RBI Act, 1934
Key Provisions for Financial Market Regulation
The RBI Act, 1934 is the foundational statute governing the Reserve Bank of India. Two provisions are particularly relevant to financial market regulation:
- Section 45U: Provides definitions applicable to Chapter IIID of the RBI Act, which governs "Regulation of Financial Markets." Key terms defined include "money market instruments," "financial instruments," and "participants" in money and securities markets.
- Section 45W: Empowers the RBI to issue directions to any agency dealing in securities, money market instruments, foreign exchange, derivatives, or other financial instruments. Directions issued under Section 45W are binding on all such agencies and form the legal basis for RBI Master Directions and Circulars governing market participants.
- Chapter IIID of the RBI Act: "Regulation of Financial Markets" — the specific chapter under which market regulation powers are housed
- Section 45U: Definitions (money market instrument, financial instrument, participants)
- Section 45W: Regulatory power over market participants — basis for NDS-OM access directions, Liquidity Adjustment Facility rules, repo market directions, and other market regulations
- This legal framework allows RBI to regulate not just banks but all categories of financial market participants (mutual funds, insurance companies, primary dealers, etc.)
● Tracked since March 25, 2026 · last seen April 27, 2026 · updates as the daily brief publishes
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