Powers of Reserve Bank of India

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Powers of Reserve Bank of India

These are as follows, as per Banking Regulation Act, 1949-

1. Every bank has to obtain prior consent of RBI for all advances of Rs. 5 crore and over to any one borrower.

2. RBI is empowered to inspect or get inspected any banking company and its books and accounts thoroughly without previous notice and to order the banking company to rectify any unsound, unsafe or anti-social actions.

3. No bank can remit, without prior approval of RBI any debt due to it, by any of its directors, or by any firm, company or individual in which any of its directors may be interested.

4. No banking company can operate in India without getting a licence from RBI.

5. Every bank has to submit the following returns/statements to RBI:

Monthly statement of gross assets and forth nightly statement of demand and time liabilities in India.
Quarterly statement of all assets and liabilities in India, as at the end of every quarter.
Statement of all accounts not operated for the last 10 years, as at the end of each financial year.
Statement of all assets and liabilities as at the end of last Friday of each month.
Any other statement of information that the RBI deems fit. Besides, RBI can also call for half-yearly classification of investments and activity-wise information of all loans and advances.
Balance sheets and audit reports, within three months of end of relevant period.
Basic Statistical Returns (BSR-I) and BSR-II
Return as on last Friday of April and October every year giving information on borrowers enjoying secured credit limits of Rs.10 lac and above and unsecured limits of Rs.5 lac and above.
Details (1/2 yearly March/Sept.) of all doubtful, loss and suit filed accounts with aggregate outstanding of Rs.100 lacs and above and circulate the information amongst banks and financial institutions.

6. RBI can publish any information relating to the banking companies in such consolidated form as it thinks fit.

7. RBI can appoint one or more additional directors of a banking company but not exceeding 5 or one-third of the maximum strength of the BOD, whichever is less.

8. Every banking company has to take prior approval of the RBI for the appointment, reappointment or termination of chairman, a managing or whole time director, manager or chief executive officer.

9. RBI can issue directions to the banking company to control advances. The directions may relate to:

Purpose of advance;
Margin to be maintained
Maximum amount of advance to any one company, firm, individual or association of persons;
Maximum amount up to which guarantees may be given by the banking company on behalf of any one company, firm etc. and
The rate of interest and other terms and conditions on which advances or guarantee may be given.

10. RBI can issue directions to banking companies in the public interest or in the interest of banking policy or in the interest of depositors, or to secure the proper management of any banking company.

11. A banking company can open its branch without prior permission of RBI if it has net owned capital of minimum Rs.100 crore, capital adequate ratio of minimum 9%, earning profits continuously for the last three fiscal year and NPA of 9% maximum.