Section 17 of the Reserve Bank of India Act, 1934 - Business the Bank May Transact

Clause (1): RBI may accept money on deposit without interest from, and collect money for, the Central Government, State Governments, local authorities, banks and other persons.

Clause (1A): RBI may accept deposits repayable with interest from banks or any other person under the Standing Deposit Facility Scheme, as approved by the Central Board from time to time, for liquidity management.

Clause (2)(a): RBI may purchase, sell and rediscount qualifying bills of exchange and promissory notes arising from bona fide commercial or trade transactions. Export-related instruments may have the longer statutory maturity specified in the clause, while other qualifying instruments are subject to the shorter statutory period.

Clause (2)(b): qualifying instruments used for financing agricultural operations or marketing crops may also be purchased, sold or rediscounted, subject to the statutory signatures and maturity requirements.

Clause (2)(bb): the power extends to specified instruments financing approved production or marketing activities of cottage and small-scale industries, subject to the conditions and State Government guarantee stated in the clause.

Clause (2)(c): qualifying short-term instruments connected with holding or trading in Central or State Government securities may be dealt in where the statutory conditions are satisfied.

Clause (3): RBI may purchase foreign exchange from and sell foreign exchange to scheduled banks and may deal in qualifying foreign bills, including treasury bills, within the conditions prescribed by the Act.

Export and commercial or agricultural credit - clauses (3A) and (3B)

RBI may make qualifying loans and advances to scheduled banks and State co-operative banks against their promissory notes, subject to statutory declarations relating to export bills, pre-shipment finance, commercial or trade transactions, agricultural operations, crop marketing or other agricultural purposes.

Short-term secured advances - clause (4)

RBI may make qualifying loans and advances to local authorities, scheduled banks, State co-operative banks and State Financial Corporations against specified securities, gold or silver, eligible bills and promissory notes, or qualifying documents of title to goods.

State Financial Corporations and notified financial institutions

Clauses including (4A) and (4BB) authorise specified advances against Government securities or qualifying guaranteed bonds and debentures, subject to the limits and conditions contained in the Act.

Rural credit and specialised institutions

The section includes annual contributions to the National Rural Credit funds and contains provisions concerning assistance to institutions such as the Deposit Insurance Corporation, National Housing Bank, National Bank for Agriculture and Rural Development, Exim Bank, Small Industries Bank and other specified or notified financial institutions.

RBI is authorised to make advances to the Central Government and State Governments, repayable in each case within the statutory period specified in clause (5).

Clause (6): RBI may issue specified remittance instruments and conduct the remittance business authorised by the clause.

Clause (6A): RBI may deal in derivatives and, with Central Board approval, other financial instruments.

RBI may purchase and sell Central or State Government securities of any maturity and specified local-authority securities. The Act also contains powers relating to specified shareholdings or capital, promotion or support of financial institutions, and deposits with the State Bank for approved specific purposes.

Clause (9): RBI may keep money, securities and other articles of value in custody and collect principal, interest or dividends on securities.

Clause (10): RBI may sell and realise movable or immovable property that comes into its possession in satisfaction or part satisfaction of its claims.

RBI may act as agent for the Central Government, State Governments and other authorities or bodies covered by the clause for specified transactions, including dealings in gold, silver and foreign exchange; securities-related functions; collection and remittance of proceeds; management of public debt; and issue and management of bonds and debentures.

Clause (11A) separately authorises specified agency functions for the Central Government, including administration of qualifying interest-subsidy or other charge-subsidy schemes connected with export finance.

RBI may purchase and sell gold or silver coins, bullion and foreign exchange and may open qualifying gold accounts. It may purchase and sell specified foreign Government or institution securities denominated in foreign currency or an international or composite currency unit, subject to the statutory maturity and guarantee conditions.

The section also authorises qualifying foreign-currency loans and advances to specified banks and financial institutions subject to the declarations, purposes and terms prescribed by the Act.

Clause (12AA): RBI may lend or borrow Central Government, State Government, specified local-authority or foreign securities.

Clause (12AB): RBI may deal in repo and reverse repo. The clause contains statutory definitions based on sale and repurchase, or purchase and resale, of qualifying securities on a mutually agreed future date at an agreed price incorporating interest for the funds borrowed or lent.

RBI may maintain qualifying overseas banking relationships, agency or correspondent arrangements and investments in specified international or regional institutions. It may also participate in clearing and settlement arrangements relating to India's external trade and remittances, including approved international or regional clearing arrangements.

RBI may borrow money for the period and purposes permitted by clause (14) and give security for such borrowing, subject to the statutory restrictions on counterparties and the aggregate limit applicable to borrowing from persons in India.

Clause (15): RBI may make and issue bank notes subject to the Act.

Clause (15A): RBI may exercise powers, perform functions and discharge duties entrusted to it under the RBI Act or any other law in force.

Clause (15B): RBI may provide facilities for banking training and promote research where this facilitates its statutory powers, functions or duties.

Clause (16): RBI may generally do matters and things incidental or consequential to the exercise of its powers or discharge of its duties under the Act.