DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name Staff Member : P. BADARINARAYANA
Designation : Sr. Lecturer
Branch : DCCP
Institute : Govt. Polytechnic, NELLORE
Year/Semester : VI Semester
Subject : BANKING II
Sub. Code : CCP-604(B)
Topic : Reserve Bank of India
Duration : 50 Mts.
Sub Topic : Obligations of Scheduled banks to
Reserve Bank of India
Teaching Aids : Animations
CCP604(B)49 1
Objective :

On completion of this period, you would be

able to
 Comprehend the obligations of Scheduled banks
to Reserve Bank of India.

CCP604(B)49 2
Introduction

In the last lesson we have seen the

Evolution of the Reserve Bank of India.
 Today we will see the Obligations of Scheduled
Banks to Reserve Bank of India.

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OBLIGATIONS OF SCHEDULED
BANKS TO RESERVE BANK OF
INDIA

CCP604(B)49 4
(1) Licensing of Banks:

 Section 22 of the Banking Regulation Act, 1949

provides that no bank shall carry banking business
in India, until it holds a licence issued by Reserve
Bank.
 This provision was introduced in the Act with a
view to ensure

CCP604(B)49 5
Licensing of Banks…

 The continuance and growth of only such banks

as were established and were operating on
sound lines and
 To prevent indiscriminate floatation of banking
companies.

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(2) Branch Licensing Policy:

 An important aspect of the Reserve Bank’s

supervisory function relates to the control exercised
over expansion of banks’ branches.
 In the terms of Section 23 of the Banking
Regulation Act, banks are required to obtain
permission from the RBI for opening new places of
business in India and also,

CCP604(B)49 7
Branch Licensing Policy…

 In certain cases, for changing the location

of their existing offices, and, for opening
temporary offices, administrative offices,
etc

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(3) Inspection of Banks:

 To safeguard the interests of the depositors

 To build up and maintain a sound banking
system in conformity with the banking laws and
regulations as well as the country’s socio-
economic objectives
 The RBI has the authority of inspecting the
scheduled banks.

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Summary:

Today we have seen the Obligations of scheduled

banks to Reserve Bank of India.

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Frequently Asked Questions
1. Explain the obligations

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