Section 20 of the Reserve Bank of India Act, 1934 - Obligation to Transact Government Business

Section 20 places a statutory obligation on the Reserve Bank of India to undertake specified banking business for the Central Government. It covers receipt of Central Government money, payments from the Government's account, exchange and remittance operations, other banking operations and management of the public debt of the Union.

What does Section 20 require RBI to do?

The language is mandatory: Section 20 states that RBI shall undertake these functions. The provision is therefore part of the statutory foundation for RBI's role as banker to the Central Government.

Acceptance of money for the Central Government

Section 20 requires RBI to accept money for the account of the Central Government. In legal terms, this establishes the Bank's obligation to receive Government funds as part of its central-banking relationship with the Union.

Payments from the Central Government account

RBI must make payments up to the amount standing to the credit of the Central Government's account. The wording links the statutory payment obligation to the amount credited to that account.

Exchange and remittance operations

The section expressly includes the Central Government's exchange and remittance operations. Exchange operations concern the banking transactions required for exchange-related Government business, while remittance operations concern the transfer of Government funds through the banking system.

Other banking operations

The phrase "other banking operations" makes clear that Section 20 is not confined to receipts, payments, exchange and remittances. It extends to the other banking operations of the Central Government falling within RBI's statutory governmental banking role.

Management of the public debt of the Union

Public debt management in this context concerns the statutory central-banking function connected with the Union's borrowing and debt obligations. Section 20 should be read with the wider legal framework governing Government securities, public debt and RBI's agency functions.

Section 20 and Section 21

Section 20 establishes RBI's obligation to transact the Central Government business described in the provision. Section 21 complements this framework by dealing with the Central Government's right to entrust its money, remittance, exchange and banking transactions in India, and management of the public debt, to RBI on the statutory terms provided there.

Section 20 and RBI's permitted business under Section 17

Section 17 specifies categories of business RBI may transact, including various agency and Government-related functions. Section 20 is different in form because it imposes a direct obligation on RBI in relation to the Central Government business specified in that section.

Section 20 and the restrictions under Section 19

Section 19 restricts certain types of business that RBI may transact, subject to its statutory exceptions. Those restrictions should not be confused with Section 20, which specifically mandates Central Government banking functions.

Key legal points under Section 20

• Mandatory obligation: RBI is required to undertake the Central Government business specified in the section.
• Government receipts: RBI accepts money for the account of the Central Government.
• Government payments: RBI makes payments up to the amount standing to the credit of the Central Government account.
• Exchange operations: the statutory obligation includes the Central Government's exchange business.
• Remittance operations: RBI carries out remittance transactions for the Central Government.
• Other banking operations: the section extends beyond the specifically named receipt, payment, exchange and remittance functions.
• Union public debt: management of the public debt of the Union is expressly included.