Section 39 - Obligation to supply different forms of currency,
Section 40 - Transactions in foreign exchange: RBI Act 1934
What is Obligation to supply different forms of currency? What are
Transactions in foreign exchange?
Section 39 and 40 of
Reserve Bank of India Act 1934
Section 39 of RBI Act 1934 : "Obligation to supply different
forms of currency"
(1) The Bank shall issue rupee coin on demand in exchange for
bank notes and currency notes of the Government of India, and
shall issue currency notes or bank notes on demand in exchange
for coin which is legal tender under the Coinage Act, 2011 (11
(2) The Bank shall, in exchange for currency notes or bank
notes of two rupees or upwards, supply currency notes or bank
notes of lower value or other coins which are legal tender under
the Coinage Act, 2011 (11 of 2011), in such quantities as may,
in the opinion of the Bank, be required for circulation; and the
Central Government shall supply such coins to the Bank on
demand. If the Central Government at any time fails to supply
such coins, the Bank shall be released from its obligations to
supply them to the public.
Section 40 of RBI Act: 1934 "Transactions in
The Bank shall sell to or buy from any authorized person who
makes a demand in that behalf at its office in Bombay, Calcutta,
Delhi or Madras or at such of its branches as the Central
Government may, by order, determine, foreign exchange at such
rates of exchange and on such conditions as the Central
Government may from time to time by general or special order
determine, having regard so far as rates of exchange are
concerned to its obligations to the International Monetary Fund
Provided that no person shall be entitled to demand to buy or
sell foreign exchange of a value less than two lakhs of rupees.
Explanation.?In this section "authorized person" means a
person who is entitled by or under the Foreign Exchange
Regulation Act, 1973 (46 of 1973) to buy, or as the case may be,
sell, the foreign exchange to which his demand relates.