From The Washington PostBy Cornel Ban and Kevin GallagherDecember 17, 2014 Cornel Ban...
Reserve Bank of India Act of 1934
(amended through 2009)
The Reserve Bank of India Act of 1934 outlines the role of The Reserve Bank of India (the Bank) in financial management.
It is divided into the following chapters:
- Chapter I the preliminary section: contains the short title and defines important terms, including;
- The “Bank”;
- The Central Board; and
- Deposit Insurance Corporation.
- Chapter II sets out: the provisions for incorporation, capital, management and business, and discusses elements including;
- The establishment and incorporation of the Bank;
- Capital of the Bank;
- Offices, branches and agencies;
- Composition of the Central Board, and term of office of Directors;
- Local Boards, their constitution and functions;
- Business which the Bank may transact; and
- Business which the Bank may not transact.
- Chapter III;
- Sets out central banking functions, including the obligation of the Bank to transact government business and its right to issue bank notes, etc.
- Is further divided into the following sections:
- Collecting and furnishing of credit information;
- Provisions relating to non-banking institutions receiving deposits and financial institutions;
- Prohibition of acceptance of deposits by unincorporated bodies; and
- Regulation of transactions in derivatives, money market instruments, securities, etc.
- Chapter IV explains the general provisions of the Act, such as:
- Contribution by the Central Government to the “Reserve Fund”;
- Exemption of the Bank from income tax and super tax;
- Powers and duties of the auditors, etc.
- Rural credit and development; and
- Power of the Central Board to make regulations.
The last chapter is entitled Penalties and discusses aspects including offences by companies and the power of the Bank to impose fines.