Chapter III — Central Banking Functions

Section 38: Obligations of Government and the Bank in respect of rupee coin

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 38 allocates obligations between Government and RBI regarding supply/exchange of rupee coin for bank notes and related currency operations.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 38 in 2 minutes

Legal effectSection 38 allocates obligations between Government and RBI regarding supply/exchange of rupee coin for bank notes and related currency operations.

Operative ruleThe provision supports convertibility and currency management between coin and note forms within the statutory system.

Connected lawIt should be read with coinage law, Section 39 and operational currency-management directions.

File evidenceFor a currency chest/treasury issue, identify whether the obligation concerns supply of coin, notes or exchange and which authority bears the duty.

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.

Scope

Section 38 allocates obligations between Government and RBI regarding supply/exchange of rupee coin for bank notes and related currency operations.

Operative limb

The provision supports convertibility and currency management between coin and note forms within the statutory system.

Legal boundary

It should be read with coinage law, Section 39 and operational currency-management directions.

Worked practical example

Facts. A shortage of a denomination at a branch is an operational fact; Section 38 analysis asks about the statutory Government/RBI obligation, not individual branch convenience alone.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 38 and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. It should be read with coinage law, Section 39 and operational currency-management directions.
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Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.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 38 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 38?

Obligations of Government and the Bank in respect of rupee coin: Section 38 allocates obligations between Government and RBI regarding supply/exchange of rupee coin for bank notes and related currency operations.

Which statutory limb should be checked first?

Scope - Section 38 allocates obligations between Government and RBI regarding supply/exchange of rupee coin for bank notes and related currency operations.

What is the next legal boundary?

Operative limb - The provision supports convertibility and currency management between coin and note forms within the statutory system.

What record should support the conclusion?

Section 38 file evidence: For a currency chest/treasury issue, identify whether the obligation concerns supply of coin, notes or exchange and which authority bears the duty.

Primary sources

Source control for Section 38: 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.