The Reserve Bank of India Act, 1934

⁶⁵[(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; ⁶⁶***

(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;

⁶⁷[(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;] ⁶⁸[(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; ]

⁶⁹[(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;]

⁷⁰[(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;]

⁷¹[(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;]

⁷²[(4F) contributing to the initial Capital of the Unit Trust;]

⁷³[(4G) the making of loans and advances to, and the purchasing of bonds and debentures of, ⁷⁴*** ⁷⁵[the Exim Bank] ⁷⁶[or the Reconstruction Bank] ⁷⁷[or the Small Industries Bank ⁷⁸[or the National Bank for Financing Infrastructure and Development or other development financial institution]] out of the National Industrial Credit (Long Term Operations) Fund established under section 46C;]

⁷⁹[(4GG) the making of loans and advances to, and the purchasing of bonds and debentures of, the National Housing Bank out of the National Housing Credit (Long Term Operations) Fund established under section 46D;]

(4H) the making to ⁷⁴*** ⁷⁷[or 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; ]

⁸⁰[(4-I) the making to scheduled banks, ⁷⁴*** ⁷⁵[the Exim Bank] ⁷⁶[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; ]

⁷⁵[(4J) the making to the Exim Bank of loans and advances-- br

(making foot note) (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; ]

⁸¹[(4K) the making to the Reconstruction Bank of loans and advances-- br

(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 br

(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; ]br

⁸²[(4L) the making to the National Bank for Financing Infrastructure and Development or other development financial institution of loans and advances—

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

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

(5) the making to the ⁸³[Central Government] ⁸⁴[ ⁸⁵*** ⁸⁶[and ⁸⁷[State] Governments]] of advances repayable in each case not later than three months from the date of the making of the advance;

⁸⁸[(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;]

⁸⁹[(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;]

⁹⁰* * * * *,

(8) the purchase and sale of securities ⁹¹[of the Central ⁹²[Government or a ⁸⁷[State] Government]] of any maturity or of such securities of a local authority ⁹³*** as may be specified in this behalf by the ⁹⁴[Central Government] on the recommendation of the Central Board:

Provided that securities fully guaranteed as to principal and interest by ⁹⁵[any such Government ⁹⁶[or authority]] shall be deemed for the purposes of this clause to be securities of such Government 96^{[or authority];}

97^{* * * * *}

98^{[(8A) the purchase and sale of shares in, or the capital of} 99^[the 100^{[National Bank],} 101^{[the Deposit Insurance Corporation],} 102^{***, the State Bank} 103^{[or any other bank} 104^{[or financial institution] notified by the Central Government in this behalf];]}

105^{[(8AA) the promoting, establishing, supporting or aiding in the promotion, establishment and support of any financial institution, whether as its subsidiary or otherwise;]}

106^{[(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 107^{*** the} 108^{[Central Government]} 112^{[or any} 94^{[State] Government} 112^{*** or any local authority} 113^***] 114^{[or the Industrial Finance Corporation of India} 115^***] 116^{[or any other body corporate which is established or constituted by or under any other law]} 117^{]or the Government of any such country outside India or} 118^{[any such person or authority] as may be approved in this behalf by the Central Government] in the transaction of any of the following kinds of business, namely:--}

(a) the purchase and sale of gold or silver 119^{[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;

120^[(f) 121^{*** the issue and management of} 122^{*** bonds and debentures; ]}

123^{[(11A) the acting as agent for the Central Government,--}

124^{[(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;

125^{[(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;]}

126^{[(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; ]

127^{[(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;

130^{[(12B) the making of loans and advances in foreign currencies to scheduled banks, 131***} 74^{[, the Exim Bank,} 133^[or 134^{[the Reconstruction Bank or the Small Industries Bank]i9563 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;]

135^{[(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; ]}

136^{[(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 137^{*** other than a scheduled bank 138*** or from any person outside India 139*** 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 135*** shall not at any time exceed the amount of the 136capital of the Bank;

140^{* * * * *}

(15) the making and issue of bank notes subject to the provisions of this Act 141^***; 142^***

143^{ic6560(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;]}

144^{[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 145^***.

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

². Subs. by the M.O. 1937, for G.G. in C..

³. Subs. by the M.O. 1937, for L.G.'s.

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

⁵. Subs. by the A.O. 1950, for Provincial.

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

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

⁸. Ins. by Act 13 of 2018, s. 135 (w.e.f. 28-3-2018).

⁹. Subs. by the M.O. 1937, for drawn on and payable in India.

¹⁰. Subs. by Act 11 of 1947, s. 11, for India or Burma and payable in India or Burma (w.e.f. 1-4-1947).

¹¹. Ins. by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

¹². Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974).

¹³. The words or a Burma scheduled bank omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947), which were inserted by M.O. 1937.

¹⁴. Subs. by Act 35 of 1962, s. 3, for maturing within ninety days from the date of such purchase or re-discount, exclusive of days of grace (w.e.f. 15-9-1962).

¹⁵. Subs. by M.O. 1937, for drawn and payable in India.

¹⁶. Subs. by Act 11 of 1947, s. 11, for either in India or in Burma and payable either in India or in Burma (w.e.f. 1-4-1947).

¹⁷. Subs. by s. 11, ibid., for a Burma scheduled bank, a provincial co-operative bank, or a Burma co-operative bank (w.e.f. 1-4-1947).

¹⁸. Subs. by the A.O. 1950, for Provincial.

¹⁹. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974).

²⁰. Subs. by s. 6, ibid.,for financing seasonal agricultural operations (w.e.f. 13-12-1974).

²¹. Subs. by Act 32 of 1951, s. 7, for nine months (w.e.f. 1-11-1951).

²². The Explanation omitted by Act 23 of 1965, s. 4 (w.e.f. 1-3-1966). Earlier added by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953).

²³. Ins. by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953).

²⁴. Subs. by Act 11 of 1947, s. 11, for either in India or Burma and payable either in India or in Burma (w.e.f. 1-4-1947).

²⁵. The words or a Burma scheduled bank omitted by s. 11, ibid. (w.e.f. 1-4-1947).

²⁶. Subs. by the M.O. 1937, for the Government of India or a L.G..

²⁷. Subs. by Act 11 of 1947, s. 11, for or a Provincial Government (w.e.f. 1-4-1947).

²⁸. The words or such securities of Part B States as may be specified in this behalf by the Central Government on the recommendation of the Central Board omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

²⁹. The words and Burma scheduled banks omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was earlier inserted by M.O. 1937.

³⁰. Subs. by Act 62 of 1948, s. 7 and the Schedule, for sterling (w.e.f. 1-1-1949).

³¹. The words in amounts of not less than the equivalent of one lakh of rupees omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

³². Subs. by Act 35 of 1962, s. 3, for sub-clause (b) (w.e.f. 15-9-1962).

³³. Sub-clause (c) omitted by Act 62 of 1948, s. 7 and the Schedule (w.e.f. 1-1-1949).

³⁴. Ins. by Act 35 of 1962, s. 3 (w.e.f. 15-9-1962).

³⁵. Subs. by Act 58 of 1968, s. 24, for sub-clause (b) (w.e.f. 1-2-1969).

³⁶. Subs. by s. 24, ibid., for clause (ii) (w.e.f. 1-2-1969).

³⁷. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974).

³⁸. The words and letter Part B States omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

³⁹. Subs. by the M.O. 1937, for and Provincial co-operative banks.

⁴⁰. The words Burma scheduled banks omitted by Act 11 of 1947, s. 11 (w.e.f 1-4-1947).

⁴¹. Subs. by the A.O. 1950, for Provincial.

⁴². Subs. by Act 19 of 1957, s. 2, for certain words (w.e.f. 8-6-1957).

⁴³. The words and figures established under the State Financial Corporations Act, 1951 omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

⁴⁴. Ins. by the A.O. 1950.

⁴⁵. Subs. by Act 32 of 1951, s. 2 for the States (w.e.f. 1-11-1951).

⁴⁶. The words or Burma omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

⁴⁷. Ins. by Act 24 of 1955, s. 6 (w.e.f. 8-5-1955).

⁴⁸. Subs. by the M.O. 1937, for or a Provincial co-operative bank.

⁴⁹. Subs. by Act 11 of 1947, s. 11, for Burma scheduled bank, provincial co-operative bank or Burma (w.e.f. 1-4-1947).

⁵⁰. Subs. by the A.O. 1950, for Provincial.

⁵¹. Subs. by Act 32 of 1951, s. 7, for which have been transferred (w.e.f. 1-11-1951).

⁵². Subs. by Act 24 of 1955, s. 6, for a cash credit or overdraft granted (w.e.f. 8-5-1955).

⁵³. Subs. by Act 51 of 1974, s. 6, for financing seasonal agricultural operations (w.e.f. 13-12-1974).

⁵⁴. Added by Act 35 of 1962, s. 3 (w.e.f. 15-9-1962).

⁵⁵. Ins. by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960).

⁵⁶. The words and figures established under the State Financial Corporations Act, 1951 omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

⁵⁷. Subs. by Act 51 of 1974, s. 6, for the proviso (w.e.f. 13-12-1974).

⁵⁸. Subs. by Act 81 of 1985, s. 2, for ninety per cent. of the paid-up share capital (w.e.f. 1-5-1986).

⁵⁹. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for clause (4AA) (w.e.f. 12-7-1982).

⁶⁰. Clause (4A) renumbered and re-lettered as clause (4AA) thereof by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960). Earlier it was inserted by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953).

⁶¹. Ins. by Act 54 of 1953, s. 3 (w.e.f. 30-12-1953).

⁶². The words and figures established under the Industrial Finance Corporation Act, 1948 omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

⁶³. The proviso omitted by Act 66 of 1988, s. 5 (w.e.f. 30-12-1988).

⁶⁴. Subs. by Act 14 of 1960, s. 2, for clause (4BB) (w.e.f. 30-4-1960). Earlier inserted by Act 19 of 1957, s. 2 (w.e.f. 8-6-1957).

⁶⁵. Ins. by Act 52 of 1963, s. 44 and the Second Schedule (w.e.f. 1-2-1964).

⁶⁶. The word or omitted by Act 17 of 1966, s. 11 (w.e.f. 10-6-1966).

⁶⁷. Ins. by s. 11, ibid. (w.e.f. 10-6-1966).

⁶⁸. Ins. by Act 28 of 1956, s. 55 (w.e.f. 1-8-1956).

⁶⁹. Ins. by Act 47 of 1961, s. 51 and the Second Schedule (w.e.f. 1-1-1962).

⁷⁰. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

⁷¹. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for clause (4E) (w.e.f. 12-7-1982).

⁷². Ins. by Ac 52 of 1963, s. 44 and the Second Schedule (w.e.f. 1-2-1964).

⁷³. Ins. by Act 18 of 1964, s. 38 and the Second Schedule (w.e.f. 1-7-1964).

⁷⁴. The words the Development Bank or omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004).

(repeat) ⁷⁵. Ins. by Act 28 of 1981, s. 40 and the Second Schedule (w.e.f. 1-1-1982).

⁷⁶. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985).

⁷⁷. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).

(reapeat ) ⁷⁸. Ins. by Act 17 of 2021, s. 47 and the second Schedule (w.e.f. 19-4-2021).

⁷⁹ Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

⁸⁰. Ins. by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

⁸¹ Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985).

⁸². Ins. by Act 17 of 2021, s. 47 and the Second Schedule (w.e.f. 19-4-2021).

⁸³. Subs. by the M.O. 1937, for G.G. in C.

⁸⁴. Subs. by ibid., for certain words.

⁸⁵. The words the Federal Railway Authority omitted by the A.O. 1948.

⁸⁶. Subs. by Act 11 of 1947, s. 11, for Provincial Governments, the Government of Burma and the Burma Railway Board (w.e.f. 1-4-1947).

⁸⁷. Subs. by the A.O. 1950, for Provincial.

⁸⁸. Subs. by Act 32 of 1951, s. 7, for clause (6) (w.e.f. 1-11-1951).

⁸⁹. Ins. by Act 26 of 2006, s. 2 (w.e.f. 9-1-2007).

⁹⁰. Clause (7) repealed by Act 2 of 1948, s. 2 and the Schedule (w.e.f. 5-1-1948).

⁹¹. Subs. by the M.O. 1937, for of the G. of I or of a L.G..

⁹².Subs. by Act 11 of 1947, s. 11, for Government, a Provincial Government or the Government of Burma (w.e.f. 1-4-197).

⁹³. The words and letter or such Part B States omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

⁹⁴. Subs. by the M.O. 1937, for G.G. in C.

⁹⁵. Subs., ibid., for the G. of I., a L.G., a local authority or State in India .

⁹⁶. Subs. by Act 32 of 1951, s. 7, for authority or State (w.e.f. 1-11-1951).

⁹⁷. The second proviso omitted by s. 7, ibid. (w.e.f. 1-11-1951).

⁹⁸. Ins. by Act 23 of 1955, s. 52 and the Third Schedule (w.e.f. 1-7-1955).

⁹⁹. Ins. by Act 10 of 1963, s. 47 and the Second Schedule (w.e.f. 1-5-1963).

¹⁰⁰. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for Agricultural Refinance and Development Corporation (w.e.f. 12-7-1982).

¹⁰¹. Ins. by Act 47 of 1961, s. 51 and the Second Schedule (w.e.f. 1-1-1962).

¹⁰². The words the Development Bank omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004).

¹⁰³. Subs. by Act 79 of 1956, s. 43 and the Second Schedule, for or any of its subsidiary banks (w.e.f. 22-10-1956).

¹⁰⁴. Ins. by Act 19 of 1957, s. 2 (w.e.f. 8-6-1957).

¹⁰⁵. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

¹⁰⁶. Ins. by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 10-9-1959).

¹⁰⁷. The words the Secretary of State omitted by the A.O. 1948.

¹⁰⁸. Subs., ibid., for certain words.

¹⁰⁹. The words and letter or any Part B State omitted by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

¹¹⁰. The words or the Government of Burma omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947).

¹¹¹. . Ins. by Act 44 of 1949, s. 2.

¹¹². The words established under the Industrial Finance Corporation Act, 1948 (15 of 1948) omitted by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

¹¹³. Ins. by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974).

¹¹⁴. Ins. by Act 32 of 1951, s. 7 (w.e.f. 1-11-1951).

¹¹⁵. Subs. by Act 51 of 1974, s. 6, for any such person (w.e.f. 13-12-1974).

¹¹⁶. Added by Act 23 of 1947, s. 3 (w.e.f. 18-4-1947).

¹¹⁷. Ins. by Act 44 of 1949, s. 2.

¹¹⁸. The words in respect of the aforesaid Corporation omitted by Act 51 of 1974, s. 6 (w.e.f. 13-12-1974).

¹¹⁹. The word its omitted by s. 6, ibid. (w.e.f. 13-12-1974).

¹²⁰. Subs. by Act 58 of 1968, s. 24, for clause (11A) (w.e.f. 1-2-1969). Earlier it was inserted by Act 14 of 1960, s. 2 (w.e.f. 30-4-1960).

¹²¹. Restored by Act 81 of 1985, s. 12 (w.e.f. 1-5-1986). Earlier sub-clause (a) omitted by Act 21 of 1978, s. 9 (date to be notified).

¹²². Subs. by Act 24 of 1978, s. 4, for clause (12) (w.e.f. 21-7-1978).

¹²³. Subs. by s. 4, ibid., for clause (12A) (w.e.f. 21-7-1978).

¹²⁴. Ins. by Act 26 of 2006, s. 2 (w.e.f. 9-1-2007).

¹²⁵. Ins. by Act 24 of 1978, s. 4 (w.e.f. 21-7-1978).

¹²⁶. The words the Development Bank omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004.

¹²⁷. Subs. by Act 24 of 1978, s. 4, for clause (13) (w.e.f. 21-7-1978) which was inserted by the M.O. 1937.

¹²⁸. Ins. by Act 44 of 1973, s. 2 (w.r.e.f. 15-9-1973).

¹²⁹. The words or a Burma scheduled bank omitted by s. 11, ibid. (w.e.f. 1-4-1947) which were earlier inserted by the M.O. 1937.

¹³⁰. The words or a Burma scheduled bank omitted by s. 11, ibid. (w.e.f. 1-4-1947) which were earlier inserted by the M.O. 1937.

¹³¹. The words and Burma omitted by s. 11, ibid. (w.e.f. 1-4-1947).

¹³². The words and Burma omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947).

¹³³. Subs. by Act 32 of 1951, s. 7, for share capital (w.e.f. 1-11-1951).

¹³⁴. Clause (14A) omitted by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 1-10-1959) which was inserted by Act 79 of 1956, s. 43 and the Second Schedule (w.e.f. 22-10-1956).

¹³⁵. The words and the making and issue of Burma notes in accordance with the law of Burma omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937

¹³⁶. The word and omitted by Ordinance 47 of 1945, s. 6.

¹³⁷. Subs. by Act 23 of 1955, s. 52 and the Third Schedule for clause (15A) (w.e.f. 1-7-1955).

¹³⁸. Ins. by Act 58 of 1968, s. 24 (w.e.f. 1-2-1969).

¹³⁹.The words and the law of Burma omitted by Act 11 of 1947, s. 11 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

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* * * * *

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

². Subs. by Act 32 of 1951, s. 8, for "Central Board” (w.e.f. 1-11-1951).

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

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

⁵. The words "or Burman" omitted by Act 11 of 1947, s. 12 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

⁶. The words, brackets, letters and figures "sub-clauses (a) and (b) of clause (2) or sub-clause (a) or (b) of clause (3) or clause (4) of" omitted by Act 51 of 1974, s. 7 (w.e.f. 13-12-1974).

⁷. Subs. by s. 7, ibid., for clause (1) (w.e.f. 13-12-1974).

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

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

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

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

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

(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. Ins. by Act 38 of 1956, s. 2 (w.e.f. 6-10-1956).

¹. Subs. by Act 32 of 1951, s. 9, for clause (2) (w.e.f. 1-1-1951).

¹. Subs. by the M.O. 1937, for certain words.

². The words "the Secretary of State" omitted by the A.O. 1950.

³. The words and letter "and the Governments of Part A States" omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956).

⁴ Subs. by s. 104, ibid., for "their accounts respectively" (w.e.f. 1-11-1956).

⁵. Subs. by s. 104, ibid., for "their exchange" (w.e.f. 1-11-1956).

⁶. Ins. by s. 104, ibid. (w.e.f. 1-11-1956).

Provided that nothing in this sub-section shall prevent the ¹[Central Government] ⁴*** from carrying on money transactions at places where the Bank has no branches or agencies, and the ¹ [Central Government] ²*** may hold at such places such balances as ⁵[it] may require.

(2) The ¹[Central Government] ⁶*** 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 ¹[Central Government] shall decide what the conditions shall be.

⁷[(4) Any agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.]

⁸* * * * *

¹. Subs. by the M.O. 1937, for “G.G. in C.

². The words "and the State Governments" omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956).

³. Subs. by s. 104, ibid., for "their" (w.e.f. 1-11-1956).

⁴. The words "or any State Government" omitted by s. 104, ibid. (w.e.f. 1-11-1956).

⁵. Subs. by s. 104, ibid., for "they" (w.e.f. 1-11-1956).

⁶. The words "and each State Government" omitted by s. 104, ibid. (w.e.f. 1-11-1956).

⁷. Subs. by s. 104, ibid. for sub-section (4) (w.e.f. 1-11-1956).

⁸. Sub-section (5) omitted by s. 104, ibid. (w.e.f. 1-11-1956) which was inserted by Act 32 of 1951, s. 3 (w.e.f. 1-11-1951).

(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. Ins. by Act 32 of 1951, s. 12 (w.e.f. 1-11-1951).

². The word and letter "Part B" omitted by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956).

³. The words "(including the autonomous State of Meghalaya)" omitted by Act 81 of 1971, s. 72 (w.e.f. 21-1-1972) which was earlier inserted by Act 55 of 1969, s. 75 (w.e.f. 2-4-1970).

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 TravancoreCochin 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. Ins. by Act 37 of 1956, s. 104 (w.e.f. 1-11-1956).

(2) On and from the date on which this Chapter comes into force the ²[Central Government] shall not issue any currency notes.

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

². Subs. by the M.O. 1937, for "G.G. in C."

¹. Ins. by Act 6 of 2022, s. 125 (w.e.f. 30-3-2022).

(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) omitted by Act 11 of 1947, s. 13 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

(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. Subs. by Act 58 of 1968, s. 25, for section 24 (w.e.f. 1-2-1969).

¹. Subs. by the M.O. 1937, for "G.G. in C."

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

². Subs. by the M.O. 1937, for "G.G. in C.".

³. Subs. by Act 32 of 1951, s. 13, for "save at an office or agency of the Bank" (w.e.f. 1-11-1951).

⁴. Sub-section (3) omitted by Act 11 of 1947, s. 14 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

¹. Ins. by Act 62 of 1956, s. 2 and the Schedule (w.e.f. 1-11-1956).

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)" omitted by Act 11 of 1947, s. 15 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

². Subs. by the M.O. 1937, for "G.G. in C.".

³. The words "of both Houses" omitted by the A.O. 1948.

⁴. Subs. by the A.O. 1950, for "the Central Legislature".

⁵. Sub-section (2) omitted by Act 11 of 1947, s. 15 (w.e.f. 1-4-1947) which was inserted by the M.O. 1937.

(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 subsection (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. Ins. by Act 14 of 1959, s. 2 (w.e.f. 1-5-1959).

¹. The words "or Burma notes" omitted by Act 11 of 1947, s. 16 (w.e.f. 1-4-1947) which was earlier inserted by the M.O. 1937.

(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 Subs. by the M.O. 1937, for "G.G. in C.".

². The words "or by or under the law of Burma" omitted by Act 11 of 1947, s. 17 (w.e.f. 1-4-1947) which was earlier inserted by the M.O. 1937.

³. Subs. by the M.O. 1937, for "he".

⁴. Subs. by the A.O. 1950, for "the Central Legislature".

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 ¹⁹⁰[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.]

⁵[(3) Notwithstanding anything contained in this section, the Central Government may authorise any scheduled bank to issue electoral bond.

Explanation.--For the purposes of this sub-section, "electroal bond" means a bond issued by any scheduled bank under the scheme as may be notified by the Central Government.]

¹ Subs. by the M.O. 1937, for "G.G. in C."

². Section 31 renumbered as sub-section (1) thereof by Act 23 of 1946, s. 2 (w.e.f. 10-11-1946).

³. Subs. by Act 32 of 1951, s. 2, for "the States" (w.e.f. 1-11-1951).

⁴. Added by Act 23 of 1946, s. 2 (w.e.f. 10-11-1946).

⁵. Ins. by Act 7 of 2017, s. 134 (w.e.f. 1-4-2017).

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) For the purposes of this section, gold coin the gold bullion shall be valued at ⁴[a price not exceeding the international market price for the time being obtaining], rupee coin shall be valued at its face value, and securities shall be valued ⁵[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 ⁶[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.

⁷[(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 ⁸[or Asian Development Bank] or the Bank for International Settlements or ⁹[any banking or financial institution ¹⁰[approved] by the Central Government] in this behalf provided that they are repayable within a ¹¹[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 ¹²[within ten years];

(ii) any drawing rights representing a liability of the International Monetary Fund.]

¹. Subs. by Act 62 of 1948, s. 7 and the Schedule, for "sterling securities" (w.e.f. 1-1-1949).

². Subs. by Act 48 of 1957, s. 2, for sub-section (2) (w.e.f. 31-10-1957).

³. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for sub-section (3) (w.e.f. 12-7-1982).

⁴. Subs. by Act 8 of 1991, s. 2, for "0.118489 grammes of fine gold per rupee" (w.e.f. 15-10-1990).

⁵. Subs. by Act 58 of 1968, s. 26, for "at the market rate" (w.e.f. 1-2-1969).

⁶. Subs. by Act 32 of 1951, s. 2, for "the States" (w.e.f. 1-11-1951).

⁷. Subs. by Act 51 of 1974, s. 10, for sub-section (6) (w.e.f. 13-12-1974).

⁸. Ins. by Act 24 of 1978, s. 6 (w.e.f. 21-7-1978).

⁹. Subs. by s. 6, ibid., for "any commercial bank notified by the Central Government" (w.e.f. 21-7-1978).

¹⁰. Subs. by Act 1 of 1984, s. 4, for "notified" (w.e.f. 15-2-1984).

¹¹. Subs. by Act 24 of 1978, s. 6, for "period of five years" (w.e.f. 21-7-198).

¹². Subs. by s. 6, ibid., for "within five years" (w.e.f. 21-7-198).

¹* * * * *

²* * * * *

¹. Sub-section (2) omitted by Act 55 of 1963, s. 2 (w.e.f. 1-2-1964).

². Sub-section (3) omitted by s. 2, ibid. (w.e.f. 1-2-1964) which was earlier inserted by the M.O. 1937.

²* * * * *]

¹. Subs. by Act 38 of 1956, s. 4, for section 37 (w.e.f. 6-10-1956).

². The proviso omitted by Act 48 of 1957, s. 3 (w.e.f. 31-10-1957).

¹. Subs. by the M.O. 1937, for "G.G. in C".

². The words and figures "to re-issue any rupee coin delivered under section 36 nor" omitted by Act 55 of 1963, s. 4 (w.e.f. 1-2- 1964).

³. The words "and as provided in that section" omitted by Ordinance 4 of 1940, s. 3.

⁴. The words "or by delivery to the Central Government under that sections" omitted by Act 55 of 1963, s. 4 (w.e.f. 1-2-1964).

(2) The Bank shall, in exchange for currency notes or bank notes of ²[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 ¹[Central Government] shall supply such coins to the Bank on demand. If the ¹[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. Subs. by the M.O. 1937, for "G.G. in C".

². Subs. by Act 62 of 1948, s. 7 and the Schedule, for "five" (w.e.f. 1-1-1949).

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 "authorised 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 Subs. by Act 23 of 1947, s. 4, for sections 40 and 41 (w.e.f. 18-4-1947).

². Ins. by Act 54 of 1953, s. 5 (w.e.f. 30-12-1953).

³. Subs. by Act 1 of 1984, s. 5, for "Foreign Exchange Regulation Act, 1947 (7 of 1947)" (w.e.f. 15-2-1984).

³* * * * *

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 ⁴[of a fortnight];

⁵[(b) fortnight shall mean the period from Saturday to the second following Friday, both days inclusive;]

⁶[(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 ⁷*** ⁸[or from the Exim Bank] ⁹[or from the Reconstruction Bank] ¹⁰[or from the National Housing Bank] or from the ¹¹[National Bank] ¹²[or from the Small Industries Bank] ¹³[or from the National Bank for Financing Infrastructure and Development or from the other development financial institution] 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 Co-operative 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;]

¹⁵[(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);

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) 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 cooperative 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].

²⁰* * * * *

¹⁵[1(C) 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] where ²⁷[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 days figures in respect of such office or offices, but shall nevertheless be deemed to relate to that Friday:

²⁸[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.]]

²⁷ [(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.]

²⁹[(3) If the average daily balance held at the Bank by a scheduled bank during any 8 [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 ³⁰[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 ³⁰[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 ³⁰[fortnight] and each subsequent 8[fortnight] during which the default continues on the amount by which such balance at the Bank falls short of the prescribed minimum.]

³¹[(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, ³²[if thereafter the average daily balance held at the Bank during the next succeeding ³³[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 ³³[fortnight] during which the default continues, and

(b) the Bank may prohibit the scheduled bank from receiving after the said ³³[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 ³⁴*** manager, secretary, branch manager, and branch secretary.]

(4) Any scheduled bank failing to comply with the provisions of sub-section (2) ³⁵[shall be liable to pay to the Bank] a penalty of one hundred rupees for each day during which the failure continues.

³⁶[(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.]

³⁷[(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 ³⁸[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) ³⁹[is a State co-operative bank or a company] as defined ⁴⁰[section 3of 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 ⁴¹[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 ⁴²[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 books 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.]

⁴³[(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.]

⁴⁴[(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. Subs. by Act 38 of 1956, s. 5, for sub-section (1) (w.e.f. (6-10-1956).

². Subs. by Act 26 of 2006, s. 3, for “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)” (w.e.f. 1-4-2007).

³. The proviso omitted by s. 3, ibid. (w.e.f. 1-4-2007).

⁴. Subs. by Act 1 of 1984, s. 6, for “of a week” (w.e.f. 29-3-1985).

⁵. Subs. by s. 6, ibid. for clause (b) (w.e.f. 29-3-1985).

⁶. Subs. by Act 23 of 1965, s. 6, for clause (c) (w.e.f. 1-3-1966).

⁷. The words “or from the Development Bank” omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004).

⁸. Ins. by Act 28 of 1981, s. 40 and the Second Schedule (w.e.f. 1-1-1982).

⁹. Ins. by Act 62 of 1984, s. 71 and the Third Schedule (w.e.f. 20-3-1985).

¹⁰. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

¹¹. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for “Agricultural Refinance and Development Corporation” (w.e.f. 12-7-1982).

¹². Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).

¹³. Ins. by Act 17 of 2021, s. 47 and the Second Schedule (w.e.f. 19-4-2021).

¹⁴. The words “or from the State Bank or from any other bank notified by the Central Government in this behalf, and” omitted by Act 51 of 1974, s. 11 (w.e.f. 13-12-1974).

¹⁵. Ins. by Act 1 of 1984, s. 6 (w.e.f. 29-3-1985).

¹⁶. The words “required to be” omitted by Act 51 of 1974, s. 11 (w.e.f. 13-12-1974).

¹⁷. Ins. by s. 11, ibid. (w.e.f. 13-12-1974).

¹⁸. Subs. by Act 35 of 1962, s. 3, for certain words (w.e.f. 15-9-1962).

¹⁹. Added by Act 1 of 1984, s. 6 (w.e.f. 29-3-1985).

²⁰. Sub-sections (1AA) and (1B) omitted by Act 26 of 2006, s. 3 (w.e.f. 1-4-2007).

²¹. Subs. by Act 32 of 1951, s. 16, for sub-section (2) (w.e.f. 1-11-1951).

²². Subs. by Act 51 of 1974, s. 11, for “other than the State Bank and any other bank notified by the Central Government in this behalf” (w.e.f. 13-12-1974).

²³. Clause (aa) omitted by Act 51 of 1974, s. 11 (w.e.f. 13-12-1974). Earlier inserted by Act 54 of 1953, s. 6 (w.e.f. 30-12-1953).

²⁴. Ins. by Act 54 of 1953, s. 6 (w.e.f. 30-12-1953).

²⁵. Subs. by Act 1 of 1984, s. 6, for “at the close of business on each Friday, and every such return shall be sent not later than five days after the date to which it relates” (w.e.f. 29-3-1985).

²⁶. Subs. by Act 51 of 1974, s. 11, for “Provided that” (w.e.f. 13-12-1974).

²⁷. Ins. by Act 1 of 1984, s. 6 (w.e.f. 29-3-1985).

²⁸. Subs. by s. 6, ibid., for the third proviso (w.e.f. 29-3-1985).

²⁹. Subs. by Act 38 of 1956, s. 5, for sub-section (3) (w.e.f. 6-10-1956).

³⁰. Subs. by Act 1 of 1984, s. 6, for “week” (w.e.f. 29-3-1985).

³¹. Ins. by Act 38 of 1940, s. 2 (w.e.f. 27-22-1940).

³². Subs. by Act 38 of 1956, s. 5, for certain words (w.e.f. 6-10-1956).

³³. Subs. by Act 1 of 1984, s. 6, for “week” (w.e.f. 29-3-1985).

³⁴. The words “managing agent” omitted by Act 32 of 1951, s. 16 (w.e.f. 1-11-1951).

³⁵. Subs. by s. 16, ibid., for “shall be liable to pay to the Central Government or to the Bank, as the case may be, or to each,” (w.e.f. 1-11-1951).

³⁶. Subs. by Act 35 of 1962, s. 4, for sub-section (5) (w.e.f. 15-9-1962).

³⁷. Subs. by Act 10 of 1949, s. 55 and the First Schedule, for sub-section (6) (w.e.f. 16-3-1949).

³⁸. Subs. by Act 32 of 1951, s. 16, for “in any State of India” (w.e.f. 1-11-1951).

³⁹. Subs. by Act 23 of 1965, s. 6, for “is a company” (w.e.f. 1-3-1966).

⁴⁰. Subs. by Act 19 of 1957, s. 4, for “clause (2) of section 2 of the Indian Companies Act, 1913 (7 of 1913)” (w.e.f. 8-6-1957).

⁴¹. Subs. by Act 32 of 1951, s. 16, for “outside the States of India” (w.e.f. 1-11-1951).

⁴². Subs. by Act 51 of 1974, s. 3, for “Banking Companies Act, 1949” (w.e.f. 13-12-1974).

⁴³. Ins. by Act 61 of 1981, s. 61 and the Second Schedule (w.e.f. 12-7-1982).

⁴⁴. Ins. by Act 32 of 1951, s. 16 (w.e.f. 1-11-1951).

¹. Subs. by Act 51 of 1974, s. 12, for section 43 (w.e.f. 13-12-1974).

². Subs. by Act 1 of 1984, s. 6, for "week" (w.e.f. 29-3-1985).

(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. Ins. by Act 54 of 1953, s. 7 (w.e.f. 30-12-1953).

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

(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. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for section 45 (w.e.f. 12-7-1982)

(a) "banking company" means a banking company as defined in section 5 of the ²[Banking Regulation Act, 1949 (10 of 1949)] and includes the State Bank of India, ³[any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), any corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), and any other financial institution notified by the Central Government in this behalf];

(b) "borrower" means any person to whom any credit limit has been sanctioned by any banking company, whether availed of or not, and includes--

(i) in the case of a company or corporation, its subsidiaries;

(ii) in the case of a Hindu undivided family, any member thereof or any firm in which such member is a partner;

(iii) in the case of a firm, any partner thereof or any other firm in which such partner is a partner; and

(iv) in the case of an individual, any firm in which such individual is a partner;

(c) "credit information" means any information relating to--

(i) the amounts and the nature of loans or advances and other credit facilities granted by a banking company to any borrower or class of borrowers;

(ii) the nature of security taken from any borrower ⁴[or class of borrowers] for credit facilities ⁵[granted to him or to such class;]

(iii) the guarantee furnished by a banking company for any of its customers ⁶[or any class of its customers];

⁶[(iv) the means, antecedents, history of financial transactions and the creditworthiness of any borrower or class of borrowers;

(v) any other information which the Bank may consider to be relevant for the more orderly regulation of credit or credit policy.]

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

². Subs. by Act 51 of 1974, s. 3, for "Banking Companies Act, 1949" (w.e.f. 13-12-1974).

³. Subs. by s. 13, ibid., for "or any other banking or financial institution notified by the Central Government in this behalf" (w.e.f. 13-12-1974).

⁴. Ins. by s. 13, ibid., (w.e.f. 13-12-1974).

⁵. Subs. by s. 13, ibid., for "granted to him; and" (w.e.f. 13-12-1974).

⁶ Ins. by Act 51 of 1974, s. 13 (w.e.f. 13-12-1974).

(a) collect, in such manner as it may think fit, credit information from banking companies; and

(b) furnish such information to any banking company in accordance with the provisions of section 45D.

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

(2) A banking company shall, notwithstanding anything to the contrary contained in any law for the time being in force on in any instrument regulating the constitution thereof or in any agreement executed by it, relating to the secrecy of its dealings with its constituents, be bound to comply with any direction issued under sub-section (1).]

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

(2) On receipt of an application under sub-section (1), the Bank shall, as soon as may be, furnish the applicant with such credit information relating to the matters specified in the application, as may be in its possession:

Provided that the information so furnished shall not disclose the names of the banking companies which have submitted such information to the Bank.

(3) The Bank may in respect of each application levy such fees, not exceeding twenty-five rupees, as it may deem fit for furnishing credit information.]

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

(a) the disclosure by any banking company, with the previous permission of the Bank, of any information furnished to the Bank under section 45C;

(b) the publication by the Bank, if it considers necessary in the public interest so to do, of any information collected by it under section 45C, in such consolidated form as it may think fit without disclosing the name of any banking company or its borrowers;

²⁵⁹[(c) the disclosure or publication by the banking company or by the Bank of any credit information to any other banking company or in accordance with the practice and usage customary among bankers or as permitted or required under any other law;

²⁶⁰[(d) the disclosures of any credit information under the Credit Information Companies (Regulation) Act, 2005 (30 of 2005):]

Provided that any credit information received by a banking company under this clause shall not be published except in accordance with the practice and usage customary among bankers or as permitted or required under any other law.]

(3) Notwithstanding anything contained in any law for the time being in force, no court, tribunal or other authority shall compel the Bank or any banking company to produce or to give inspection of any statement submitted by that banking company under section 45C or to disclose any credit information furnished by the Bank to that banking company under section 45 D.]

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

². Ins. by s. 14, ibid. (w.e.f. 13-12-1974).

³. Ins. by Act 30 of 2005, s. 34 and the Schedule (w.e.f. 14-12-2006).

¹. Ins. by Act 35 of 1962, s. 6 (w.e.f. 1-9-1962).

Provided that for the purposes of this Chapter, the ⁵[Tamil Nadu Industrial Investment Corporation Limited] shall not be deemed to be a banking company.]

¹. Ins. by Act 55 of 1963, s. 5 (w.e.f. 1-2-1964).

². Subs. by Act 51 of 1974, s. 3, for "Banking Companies Act, 1949" (w.e.f. 13-12-1974).

³. Subs. by Act 1 of 1984, s. 8, for "a banking institution notified under section 51 of that Act" (w.e.f. 15-2-1984).

⁴. Subs. by Act 21 of 1976, s. 33, for "a co-operative bank" (w.e.f. 26-9-1975).

⁵. Subs. by Act 51 of 1974, s. 16, for "Madras Industrial Investment Corporation Limited" (w.e.f. 13-12-1974).

¹[(a) "business of a non-banking financial institution" means carrying on the business of a financial institution referred to in clause (c) and includes business of a non-banking financial company referred to in clause (f);]

²[(aa)] "company" means a company as defined in section 3 of the Companies Act, 1956 (1 of 1956), and includes a foreign company within the meaning of section 591 of that Act;

(b) "corporation" means a corporation incorporated by an Act of any legislature;

³[(bb) deposit includes and shall be deemed always to have include any receipt of money by way of deposit or loan or in any other form, but does not include,--

(i) amounts raised by way of share capital;

(ii) amounts contributed as capital by partners of a firm;

(iii) amounts received from a scheduled bank or a co-operative bank or any other banking company as defined in clause (c) of section 5 of a Banking Regulation Act, 1949 (10 of 1949);

(iv) any amount received from,--

⁴* * * * *

(b) a State Financial Corporation,

(c) any financial institution specified in or under section 6A of the Industrial

Development Bank of India Act, 1964 (18 of 1964), or

(d) any other institution that may be specified by the Bank in this behalf;

(v) amounts received in the ordinary course of business, by way of--

(a) security deposit,

(b) dealership deposit,

(c) earnest money, or

(d) advance against orders for goods, properties or services;

(vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is for the time being in force in any State; and

(vii) any amount received by way of subscriptions in respect of a chit.

Explanation I.-- "Chit" has the meaning assigned to it in clause (b) of section 2 of the Chit Funds Act, 1982 (40 of 1982).

Explanation II.-- Any credit given by a seller to a buyer on the sale of any property (whether movable or immovable) shall not be deemed to be deposit for the purposes of this clause;]

⁵[Explanation III.--The amounts accepted by a co-operative society from the members or shareholders, by whatever name called, but excluding the amounts received as share capital, shall be deemed to be deposits for the purposes of this clause, if such members or shareholders are nominal or associate members, by whatever name called, who do not have full voting rights in the meetings of such co-operative society.]

⁶[(c) "financial institution" means any non-banking institution which carries on as its business or part of its business any of the following activities, namely:--

(i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own;

(ii) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature;

(iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire-Purchase Act, 1972 (26 of 1972);

(iv) the carrying on of any class of insurance business;

(v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto;

(vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lump sum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and awarding prizes or gifts, whether in cash or king, or disbursing monies in any other way, to persons from whom monies are collected or to any other person,

⁷[but does not include any institution, which carries on as its principal business,--

(a) agricultural operations; or

(aa) industrial activity; or]

(b) the purchase, or sale of any goods (other than securities) or the providing of any services; or

(c) the purchase, construction or sale of immovable property, so, however, that no portion of the income of the institution is derived from the financing of purchases, constructions or sales of immovable property by other persons;]

⁸[Explanation.--For the purposes of this clause, "industrial activity" means any activity specified in sub-clauses (i) to (xviii) of clause (c) of section 2 of the Industrial Development Bank of India Act, 1964 (18 of 1964);]

(d) "firm" means a firm as defined in the Indian Partnership Act, 1932 (9 of 1932) ⁹***;

(e) "non-banking institution" means a company, corporation ¹⁰[or co-operative society];

⁸[(f) "non-banking financial company" means--

(i) a financial institution which is a company;

(ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner;

(iii) such other non-banking institution or class of such institutions, as the Bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify.]

¹. Ins. by Act 23 of 1997, s. 2 (w.e.f. 9-1-1997).

². Clause (a) renumbered as clause (aa) thereof by s. 2, ibid. (w.e.f. 9-1-1997).

³. Subs. by Act 1 of 1984, s. 9, for clause (bb) (w.e.f. 15-2-1984).

⁴. Item (a) omitted by Act 53 of 2003, s. 12 and the Schedule (w.e.f. 2-7-2004).

⁵. Ins. by Act 21 of 2019, s. 42 the second schedule (w.e.f. 21-2-2019).

⁶. Subs. by Act 51 of 1974, s. 17, for clause (c) (w.e.f. 13-12-1974).

⁷. Subs. by Act 23 of 1997, s. 2, for certain words (w.e.f. 9-1-1997).

⁸. Ins. by Act 23 of 1997, s. 2 (w.e.f. 9-1-1997).

⁹. The words ",of which the capital subscribed by its partners exceeds one lakh of rupees" omitted by Act 1 of 1984, s. 9 (w.e.f. 15-2-1984).

¹⁰. Subs. by s. 9, ibid., for ",co-operative society or firm" (w.e.f. 15-2-1984).

(a) obtaining a certificate of registration issued under this Chapter; and

²[(b) having the net owned fund of twenty-five lakh rupees or such other amount, not exceeding hundred crore rupees, as the Bank may, by notification in the Official Gazette, specify:

Provided that the Bank may notify different amounts of net owned fund for different categories of non-banking financial companies.]

(2) Every non-banking financial company shall make an application for registration to the Bank in such form as the Bank may specify:

Provided that a non-banking financial company in existence on the commencement of the Reserve Bank of India (Amendment) Act, 1997 (23 of 1997) shall make an application for registration to the Bank before the expiry of six months from such commencement and notwithstanding anything contained in sub-section (1) may continue to carry on the business of a non-banking financial institution until a certificate of registration is issued to it or rejection of application for registration is communicated to it.

(3) Notwithstanding anything contained in sub-section (1), a non-banking financial company in existence on the commencement of the Reserve Bank of India (Amendment) Act, 1997 (23 of 1997) and having a net owned fund of less than twenty-five lakh rupees may, for the purpose of enabling such company to fulfil the requirement of the net owned fund, continue to carry on the business of a nonbanking financial institution--

(i) for a period of there years from such commencement; or

(ii) for such further period as the Bank may, after recording the reasons in writing for so doing, extend,

subject to the condition that such company shall, within three months of fulfilling the requirement of the net owned fund, inform the Bank about such fulfillment:

(4) The Bank, for the purpose of considering the application for registration, may require to be satisfied by an inspection of the books of the non-banking financial company or otherwise that the following conditions are fulfilled:--

(a) that the non-banking financial company is or shall be in a position to pay its present or future depositors in full as and when their claims accrue;

(b) that the affairs of the non-banking financial company are not being or are not likely to be conducted in a manner detrimental to the interest of its present or future depositors;

(c) that the general character of the management or the proposed management of the non-banking financial company shall not be prejudicial to the public interest or the interests of its depositors;

(d) that the non-banking financial company has adequate capital structure and earning prospects;

(e) that the public interest shall be served by the grant of certificate of registration to the nonbanking financial company to commence or to carry on the business of India;

(f) that the grant of certificate of registration shall not be prejudicial to the operation and consolidation of the financial sector consistent with monetary stability, and economic growth considering such other relevant factors which the Bank may, by notification in the Official Gazette, specify; and

(g) any other condition, fulfilment of which in the opinion of the Bank, shall be necessary to ensure that the commencement of or carrying on of the business in India by a non-banking financial company shall not be prejudicial to the public interest or in the interests of the depositors.

(5) The Bank may, after being satisfied that the conditions specified in subsection (4) are fulfilled, grant a certificate of registration subject to such conditions which it may consider fit to impose.

(6) The Bank cancel a certificate of registration granted to a non-banking financial company under this section if such company--

(i) ceases to carry on the business of a non-banking financial institution in India; or

(ii) has failed to comply with any condition subject to which the certificate of registration had been issued to it; or

(iii) at any time fails to fulfil any of the conditions referred to in clauses (d) to (g) of sub-section (4); or

(iv) fails--

(a) to comply with any direction issued by the Bank under the provisions of this Chapter; or

(b) to maintain accounts in accordance with the requirements of any law or any direction or order issued by the Bank under the provisions of this Chapter; or

(c) to submit or offer for inspection its books of account and other relevant documents when so demanded by an inspecting authority of the Bank; or

(v) has been prohibited from accepting deposit by an order made by the Bank under the provisions of this Chapter and such order has been in force for a period of not less than three months:

Provided that before cancelling a certificate of registration on the ground that the non-banking financial company has failed to company with the provisions of clause (ii) or has failed to fulfil any of the conditions referred to in clause (iii) the Bank, unless it is of the opinion that the delay in cancelling the certificate of registration shall be prejudicial to public interest or the interest of the depositors or the non-banking financial company, shall give an opportunity to such company on such term as the Bank may specify for taking necessary steps to comply with such provision or fulfilment of such condition:

Provided further that before making any order of cancellation of certificate of registration, such company shall be given a reasonable opportunity of being heard.

(7) A company aggrieved by the order of rejection of application for registration or cancellation of certificate of registration may prefer an Appeal, within a period of thirty days from the date on which such order of rejection or cancellation is communicated to it, to the Central Government and the decision of the Central Government where an appeal has been preferred to it, or of the Bank where no appeal has been preferred, shall be final:

Provided that before making any order of rejection of appeal, such company shall be given a reasonable opportunity of being heard.

Explanations.-- For the purposes of this section,--

(I) "net owned fund" means--

(a) the aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance-sheet of the company after deducting there from--

(i) accumulated balance of loss;

(ii) deferred revenue expenditure; and

(iii) other intangible assets; and

(b) further reduced by the amounts representing--

(1) investments of such company in shares of

(i) its subsidiaries;

(ii) companies in the same group;

(iii) all other non-banking financial companies; and

(2) the book value of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with,--

(i) subsidiaries of such company; and

(ii) companies in the same group,

to the extent such book value exceeds ten per cent. of (a) above.

(II) "subsidiaries" and "companies in the same group" shall have the same meanings assigned to them in the Companies Act, 1956, (1 of 1956).

¹. Ins. by Act 23 of 1997, s. 3 (w.e.f. 9-1-1997).

². Subs. by Act 23 of 2019, s. 137, for clause (b) (w.e.f. 9-8-2019)

Provided that the Bank may specify different percentages of investment in respect of different classes of non-banking financial companies.

(2) For the purpose of ensuring compliance with the provisions of this section, the Bank may require every non-banking financial company to furnish a return to it in such form, in such manner and for such period as may be specified by the Bank.

(3) If the amount invested by a non-banking financial company at the close of business on any day falls below the rate specified under sub-section (1), such company shall be liable to pay to the Bank, in respect of such shortfall, a penal interest at a rate of three per cent. per annum above the bank rate on such amount by which the amount actually invested falls short of the specified percentage, and where the shortfall continues in the subsequent quarters, the rate of penal interest shall be five per cent. per annum above the bank rate on such shortfall for each subsequent quarter.

(4) (a) The penal interest payable under sub-section (3) shall be payable within a period of fourteen days from the date on which a notice issued by the Bank demanding payment of the same is served on the non-banking financial company and, in the event of a failure of the non-banking financial company to pay the same within such period, penalty may be levied by a direction of the principal civil court having jurisdiction in the area where an office of the defaulting non-banking financial company is situated and such direction shall be made only upon an application made in this behalf to the court by the Bank; and

(b) when the court makes a direction under clause (a), it shall issue a certificate specifying the sum payable by the non-banking financial company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a suit.

(5) Notwithstanding anything contained in this section, if the Bank is satisfied that the defaulting nonbanking financial company had sufficient cause for its failure to comply with the provisions of subsection (1), it may not demand the payment of the penal interest.

Explanation.--For the purpose of this section,--

(i) "approved securities" means securities of any State Government or of the Central Government and such bonds, both the principal whereof and the interest whereon shall have been fully and unconditionally guaranteed by any such Government;

(ii) "unencumbered approved securities" includes the approved securities lodged by the nonbanking financial company with another institution for an advance or any other arrangement to the extent to which such securities have not been drawn against or availed of or encumbered in any manner;

(iii) "quarter" means the period of three months ending on the last day of March, June, September or December.]

¹. Ins. by Act 55 of 1963, s. 5 (w.e.f. 1-2-1964).

(2) No appropriation of any sum from the reserve fund shall be made by the non-banking financial company except for the purpose as may be specified by the Bank from time to time and every such appropriation shall be reported to the Bank within twenty-one days from the date of such withdrawal:

Provided that the Bank may, in any particular case and for sufficient cause being shown, extend the period of twenty-one days by such further period as it thinks fit or condone any delay in making such report.

(3) Notwithstanding anything contained in sub-section (1), the Central Government may, on the recommendation of the Bank and having regard to the adequacy of the paid-up capital and reserves of a non-banking financial company in relation to its deposit liabilities, declare by order in writing that the provisions of sub-section (1) shall not be applicable to the non-banking financial company for such period as may be specified in the order:

Provided that no such order shall be made unless the amount in the reserve fund under sub-section (1) together with the amount in the share premium account is not less than the paid-up capital of the nonbanking financial company.]

¹. Ins. by Act 55 of 1963, s. 5 (w.e.f. 1-2-1964).

(2) No order under sub-section (1) shall be made unless the director concerned has been given a reasonable opportunity of making a representation to the Bank against the proposed order:

Provided that if, in the opinion of the Bank, any delay will be detrimental to the interest of the said company or its depositors, the Bank may, at the time of giving the aforesaid opportunity or at any time thereafter, by order direct that, pending the consideration of the representation, if any, the director, shall not, with effect from the date of such order

(a) act as such director of that company;

(b) in any way, whether directly or indirectly, be concerned with or take part in the management of that company.

(3) Where any order is made in respect of a director of a company under sub-section (1), he shall cease to be a director of that non-banking financial company and shall not, in any way, whether directly or indirectly, be concerned with, or take part in the management of any non-banking financial company for such period not exceeding five years at a time as may be specified in the order.

(4) Where an order under sub-section (1) has been made, the Bank may, by order in writing, appoint a suitable person in place of the director, who has been so removed from his office, with effect from such date as may be specified in such order.

(5) Any person appointed under sub-section (4) shall, --

(a) hold office during the pleasure of the Bank and subject thereto for a period not exceeding three years or such further periods not exceeding three years at a time;

(b) not incur any obligation or liability by reason only of his being a director for anything done or omitted to be done in good faith in the execution of the duties of his office or in relation thereto.

(6) Notwithstanding anything contained in any other law for the time being in force or in any contract, memorandum or articles of association, on the removal of a director from office under this section, such director shall not be entitled to claim any compensation for the loss or termination from office.]

¹. Ins. by 23 of 2019, s. 138 (w.e.f. 9-8-2019).

(2) The Bank may, on supersession of the Board of Directors of the non-banking financial company under sub-section (1), appoint a suitable person as the Administrator for such period as it may determine.

(3) The Bank may issue such directions to the Administrator as it may deem appropriate and the Administrator shall be bound to follow such directions.

(4) Upon making the order of supersession of the Board of Directors of a non-banking financial company, --

(a) the chairman, managing director and other directors shall from the date of super session of the Board of Directors vacate their offices;

(b) all the powers, functions and duties, which may, by or under the provisions of this Act or any other law for the time being in force, be exercised and discharged by or on behalf of the Board of Directors of such non-banking financial company or by a resolution passed in general meeting of such non-banking financial company, shall, until the Board of Directors of such company is reconstituted, be exercised and discharged by the Administrator referred to in sub-section (2).

(5) (a) The Bank may constitute a committee consisting of three or more members who have experience in law, finance, banking, administration or accountancy to assist the Administrator in discharge of his duties.

(b) The committee shall meet at such times and places and observe such rules of procedure as may be specified by the Bank.

(6) The salary and allowances payable to the Administrator and the members of the committee constituted by the Bank shall be such as may be specified by the Bank and be paid by the concerned nonbanking financial company.

(7) On or before the expiration of the period of super session of the Board of Directors as specified in the order issued under sub-section (1), the Administrator of the non-banking financial company shall facilitate reconstitution of the Board of Directors of the non-banking financial company.

(8) Notwithstanding anything contained in any other law for the time being in force or in any contract, no person shall be entitled to claim any compensation for the loss or termination of his office.

(9) The Administrator referred to in sub-section (2) shall vacate office immediately after the Board of Directors of the non-banking financial company has been reconstituted.]

¹. Ins. by 23 of 2019, s. 138 (w.e.f. 9-8-2019).

(a) regulate or prohibit the issue by any non-banking institution of any prospectus or advertisement soliciting deposits of money from the public, and

(b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.

(2) Without prejudice to the generality of the powers vested under sub-section (1), the Bank may give directions to non-banking financial companies generally or to a class of non banking financial companies or to any non-banking financial company in particular as to--

(a) the purpose for which advances or other fund based or non-fund based accommodation may not be made; and

(b) the maximum amount of advances of other financial accommodation or investment in shares and other securities which, having regard to the paid-up capital, reserves and deposits of the nonbanking financial company and other relevant considerations, may be made by that non-banking financial company to any person or a company or to a group of companies.]

¹. Ins. by Act 23 of 1997, s. 4 (w.e.f. 9-1-1997).

(2) Without prejudice to the generality of the power vested in the Bank under sub-section (1), the statements, information or particulars to be furnished under sub-section (1), may relate to all or any of the following matters, namely, the amount of the deposits, the purposes and periods for which, and the rates of interest and other terms and conditions on which, they are received.

(3) The Bank may, if it considers necessary in the public interest so to do, give directions to nonbanking institutions either generally or to any non-banking institution or group of non-banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.

(4) If any non-banking institution fails to comply with any direction given by the Bank under sub-section (3), the Bank may prohibit the acceptance of deposits by that non-banking institution.

¹* * * * *

(6) Every non-banking institution receiving deposits shall, if so required by the Bank and within such time as the Bank may specify, cause to be sent at the cost of the non-banking institution a copy of its annual balance-sheet arid profit and loss account or other annual accounts to every person from whom the non-banking institution holds, as on the last day of the year to which the accounts relate, deposits higher than such sum as may be specified by the Bank.

¹. Sub-section (5) omitted by Act 51 of 1974, s. 18 (w.e.f. 13-12-1974).

(a) require financial institutions either generally or any group of financial institutions or financial institution in particular, to furnish to the Bank in such form, at such intervals and within such time, such statements, information or particulars relating to the business of such financial institutions or institution, as may be specified by the Bank by general or special order;

(b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.

(2) Without prejudice to the generality of the power vested in the Bank under clause (a) of subsection (1), the statements, information or particulars to be furnished by a financial institution may relate to all or any of the following matters, namely, the paid-up capital, reserves or other liabilities, the investments whether in Government securities or otherwise, the persons to whom, and the purposes and periods for which, finance is provided and the terms and conditions, including the rates of interest, on which it is provided.

(3) In issuing directions to any financial institution under clause (b) of subsection (1), the Bank shall have due regard to the conditions in which, and the objects for which, the institution has been established, its statutory responsibilities, if any, and the effect the business of such financial institution is likely to have on trends in the money and capital markets.

²[(1A) The Bank may, on being satisfied that it is necessary so to do, in the public interest or in the interest of the depositors or for the purpose of proper assessment of the books of accounts, issue directions to any non-banking financial company or any class of non-banking financial companies or nonbanking financial companies generally or to the auditors of such non-banking financial company or companies relating to balance-sheet, profit and loss account, disclosure of liabilities in the books of accounts or any matter relating thereto.]

(2) Where, in the case of ³[a non-banking financial company], the auditor has made, or intends to make, a report to the Bank under sub-section (1), he shall include in his report under sub-section (2) of section 227 of the Companies Act, 1956 (1 of 1956), the contents of the report which he has made or intends to make, to the Bank.]

²[(3) Where the bank is of the opinion that it is necessary so to do in the public interest or in the interest of the non-banking financial company or in the interest of depositors of such company it may at any time by order direct that a special audit of the accounts of the non-banking financial company in relation to any such transaction or class of transactions or for such period or periods, as may be specified in the order, shall be conducted and the Bank may appoint an auditor or auditors to conduct such special audit and direct the auditor or the auditors to submit the report to it.

(4) The remuneration of the auditors as may be fixed by the Bank, having regard to the nature and volume of work involved in the audit and the expenses of or incidental to the audit, shall be borne by the non-banking financial company so audited.]

¹. Ins. by Act 51 of 1974, s. 19 (w.e.f. 13-12-1974).

². Ins. by Act 23 of 1997, s. 5 (w.e.f. 9-1-1997).

³. Subs. by s. 5, ibid., for "a non-banking institution, being a company" (w.e.f. 9-1-1997).

¹. Ins. by Act 23 of 2019, s. 139 (w.e.f. 9-8-2019).

(2) Notwithstanding anything to the contrary contained in any agreement or instruments or any law for the time being in force, the Bank, on being satisfied that it is necessary so to do in the public interest or in the interest of the depositors, may direct, the non-banking financial company against which an order prohibiting from accepting deposit has been issued, not to sell, transfer, create charge or mortgage or deal in any manner with its property and assets without prior written permission of the Bank for such period not exceeding six months from the date of the order.]

¹. Ins. by s. 6, ibid. (w.e.f. 9-1-1997).

(a) amalgamation with any other non-banking institution;

(b) reconstruction of the non-banking financial company;

(c) splitting the non-banking financial company into different units or institutions and vesting viable and non-viable businesses in separate units or institutions to preserve the continuity of the activities of that non-banking financial company that are critical to the functioning of the financial system and for such purpose establish institutions called "Bridge Institutions".

Explanation.-- For the purposes of this sub-section, "Bridge Institutions" mean temporary institutional arrangement made under the scheme referred to in this sub-section, to preserve the continuity of the activities of a non-banking financial company that are critical to the functioning of the financial system.

(2) Without prejudice to the generality of the foregoing provisions, the scheme referred to in sub-section (1) may provide for--

(a) reduction of the pay and allowances of the chief executive officer, managing director, chairman or any officer in the senior management of the non-banking financial company;

(b) cancellation of all or some of the shares of the non-banking financial company held by the chief executive officer, managing director, chairman or any officer in the senior management of the non-banking financial company or their relatives;

(c) sale of any of the assets of the non-banking financial company.

(3) The chief executive officer, managing director, chairman or any officer in the senior management of the non-banking financial company whose pay and allowances are reduced or the shareholders whose shares are cancelled under the scheme shall not be entitled to any compensation.]

¹. Ins. by Act 23 of 2019, s. 140 (w.e.f. 9-8-2019).

(a) is unable to pay its debt; or

(b) has by virtue of the provisions of section 45-IA become disqualified to carry on the business of a non-banking financial institution; or

(c) has been prohibited by the Bank from receiving deposit by an order and such order has been in force for a period of not less than three months; or

(d) the continuance of the non-banking financial company is detrimental to the public interest or to the interest of depositors of the company,

may file an application for winding up of such non-banking financial company under the Companies Act, 1956 (1 of 1956).

(2) A non-banking financial company shall be deemed to be unable to pay its debt if it has refused or has failed to meet within five working days any lawful demand made at any to its offices or branches and the Bank certifies in writing that such company is unable to pay its debt.

(3) A copy of every application made by the Bank under sub-section (1) shall be sent to the Registrar of Companies.

(4) All the provisions of the Companies Act, 1956 (1 of 1956) relating to winding up of a company shall apply to a winding up proceeding initiated on the application made by the Bank under this provision.]

(i) of any non-banking institution, including a financial institution, for the purposes of verifying the correctness or completeness of any statement, information or particulars furnished to the Bank or for the purpose of obtaining any information or particulars which the non-banking institution has failed to furnish on being called upon to do so; or

(ii) of any non-banking institution being a financial institution, if the Bank considers it necessary or expedient to inspect that institution.]

(2) It shall be the duly of every director or member of any committee or other body for the time being vested with the management of the affairs of the non-banking institution or other officer or employee thereof to produce to the inspecting authority all such books, accounts and other documents in his custody or power and to furnish that authority with any statements and information relating to the business of the institution as that authority may require of him, within such time as may be specified by that authority.

(3) The inspecting authority may examine on oath any director or member of any committee or body for the time being vested with the management of the affairs of the non-banking institution or other officer or employee thereof, in relation to its business and may administer an oath accordingly.

¹. Subs. by Act 51 of 1974, s. 20, for sub-section (1) (w.e.f. 13-12-1974).

(a) he has been authorised in writing by the said non-banking institution to do so and specifies the name of the institution which has so authorised him, and

(b) the prospectus or advertisement complies with any order made by the Bank under section 45J and with any other provision of law for the time being in force, applicable to the publication of such prospectus or advertisement.]

¹. Ins. by s. 21, ibid. (w.e.f. 13-12-1974).

(2) Notwithstanding anything to the contrary contained in the Companies Act, 2013 (18 of 2013), the Bank may, at any time, cause an inspection or audit to be made of any group company of a non-banking financial company and its books of account.

Explanation. — For the purposes of this section, —

(a) “group company” shall mean an arrangement involving two or more entities related to each other through any of the following relationships, namely: —

(i) subsidiary—parent (as may be notified by the Bank in accordance with Accounting Standards);

(ii) joint venture (as may be notified by the Bank in accordance with Accounting Standards);

(iii) associate (as may be notified by the Bank in accordance with Accounting Standards);

(iv) promoter-promotee (under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the rules or regulations made there under for listed companies);

(v) related party;

(vi) common brand name (that is usage of a registered brand name of an entity by another entity for business purposes); and

(vii) investment in equity shares of twenty per cent. and above in the entity;

(b) “Accounting Standards” means the Accounting Standards notified by the Central Government under section 133, read with section 469 of the Companies Act, 2013 (18 of 2013) and sub-section (1) of section 210A of the Companies Act, 1956 (1 of 1956).]

¹.Ins. by Act 23 of 2019, s. 141 (w.e.f. 9-8-2019).

(i) contained in any statement or return submitted by such company under the provisions of this chapter; or

(ii) obtained through audit or inspection or otherwise by the Bank,

shall be treated as confidential and shall not, except otherwise provided in this section, be disclosed.

(2) Nothing in this section shall apply to--

(a) the disclosure by any non-banking financial company, with the previous permission of the Bank, of any information furnished to the Bank under sub-section (1);

(b) the publication by the Bank, if it considers necessary in the public interest so to do, of any information collected by it under sub-section (1) in such consolidated form as it may think fit without disclosing the name of any non-banking financial company or its borrowers;

(c) the disclosure or publication by the non-banking financial company or by the Bank of any such information to any other non-banking financial company or in accordance with the practice and usage customary amongst such companies or as permitted or required under any other law:

Provided that any such information received by a non-banking financial company under this clause shall not be published except in accordance with the practice and usage customary amongst companies or as permitted or required under any other law.

(3) Notwithstanding anything contained in this Act or in any other law for the time being in force, the Bank, if it is satisfied that, in the public interest or in the interest of the depositors or the non-banking financial company or to prevent the affairs of any non-banking financial company being conducted in a manner detrimental to the interest of the depositors, it is expedient so to do, may, either on its own motion or on being requested, furnish or communicate any information relating to the conduct of business by any non-banking financial company to any authority constituted under any law.

(4) Notwithstanding anything contained in any law for the time being in force, no court or tribunal or other authority shall compel the Bank to produce or to give inspection of any statement or other material obtained by the Bank under any provisions of this chapter.]

¹. Ins. by Act 23 of 1997, s. 7 (w.e.f. 9-1-1997).

(2) Where a non-banking financial company has failed to repay and deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board constituted under section 10E of the Companies Act, 1956 (1 of 1956), may, if it is satisfied, either on its own motion or on an application of the depositor, that it is necessary so to do to safeguard the interests of the company, the depositors or in the public interest, direct, by order, the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order:

Provided that the Company Law Board may, before making any order under this sub-section, give a reasonable opportunity of being heard to the non-banking financial company and the other persons interested in the matter.]

¹. Ins. by s. 8, ibid. (w.e.f. 9-1-1997).

(2) Notwithstanding anything contained in any other law for the time being in force, or in any disposition, whether testamentary or otherwise, in respect of such deposit, where a nomination made purports to confer on any person the right to receive the amount of deposit from the non-banking financial institution, the nominee shall, on the death of the sole depositor or, as the case may be, on the death of all the depositors, become entitled to all the rights of the sole depositor or, as the case may be, of the depositors, in relation to such deposit to the exclusion of all other persons, unless the nomination is varied or cancelled in the manner prescribed by rules made by the Central Government under section 45ZA of the Banking Regulation Act, 1949 (10 of 1949).

(3) Where the nominee is a minor, it shall be lawful for the depositor making the nomination to appoint, in the manner prescribed by rules made by the Central Government under section 45ZA of the Banking Regulation Act, 1949 (10 of 1949), any person to receive the amount of deposit in the event of his death during the minority of the nominee.

(4) Payment by a non-banking institution in accordance with the provisions of this section shall constitute a full discharge to the non-banking institution of its liability in respect of the deposit:

Provided that nothing contained in this sub-section shall effect the right or claim which any person may have against the person to whom any payment is made under this section.

(5) No notice of the claim of any person, other than the person or persons in whose name a deposit is held by a non-banking institution, shall be receivable by the non-banking institution, nor shall the nonbanking institution be bound by any such notice even though expressly given to it:

Provided that where any decree order, certificate or other authority from a court of competent jurisdiction relating to such deposit is produced before a non-banking institution, the non-banking institution shall take due note of such decree, order, certificate or other authority.]

¹. Ins. by s. 8, ibid. (w.e.f. 9-1-1997).

¹. Ins. by Act 1 of 1984, s. 10 (w.e.f. 15-2-1984).