Reserve Bank of India Act, 1934 and Banking Framework Vocabulary

A comprehensive vocabulary flashcard set covering legal frameworks, statutory provisions, monetary policy tools, and banking sector types under the Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949.

Reserve Bank of India (RBI)

The central bank of India, established in 1935, responsible for regulating the monetary and banking systems, issuing currency, and managing foreign exchange reserves.

Reserve Bank of India Act, 1934

The landmark legislation enacted to provide the legal foundation for the establishment, constitution, powers, and monetary functions of the RBI.

Section 42 of the RBI Act, 1934

The statutory provision that mandates scheduled commercial banks to maintain the Cash Reserve Ratio (CRR) with the RBI.

Section 18 of the RBI Act, 1934

The provision that allows the RBI to directly discount bills of exchange and promissory notes to provide rediscounting facilities for credit management.

Cash Reserve Ratio (CRR)

The minimum percentage of a bank's total demand and time liabilities (DTL) that must be maintained as cash reserves with the RBI.

Statutory Liquidity Ratio (SLR)

The mandatory percentage of net demand and time liabilities (NDTL) that banks must maintain in government-approved securities, gold, or cash under Section 24 of the Banking Regulation Act, 1949.

Repo Rate

The interest rate at which the RBI lends money to commercial banks against government securities to manage liquidity in the economy.

Banking Regulation Act, 1949

The foundational legislation (originally passed as the Banking Companies Act) governing bank regulation, licensing, management supervision, and depositor protection in India.

Section 5(i)(b) of the BR Act, 1949

The statutory section that defines 'banking' as the acceptance of public deposits for the purpose of lending or investment, repayable on demand or otherwise.

Section 5(i)(c) of the BR Act, 1949

The legal section that defines a 'banking company' as any company engaged in the business of banking.

Section 7 of the BR Act, 1949

The provision mandating that every entity conducting banking business in India must include the word 'bank', 'banking', or 'banking company' in its name.

Section 8 of the BR Act, 1949

The statutory provision that prohibits banks from engaging directly in the trading of goods.

Section 29 of the BR Act, 1949

The compliance provision requiring banks to publish their annual balance sheets and profit and loss accounts as of March 31.

Banking Regulation (Amendment) Act, 2020

An amendment that extended the regulatory and supervisory oversight of the RBI to cooperative banks to enhance depositor protection.

State Bank of India Act, 1955

The specific central legislation under which the State Bank of India (SBI) is constituted and governed.

Regional Rural Banks Act, 1976

The statutory framework establishing Regional Rural Banks (RRBs), which are jointly owned by the Central Government, State Government, and Sponsor Banks.

Corporate Banking

Also known as wholesale banking, this sector provides specialized financial services such as working capital finance, term loans, syndicated loans, and trade finance to large corporations and government entities.

Retail Banking

Mass-market consumer banking focused on personal financial services for households and individuals, including savings deposits, personal loans, home loans, and digital payments.

Nostro Accounts

Accounts maintained by domestic Indian banks with correspondent foreign banks overseas to facilitate international settlement of payments.

External Commercial Borrowings (ECBs)

Commercial loan instruments raised overseas by Indian corporate entities from non-resident lenders according to FEMA guidelines.

NABARD

The National Bank for Agriculture and Rural Development, acting as the apex institution for credit policy, refinancing, and rural development in India.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

A major government financial inclusion scheme designed to ensure universal access to basic banking facilities, savings accounts, credit, and insurance for all households.

Demand Liabilities

Bank liabilities payable on demand, including current account deposits, the demand component of savings accounts, overdue fixed deposits, and unpaid drafts.

Time Liabilities

Bank deposit obligations repayable after a fixed term or maturity, such as fixed deposits, recurring deposits, and staff security deposits.

Non-Operative Financial Holding Company (NOFHC)

A wholly-owned corporate structure required under the RBI 2013 Licensing Policy to hold all regulated financial services entities of a promoter group applying for a new banking license.

Form A Return

The statutory return filed by Scheduled Commercial Banks under Section 42(2) of the RBI Act to report fortnight-end CRR positioning and balances.