be legal tender
Notwithstanding anything contained in section 26, no bank note of the denominational value of five hundred rupees, one thousand rupees or ten thousand rupees issued before the 13th day of January, 1946, shall be legal tender in payment or on account for the amount expressed therein.]
________________________
1. Inserted by Act 62 of 1956, section 2 and Schedule (w.e.f. 1-11-1956).
Section 27 - Re-issue notes
The Bank shall not re-issue bank notes which are torn, defaced or excessively spoiled.
Section 28 - Recovery of notes lost, stolen, mutilated or imperfect
1 [***] Notwithstanding anything contained in any enactment or rule of law to the contrary, no person shall of right be entitled to recover from the 2 [Central Government] or the Bank, the value of any lost, stolen, mutilated or imperfect currency note of the Government of India or bank note:
Provided that the Bank may, with the previous sanction of the 2 [Central Government], prescribed the circumstances in and the conditions and limitations subject to which the value of such currency notes or bank notes may be refunded as of grace and the rules made under this proviso shall be laid on the table 3 [***] of 4 [Parliament].
5 [***]
________________________
1. The brackets and figure "(1)" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 15 (w.e.f. 1-4-1947).
2. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
3. The words " of both Houses" omitted by the A.O. 1948.
4. Substituted by the A.O. 1950, for "Central Legislature".
5. Sub-section (2) Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 15 (w.e.f. 1-4-1947).
Section 28A - Issue of special bank notes and special one rupee notes in certain cases
1 [28A. Issue of special bank notes and special one rupee notes in certain cases
(1) For the purpose of controlling the circulation of bank notes without India, the Bank may, notwithstanding anything contained in any other provision of this Act, issue bank notes of such design, form and material as may be approved under sub-section (3) (hereinafter in this section referred to as special bank notes) of the denominational values of five rupees, ten rupees and one hundred rupees.
(2) For the purpose of controlling the circulation of Government of India one rupee notes without India, the Central Government may, notwithstanding anything contained in any other provision of this Act or in the Currency Ordinance, 1940, (Ord. 4 of 1940) issue Government of India notes of the denominational value of one rupee of such design, form and material as may be adopted under sub-section (3) (hereinafter in this section referred to as special one rupee notes).
(3) The design, form and material of the special bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by the Governor and of the special one rupee notes shall be such as the Central Government may think fit to adopt.
(4) Neither the special bank notes not the special one rupee notes shall be legal tender in India.
(5) The special one rupee note shall be deemed to be included in the expression "rupee coin" for all the purposes of this Act except section 39, but shall be deemed not to be a currency note for any of the purposes of this Act.
(6) Where a special bank note is on its face expressed to be payable at a specified office or branch of the Bank, the obligation imposed by section 39 shall be only on the specified "office or branch and, further, shall be subject to such regulations as may be made under this section.
(7) The Bank may, with the previous sanction of the Central Government, make regulations to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of this section, and, in particular, the manner in which, and the conditions or limitations subject to which-
(i) bank notes and one rupee notes in circulation in any country outside India may be replaced by special notes issued under this section;
(ii) any such special notes may be exchanged for any other bank notes or one rupee notes.]
________________________
1. Inserted by Act 14 of 1959, section 2 (w.e.f. 1-5-1959).
Section 29 - Bank exempt from stamp duty on bank notes
The Bank shall not be liable to the payment of any stamp duty under the Indian Stamp Act, 1899 (2 of 1899) in respect of bank notes 1 [***] issued by it.
________________________
1. The words "or Burma notes" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 16(w.e.f.1-4-1947).
Section 30 - Powers of Central Government to supersede Central Board
(1) If in the opinion of the 1 [Central Government] the Bank fails to carry out any of the obligations imposed on it by or under this Act 2 [***] 3 [the Central Government] may, by notification in the Gazette of India, declare the Central Board to be superseded, and thereafter the general superintendence and direction of the affairs of the Bank shall be entrusted to such agency as the 1 [Central Government] may determine, and such agency may exercise the powers and do all acts and things which may be exercised or done by the Central Board under this Act.
(2) When action is taken under this section the 1 [Central Government] shall cause a full report of the circumstances leading to such action and of the action taken to be laid before 4 [Parliament] at the earliest possible opportunity and in any case within three months from the issue of the notification superseding the Board.
________________________
1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
2. The words "or by or under the law of Burma" Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 17 (w.e.f. 1-4-1947).
3. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "he".
4. Substituted by the A.O. 1950, for "the Central Legislature".
Section 31 - Issue of demand bills and notes
1 [(1)] No person in 2 [India] other than the Bank, or, as expressly authorized by this Act the 3 [Central Government] shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person:
Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person's account with a banker, shroff or agent.
4 [(2) Notwithstanding anything contained in the Negotiable Instruments Act, 1881, (26 of 1881) no person in 2 [India] other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument.]
________________________
1. Section 31 re-numbered as sub-section (1) of that section by Act 23 of 1946., section 2 (w.e.f. 16-11-1946).
2. Substituted by Act 32 of 1951, section 2, for "the States" (w.e.f. 1-11-1951).
3. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
4. Inserted by Act 23 of 1996, section 2 (w.e.f. 16-11-1946).
Section 32 - Penalty (repealed)
[Rep. by the Reserve Bank of India (Amendment) Act, 1974 (51 of 1974), section 9 w.e.f. 13-12-1974).]
Section 33 - Assets of the Issue Department
(1) The assets of the Issue Department shall consist of gold coin, gold bullion, 1 [foreign securities], rupee coin and rupee securities to such aggregate amount as is not less than the total of the liabilities of the Issue Department as hereinafter defined.
2 [(2) The aggregate value of the gold coin, gold bullion and foreign securities held as assets and the aggregate value of the gold coin and gold bullion so held shall not at any time be less than two hundred crores of rupees and one hundred and fifteen crores of rupees, respectively.]
3 [(3) The remainder of the assets shall be held in rupee coin, Government of India rupee securities of any maturity, promissory notes drawn by the National Bank for any loans or advances under clause (4E) of section 17 and such bills of exchange and promissory notes payable in India as are eligible for purchase by the Bank under sub-clause (a) or sub-clause (b) or sub-clause (bb) of clause (2) of section 17 or under clause (1) of section 18.]
4 [*]
(4) For the purposes of this section, gold coin the gold bullion shall be valuated at 5 [6 [a price not exceeding the international market price for the lime being obtaining]], rupee coin shall be valued at its face value, and securities shall be valued 7 [at rates not exceeding the market rates] for the time being obtaining.
(5) Of the gold coin and gold bullion held as assets, not less than seventeen-twentieths shall be held in 8 [India], and all gold coin and gold bullion held as assets shall be held in the custody of the Bank or its agencies:
Provided that gold belonging to the Bank which is in any other bank or in any mint or treasury or in transit may be reckoned as part of the assets.
9 [(6) For the purposes of this section, the foreign securities which may be held as part of the assets shall be-
(i) securities of the following kinds payable in the currency of any foreign country which is a member of the International Monetary Fund, namely:-
(a) balances with the bank which is the principal currency authority of that foreign country and any other balances or securities in foreign currency maintained with or issued by the International Monetary Fund, the International Bank for Reconstruction and Development, the International Development Association or the International Finance Corporation 10 [or Asian Development Bank] or the Bank for International Settlements or 11 [any banking or financial institution 12 [approved] by the Central Government] in this behalf provided that they are repayable within a 13 [period of ten years]:
(b) bills of exchange bearing two or more good signatures and drawn on and payable at any place in that foreign country and having a maturity not exceeding ninety days; and
(c) Government securities of that foreign country maturing 14 [within ten years];
(ii) any drawing rights representing a liability of the International Monetary Fund.
________________________
1. Substituted by Act 62 of 1948, section 7 and Schedule, for "Sterling securities" (w.e.f. 1-1-1949).
2. Substituted by Act 48 of 1957, section 2, for sub-section (2) (w.r.e.f. 31-10-1957).
3. Substituted by Act 61 of 1981, section 61 and Schedule II, for sub-section (3) (w.e.f. 12-7-1982).
4. The proviso omitted by Ordinance 3 of 1941, section 2.
5. Substituted by Act 58 of 1968, sec 26 , for "2.88 grains" (w.e.f. 1-2-1969).
6. Substituted by Act 8 of 1991, section2, for "0.118489 grammes of fine gold per rupee".
7. Substituted by Act 58 of 1968, section 26, for " at the market rate" (w.e.f. 1-2-1969).
8. Substituted by Act 32 of 1951, section 2, for "the States" (w.e.f. 1-11-1951).
9. Substituted by Act 51 of 1974, section 10, for sub-section (6) (w.e.f. 13-12-1974).
10. Inserted by Act 24 of 1978, section 6 (w.e.f. 21-7-1978).
11. Substituted by Act 24 of 1978, section 6, for certain words (w.e.f. 21-7-1978).
12. Substituted by Act 1 of 1984, section 4, for "notified" (w.e.f. 15-2-1984).
13. Substituted by Act 24 of 1978, section 6, for "period of five years" (w.e.f. 21-7-1978).
14. Substituted by Act 24 of 1978, section 6, for "within five years" (w.e.f. 21-7-1978).
Section 34 - Liabilities of Issue Department
(1) The Liabilities of the Issue Department shall be an amount equal to the total of the amount of the currency notes of the Government of India and bank notes for the time being in circulation.
1 [***]
2 [***]
________________________
1. Sub-section (2) omitted by Act 55 of 1963, sec 2 (w.e.f. 1-2-1964).
2. Sub-section (3) Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937 and omitted by Act 11 of 1947, section 19 (w.e.f. 1-4-1947).
Section 35 - Initial assets and liabilities (Repealed)
[Rep. by Act 62 of 1948, section7 and Schedule (w.e.f. 1-1-1949).]
Section 36 - Method of dealing with fluctuations in rupee coin assets (Repealed)
[Rep. by Act 55 a/1963, section 3 (w.e.f. 1-2-1964).]
Section 37 - Suspension of assets requirements as to foreign securities
1 [37. Suspension of assets requirements as to foreign securities
Notwithstanding anything contained in the foregoing provisions, the Bank may, with the previous sanction of the Central Government, for periods not exceeding six months in the first instance, which may, with the like sanction, be extended from time to time by period not exceeding three months at a time, hold as assets foreign securities of less amount in value than that required by sub-section (2) of section 33:
2 [***]
________________________
1. Substituted by Act 38 of 1956, section 4, for section 37 (w.e.f. 6-10-1956).
2. Proviso omitted by Act 48 of 1957, section 3 (w.e.f. 31-10-1957).
Section 38 - Obligations of Government and the Bank in respect of rupee coin
The 1 [Central Government] shall undertake not 2 [***] to put into circulation any rupees, except through the Bank, 3 [***] and the Bank shall undertake not to dispose of rupee coin other-wise than for the purposes of circulation 4 [***].
________________________
1. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
2. The words "to re-issue any rupee coin delivered under section 36 nor" omitted by Act 55 of 1963, section 4 (w.e.f. 1-2-1964).
3. The words "and as provided in that section" omitted by Ordinance 4 of 1940, section 3.
4. The words "or by delivery to the Central Government under that section" omitted by Act 55 of 1963, section 4 (w.e.f. 1-2-1964).
Section 39 - Obligation to supply different forms of currency
(1) The Bank shall issue rupee coin on demand in exchange for bank notes and currency notes of the Government of India and shall issue currency notes or bank notes on demand in exchange for coin which is legal tender under the Indian Coinage Act, 1906 (3 of 1906).
(2) The Bank shall, in exchange for currency notes or bank notes of 1 [two] rupees or upwards, supply currency notes or bank notes of lower value or other coins which are legal tender under the Indian Coinage Act, 1906 (3 of 1906), in such quantities as may, in the opinion of the Bank, be required for circulation; and the 2 [Central Government] shall supply such coins to the Bank on demand. If the 2 [Central Government] at any time fails to supply such coins, the Bank shall be released from its obligations to supply them to the public.
________________________
1. Substituted by Act 62 of 1948, section 7 and Schedule, for "five" (w.e.f. 1-1-1949).
2. Substituted by the India and Burma (Burma Monetary Arrangements) Order, 1937, for "Governor-General in Council".
Section 40 - Transactions in foreign exchange
1 [40. Transactions in foreign exchange
The Bank shall sell to or buy from any authorized person who makes a demand in that behalf at its office in Bombay, Calcutta, Delhi or Madras 2 [or at such or its branches as the Central Government may, by order determine], foreign exchange at such rates of exchange and on such conditions as the Central Government may from time to time by general or special order determine, having regard so far as rates of exchange are concerned to its obligations to the International Monetary Fund:
Provided that no person shall be entitled to demand to buy or sell foreign exchange of a value less than two lakhs of rupees.
Explanation,-In the section "authorized person" means a person who is entitled by or under the 3 [Foreign Exchange Regulation Act, 1973 (46 of 1973)] to buy, or as the case may be, sell, the foreign exchange to which his demand relates.]
________________________
1. Substituted by Act 23 of 1947, section 4, for sections 40 and 41 (w.e.f. 18-4-1947).
2. Inserted by Act 54 of 1953, section 5 (w.e.f. 30-12-1953).
3. Substituted by Act 1 of 1984, section 5, for "Foreign Exchange Regulation Act, 1947 (7 of 1947)" (w.e.f. 15-2-1984).
Section 41 - Obligation to buy sterling (Repealed)
Rep. By Act 23 of 1947, s. 4 (w.e.f. 18-4-1947).
Section 41A - Obligation to provide remittance between India and Burma (Repealed)
1 [41A. Obligation to provide remittance between India and Burma
[Rep. by Act 11 of 1947, section 22 (w.e.f. 1-4-1947).]]
________________________
1. Inserted by the India and Burma (Burma Monetary Arrangements) Order, 1937.
Section 42 - Cash reserves of scheduled banks to be kept with the Bank
1 [(1) Every bank included in the Second Schedule shall maintain with the Bank an average daily balance the amount of which shall not be less than 40 [such per cent. of the total of the demand and time liabilities in India of such bank as shown in the return referred to in sub-section (2), as the Bank may from time to time, having regard to the needs of securing the monetary stability in the country, notify in the Gazette of India]
41 [***]
Explanation.-For the purposes of this section,-
(a) "average daily balance" shall mean the average of the balances held at the close of business of each day 5 [of a fortnight];
6 [(b) "fortnight" shall mean the period from Saturday to the second following Friday, both days inclusive;]
7 [(c) "liabilities" shall not include-
(i) the paid-up capital or the reserves or any credit balance in the profit and loss account of the bank;
(ii) the amount of any loan taken from the Bank 8 [***] 9 [or from the Exim Bank] 10 [or from the Reconstruction Bank] 11 [or from the National Housing Bank or from the 12 [National Bank] 13 [or from the Small Industries Bank] 14 [***];
(iii) in the case of a State co-operative bank, also any loan taken by such bank from a State Government 15 [or from the National Cooperative Development Corporation established under the National Co-operative Development Corporation Act, 1962 (26 of 1962)] and any deposit of money with such bank representing the reserve fund or any part thereof 16 [***] maintained with it by any co-operative society within its area of operation;
17 |(iv) in the case of a State co-operative bank, which has granted an advance against any balance maintained with it, such balance to the extent of the amount outstanding in respect of such advance;]
15 [(v) in the case a Regional Rural Bank, also any loan taken by such bank from its Sponsor Bank;]]
17 [(d) the aggregate of the liabilities" of a Scheduled bank which is not a State co-operative bank, to,-
(i) the State Bank;
(ii) a subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);
(iii) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970);
15 [(iiia) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)];
(iv) a banking company as defined in clause (c) section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(v) a co-operative bank; or
(vi) any other financial institution notified by the Central Government in this behalf,
shall be reduced by the aggregate of the liabilities of all such banks and institutions to the scheduled bank;
(e) the aggregate of the "liabilities" of a scheduled bank which is a State co-operative bank, to,-
(i) the State Bank;
(ii) a subsidiary bank as defined in section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);
(iii) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970);
1 [(iiia) a corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);]
(iv) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); or
(v) any other financial institution notified by the Central Government in, this behalf,
shall be reduced by the aggregate of the liabilities of all such banks and institutions to the State co-operative bank.]
(1A) Notwithstanding anything contained in sub-section (1), the Bank may, by notification in the Gazette of India, direct that every scheduled bank shall, with effect from such date as may be specified in the notification, maintain with the Bank, in addition to the balance prescribed by or under sub-section (1), an additional average daily balance the amount of which shall not be less than the 18 [rate specified in the notification, such additional balance being calculated with reference to the excess of the total of the demand and time liabilities of the bank as shown in the return referred to in sub-section (2) over the total of its demand and time liabilities] at the close of business on the date specified in the notification as shown by such return so however, that the additional balance shall, in no case, be more than such excess:
19 [Provided that the Bank may, by a separate notification in the Gazette of India, specify different dates in respect of a Bank subsequently included in the Second Schedule].
4[***]
4[***]
15 [1C) The Bank may, for the purposes of this section, specify from time to time with reference to any transaction or class of transactions that such transaction or transactions shall be regarded as liability in India of a scheduled bank, and if any question arises as to whether any transaction or class of transactions shall be regarded, for the purposes of this section, as liability in India of a scheduled bank, the decision of the Bank thereon shall be final.]
21 [(2) Every scheduled bank shall send to the Bank a return signed by two responsible officers of such bank showing-
(a) the amount of its demand and time liabilities and the amount of its borrowings from banks in India, 22 [classifying them into demand and time liabilities],
23 [***]
(b) the total amount of legal tender notes and coins held by it in India,
(c) the balance held by it at the Bank in India,
(d) the balances held by it at other banks in current account and the money at call and short notice in India,
(e) the investments (at book value) in Central and State Government securities including treasury bills and treasury deposit receipts,
(f) the amount of advances in India,
(g) the inland bills purchased and discounted in India 24 [and foreign bills purchased and discounted].
25 [at the close of business on each alternate Friday, and every such return shall be sent not later than seven days after the date to which it relates:]
26 [Provided that the Bank may, by notification in the Gazette of India, delete or modify or add to any of the particulars specified in the foregoing clauses:
Provided further that] 15 [such alternate] Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), for one or more offices of a scheduled bank the return shall give the preceding working day's figures in respect of such office or offices, but shall nevertheless be deemed to relate to that Friday:
27 [Provided also that where the Bank is satisfied that the furnishing of a fortnightly return under this sub-section is impracticable in the case of any scheduled bank by reason of the geographical position of the bank and its branches, the Bank may allow such bank-
(i) to furnish a provisional return for the fortnight within the period aforesaid to be followed by a final return not later than twenty days after the date to which it relates, or
(ii) to furnish in lieu of a fortnightly return a monthly return to be sent not later than twenty days after the end of the month to which it relates giving the details specified in this sub-section in respect of such bank at the close of business for the month.]]
15 [(2A) Where the last Friday of a month is not an alternate Friday for the purpose of sub-section(2), every scheduled bank shall send to the Bank, a special return giving the details specified in sub-section (2) as at the close of business on such last Friday or where such last Friday is a public holiday under the Negotiable Instruments Act, 1881 (26 of 1881), as at the close of business on the preceding working day and such return shall be sent not later than seven days after the date to which it relates.]
28 [(3) If the average daily balance held at the Bank by a scheduled bank during any 5 [fortnight] is below the minimum prescribed by or under sub-section (1) or sub-section (1A), such scheduled bank shall be liable to pay to the Bank in respect of that 5 [fortnight] penal interest at a rate of three per cent, above the bank rate on the amount by which such balance with the Bank falls short of the prescribed minimum, and if during the next succeeding 5 [fortnight], such average daily balance is still below the prescribed minimum, the rates of penal interest shall be increased to a rate of five per cent, above the bank rate in respect of that 5 [fortnight] and each subsequent 5 [fortnight] during which the default continues on the amount by which such balance at the Bank falls short of the prescribed minimum.]
29 [(3A) When under the provisions of sub-section (3) penal interest at the increased rate of five per cent, above the bank rate has become payable by a scheduled bank, 30 [if thereafter the average daily balance held at the Bank during the next succeeding 5 [fortnight] is still below the prescribed minimum, -
(a) every director, manager or secretary of the scheduled bank, who is knowingly and wilfully a party to the default, shall be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each subsequent 5 [fortnight] during which the default continues, and
(b) the Bank may prohibit the scheduled bank from receiving after the said 5 [fortnight] any fresh deposit,]
and, if default is made by the scheduled bank in complying with the prohibition referred to in clause (b), every director and officer of the scheduled bank who is knowingly and wilfully a party to such default or who through negligence or otherwise contributes to such default shall in respect of each such default be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each day after the first on which a deposit received in contravention of such prohibition is retained by the scheduled bank.
Explanation.-In this sub-section "officer" includes a 31 [***] manager, secretary, branch manager, and branch secretary.]
(4) Any scheduled bank failing to comply with the provisions of sub-section (2) 32 [shall be liable to pay to the Bank] a penalty of one hundred rupees for each day during which the failure continues.
18 [(5) (a) The penalties imposed by sub-sections (3) and (4) shall be payable within a period of fourteen days from the date on which a notice issued by the Bank demanding the payment of the same is served on the scheduled bank, and in the event of failure of the scheduled bank to pay the same within such period, may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting bank is situated, such direction to be mode only upon an application made in this behalf to the court by the Bank;
(b) when the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the scheduled bank and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit;
(c) notwithstanding anything contained in this section, if the Bank is satisfied that the defaulting bank and sufficient cause for its failure to comply with the provisions of sub-section (1), (1A) or (2), it may not demand the payment of the penal interest of the penalty, as the case may be.]
33 [(6) The Bank shall, save as hereinafter provided, by notification in the Gazette of India,-
(a) direct the inclusion in the Second Schedule of any bank not already so included which carries on the business of banking 34 [in India] and which-
(i) has a paid-up capital and reserve of an aggregate value of not less than five lakhs or rupees, and
(ii) satisfies and Bank that its affairs are not being conducted in a manner detrimental to the interests of its depositors, and
(iii) 35 [is a State co-operative bank or a company] as defined 36 [section 3 of the Companies Act, 1956 (1 of 1956), or an institution notified by the Central Government in this behalf] or a corporation or a company incorporated by or under any law in force in any place 37 [outside India];
(b) direct the exclusion from that Schedule of any scheduled bank,-
(i) the aggregate value of whose paid-up capital and reserves becomes at any time less than five lakhs of rupees, or
(ii) which is, in the opinion of the Bank after making an inspection under section 35 of the Banking Regulation Act, 1949 (10 of 1949), conducting its affairs to the detriment of the interests of its depositors, or
(iii) which goes into liquidation or otherwise ceases to carry on banking business:
Provided that the Bank may, on application of the scheduled bank concerned and subject to such conditions, if any, as it may impose, defer the making of a direction under sub-clause (i) or sub-clause (ii) of clause (b) for such period as the Bank consider reasonable to give the scheduled bank an opportunity of increasing the aggregate value of its paid-up capital and reserves to not less than five lakhs of rupees or, as the case may be, of removing the defects in the conduct of its affairs;
(c) alter the description in that Schedule whenever any scheduled bank changes its name.
Explanation.-In this sub-section the expression "value" means the real or exchangeable value and not the nominal value which may be shown in the boods of the bank concerned; and if any dispute arises in computing the aggregate value of the paid-up capital and reserves of a bank, a determination thereof by the Bank shall be final for the purposes of this sub-section.]
38 [(6A) In considering whether a State co-operative bank or a regional rural bank should be included in or excluded from the Second Schedule, it shall be competent for the Bank to act on a certificate from the National Bank on the question whether or not a State co-operative bank or a regional rural bank, as the case may be, satisfies the requirements as to paid-up capital and reserves or whether its affairs are not being conducted in a manner detrimental to the interests of its depositors.]
39 [(7) The Bank may, for such period and subject to such conditions as may be specified, grant to any scheduled bank such exemptions from the provisions of this section as it thinks fit with reference to all or any of its offices or with reference to the whole or any part of its assets and liabilities.]
________________________
1. Sub-sections (1), (1A) and (IB) Substituted by Act 38 of 1956, section 5, for sub-section (1) (w.e.f. 6-10-1956).
2. Substituted by Act 35 of 1962, section 4, for "five per cent, of demand liabilities" (w.e.f. 15-9-1962).
3. Substituted by Act 35 of 1962, section 4, for the proviso.
4. Substituted by Act 9 of 1991, section 2, for "fifteen per cent." (w.e.f. 25-1-1991).
4. Omitted by Reserve Bank of India (Amendment) Act, 2006 (26 of 2006), w.e.f 1st April, 2007. Prior to omission it was read as under:
"20 [(1AA) Notwithstanding anything contained in sub-section (1) or sub-section (1A), it shall not be necessary for any scheduled bank to maintain with the Bank any balance which shall be more than fifteen per cent, of the total of its demand and time liabilities as shown in the return referred to in sub-section (2).]
(1B) Where any scheduled bank maintains, in pursuance of a notification issued under the proviso to sub-section (1) or under sub-section (1A), any balance with the Bank the amount of which is not less man that required to be maintained by such notification, the Bank may pay to the scheduled bank interest at such rate or rates as may be determined by the Bank from time to time on the amount by which such balance actually maintained is in excess of the balance which the scheduled bank would have to maintain, if no such notification was issued:
Provided that no interest shall be payable on any such amount actually maintained as is in excess of the balance required to he maintained by or under sub-section (1) or under subsection (1A):]
21 [Provided further that where the Bank does not, under sub-section (5), demand the payment of the penalty imposed by sub-section (3), it may pay interest at such rate or rates as may be determined by the Bank from time to time on the amount actually maintained with it by the scheduled bank, notwithstanding that such amount is less than the balance required to be maintained in pursuance of a notification issued under the proviso to sub-section (1) or under sub-section (1-A).]"
5. Substituted by Act 1 of 1984, section 6, for "of a week" (w.e.f. 29-3-1985).
6. Substituted by Act 1 of 1984, section 6, for clause (b) (w.e.f. 29-3-1985).
7. Substituted by Act 23 of 1965, section 6, for clause (c) (w.e.f. 1-3-1966).
8. The words "or from the Development Bank" omitted by Act 53 of 2003, section 12 and Schedule, Pt. I.
9. Inserted by Act 28 of 1981, section 40 and Schedule II (w.e.f. 1-1-1982).
10 Inserted by Act 62 of 1984, section 71 and Schedule Ill (w.e.f. 20-3-1985).
11. Inserted by Act 53 of 1987, section 56 and the Second Schedule (w.e.f. 9-7-1988).
12. Substituted by Act 61 of 1981, section 61 and Schedule II, for "Agricultural Refinance and Development Corporation" (w.e.f. 1-5-1982).
13. Inserted by Act 39 of 1989, section 53 and ScheduleII (w.e.f. 7-3-1990).
14. Certain words omitted by Act 51 of 1974, section 11 (w.e.f. 13-12-1947).
15. Inserted by Act 1 of 1984, section 6 (w.e.f. 29-3-1985).
16. The words "required to be"omitted by Act 51 of 1974, section 11 (w.e.f. 13-12-1974).
17. Inserted by Act 51 of 1974, section 11 (w.e.f. 13-12-1974).
18. Substituted by Act 35 of 1962, section 4, for certain words (w.e.f. 15-9-1962).
19. Inserted by Act 1 of 1984, section 6 (w.e.f. 29-3-1985). Earlier the proviso was omitted by Act 35 of 1962, section 4 (w.e.f. 15-9-1962).
20. Inserted by Act 35 of 1962, section 4 (w.e.f. 15-9-1962).
21. Substituted by Act 32 of 1951, section 16, for sub-section (2) (w.e.f. 1-11-1951).
22. Substituted by Act 51 of 1974, section 11, for certain words (w.e.f. 13-12-1974).
23. Clause (aa) omitted by Act 51 of 1974, section 11 (w.e.f. 13-12-1974). Earlier clause (a) was Inserted by Act 54 of 1953, section 6 (w.e.f. 30-12-1953).
24. Inserted by Act 54 of 1953, section 6 (w.e.f. 30-12-1953).
25. Substituted by Act 1 of 1984, section 6, for certain words (w.e.f. 29-3-1985).
26. Substituted by Act 51 of 1974, section 11, for "Provided that" (w.e.f. 13-12-1974).
27. Substituted by Act 1 of 1984, section 6, for the third proviso (w.e.f. 29-3-1985).
28. Substituted by Act 38 of 1956, section 5, for sub-section (3) (w.e.f. 6-10-1956).
29. Inserted by Act 38 of 1940, sec, 2.
30. Substituted by Act 38 of 1956, sec, 5, for certain words (w.e.f. 6-10-1956).
31. The words "managing agent," omitted by Act 32 of 1951, sec, 16 (w.e.f. 1-11-1951).
32. Substituted by Act 32 of 1951, section 16, for certain words (w.e.f. 1-11-1951).
33. Substituted by Act 10 of 1949, sec, 55 and Schedule I, for sub-section (6) (w.e.f. 16-3-1949).
34. Substituted by Act 32 of 1951, sec, 16, for "in any State of India" (w.e.f. 1-11-1951).
35. Substituted by Act 23 of 1965, sec, 6, for "is a company" (w.e.f. 1-3-1966).
36. Substituted by Act 19 of 1957, sec, 4, for "clause (2) of section 2 of the Indian Companies Act, 1913 (7 of 1913)".
37. Substituted by Act 32 of 1951, sec, 16, for "outside the States of India" (w.e.f. 1-11-1951).
38. Inserted by Act 61 of 1981, section 61 and Schedule II (w.e.f. 1-5-1982).
39. Inserted by Act 32 of 1951, section 16 (w.e.f. 1-11-1951).
40. Substituted by Reserve Bank of India (Amendment) Act, 2006 (26 of 2006) w.e.f. 1st April, 2007 for the following:
2 [three per cent. of the total of the demand and time liabilities] in India of such bank as shown in the return referred to in sub-section(2):
41. Omitted by Reserve Bank of India (Amendment) Act, 2006 (26 of 2006) w.e.f. 1st April, 2007. Prior to omission it was read as under:
3 [Provided that the Bank may, by notification in the Gazette of India, increase the said rate to such higher rate as may be specified in the notification so however that the rate shall' not be more than fifteen per cent, of the total of the demand and time liabilities.]"
Section 43 - Publication of consolidated statement by the Bank
1 [43. Publication of consolidated statement by the Bank
The Bank shall cause to be published each 2 [fortnight] a consolidated statement showing the aggregate liabilities and assets of all the scheduled banks together, based on the returns and information received under this Act or any other law for the time being in force.]
______________________
1. Substituted by Act 51 of 1974, section 12, for section 43 (w.e.f. 13-12-1974).
2. Substituted by Act 1 of 1984, section 7, for "week" (w.e.f. 29-3-1985).
Section 43A - Protection of action taken in good faith
1 [43A. Protection of action taken in good faith
(1) No suit or other legal proceeding shall lie against the Bank or any of its officers for anything which is in good faith done or intended to be done in pursuance of section 42 or section 43 2 [or in pursuance of the provisions of Chapter IIIA].
(2) No suit or other legal proceeding shall lie against the Bank or any of its officers for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of section 42 or section 43 2 [or in pursuance of the provisions of Chapter IIIA].]
______________________
1. Inserted by Act 54 of 1953, section 7 (w.e.f. 30-12-1953).
2. Inserted by Act 35 of 1962, section 5 (w.e.f. 15-9-1962).
Section 44 - Power to require returns from co-operative banks (Repealed)
[Rep. by the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965), section 7 (w.e.f. 1-3-1966).]
Section 45 - Appointment of agents
1[45. Appointment of agents
(1) Unless otherwise directed by the Central Government with reference to any place, the Bank may, having regard to public interest, convenience of banking, banking development and such other factors which in its opinion are relevant in this regard, appoint the National Bank, or the State Bank, or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), as its agent at all places, or at any place in India for such purposes as the Bank may specify.
(2) When any bank is appointed by the Bank as its agent under sub-section (1) to receive on behalf of the Bank any payment required to be made into the Bank, or any bill, hundies or other securities required to be delivered into the Bank, under any law or rule, regulations or other instructions having the force of law, the same may be paid or delivered into the bank so appointed as the agent of the Bank.]
_______________________
1. Substituted by Act 61 of 1981, section 61 and Schedule II, for section 45 (w.e.f. 12-7-1982).