Inspection
Section 35 of the Banking Regulation Act, 1949 deals with inspection. Notwithstanding anything to the contrary contained in [section 235 of the Companies Act, 1956 (1 of 1956)], the Reserve Bank at any time may, and on being directed so to do by the Central Government shall, cause an inspection to be made by one or more of its officers of any banking company and its b The Act came into force on 16 Mar 1949.
(1) Notwithstanding anything to the contrary contained in 1[section 235 of the Companies Act, 1956 (1 of 1956)], the Reserve Bank at any time may, and on being directed so to do by the Central Government shall, cause an inspection to be made by one or more of its officers of any banking company and its books and accounts; and the Reserve Bank shall supply to the banking company a copy of its report on such inspection.
2[(1A) (a) Notwithstanding anything to the contrary contained in any law for the time being in force and without prejudice to the provisions of sub-section (1), the Reserve Bank, at any time, may also cause a scrutiny to be made by any one or more of its officers, of the affairs of any banking company and its books and accounts; and
(b) a copy of the report of the scrutiny shall be furnished to the banking company if the banking company makes a request for the same or if any adverse action is contemplated against the banking company on the basis of the scrutiny.]
(2) It shall be the duty of every director or other officer 3[or employee] of the banking company to produce to any officer making an inspection under sub-section (1) 4[or a scrutiny under sub-section (1A)] all such books, accounts and other documents in his custody or power and to furnish him with any statements and information relating to the affairs of the banking company as the said officer may require of him within such time as the said officer may specify.
(3) Any person making an inspection under sub-section (1) 4[or a scrutiny under sub-section (1A)] may examine on oath any director or other officer 3[or employee] of the banking company in relation to its business, and may administer an oath accordingly.
(4) The Reserve Bank shall, if it has been directed by the Central Government to cause an inspection to be made, and may, in any other case, report to the Central Government on any inspection 5[or scrutiny]made under this section, and the Central Government, if it is of opinion after considering the report that the affairs of the banking company are being conducted to the detriment of the interests of its depositors, may, after giving such opportunity to the banking company to make a representation in connection with the report as, in the opinion of the Central Government, seems reasonable, by order in writing--
(a) prohibit the banking company from receiving fresh deposits;
(b) direct the Reserve Bank to apply under section 38 for the winding up of the banking company:
Provided that the Central Government may defer, for such period as it may think fit, the passing of an order under this sub-section, or cancel or modify any such order, upon such terms and conditions as it may think fit to impose.
(5) The Central Government may, after giving reasonable notice to the banking company, publish the report submitted by the Reserve Bank or such portion thereof as may appear necessary.
5[Explanation.--For the purposes of this section, the expression "banking company" shall include--
(i) in the case of a banking company incorporated outside India, all its branches in India; and
(ii) in the case of a banking company incorporated in India--
(a) all its subsidiaries formed for the purpose of carrying on the business of banking exclusively outside India; and
(b) all its branches whether situated in India or outside India.]
6[(6) The powers exercisable by the Reserve Bank under this section in relation to regional rural banks may (without prejudice to the exercise of such powers by the Reserve Bank in relation to any regional rural bank whenever it considers necessary so to do) be exercised by the National Bank in relation to the regional rural banks, and accordingly, sub-sections (1) to (5) shall apply in relation to regional rural banks as if every reference therein to the Reserve Bank included also a reference to the National Bank].
Section 35, The Banking Regulation Act, 1949 (Act 10 of 1949).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Reserve Bank of India vs Jayantilal N. Mistry
Court's Decision & Legal Precedent
The Court dismissed the applications by HDFC Bank, State Bank of India, ICICI Bank and others to recall and to be impleaded in the judgment directing the Reserve Bank to disclose bank inspection and risk-assessment reports under the Right to Information Act, holding that a recall application dressed up as a review is not maintainable and that the RBI stands in no fiduciary relationship with the banks it supervises, so its statutory duty of transparency in the public interest outweighs the banks' claim to confidentiality and the Section 8 exemptions.
On this section: It treats the annual financial inspection and risk-assessment reports that the Reserve Bank generates in exercise of its inspection power under Section 35 as disclosable information rather than confidential supervisory material, and forecloses further attempts by inspected banks to reopen that finding.
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Salim Akbarali Nanji vs Union of India
Court's Decision & Legal Precedent
Writing off non-performing assets is a legitimate internal accounting procedure to clean the balance sheet of a banking company. Such write-off does not require prior approval from the Reserve Bank of India under statutory law, though banking companies customarily seek such approval as a matter of practice. The Reserve Bank of India, in its regulatory capacity, may consider the financial position of the applicant banking company before granting permission to utilize reserves for write-off purposes. The write-off does not extinguish the bank's right to proceed against borrowers to recover the dues; it is merely an accounting entry that does not affect the creditor's legal rights to pursue recovery through available legal remedies. The decision to write off bad debts, when approved by shareholders and supported by adequate reserves and maintained capital adequacy ratios, does not constitute illegal or arbitrary action by the Reserve Bank of India and is not subject to judicial review through writ jurisdiction.
On this section: Empowers RBI to cause inspection of banking companies and their books and accounts. Court noted RBI's inspection authority but found no breach.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 35
What have the courts held on Section 35 of the Banking Regulation Act?
Reserve Bank of India vs Jayantilal N. Mistry (28 Apr 2021) is the leading judgment on this section among those set out below: It treats the annual financial inspection and risk-assessment reports that the Reserve Bank generates in exercise of its inspection power under Section 35 as disclosable information rather than confidential supervisory material, and forecloses further attempts by inspected banks to reopen that finding. Another 1 judgment on this section is set out below, all of them from the Supreme Court. They run from 2006 to 2021.
How do I find court cases under Section 35 of the Banking Regulation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Banking Regulation Act 1949 35, section 35 Banking Regulation Act 1949, section 35 of the Banking Regulation Act. People searching for it also type banking regulation act 35a and banking regulation act 1949 section 35. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Reserve Bank of India vs Jayantilal N. Mistry (28 Apr 2021).
What should I read with Section 35 of the Banking Regulation Act, and has it changed?
Its own text turns on section 38 (Winding up by High Court), so none of them can safely be read on its own. 6 other provisions in this corpus refer back to it.
When did Section 35 of the Banking Regulation Act come into force?
Section 35 of the Banking Regulation Act, cited as Banking Regulation Act 1949 35, came into force on 16 Mar 1949, having been enacted on 10 Mar 1949. It is in force as at the date shown on this page.
Other sections of this Act
- 56. Act to apply to co-operative societies subject to modifications5544 words
- 45. Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation2310 words
- 10B. Banking company to be managed by whole time chairman1171 words
- 5. Interpretation1164 words
- 43A. Preferential payments to depositors1031 words
- 11. Requirement as to minimum paid-up capital and reserves988 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.