Skip to main content

Reserve Bank of India Act, 1934 – Part-VII – Section 45S to 45Y

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 seventh article in the series. 

Chapter IIIC – Prohibition of Acceptance of Deposits by Unincorporated Bodies

Section 45S – Interpretation

An individual / firm / unincorporated association of individuals shall not accept any deposits if –

  • his / its business wholly or partly includes the activities specified in Section 45-I.
  • his / its principal business is that of receiving deposits, or lending in any manner.

Section 45T – Power to issue search warrants

On an application by RBI / State Government, the Court to issue search warrant for the documents relating to acceptance of deposits in contravention of the provisions of Section 45S.

Chapter IIID – Regulation of Transactions in Derivatives, Money Market Instruments, Securities, etc.

Section 45V – Transactions in derivatives

  • Transactions in derivatives shall be valid if at least one of the parties to the transaction is RBI, a scheduled bank, or other agency regulated by RBI / any other Act.
  • Transactions in derivatives shall be deemed always to have been valid.

Section 45W – Power to regulate transactions in derivatives, money market instruments, etc.

  • RBI may determine the policy relating to interest rates or interest rate products and give directions in that behalf to agencies dealing in securities, money market instruments, foreign exchange, derivatives, or other instruments of like nature. The directions shall not relate to the procedure for execution / settlement of the trades on the Stock Exchanges. 
  • RBI may call for any information / statements or inspect such agencies.

Section 45X – Duty to comply with directions and furnish information

The agencies referred to in Section 45W to comply with the directions given by RBI and to submit information / statements called for under Section 45W.

Chapter IIIE – Joint Mechanism

Section 45Y – Joint Mechanism

  • In case of hybrid / composite instrument, having a component of money market investment / securities market instrument / insurance, etc. if any difference of opinion arises as to whether it will fall under Reserve Bank of India (RBI) / Securities and Exchange Board of India (SEBI) / Insurance Regulatory and Development Authority (IRDA) / Pension Fund Regulatory and Development Authority (PFRDA), it shall be referred to a Joint Committee consisting of –
    1. Union Finance Minister (chairperson)
    2. Governor – RBI (vice-chairperson)
    3. Secretary, Department of Economic Affairs in the Ministry of Finance, Government of India (member)
    4. Secretary, Department of Financial Services in the Ministry of Finance, Government of India (member)
    5. Chairperson, SEBI (member)
    6. Chairperson, IRDA (member)
    7. Chairperson, PFRDA (member)

  • The Secretary, Department of Financial Services in the Ministry of Finance, Government of India shall be the convener of the meetings of the Joint Committee.
  • In case of any difference of opinion, any member of the Joint Committee (i.e. RBI / SEBI / IRDA / PFRDA) may make a reference to the Joint Committee.
  • The Joint Committee shall give its decisions to the Central Government within 3 months of the reference.
  • The decision of the Joint Committee shall be binding on RBI, SEBI, IRDA and PFRDA.


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

Amendments in / additions to forex guidelines

Reserve Bank of India (RBI) has amended various forex guidelines. This article lists out some of the such recent amendments. What are the updates in the existing guidelines? Previous guidelines Revised guidelines Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills and non-convertible debentures / bonds and commercial papers issued by an Indian company. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. The balance...
Post a Comment
Read more

FX Global Code

Reserve Bank of India (RBI) has signed its renewed Statement of Commitment (SoC) to the FX Global Code.  What is FX Global Code? FX Global Code is a set of global principles of good practice in the foreign exchange market. The Code contains 55 principles that provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. The principles cover ethics, governance, execution, information sharing, risk management and compliance as well as confirmation and settlement. The establishment of the Code was facilitated by the Foreign Exchange Working Group (FXWG), which operated under the auspices of the BIS Markets Committee.  The Code was developed by a partnership between central banks and market participants from around the globe and was first published in 2017. The Code promotes a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infras...
Post a Comment
Read more

Nomination for demat accounts and mutual fund folios

Securities and Exchange Board of India (SEBI) had revised the guidelines on nomination for demat accounts and mutual fund folios.   Which entities are covered by the guidelines? The following regulated entities (REs) are covered by the guidelines – Asset Management Companies (AMCs) of Mutual Funds (MFs) and their Registrars to an issue and share Transfer Agents (RTAs)  Association of Mutual Funds in India (AMFI)  Recognized Depositories  Registered Depository Participants (DPs) What are the guidelines on nomination facility? Nomination shall be mandatory for single holding and optional for jointly held accounts / folios. However, an investor having single holding / account / folio can opt-out of nomination, either online or through physical / offline mode. In case a joint account / folio becomes single holding, post the demise of holders, either nomination or ‘opt-out’, is mandatory. Investors shall have the option to specify guardians when nominees are minors....
Post a Comment
Read more

Nomination Facility in Banks

Reserve Bank of India (RBI) has issued directions on nomination facility in deposit accounts, safe deposit lockers and articles kept in safe custody with the banks. What is the legal framework for nomination facility in banks? Banking Regulation Act, 1949 (BR Act) contain provisions on nomination facility in banks. Section 45ZA – Nomination for payment of depositors' money  Where a deposit is held by a banking company to the credit of one or more persons, the depositor / all the depositors together, may nominate one person to whom in the event of his / their death, the amount of deposit may be returned by the banking company. Where the nominee is a minor, the depositor shall appoint any person to receive the amount of deposit in the event of his death during the minority of the nominee. Section 45ZC – Nomination for return of articles kept in safe custody with banking company  Where any person leaves any article in safe custody with a banking company, such person may nominate ...
Post a Comment
Read more

Recognition of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs)

Reserve Bank of India (RBI) has invited applications for recognition of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs). What is the basis of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs)? Reserve Bank of India (RBI) had issued ‘ Omnibus Framework for recognition of Self-Regulatory Organisations for Regulated Entities of the Reserve Bank ’ dated March 21, 2024, wherein broad parameters, viz., objectives, responsibilities, eligibility criteria, governance standards, application process, etc., were specified. It was also stated that other sector-specific guidelines like number of SROs, membership, etc., shall be issued separately whenever a sectoral SRO is intended to be set up. RBI has now invited applications for recognition of SROs for the NBFC sector under the aegis of the aforesaid omnibus framework.  What are the membership criteria for the SRO for NBFCs? The SRO for NBFC sector is primarily envisaged for NBFCs...
Post a Comment
Read more