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Reserve Bank of India Act, 1934 – Part-X – Section 58B to 58G

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 tenth and last article in the series. 

Chapter V – Penalties

Section 58B – Penalties

Section Offense Punishment
58B(1) Whoever in any application / declaration / return / statement / information furnished or in any prospectus / advertisement issued for the invitation of deposits of money from the public, willfully makes a false statement or willfully omits to make a material statement. Imprisonment for up to 3 years with fine.
58B(2) Any person fails to produce any book / account / document / statement / information. Fine of up to Rs.1 lakh in respect of each offence.
Further fine of up to Rs.5000 for every day till the offense continues.
58B(3) Any person contravenes the provisions of section 31. Fine of up to the amount of the bills of exchange / hundi / promissory note involved in the contravention.
58B(4) Any person discloses any credit information, the disclosure of which is prohibited under Section 45E. Imprisonment for up to 6 months or fine of up to Rs.1000 or both.
58B(4A) Any person contravenes the provisions of section 45-IA(1). Imprisonment for at least 1 year but up to 5 years and fine of at least Rs.1 lakh but up to Rs.25 lakh.
58B(4AA) If any auditor fails to comply with any direction given / order made by RBI under Section 45MA. Fine of up to Rs.10 lakh.
58B(4AAA) Whoever fails to comply with any order made by the Company Law Board under Section 45QA(2). Imprisonment for up to 3 years and fine of at least Rs.5000 for every day till the non-compliance continues.
58B(5) If any person other than an auditor –
(1) Receives any deposit without being authorized so to do or in contravention of any direction given / order made under Chapter IIIB.
(2) Fails to comply with any directions given / order made by RBI under Chapter IIIB.
(3) Issues any prospectus / advertisement otherwise than in accordance with section 45J. 		Imprisonment for up to 3 years and fine of up to –
– for contravention under point (1), twice the amount of the deposit received.
– for contravention under point (3), twice the amount of the deposit called for by the prospectus / advertisement.
58B(5A) Any person contravenes any provision of section 45S. Imprisonment for up to 2 years or fine of up to twice the amount of deposit received / Rs.2000, whichever is more, or both imprisonment and fine.
Unless contrary mentioned – imprisonment for at least 1 year and fine of at least Rs.1000.
58B(5B) Metropolitan Magistrate or Judicial Magistrate of the first class to impose a sentence / fine in excess of the limit specified.
58B(6) Contravention of other provisions / orders. Fine of up to Rs.1 lakh.
Further fine of up to Rs.10,000 for every day till the contravention continues.


Section 58C – Offences by companies

Where an offence has been committed by a company, the director / manager / secretary / other officer / employee responsible for the offence shall be liable for punishment.

Section 58D – Application of section 58B barred

Section 58B shall not apply to any matter dealt with in section 42.

Section 58E – Cognizance of offences

  • A court shall not take cognizance of any offence punishable under this Act, except upon a complaint made by RBI.
  • Only courts of Metropolitan Magistrate or Judicial Magistrate of the first class or courts superior thereto shall try any such offence.
  • In respect of any offence punishable under Section 58B(5A), a complaint may also be made by the State Government.

Section 58F – Application of fine

A court imposing any fine under this Act may direct that the whole / any part thereof shall be applied towards payment of the costs of the proceedings.

Section 58G – Power of Bank to impose fine

  • If contravention referred to under Section 58B is committed by a non-banking financial company (NBFC), RBI may impose on such NBFC – 
    • Penalty up to Rs.25,000.
    • Where contravention continues or default is under Section 58B(4A) / 58B(5)(a) / 58B(5)(aa), a penalty up to Rs.10 lakh or twice the amount involved in such contravention / default, whichever is more. Further penalty up to Rs.1 lakh for every day till the contravention continues.
  • Any penalty imposed under this section shall be payable within 30 days from the date on which notice is served on the NBFC. If the NBFC fails to pay the sum within the prescribed period, 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.
  • No complaint shall be filed against any NBFC in any court of law pertaining to any contravention / default in respect of which any penalty has been imposed by RBI.
  • Where any complaint has been filed against an NBFC in a court in respect of contravention / default referred to in section 58B, penalty shall not be imposed on that NBFC.


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


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