Chapter III — Central Banking Functions

Section 23: Issue Department

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 23 requires the issue of bank notes to be conducted through a separate Issue Department of RBI and separates its assets from the Banking Department.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 23 in 2 minutes

Legal effectSection 23 requires the issue of bank notes to be conducted through a separate Issue Department of RBI and separates its assets from the Banking Department.

Operative ruleThe statutory separation supports transparent backing and accounting of the note issue function; Issue Department assets are held for note liabilities as governed by the Act.

Connected lawRead Section 23 with Sections 33 and 34, which deal with assets and liabilities of the Issue Department.

File evidenceFor financial-statement or exam analysis, classify the item by department before deciding how the Act treats it.

Statutory structure and clause / subsection decode

This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.

Rule 1

The statutory separation supports transparent backing and accounting of the note issue function

Rule 2

Issue Department assets are held for note liabilities as governed by the Act.

Connected rule

Read Section 23 with Sections 33 and 34, which deal with assets and liabilities of the Issue Department.

Worked practical example

Facts. An asset held for ordinary RBI banking operations should not be treated as an Issue Department asset merely because RBI also issues notes.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 23 and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. Read Section 23 with Sections 33 and 34, which deal with assets and liabilities of the Issue Department.
Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.

Connected provisions and instruments

Section 23 has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.

Questions and answers

What is the purpose of Section 23?

Issue Department: Section 23 requires the issue of bank notes to be conducted through a separate Issue Department of RBI and separates its assets from the Banking Department.

Which statutory limb should be checked first?

Rule 1 - The statutory separation supports transparent backing and accounting of the note issue function

What is the next legal boundary?

Rule 2 - Issue Department assets are held for note liabilities as governed by the Act.

What record should support the conclusion?

Section 23 file evidence: For financial-statement or exam analysis, classify the item by department before deciding how the Act treats it.

Primary sources

Source control for Section 23: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.