Taxmann's Economic Business & Commercial Laws

Topic-wise Marks Distribution S. No.

Topic

2011

2012

2013

2014

2015

2016

2017

2018

2019

J

J

J

J

J

J

J

J

D

J

D

D

J

D

5

5

4

9

9

13

9

9

9

9

5

4

9

9

9

13

8

D

1

Reserve Bank of India Act, 1934

2

Foreign Exchange Management Act, 1999

3

FEMA - Current & Capital Account Transactions, Liberalized Remittance Scheme

4

2

4

FEMA - Foreign Direct Investment in India

1

1

5

FEMA - Direct Investment Outside India

6

External Commercial Borrowings (ECB)

7

Foreign Contribution (Regulation) Act, 2010

8

Foreign Trade Policy & Procedures

9

NonBanking Finance Companies (NBFC)

D

5

5

4

1

1

3

5

2

2

3

9

3

1

D

5

5

8

8

5

5

3

6

6

3

12 Consumer Protection Act, 1986

5

13 Essential Commodities Act, 1955

3

14 Legal Metrology Act, 2009 5

5

11

8

5

8

5

13

8

13

5

5

5

3

3

3

3

17

12

14

8

10

5

5

3

9

9

4

4

4

5

7

4

5

4

4

4

4

6

5

5

4

5

5

5

5

4

5

9

5

9

4

4

8

4

4

8

4

9

4

4

8

8

3

3

5

8

13

9

4

8

5

20

25

25

25

25

25

25

7

7

4

16

5

5

11

11

13

5

10

8

8

8

4

10

3

5

5

5

5

3

I-5

27

4

3

7

6

4

8

5 18

2021

5

5

7

5

2020

5

2

5

D

9

5

11 Competition Act, 2002

D

10

10

10 Special Economic Zones Act, 2005

15 Transfer of Property Act, 1882

D

5

5

9

5

D

13

3

10

11

7

7

4

4

3

4

3

3

8

7

8

10

I-6 S. No.

Topic

Topic-wise Marks Distribution

2011

2012

2013

2014

2015

2016

2017

2018

2019

J

J

J

J

J

J

J

J

D

J

D

D

J

D

16 Real Estate (Regulation & Development) Act, 2016

3

3

3

6

6

6

17 Benami Transactions (Prohibition) Act, 1988

3

3

3

7

3

D

18 Prevention of Money Laundering Act, 2002

5

5

19 Contract Act, 1872

5

5

20 Specific Relief Act, 1963

4

4

D

D

D

D

D

D

2020

2021

5

5

3

8

14

5

10

10

10

5

3

4

3

3

7

3

10

13

8

6

13

10

13

13

10

15

13

8

12

4

3

7

6

9

4

3

3

6

3

3

21 Sale of Goods Act, 1930

3

3

8

6

3

3

22 Partnership Act, 1932

3

3

3

3

4

23 Negotiable Instruments Act, 1881

4

4

8

Note:

37

51

r e b m e c e D D ; e n u J J

Total

5

43

8

56

4

48

64

84

67

61

78

67

87

68

72

66 135 135 135

3

7

135 135 135

Contents E G A P

Topic-wise Marks Distribution

I-5

PART A FOREIGN EXCHANGE MANAGEMENT & NBFCs Chapter 1 u

1.3

RESERVE BANK OF INDIA ACT, 1934

Chapter 2 u

FOREIGN EXCHANGE MANAGEMENT ACT, 1999

2.1

Chapter 3 u

FEMA - CURRENT & CAPITAL ACCOUNT TRANSACTIONS, LIBERALIZED REMITTANCE SCHEME

3.1

Chapter 4 u

FEMA - FOREIGN DIRECT INVESTMENT IN INDIA

4.1

Chapter 5 u

5.1

FEMA - DIRECT INVESTMENT OUTSIDE INDIA

Chapter 6 u

EXTERNAL COMMERCIAL BORROWINGS (ECB)

6.1

Chapter 7 u

FOREIGN CONTRIBUTION (REGULATION) ACT, 2010

7.1

Chapter 8 u

8.1

FOREIGN TRADE POLICY & PROCEDURES

Chapter 9 u

NON-BANKING FINANCIAL COMPANIES (NBFCs)

9.1

Chapter 10 u

10.1

SPECIAL ECONOMIC ZONES ACT, 2005

I-7

I-8

E G A P

Contents

PART B COMPETITION LAW Chapter 11 u

11.3

COMPETITION ACT, 2002

PART C COMMERCIAL LAWS Chapter 12 u

12.3

CONSUMER PROTECTION ACT, 2019

Chapter 13 u

13.1

ESSENTIAL COMMODITIES ACT, 1955

Chapter 14 u

14.1

LEGAL METROLOGY ACT, 2009

PART D PROPERTY LAWS Chapter 15 u

15.3

TRANSFER OF PROPERTY ACT, 1882

Chapter 16 u

REAL ESTATE (REGULATION & DEVELOPMENT) ACT, 2016

16.1

PART E ANTI-CORRUPTION LAWS Chapter 17 u

BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988

17.3

Chapter 18 u

PREVENTION OF MONEY LAUNDERING ACT, 2002

18.1

PART F BUSINESS LAWS Chapter 19 u

INDIAN CONTRACT ACT, 1872

19.3

Chapter 20 u

SPECIFIC RELIEF ACT, 1963

20.1

Chapter 21 u

SALE OF GOODS ACT, 1930

21.1

I-9 E G A P

Contents

Chapter 22 u

PARTNERSHIP ACT, 1932

22.1

Chapter 23 u

NEGOTIABLE INSTRUMENTS ACT, 1881

SOLVED PAPER : DECEMBER 2021 (NEW SYLLABUS)

23.1 P.1

1

Reserve Bank of India Act, 1934

CHAPTER CONTENTS OBJECTIVE & ESTABLISHMENT OF RBI Establishment and incorporation of the Reserve Bank [Section 3] Central Board of Directors [Section 8]

Powers of Central Government to supersede Central Board [Section 30] Local Boards, their constitution and functions [Section 9] Business which the RBI may not transact [Section 18] FUNCTIONS OF RBI

Functions of RBI under the RBI Act, 1934

Reserve Bank of India as Banker to Banks Banker to Government

Notes issue function of RBI

Public Debt Functions of the RBI

Foreign exchange management function of RBI

Banking regulation & supervision function of RBI Powers of RBI for resolution of stressed assets Regulation and Supervision of NBFCs by RBI

Role and functions of the RBI in relation to regulation & supervision of co-operative banks Legal tender character of notes [Section 26] Coin Distribution

Counterfeit Money

Combating Counterfeiting

Issue of demand bills and notes [Section 31] Prudential norms for banks

Foreign Exchange Reserves Management by RBI MONETARY POLICY

Open Market Operations

Monetary Policy Function of the RBI

Monetary Policy Committee [Section 45ZB]

Instruments used by the RBI for implementing Monetary Policy Meetings of Monetary Policy Committee [Section 45ZI] Monetary Policy Report [Section 45ZM]

1.3

1.4

PART A : FOREIGN EXCHANGE MANAGEMENT & NBFCs

INTRODUCTION: The Reserve Bank of India (RBI) is the apex financial institution of the country’s financial system entrusted with the task of control, supervision, promotion, development and planning. RBI is the queen bee of the Indian financial system which influences the commercial banks’ management in more than one way.

The RBI influences the management of commercial banks through its various policies, directions and regulations.

Its role in bank management is quite unique. In fact, the RBI performs the four basic functions of management, viz., planning, organizing, directing and controlling in laying a strong foundation for the functioning of commercial banks.

In 1921, the Imperial Bank of India was established to perform as Central Bank of India by the British Government.

But unfortunately Imperial Bank failed to show its performance up to the mark and didn’t achieve any success as the Central Bank. So, Government required setup of brand new central bank. In 1st April 1935, Reserve Bank of India was setup. In January, 1949, RBI was nationalized.

OBJECTIVE & ESTABLISHMENT OF THE RBI Objectives of the Important aspects relating to objectives of the Reserve Bank of India (RBI) are as follows: Reserve Bank of (1) Primary objects: Preamble to the RBI Act, 1934 spells out the objectives of the RBI India (RBI) as: (a) To regulate the issue of bank notes.

(b) To keep reserves with a view to securing monetary stability in India.

(c) To operate currency and credit system of the country to its advantage.

Prior to the establishment of the RBI, the Indian financial system was totally inadequate on account of the inherent weakness of the dual control of currency by the Central Government and of credit by the Imperial Bank of India. The Hilton-Young Commission, therefore, recommended division of functions and responsibility for control of currency and credit and the divergent policies by setting-up of a central bank called the RBI which would regulate the financial policy and develop banking facilities throughout the country. Hence, the RBI was established with this primary object in view.

(2) Remain free from political influence: Another objective of the RBI has been to remain free from political influence and be in successful operation for maintaining financial stability and credit.

(3) Fundamental objects: Fundamental object of the RBI is to discharge purely central banking functions in the Indian money market i.e. to act as (a) Note-issuing authority (b) Bankers’ bank

(c) Banker to government

(4) Promote the growth of the economy: RBI aims to promote the growth of the economy within the framework of the general economic policy of the Government, consistent with the need of maintenance of price stability.

Establishment and incorporation of Reserve Bank [Section 3]

(5) Development of Indian Economy: A significant object of the RBI has also been to assist the planned process of development of the Indian economy. Besides the traditional central banking functions, with the launching of the 5 year plans in the country, the RBI has been moving ahead in performing a host of developmental and promotional functions, which are normally beyond the purview of a traditional Central Bank.

Establishment & incorporation: A bank to be called the RBI shall be constituted for the purposes of taking over the management of the currency from the Central Government and of carrying on the business of banking in accordance with the provisions of the Act.

RBI shall be a body corporate: The RBI shall be a body corporate by the name of the RBI, having perpetual succession and a common seal and shall by the said name sue and be sued.

Capital: The capital of the RBI shall be ` 5 Crore.

CH. 1 : Reserve Bank of India Act, 1934

Central Board of Directors [Section 8]

1.5

Offices, branches & agencies: The RBI shall establish offices in Bombay, Calcutta, Delhi and Madras and may establish branches or agencies in any other place in India with the previous sanction of the Central Government.

The Central Board shall consist of the following Directors, namely:

(a) A Governor and not more than 4 Deputy Governors to be appointed by the Central Government. (b) 4 Directors to be nominated by the Central Government, 1 from each of the 4 Local Boards. (c) 10 Directors to be nominated by the Central Government.

(d) 2 Government officials to be nominated by the Central Government.

Thus, Central Board consists of total 21 persons.

Governor & Deputy Governors: The Governor & Deputy Governors shall devote their wholetime to the affairs of the RBI. They are entitled to receive salaries and allowances determined by the Central Board, with the approval of the Central Government.

In the interest of public and at the request of the Central or State Government, the Central Board may permit the Governor or a Deputy Governor to undertake part-time honorary work, whether related to the purposes of the Act or not. However, such additional work shall not interfere with duties as Governor or Deputy Governor.

Voting by Deputy Governor & Nominated Director: Deputy Governor & Nominated Director may attend any meeting of the Central Board and take part in its deliberations but shall not be entitled to vote. However, due to some reason, if Governor is unable to attend any such meeting then Deputy Governor authorized by him in writing may vote for him at that meeting.

Powers of Central Government to supersede Central Board [Section 30]

Term of office of Governor, Deputy Governor & Nominated Director: The Governor and a Deputy Governor shall hold office for such term not exceeding 5 years and shall be eligible for reappointment. A Nominated Director shall hold office for a period of 4 years and shall be eligible for reappointment. However, any such Director shall not be appointed for more than 2 terms, that is, for a maximum period of 8 years either continuously or intermittently.

A Nominated Director shall hold office during the pleasure of the Central Government. u

u

u

Local Boards, their constitution and functions [Section 9]

u

u

If in the opinion of the Central Government the RBI fails to carry out any of the obligations imposed on it under the Act, the Central Government by notification in the Gazette of India may declare the Central Board to be superseded.

After the issuing such notification the general superintendence and direction of the affairs of the RBI shall be entrusted to such agency as the Central Government may determine. Such agency may exercise the powers and do all acts and things which may be exercised or done by the Central Board under the Act. When action is taken under this section the Central Government shall cause a full report of the circumstances leading to such action and of the action taken to be laid before Parliament at the earliest possible opportunity and in any case within 3 months from the issue of the notification superseding the Board.

A Local Board shall be constituted for each of the four areas specified in the First Schedule i.e. one each for the Western, Eastern, Northern and Southern areas of the country. Local Board shall consist of 5 members to be appointed by the Central Government to represent.

The members of the Local Board shall elect from amongst themselves one person to be the chairman of the Board.

1.6

PART A : FOREIGN EXCHANGE MANAGEMENT & NBFCs

u

u

Business which the RBI may not transact [Section 18]

u

u

u

u u u

Every member of a Local Board shall hold office for a term of 4 years and shall be eligible for reappointment. However, any such member shall not be appointed for more than 2 terms, that is, for a maximum period of 8 years either continuously or intermittently.

A Local Board shall advise the Central Board on such matters as may be generally or specifically referred to it. It shall perform such duties as the Central Board may delegate to it.

RBI cannot engage in trade. It cannot have a direct interest in any commercial, industrial, or other undertaking except such interest as it may in any way acquire in the course of the satisfaction of any of its claims. However, all such interests shall be disposed of at the earliest possible moment.

RBI cannot purchase the shares of any banking company or of any other company, or grant loans upon the security of any such shares.

RBI cannot advance money on mortgage of immovable property or documents of title relating thereto. The RBI cannot become the owner of immovable property, except so far as is necessary for its own business premises and residences for its officers and servants.

RBI cannot make loans or advances.

RBI cannot draw or accept bills payable otherwise than on demand.

RBI cannot allow interest on deposits or current accounts.

QUESTIONS FOR PRACTICE

Question 1: What are the objectives of the Reserve Bank of India (RBI)?

Hint: Refer Topic Objectives of the Reserve Bank of India (RBI).

Question 2: Write a short note on: Establishment and incorporation of Reserve Bank Hint: Refer to Section 3 of the RBI Act, 1934.

Question 3: Write a short note on: Central Board of Directors Hint: Refer to Section 8 of the RBI Act, 1934.

Question 4: Under what circumstances the Central Government has power to supersede the RBI? What conditions are required to be fulfilled by the Central Government for taking such action?

Hint: Refer to Section 30 of the RBI Act, 1934.

Question 5: Write a short note on: Local Boards of the RBI Hint: Refer to Section 9 of the RBI Act, 1934.

Question 6: Which kind of business cannot be transacted by the RBI as per the Reserve Bank of India Act, 1934?

Hint: Refer to Section 18 of the RBI Act, 1934.

FUNCTIONS OF RBI

Functions of RBI Various functions of RBI under the RBI Act, 1934 are as follows: under the RBI u Banking Functions Act, 1934 u Issue bank notes u u u u

Monetary Policy Functions Public Debt Functions

Foreign Exchange Management

Banking Regulation & Supervision

CH. 1 : Reserve Bank of India Act, 1934

u u u u u u

Reserve Bank of India as Banker to Banks

u

u

u

u

Banker to Government Notes issue function of RBI

1.7

Regulation and Supervision of NBFCs

Regulation & Supervision of Co-operative banks

Regulation of Derivatives and Money Market Instruments Payment and Settlement Functions Consumer Protection Functions

Financial Inclusion and Development Functions

The RBI to fulfill this function opens current accounts of banks with itself, enabling these banks to maintain cash reserves as well as to carry out inter-bank transactions through these accounts. Inter-bank accounts can also be settled by transfer of money through electronic fund transfer system, such as, the Real Time Gross Settlement System (RTGS).

In addition, the RBI has also introduced the Centralized Funds Management System (CFMS) to facilitate centralized funds enquiry and transfer of funds across Deposit Accounts Department (DADs). This helps banks in their fund management as they can access information on their balances maintained across different DADs from a single location.

Bankers’ Bank: As Banker to Banks, the RBI provides short-term loans and advances to select banks, when necessary, to facilitate lending to specific sectors and for specific purposes. These loans are provided against promissory notes and other collaterals given by the banks.

Lender of the Last Resort: The RBI also acts as the ‘lender of last resort’. It can come to the rescue of a bank that is solvent but faces temporary liquidity problems by supplying it with much needed liquidity when no one else is willing to extend credit to that bank.

The RBI extends this facility to protect the interest of the depositors of the bank and to prevent possible failure of a bank, which in turn may also affect other banks and institutions and can have an adverse impact on financial stability and thus on the economy.

The second important function of the RBI is to act as Government banker, agent and adviser.

The RBI is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir.

Management of currency is one of the core central banking functions of the RBI for which it derives the necessary statutory powers from Section 22 of the RBI Act, 1934.

Bank of issue: The RBI has the sole right to issue bank notes of all denominations. The distribution of ` 1, ` 2 currencies note and coins and small coins all over the country are undertaken by the RBI as agent of the Government.

Right to issue bank notes [Section 22]: The RBI shall have the sole right to issue ‘bank notes’ in India.

The RBI, on the recommendation of the Central Board, may issue ‘currency notes’ of the Government of India. All of the provisions of the RBI Act shall apply to ‘currency notes’ as they apply to ‘bank notes’ issued by the RBI.

The issue function of bank notes is performed by the Issue Department, which is separated and kept wholly distinct from Banking Department.

The RBI recommends the Central Government about denomination of bank notes i.e. ` 2, ` 5, ` 10, ` 20, ` 50, ` 100, ` 500, ` 1,000, ` 2,000, ` 5,000 & ` 10,000 or other denominations not exceeding ` 10,000. [Section 24]

The design, form and material of bank note are approved by Central Government on the recommendations of Central Board of the RBI. Every bank note is a legal tender at any place

1.8

PART A : FOREIGN EXCHANGE MANAGEMENT & NBFCs

in India. However, on recommendation of the Central Board, the Central Government may declare any series of bank notes of any denomination as not to be a legal tender.

Exchange of Notes: Another important function is exchange of mutilated or torn notes, which under the RBI Act, 1934 is not a matter of right, but a matter of grace. The bank notes that are being issued by RBI are exempt from payment of stamp duty. [Section 29]

` 1 and ` 2 denominations notes are the ‘currency notes’. These are issued by the Government of India in consultation with RBI. The printing of ` 1 & ` 2 denominations has been discontinued, though the notes in circulation are valid. Currently ‘bank notes’ issued by RBI are mostly in circulation i.e. notes having denominations ` 10, ` 20, ` 50, ` 100, ` 500 & ` 2,000, In India, the paper currency was first issued during British East India Company rule. The first paper notes were issued by the private banks such as Bank of Hindustan and the presidency banks during late 18th century. With the introduction of the Paper Currency Act, 1861, the British Government of India was conferred the monopoly to issue paper notes in India.

After this act, the government of India entered into agreements with the Presidency Banks to work as authorized agents to promote circulations of the paper notes across length and breadth of British India. But since India is a vast country, redemption of these notes became a big issue. Consequently, some “Currency Circles” came up in various parts of country where the paper notes of Indian government were legal tenders.

In 1867, the agreements with the presidency banks were terminated. The job of promoting, circulating and redemption of the currency notes was entrusted to Mint Masters, Accountant General and the Controller of Currency. This practice continued till RBI came into existence in 1935.

Public Debt Functions of the RBI

Section 22 of the RBI Act, 1934 makes provided that RBI has the sole right to issue ‘bank notes’ of all denominations. Thus, RBI is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes. In consultation with the Government, the Reserve Bank routinely addresses security issues and targets ways to enhance security features to reduce the risk of counterfeiting or forgery of currency notes.

RBI’s debt management strategy aims at minimizing the cost of borrowing, reducing the rollover and other risks, smoothening the maturity structure of debt, and improving depth and liquidity of Government securities markets by developing an active secondary market.

As per Preamble to the Government Securities Act, 2006, it is an Act to consolidate and amend the law relating to Government securities and its management by the RBI and for matters connected therewith or incidental thereto. u

u

u

u

Foreign exchange management function of RBI

The Act applies to Government securities created and issued by the Central/State Government.

The Act prescribes the procedure and modalities to be followed by RBI in the management of public debt and also confers various powers on RBI including the power to determine the title to a Government security if there exists any doubt in the opinion of RBI. No order made by RBI under the Act shall be called in question by any Court for the reasons stated therein. [Section 18]

Prior to the enactment of the Government Securities Act, 2006, the said public debt functions of the RBI have been governed under the provisions of the Public Debt Act, 1944.

Foreign Exchange Management Act (FEMA) envisages that RBI will have a key role in management of foreign exchange.

Main functions of RBI under FEMA are as follows:

CH. 1 : Reserve Bank of India Act, 1934

u

u

u

u u

Banking regulation & supervision function of RBI

1.9

To exercise its powers under the FEMA and discharge duties with respect to external trades and payments, development and maintenance of foreign exchange market in India.

To authorize any person to deal in foreign exchange or in foreign securities, as an authorized dealer, money changer or off-shore banking unit or in any other manner as it deems fit.

To revoke an authorization issued to an authorized dealer in public interest or if the authorized person has failed to comply with the conditions subject to which the authorization was granted.

To impose penalty for contraventions of FEMA.

To compound such contraventions u/s 15 of the FEMA.

The power to regulate and supervise banks has been provided to RBI under the provisions of Banking Regulation Act, 1949.

The RBI has wide powers of supervision and control over commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction and liquidation.

The RBI is authorized to carry out periodical inspection of the banks and to call for returns and necessary information from them. Thus, supervisory functions of the RBI have helped a great deal in improving the standard of banking in India.

Powers of RBI Stressed Assets are loans where the borrower has defaulted in repayment or where the loan for resolution of has been restructured. stressed Assets In terms of Sections 35AA & 35AB of the Banking Regulation Act, 1949, the RBI has been specifically authorized to issue directions to banking companies for resolution of stressed assets.

Power of issuing directions to banking companies to initiate insolvency resolution process [Section 35AA]: The Central Government may authorize the RBI to issue directions to any banking company to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency & Bankruptcy Code, 2016.

Power of RBI to issue directions in respect of stressed assets [Section 35AB]: The RBI may, from time to time, issue directions to any banking company for resolution of stressed assets.

The RBI may specify one or more authorities or committees with such members as the RBI may appoint to advise any banking company or banking companies on resolution of stressed assets.

Regulation and The regulation and supervision of non-banking financial companies is one of the critical Supervision of functions that the RBI. NBFCs by RBI Following are some of the important points in this regard:

(1) Registration of NBFC: In terms of Section 45-IA, all Non-Banking Financial Companies have to be mandatorily registered with the RBI.

(2) Regulate or prohibit issue of prospectus or advertisements soliciting deposits: As part of regulation and supervision of NBFCs, the RBI has been conferred with the statutory powers to regulate or prohibit issue of prospectus or advertisements soliciting deposits of money by NBFCs, power to determine policy and issue directions to NBFCs etc.

(3) Call information and issue directions: The RBI has been empowered to call for information and issue directions to NBFCs for the reasons stated therein.

(4) Supervisory control: As a part of the supervisory control over the non-banking financial companies, the RBI has powers to inspect NBFCs.

1.10

Role and functions of the RBI in relation to regulation & supervision of co-operative banks

PART A : FOREIGN EXCHANGE MANAGEMENT & NBFCs

The RBI shall exercise all above powers in the public interest or to regulate the financial system of the country to its advantage or to prevent the affairs of any NBFC being conducted in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of the NBFC. u

u

u

u

u

Regulation and supervision of urban co-operative banks is another area the RBI has been entrusted with.

As per Article 246 of the Constitution of India, the exercise of legislative powers of the Union and the States are given in the List-I (Union List) and List-II (State List) respectively of the Schedule VII to the Constitution.

The entry relating to Co-operative Societies fall in State List whereas the entry relating to banking falls in the Union List. These results in the duality of jurisdiction over co-operative banks both by the RBI in terms of Banking Regulation Act, 1949, and the Registrar of Co-operative Societies, in terms of the respective State Co-operative Societies Act of the State.

Section 56 of the Banking Regulation Act, 1949, makes it applicable to co-operative societies involved in the business of banking.

As a part of the regulatory and supervisory regime over co-operative banks, the RBI has been entrusted with the powers to issue licenses and cancel licenses of co-operative banks, supersede their boards, inspect them and also issue directions to them in the public interest, interest of banking policy, control over loans and advances etc.

Judicial view:

Legal tender character of notes [Section 26] Coin Distribution

It was held by the Bombay High Court that though the control over management of Co-operative Society is vested in the Registrar of Co-operative Societies, but insofar as banking is concerned, by virtue of Section 56 read with Section 35A of the Banking Regulation Act, 1949, the RBI has full power to regulate and control co-operative societies in relation to banking operations.

[Janata Sahakari Bank Ltd. v. State of Maharashtra] Every bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government.

On recommendation of the Central Board the Central Government may declare that with effect from specified date in the notification, any series of bank notes of any denomination shall cease to be legal tender to such extent as may be specified in the notification. u

u u

u

The Indian Coinage Act, 1906 governs the minting of rupee coins, including small coins of the value of less than ` 1.

Coins are legal tender in India for unlimited amounts.

50 paisa coins are legal tender for any sum not exceeding ` 10 and smaller coins for any sum not exceeding ` 1.

RBI acts as an agent of the Central Government for distribution, issue and handling of the coins and for withdrawing and remitting them back to Government as may be necessary.

A mint is an industrial facility which manufactures coins that can be used in currency.

Counterfeit Money

u

u u

Counterfeit money is imitation currency produced without the legal sanction of the Government.

Producing or using counterfeit money is a form of fraud or forgery.

Counterfeiting currency-notes or bank-notes is offence u/s 489A of the Indian Penal Code, 1860 and punishable with imprisonment for life, or with imprisonment of either description for a term which may extend to 10 years and shall also be liable to fine.

ECONOMIC BUSINESS & COMMERCIAL LAWS AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO PAGE NO. BINDING TYPE

: : : : : : :

N.S. ZAD, DIVYA BA JPAI TAXMANN MARCH 2022 2ND EDITION 9789393880741 672 PAPERBACK

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