Section 31 - Issue of demand bills and notes, Section 32 - Penalty, Section 33 - Assets of the Issue Department: RBI Act 1934



What is the procedure for Issue of demand bills and notes? What is Penalty? What are Assets of the Issue Department? Section 31, 32 and 33 of Reserve Bank of India Act 1934

Section 31 of RBI Act 1934 : "Issue of demand bills and notes"

(1) No person in India other than the Bank or, as expressly authorized by this Act, the Central Government shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person :

Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person's account with a banker, shroff or agent.

(2) Notwithstanding anything contained in the Negotiable Instrument Act, 1881 (26 of 1881), no person in 1[India] other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument.


Section 32 of RBI Act: 1934  "Penalty"

Omitted by the Reserve Bank of India (Amendment) Act, 1974

Section 33 of RBI Act: 1934  "Assets of the Issue Department"

(1) The assets of the Issue Department shall consist of gold coin, gold bullion, foreign securities, rupee coin and rupee securities to such aggregate amount as is not less than the total of the liabilities of the Issue Department as hereinafter defined.

(2) The aggregate value of the gold coin, gold bullion and foreign securities held as assets and the aggregate value of the gold coin and gold bullion so held shall not at any time be less than two hundred crores of rupees and one hundred and fifteen crores of rupees, respectively.

(3) The remainder of the assets shall be held in rupee coin, Government of India rupee securities of any maturity, promissory notes drawn by the National Bank for any loans or advances under clause (4E) of section 17 and such bills of exchange and promissory notes payable in India as are eligible for purchase by the Bank under sub-clause (a) or sub-clause (b) or sub-clause (bb) of clause (2) of section 17 or under clause (1) of section 18.

(4) For the purposes of this section, gold coin and gold bullion shall be valued at a price not exceeding the international market price for the time being obtaining, rupee coin shall be valued at its face value, and securities shall be valued at rates not exceeding the market rates for the time being obtaining.

(5) Of the gold coin and gold bullion held as assets, not less than seventeen-twentieths shall be held in India, and all gold coin and gold bullion held as assets shall be held in the custody of the Bank or its agencies :

Provided that gold belonging to the Bank which is in any other bank or in any mint or treasury or in transit may be reckoned as part of the assets.

(6) For the purposes of this section, the foreign securities which may be held as part of the assets shall be-

(i) securities of the following kinds payable in the currency of any foreign country which is a member of the International Monetary Fund, namely :-

(a) balances with the bank which is the principal currency authority of that foreign country and any other balances or securities in foreign currency maintained with or issued by the International Monetary Fund, the International Bank for Reconstruction and Development, the International Development Association or the International Finance Corporation or Asian Development Bank or the Bank for International Settlements or any banking or financial institution approved by the Central Government in this behalf, provided that they are repayable within a period of ten years;

(b) bills of exchange bearing two or more good signatures and drawn on and payable at any place in that foreign country and having a maturity not exceeding ninety days; and

(c) Government securities of that foreign country maturing within 7[ten] years;

(ii) any drawing rights representing a liability of the International Monetary Fund.


RBI ACT 1934

Section 21 - Bank to have the right to transact Government business in India

Section 21A - Bank to transact Government business of States on agreement

Section 21B - Effect of agreements made between the Bank and certain States before the 1st November, 1956

Section 22 - Right to issue bank notes

Section 23 - Issue Department



Section 24 - Denominations of notes

Section 25- Form of bank notes

Section 26 - Legal tender character of notes

Section 26A - Certain bank notes to cease to be legal tender

Section 27 - Re-issue of notes

Section 28 - Recovery of notes lost, stolen, mutilated or imperfect



Section 28A - Issue of special bank notes and special one rupee notes in certain cases

Section 29 - Bank exempt from stamp duty on bank notes

Section 30 - Powers of Central Government to supersede Central Board

Section 31 - Issue of demand bills and notes

Section 32 - Penalty

Section 33 - Assets of the Issue Department



Section 34 - Liabilities of the issue department

Section 35 - Initial assets and liabilities

Section 36 - Method of dealing with fluctuations in rupee coin assets

Section 37 - Suspension of assets requirements as to foreign securities

Section 38 - Obligations of Government and the Bank in respect of rupee coin

Section 39 - Obligation to supply different forms of currency

Section 40 - Transactions in foreign exchange

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