Chapter IIIB — Non-Banking Institutions and Financial Institutions
Section 45JA: Power of Bank to determine policy and issue directions
Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026
Section 45JA authorises RBI to determine policy and issue directions to NBFCs relating to income recognition, accounting standards, provisioning, capital adequacy, deployment of funds and other prudential matters specified by the statute.
Operative provisionOfficial sources mappedProvision-specific decode
Finin2min - Section 45JA in 2 minutes
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 power is a principal statutory foundation for detailed NBFC prudential/governance directions
Rule 2
non-compliance can attract supervisory and penalty consequences.
Connected rule
For 2026 analysis, map the issue to the relevant thematic 2025 RBI Direction—registration/SBR, governance, capital, credit facilities, public deposits or another current direction—and the NBFC's category/layer.
Worked practical example
Facts. A Middle Layer NBFC's provisioning treatment cannot be concluded from Section 45JA alone; the adviser must identify the current prudential Direction and category-specific paragraph made under the power.
Compliance points and common mistakes
- Do not decide the issue from the heading alone. Map the facts to the operative words of Section 45JA and to each relevant subsection, clause, proviso or explanation shown above.
- Keep the statutory question separate from the operational overlay. For 2026 analysis, map the issue to the relevant thematic 2025 RBI Direction—registration/SBR, governance, capital, credit facilities, public deposits or another current direction—and the NBFC's category/layer.
- 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- Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.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
NBFC Registration, Exemptions and Scale Based Regulation — current frameworkCurrent operating framework is the RBI (NBFC – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025, amended in 2026; this existing Finin2min URL is retained.Reserve Bank of India (Digital Lending) Directions, 2025Current consolidated digital-lending requirements; RBI/2025-26/36 dated 8 May 2025. For NBFCs it expressly relies on sections 45JA, 45L and 45M among other statutes.Master Direction – Know Your Customer (KYC)Cross-law RBI direction principally grounded in banking/PMLA authorities; linked here where relevant to regulated-entity onboarding and customer controls.RBI (NBFC – Governance) Directions, 2025Thematic NBFC governance direction issued 28 November 2025 and amended in 2026; enabling provisions include sections 45JA, 45K, 45L and 45M.RBI (NBFC – Prudential Norms on Capital Adequacy) Directions, 2025Current thematic prudential capital framework, issued under section 45L and allied statutes and amended in 2026.RBI (NBFC – Credit Facilities) Directions, 2025Current thematic credit-facility framework issued 28 November 2025 and updated during 2026; enabling provisions include sections 45JA, 45L and 45M.
Questions and answers
What is the purpose of Section 45JA?
Power of Bank to determine policy and issue directions: Section 45JA authorises RBI to determine policy and issue directions to NBFCs relating to income recognition, accounting standards, provisioning, capital adequacy, deployment of funds and other prudential matters specified by the statute.
Which statutory limb should be checked first?
Rule 1 - The power is a principal statutory foundation for detailed NBFC prudential/governance directions
What is the next legal boundary?
Rule 2 - non-compliance can attract supervisory and penalty consequences.
What record should support the conclusion?
Section 45JA file evidence: Keep the exact Direction paragraph, effective date, SBR layer, Board approval, calculation or system rule and evidence of implementation.
Primary sources
- Department of Financial Services - consolidated RBI Act (states amendments through Finance Act, 2022)
- India Code - Reserve Bank of India Act, 1934
Source control for Section 45JA: 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.