Reserve Bank of India Act, 1934

Reserve Bank of India Act, 1934

1. Reserve Bank of India Act, 1934 came into force on 01.04.1935.
2. RBI was established on the recommendations of the Hilton Young Commission.
3. Section 4 : The capital of RBI shall be 5 crores of rupees.
4. Section 22 confers sole right on RBI to Issue bank notes of denominational values of Rs. 2, Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs. 10,000, or any other denomination which the Central Govt. may direct.
5. Section 27 lays down that RBI shall not reissue bank notes which are torn, defaced or excessively spoiled.
6. Section 29 exempts RBI from stamp duty on Bank notes.
7. Section 31 prohibits drawing, accepting, making or issue of any bill of exchange, hundi, promissory notes payable to bearer on demand except by Central Govt or RBI. Promissory Note cannot be issued payable to bearer even if it is payable after some time.
8. Section 33 lays down that assets of the issue department of RBI shall consist of gold coin, gold bullion, foreign securities, rupee coins and rupee securities. The aggregate value of gold coin, gold bullion and foreign securities held shall not at any time be less than Rs.200 crore of which gold coin and gold bullion not less than Rs.115 crore
9. Section 42(1) deals with cash reserves ratio to be maintained by scheduled commercial banks.
10. Section 49 requires RBI to publish bank rate from time to time.