RBI Act Sections 34, 35 and 36: Liabilities of the Issue Department

Sections 34, 35 and 36 of the Reserve Bank of India Act, 1934 concern the liabilities of the Issue Department and two historical provisions that have since been omitted. Section 34 remains relevant to the statutory accounting of notes in circulation, while Sections 35 and 36 no longer contain operative rules.

Section 34: Liabilities of the Issue Department

Section 34(1) provides that the liabilities of the Issue Department equal the total amount of Government of India currency notes and Reserve Bank banknotes for the time being in circulation. This establishes the amount against which the Issue Department's statutory assets are maintained.

The liabilities of the Issue Department shall be an amount equal to the total of the amount of the currency notes of the Government of India and bank notes for the time being in circulation.

In practical terms, the notes issued and outstanding constitute liabilities of the Issue Department for the purposes of the Act. This is an accounting and reserve-backing rule; it does not mean that an individual noteholder holds an ordinary bank deposit with the RBI.

Section 34(2) was omitted by the Banking Laws (Miscellaneous Provisions) Act, 1963 (Act 55 of 1963), with effect from 1 February 1964. The former sub-section (3), which had been inserted under the Modification Order, 1937, is also omitted. These omitted provisions must not be presented as current obligations.

Relationship with Sections 23 and 33

Section 23 separates the Issue Department from the Banking Department. Section 33 specifies the classes and minimum amounts of assets to be held by the Issue Department. Section 34 determines the corresponding liability amount. The three sections should therefore be read together.

Section 35: Initial assets and liabilities (omitted)

Section 35 was originally headed "Initial assets and liabilities". It was omitted by Section 7 and the Schedule to the Reserve Bank (Transfer to Public Ownership) Act, 1948 (Act 62 of 1948), effective 1 January 1949.

The provision related to the initial position of the Bank and is of historical relevance only. It does not presently impose a separate requirement governing RBI's initial assets or liabilities.

Section 36: Method of dealing with fluctuations in rupee coin assets (omitted)

Section 36 was headed "Method of dealing with fluctuations in rupee coin assets". It was omitted by Section 3 of the Banking Laws (Miscellaneous Provisions) Act, 1963 (Act 55 of 1963), with effect from 1 February 1964. Before its omission, it had been amended by the Reserve Bank of India (Amendment) Act, 1951, effective 1 November 1951.

Accordingly, Section 36 should be identified as omitted rather than treated as an existing mechanism for handling changes in rupee-coin assets.

Legal significance and interpretation

The operative rule in this group is Section 34(1). The distinction between outstanding note liabilities and the backing assets prescribed by Section 33 helps explain how the RBI's Issue Department is organised. Historical references to Sections 35 and 36 in older publications should be read with their subsequent statutory omissions in mind.

Frequently asked questions

What are the liabilities of the RBI Issue Department?

Under Section 34(1), they equal the aggregate amount of Government of India currency notes and banknotes currently in circulation.

Is Section 35 of the RBI Act still in force?

No. Section 35 was omitted with effect from 1 January 1949.

Does Section 36 still regulate rupee-coin fluctuations?

No. Section 36 was omitted with effect from 1 February 1964.

Official legislation and references

For the statutory text and updates, consult the Department of Financial Services: Reserve Bank of India Act, 1934 (PDF), the India Code legislative portal and the Reserve Bank of India. RBI's published accounting guidance also explains the relationship between Issue Department assets and liabilities.