Skip to main content

Reserve Bank of India Act, 1934 – Part-V – Section 45B to 45JA

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fifth article in the series. 

Chapter IIIA - Collection and Furnishing of Credit Information

Section 45B – Power of Bank to collect credit information

RBI may collect credit information from banking companies and furnish it to any banking company in accordance with section 45D.

Section 45C – Power to call for returns containing credit information

RBI may direct any banking company to submit statements relating to credit information.

Section 45D – Procedure for furnishing credit information to banking companies

  • A banking company may apply to RBI to provide credit information.
  • RBI shall furnish the requested credit information without disclosing the names of the banking companies which have submitted the information.
  • RBI may levy fees of up to Rs.25 for furnishing credit information.

Section 45E – Disclosure of information prohibited

  • Information submitted by a banking company to RBI under Section 45C or furnished by RBI to any banking company under Section 45D, shall be confidential and shall not be published / disclosed.
  • The court / tribunal / other authority shall not compel RBI / any banking company to produce / disclose such information.

Section 45F – Certain claims for compensation barred

No person shall have any right to any compensation for any loss incurred due to operation of Chapter IIIA.

Chapter IIIB – Provisions Relating To Non-Banking Institutions Receiving Deposits and Financial Institutions

Section 45H – Chapter IIIB not to apply in certain cases

Chapter IIIB shall not apply to State Bank / banking company / new bank / Regional Rural Bank / co-operative bank / primary agricultural credit society / primary credit society.

Section 45-IA – Requirement of registration and net owned fund

  • Non-banking financial company (NBFC) shall commence / carry on the business of non-banking financial institution (NBFI) only after –
    • obtaining a certificate of registration.
    • having net owned fund of Rs.25 lakh or such other amount, not exceeding Rs.100 crore.
  • RBI may notify different amounts of net owned fund for different categories of NBFCs.
  • RBI may cancel a certificate of registration granted to an NBFC.
  • A company aggrieved by the order of rejection of application for registration / cancellation of registration certificate may appeal to the Central Government within 30 days of the order.
  • Where an appeal is made to the Central Government, the decision of the Central Government shall be final. Where no appeal is made, the decision of RBI shall be final.

Section 45-IB – Maintenance of percentage of assets

  • Every NBFC shall invest and continue to invest in India in unencumbered approved securities –
    • an amount, not less than 5% or not exceeding 25%, as RBI my specify
    • of the deposits outstanding at the close of business on the last working day of the second preceding quarter
  • RBI may specify different percentages of investment for different classes of NBFCs.
  • If the amount invested by an NBFC at the close of business on any day falls below the rate specified, the NBFC shall pay to RBI penal interest @ (3% p.a. + Bank Rate) on the shortfall amount.
  • Where the shortfall continuous in the subsequent quarters, penal interest shall be payable @ (5% p.a. + Bank Rate) on the shortfall amount for each subsequent quarter.
  • The penal interest shall be paid within 14 days from the date the notice is served on the NBFC.
  • If the NBFC fails to pay the penal interest within the prescribed time, the penalty may be levied by the order of the Court. When order is issued by the Court, it shall issue a certificate specifying the sum payable by the NBFC. If satisfied that the defaulting NBFC had sufficient cause for its failure, RBI may waive the penal interest.

Section 45-IC – Reserve fund

  • Every NBFC shall create a reserve fund and transfer therein at least 20% of its net profit every year before any dividend is declared.
  • No appropriation of any sum from the reserve fund shall be made by the NBFC except for the purpose specified by RBI and every such appropriation shall be reported to RBI within 21 days of withdrawal. RBI may extend the period of 21 days or condone any delay in making such report.
  • On the recommendation of RBI, the Central Government may exempt an NBFC from the provisions of Section 45-IC. Such order shall be made only if the reserve fund together with the share premium account is not less than the paid-up capital of the NBFC.

45-ID – Power of Bank to remove directors from office

  • RBI may remove from office a director of NBFC (other than Government owned NBFC).
  • Such director shall not, directly / indirectly, take part in the management of any NBFC for up to 5 years.
  • RBI may appoint a suitable person in place of the director, so removed from his office.
  • The new director shall –
    • hold office for up to 3 years or such further periods up to 3 years at a time.
    • not incur any obligation / liability as director for anything done / omitted to be done in good faith in the execution of the duties of his office.
  • On the removal of a director from office, such director shall not be entitled to claim any compensation for the loss / termination from office.

45-IE – Supersession of Board of directors of NBFC (other than Government Company)

  • RBI may supersede the Board of Directors of NBFC (other than Government Company) for up to 5 years.
  • On supersession of the Board of Directors of NBFC, RBI may appoint a suitable person as the Administrator.
  • RBI may issue directions to the Administrator and the Administrator shall be bound to follow such directions.
  • On making the order of supersession of the Board of Directors of an NBFC –
    • the chairman, managing director and other directors shall vacate their offices.
    • until the Board of Directors of NBFC is reconstituted, all the powers, functions and duties of the Board, shall be exercised and discharged by the Administrator.
  • RBI may constitute a committee consisting of 3 or more members who have experience in law / finance / banking / administration / accountancy to assist the Administrator in discharge of his duties. 
  • The salary and allowances payable to the Administrator and the members of the committee constituted by RBI, shall be specified by RBI and paid by the concerned NBFC.
  • On / before the expiration of the period of supersession of the Board of Directors, the Administrator shall facilitate reconstitution of the Board of Directors of the NBFC.
  • A person shall not be entitled to any compensation for the loss / termination of his office.
  • Administrator shall vacate office immediately after the Board of Directors of the NBFC is reconstituted.

Section 45J – Bank to regulate or prohibit issue of prospectus or advertisement soliciting deposits of money

RBI may by general / special order –

  • Regulate / prohibit the issue of any prospectus / advertisement by any NBFC, soliciting deposits of money from the public.
  • Specify the conditions subject to which such prospectus / advertisement may be issued.

Section 45JA – Power of Bank to determine policy and issue directions

RBI may determine the policy and give directions to NBFCs relating to income recognition, accounting standards, prudential norms, purpose of advance (fund / non-fund based), maximum amount of advance / investment in shares and securities, etc.


References

Reserve Bank of India. (2022, August 29). 'The Reserve Bank of India Act, 1934'. Retrieved from https://rbi.org.in/Scripts/OccasionalPublications.aspx?head=Reserve%20Bank%20of%20India%20Act


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

National Strategy for Financial Inclusion (NSFI) 2025-30

Reserve Bank of India (RBI) has published National Strategy for Financial Inclusion (NSFI) 2025-30. Financial Inclusion The Committee on Financial Inclusion (Chairman: Dr C Rangarajan, RBI, 2008) defined financial inclusion as “the process of ensuring access to financial services, timely and adequate credit for vulnerable groups such as weaker sections and low-income groups at an affordable cost”. The Committee on Medium-Term Path to Financial Inclusion (Chairman: Shri Deepak Mohanty, RBI, 2015) viewed financial inclusion as, “convenient access to a basket of basic formal financial products and services that should include savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low income households at reasonable cost with adequate protection progressively supplemented by social cash transfers, besides increasing the access of small and marginal enterprises to formal finance with a greater reliance on technology to cut costs an...
Post a Comment
Read more

RBI’s Monetary Policy (December 05, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on December 05, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 25 bps 5.25% Standing deposit facility (SDF) rate 5.00% Marginal standing facility (MSF) rate 5.50% Bank rate 5.50% Monetary policy stance Monetary policy stance unchanged as ‘neutral’. Domestic Economy  Real Gross Domestic Product (GDP) growth accelerated to 8.2% in Q2, buoyed by strong spending during the festive season which was further facilitated by the rationalisation of the goods and services tax (GST) rates.  Real GDP growth for 2025-26 is projected at 7.3%. For the first time since the adoption of flexible inflation targeting (FIT), average headline inflation for a quarter at 1.7% in Q2, breached the lower tolerance threshold (2%) of the inflation target (4%). It dipped further to an all-time low of 0.3% in October 2025. The underlying inflation pressu...
Post a Comment
Read more

Export / Import of Currency and Possession / Retention of Foreign Currency

Reserve Bank of India (RBI) has updated the guidelines on export and import of currency. What are the guidelines on export and import of Indian currency? Transferor Transfer from Transfer to Nature of currency Maximum limit Person resident in India India Countries other than Nepal and Bhutan Currency notes of Government of India (GoI) and RBI notes ₹25000 per person Commemorative coins 2 coins Person resident in India gone out of India on temporary visit, on his return Countries other than Nepal and Bhutan India Currency notes of GoI and RBI notes ₹25000 per person Person resident outside India (not citizen of Pakistan / Bangladesh) visiting India India Any country Currency notes of GoI and RBI notes ₹25000 per person Any country India Person (not citizen of Pakist...
Post a Comment
Read more

Rupee Interest Rate Derivatives

Reserve Bank of India (RBI) has issued directions on rupee interest rate derivatives. What is Interest Rate Derivative (IRD)? Interest Rate Derivative (IRD) means a financial derivative contract whose value is derived from one or more Rupee interest rates, prices of Rupee interest rate instruments, or Rupee interest rate indices. To which transactions shall the directions be applicable? The directions shall be applicable to Rupee IRD transactions undertaken in the over-the-counter (OTC) market and on recognised stock exchanges in India. Forward Contracts in Government Securities shall be undertaken in the OTC market in terms of the Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025, dated February 21, 2025. Who are eligible participants in IRD markets? Resident Non-resident, through its central treasury or its group entity, where applicable.  What are the directions on trading of IRDs on recognised stock exchanges? A recognised stock exchange is per...
Post a Comment
Read more

What are Government Securities (G-Secs)?

Governments raise / borrow funds by issuing government securities to finance a variety of projects and activities. What is Government Security (G-Sec)? Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments.  G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments. What are the tenures of G-Secs? G-Secs can be short-term securities (with original maturities of less than 1 year) or long-term securities (with original maturity of 1 year or more).  In India, the Central Government issues both short-term and long-term securities while the State Governments issue only long-term securities. What are the types of G-Secs? Government security Term Issued by Treasury Bills (T-bills) Short-term Central Government Cash Management Bills (CMBs) Short-term Central Government Bonds or Dated G-Secs ...
Post a Comment
Read more