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Banking Regulation Act, 1949 · Section guide

Section 18: Cash reserve

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 18 — Cash reserve. Requires non-scheduled banking companies to maintain the statutory cash reserve and make the related return. From 15 December 2025, the reference cycle uses calendar fortnights (1–15 and 16–month-end) and “last day of the fortnight” mechanics instead of legacy alternate-Friday language.

Official statute linkedProvision-specific anatomyPractical case + evidence file2025 amendment mapped
Official text: DFS consolidated Act · Banking Laws (Amendment) Act, 2025
Effective-date control — 15 December 2025. Calendar-fortnight / last-day reporting references substituted. For an event that straddles this date, the working paper should show the pre/post amendment position rather than treating the current wording as historically universal.

Statutory structure and provision map

This map is a provision-specific explanation, not a substitute for the exact statutory text.

Core statutory rule

Requires non-scheduled banking companies to maintain the statutory cash reserve and make the related return.

Condition / limitation

from 15 December 2025 the reference cycle uses calendar fortnights (1–15 and 16–month-end) and “last day of the fortnight” mechanics instead of legacy alternate-Friday language.

Source and effective-date control

Apply the wording of Section 18 that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.

Professional application

Separate non-scheduled-bank statutory cash reserve from scheduled-bank RBI Act section 42 requirements; add current computation, filing dates and amended fortnight basis.

Evidence / working-paper checklist

  • Section 18 evidence: general-ledger / treasury reconciliation.
  • Section 18 evidence: return or financial statement submitted to RBI/Registrar.
  • Section 18 evidence: auditor sign-off or working papers where relevant.
  • Section 18 evidence: filing acknowledgement and calculation of the statutory reference date.

Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.

Common mistakes to avoid

  • For Section 18, avoid using a legacy Friday/fortnight reference after the statutory date changed.
  • For Section 18, avoid submitting a return without a ledger reconciliation.
  • For Section 18, avoid assuming an extension exists without a written statutory/RBI basis.

Linked Rules, RBI directions, notifications and forms

Linked instruments keep their own legal basis; they are not attributed to Section 18 unless the official instrument says so.

Related sections inside the Act

Section 24 — Maintenance of a percentage of assetsSection 25 — Assets in IndiaSection 27 — Monthly returns and power to call for other returns and informationSection 56 — Act to apply to co-operative societies subject to modificationsSection 16 — Prohibition of common directorsSection 17 — Reserve FundSection 42 — contextual cross-reference

Use these links to read Section 18 in its statutory sequence, especially where the provision imports definitions, approvals, appeals, penalties or winding-up consequences from neighbouring sections.

Current-law source control

Source control: read Section 18 in the DFS/India Code text together with the mapped 2025 amending Act and commencement date.

Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 18 on the event date.

Disclaimer

This Finin2min page is an educational and professional reference. Banking regulation is fact-, entity- and date-sensitive. Verify the current Act, Gazette amendments and commencement notifications, applicable RBI Rules/directions and the transaction record before acting or filing.