The Reserve Bank of India Act, 1934

What is the role of The Reserve Bank of India in financial management?
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This document presents The Reserve Bank of India Act, 1934. The Reserve Bank is called "The Bank" in the Act. The Act is divided into the following chapters:Chapter I, the preliminary section, contains the short title and defines important terms, like:

  • The Bank;
  • The Central Board;
  • Deposit Insurance Corporation, etc.

Chapter II sets out the provisions for incorporation, capital, management and business, and discusses:

  • The establishment of the Reserve Bank;
  • Its offices, branches and agencies;
  • The composition of the Central Board, etc.

Chapter III:

  • Explains the functions of the Central Bank, such as:
    • The obligation of The Bank to transact government business,
    • Its right to issue bank notes, etc.
  • Is further divided into the following sections:
    • Collecting and furnishing of credit information,
    • Provisions relating to non-banking financial institutions receiving deposits and financial institutions,
    • Prohibition of acceptance of deposits by uncorporated bodies.

Chapter IV explains the general provisions of the Act, such as:

  • Contribution by the Central Government to the Reserve Fund;
  • Exemption of The Bank from income-tax and super tax;
  • Powers and duties of the auditors, etc.

The last section, is titled "Penalties" and discusses:

  • Offences by companies and the power of The Bank to impose fines.

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