Further powers and functions of Reserve Bank
Section 36 of the Banking Regulation Act, 1949 deals with further powers and functions of Reserve Bank. The Reserve Bank may-- (a) caution or prohibit banking companies generally or any banking company in particular against entering into any particular transaction or class of transactions, and generally give advice to any banking company; The Act came into force on 16 Mar 1949.
(1) The Reserve Bank may--
(a) caution or prohibit banking companies generally or any banking company in particular against entering into any particular transaction or class of transactions, and generally give advice to any banking company;
(b) on a request by the companies concerned and subject to the provisions of section 1[44A], assist, as intermediary or otherwise, in proposals for the amalgamation of such banking companies;
(c) give assistance to any banking company by means of the grant of a loan or advance to it under clause (3) of sub-section (1) of section 18 of the Reserve Bank of India Act, 1934 (2 of 1934);
2[(d) 3[at any time, if it is satisfied that in the public interest or in the interest of banking policy policy or for preventing the affairs of the banking company being conducted in a manner detrimental to the interests of the banking company or its depositors it is necessary so to do,] by order in writing and on such terms and conditions as may be specified therein--
(i) require the banking company to call a meeting of its directors for the purpose of considering any matter relating to or arising out of the affairs of the banking company, or require an officer of the banking company to discuss any such matter with an officer an officer of the Reserve Bank;
(ii) depute one or more of its officers to watch the proceedings at any meeting of the Board of directors of the banking company or of any committee or of any other body constituted by it; require that banking company to give an opportunity to the officers so deputed to be heard at such meetings and also require such officers to send a report of such proceedings to the Reserve Bank;
(iii) require the Board of directors of the banking company or any committee or any other body constituted by it to give in writing to any officer specified by the Reserve Bank in this behalf at his usual address all notices of, and other communications relating to, any meeting of the Board, committee or other body constituted by it;
(iv) appoint one or more of its officers to observe the manner in which the affairs of the banking company or of its offices or branches are being conducted and make a report thereon;
(v) require the banking company to make, within such time as may be specified in the order, such changes in the management as the Reserve Bank may consider necessary 4***.]
(2) The Reserve Bank shall make an annual report to the Central Government on the trend and progress of banking in the country, with particular reference to its activities under clause (2) of section 17 of the Reserve Bank of India Act, 1934 (2 of 1934), including in such report its suggestions, if any, for the strengthening of banking business throughout the country.
(3) The Reserve Bank may appoint such staff at such places as it considers necessary for the scrutiny of the returns, statements and information furnished by banking companies under this Act, and generally to ensure the efficient performance of its functions under this Act.
Section 36, The Banking Regulation Act, 1949 (Act 10 of 1949).
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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Richmond Investments PVT LTD vs Union of India
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code, 2016, in its entirety, is constitutionally valid. The Code does not violate Article 14 (equality) of the Constitution. The classification between financial and operational creditors is based on clear intelligible differentia having direct relation to the Code's objects; operational creditors' exclusion from voting rights in the committee of creditors is justified because financial creditors are better equipped to assess business viability, and operational creditors' interests are protected through guaranteed minimum liquidation value payment and priority in resolution plans. Section 29A's eligibility restrictions do not violate vested rights because resolution applicants have no pre-existing right to be considered, and the provisions are designed to prevent unscrupulous and unfit persons from regaining control of stressed corporate debtors. Economic legislation deserves judicial deference and should be judged by the generality of its provisions rather than alleged crudities; trial-and-error experimentation in economic matters is proper legislative function which courts cannot strike down unless the legislation is manifestly arbitrary or palpably unreasonable. The Code's success in reviving assets, increasing credit flow, and resolving disputes within time-bound manner demonstrates it is a valid, justified, and beneficial legislative intervention addressing prior failures of insolvency law.
On this section: RBI's authority to issue guidelines on non-performing assets
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Shivam Water Treaters Pvt. Ltd. Thr. Authorised Signatory Gaurav Hargovindbhai Dave vs Union of India Thr. Secretary to Govt. Ministry of Corporate Affairs
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code 2016 and all its challenged provisions are constitutionally valid as they represent legitimate legislative experimentation to address the complex economic problem of insolvency resolution. The classification between financial and operational creditors has intelligible differentia directly related to the objective of maximizing asset value through time-bound resolution. Restrictions on promoter participation, operational creditor voting, and information utility evidence are not arbitrary but rationally related to preventing abuse of the resolution process and ensuring efficient management by qualified stakeholders. Economic legislation deserves greater judicial deference than legislation affecting fundamental rights, and courts should not substitute their views for legislative policy in complex economic matters absent manifest arbitrariness, defined as unfair, unreasonable, irrational, capricious, or excessively disproportionate action. The evidence demonstrates that the Code is achieving its objective of recovering significantly higher amounts than liquidation value, increasing credit flow to the commercial sector, and reducing the time for insolvency resolution in India toward international standards.
On this section: The Court referenced RBI's authority under this Act to issue guidelines on non-performing assets, which form the basis for Section 29A(c) NPA classification criteria.
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Swiss Ribbons Pvt. Ltd. Thr. Authorised Signatory Dinesh Bhagwandas Jariwala vs Union of India Ministry of Corporate Affairs
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code, 2016 and its major provisions including the classification between financial and operational creditors, exclusion of operational creditors from committee voting, Section 12A withdrawal threshold, Section 29A eligibility restrictions, information utility procedures, and resolution professional functions do not violate Article 14 or any fundamental constitutional right. The Code represents a legitimate legislative experiment in economic policy aimed at timely resolution of corporate insolvency through asset maximization and creditor restructuring. While procedural defects exist in tribunal administration and circuit bench establishment, these do not invalidate the substantive provisions and can be remedied through compliance directions. Courts must accord significant deference to legislative choices in complex economic matters and cannot substitute their judgment for the legislature's policy determinations merely because alternative approaches might be preferred. The challenged provisions are justified by intelligible differentiae related to legislative objectives, serve rational policy purposes, and have demonstrated empirical success in implementation.
On this section: Cited for RBI authority to issue guidelines on non-performing assets and willful defaulters; Court relied on RBI Master Circular definitions of NPAs and asset classification periods
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M. Gopalakrishnan vs State by Addl. S. P. Cbi, Bs&fc Bangalore
Court's Decision & Legal Precedent
A public servant accused of offences like cheating and criminal conspiracy does not qualify for the protection of Section 197 CrPC sanction requirement merely because of his official position. The sanction requirement applies only when: (1) the accused is a public servant removable only by or with sanction of Government, AND (2) the offence was committed while acting or purporting to act in discharge of official duties. For offences like cheating and criminal conspiracy, official status provides only an opportunity for commission, not an integral element of the offence. The question of whether sanction is required can be deferred and decided during or after trial. In the case of a nationalised bank chairman, the Reserve Bank of India (not the Central Government) has removal authority under the Banking Regulation Act, 1949, which prevails over the Nationalised Banks Scheme, 1970.
On this section: Power of Reserve Bank to remove Chairman, Director, and other officers. Court held this provision establishes RBI's removal authority over the appellant.
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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: Enumerates other powers and functions of RBI. Court noted RBI's broad regulatory powers.
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 36
What have the courts held on Section 36 of the Banking Regulation Act?
Richmond Investments PVT LTD vs Union of India (25 Jan 2019) is the leading judgment on this section among those set out below: RBI's authority to issue guidelines on non-performing assets. Another 4 judgments on this section are set out below, all of them from the Supreme Court. They run from 2006 to 2019.
How do I find court cases under Section 36 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 36, section 36 Banking Regulation Act 1949, section 36 of the Banking Regulation Act. People searching for it also type banks act regulation 36. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 5 reported judgments on this section are set out on this page, beginning with Richmond Investments PVT LTD vs Union of India (25 Jan 2019).
When did Section 36 of the Banking Regulation Act come into force?
Section 36 of the Banking Regulation Act, cited as Banking Regulation Act 1949 36, 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 14 Oct 2026. This page is not a substitute for legal advice.