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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework of Banks

A Local Board of the Reserve Bank wants to take decisions binding on the Central Board on credit policy for its area. Which statement reflects the role of a Local Board under section 9 of the RBI Act, 1934?

A Local Board is advisory and delegated in role. It advises the Central Board on matters generally or specifically referred to it and performs duties that the Central Board delegates. It cannot bind the Central Board, frame independent monetary policy or remove senior officers.

  1. AIt advises the Central Board on matters referred to it and performs duties the Central Board delegates to itCorrect
  2. BIt issues binding directions to the Central Board on regional matters
  3. CIt supervises the Governor and may remove Deputy Governors
  4. DIt frames monetary policy independently for its area

Explanation

Section 9(4) says a Local Board advises the Central Board on matters generally or specifically referred to it and performs duties delegated by the Central Board. It has no power to bind the Central Board or to make policy independently.

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