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CS Professional · Banking and Insurance - Laws and Practice · Banking Operations

RBI cancels a bank's licence on the ground that its capital structure is inadequate. The bank does not file any appeal. What is the legal position of RBI's decision?

The decision is final as the decision of the Reserve Bank where no appeal has been preferred. Section 22(6) makes the Central Government's decision final if an appeal is filed, and RBI's decision final otherwise. No confirmation or lapse mechanism applies.

  1. AIt is final, as the decision of the Reserve Bank where no appeal has been preferredCorrect
  2. BIt is final only after the Central Government confirms it
  3. CIt remains open to challenge before RBI indefinitely
  4. DIt lapses after thirty days unless notified

Explanation

Section 22(6) states that the decision of the Central Government where an appeal is preferred, or of the Reserve Bank where no appeal is preferred, is final. Inadequate capital structure falls under section 22(3)(d), a ground for cancellation under 22(4)(iii). No confirmation by government is needed absent an appeal.

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