Reserve Bank of India Act 1934 and Important Sections

The Reserve Bank of India Act 1934 is an Act to constitute a Reserve Bank of India (RBI) and provide the central bank (RBI) with various powers to act as the central bank of India. RBI Act 1934.

Note: Bank here means RBI.

There are total 61 Sections in the RBI Act 1934.

Some important sections are listed below:

Section 3: Establishment and incorporation of Reserve Bank.

Section 4: Capital of the Bank. The capital of the Bank shall be five crores of rupees.

Section 6: Establishment of Offices, branches and agencies

Section 8: The composition of central board of Reserve Bank of India

Section 17: The business that RBI can carry out

Section 20: Obligation of the Bank to transact Government business.  

Section 21: Bank to have the right to transact Government business in India.

Section 21A: Bank to transact Government business of States on agreement.

Section 22: Right to issue bank notes.

Section 24: Denominations of notes. (1) Subject to the provisions of sub-section (2), bank notes shall be of the denominational values of two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees.

Section 27: Re-issue of notes. The Bank shall not re-issue bank notes which are torn, defaced or excessively soiled.

Section 26 (1): Defines legal tender of notes

Section 26(2): Withdrawal of legal tender of notes

Section 42: Cash reserves of scheduled banks to be kept with the Bank.

Section 45(U): Defines repo, reverse repo, derivative, money market instruments and securities.

The first schedule of the RBI Act 1934 defines the 4 areas under which the Indian states should come. The 4 areas are Western Area, Eastern Area, Northern Area, Southern Area

The second schedule of the Act lists all the SCHEDULED BANKS in India.




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15 Thoughts to “Reserve Bank of India Act 1934 and Important Sections”

  1. AVI™ (Sinchen loveR)


  2. Be positive

    Thanks AZ 🙂

  3. Overt

    thankyou mam :))

  4. Ittu Si Barbie (。♥‿♥。)

    Thanku AZ 🙂

  5. Singharya23

    thanku az

  6. Alice

    difference btw section 20/21?

    1. 20 says that is the duty of RBI to transact….
      21 gives some rights to banks for the same

      1. Alice

        thank you ma’am

        1. you asked questions

          Bank here only means RBI

          1. Alice

            gt it then only ma’am that’s why edited..still thank you for your concern 🙂


        Ma’am plzz post all sections related to banking and negotiable instruments , nbfcs

  7. Xyz

    What about section 35?

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