Interpreting Section 7 of RBI Act 1935


Interpreting Section 7

An interesting analysis. As regards Section 7 of RBI Act, a second reading of the relevant clauses will convince the reader that the use of Section 7 to "threaten" RBI Governor or, for that matter RBI is impossible. If GOI forces a consent after complying with the statutory requirement of consultation with Governor on an issue on which the Governor denies consent after application of mind before the 'direction' reaches RBI, the Governor, and today, some of his deputies, would have left their chambers. Section 7 can be used by Governor to obtain directions to handle a recalcitrant central board, in exceptionally extraordinary situations.

M G Warrier


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