Banking Regulation Act, 1949 · Section guide
Section 21: Power of Reserve Bank to control advances by banking companies
Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026
Section 21 — Power of Reserve Bank to control advances by banking companies. Allows RBI to determine policy and issue binding directions concerning advances,. including purposes, margins, exposure/interest or other credit conditions within the statutory scope; banks must map each operative RBI lending direction back to this enabling. Power.
Official statute linkedProvision-specific anatomyPractical case + evidence file
Statutory structure and provision map
This map is a provision-specific explanation, not a substitute for the exact statutory text.
Core statutory rule
Allows RBI to determine policy and issue binding directions concerning advances, including purposes, margins, exposure/interest or other credit conditions within the statutory scope.
Condition / limitation
banks must map each operative RBI lending direction back to this enabling power.
Source and effective-date control
Apply the wording of Section 21 that was in force on the event date; use the official Act and any applicable commencement/amending instrument linked on this page.
Professional application
List RBI control powers and the binding duties they create; source current directions separately.
Evidence / working-paper checklist
- Section 21 evidence: borrower and connected-party declarations.
- Section 21 evidence: sanction note and security/interest documentation.
- Section 21 evidence: board/RBI approval where the provision requires it.
- Section 21 evidence: credit-policy mapping to any RBI direction issued under sections 21/35A.
Retain the event date and source version with the file so the conclusion remains reproducible after later amendments.
Common mistakes to avoid
- For Section 21, avoid testing only the borrower name and not the prohibited relationship or interest.
- For Section 21, avoid confusing an RBI policy direction with a discretionary internal credit policy.
- For Section 21, avoid remitting/restructuring an exposure without checking statutory board/RBI restrictions.
Linked Rules, RBI directions, notifications and forms
Linked instruments keep their own legal basis; they are not attributed to Section 21 unless the official instrument says so.
Related sections inside the Act
Use these links to read Section 21 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: Section 21 is anchored to the official DFS consolidated text; later changes require separate Gazette verification.
Dated matters: verify any later Gazette, RBI direction or binding judgment affecting Section 21 on the event date.
Primary official sources
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.