Section 9 of RBI Act : Section 9: Local Boards, Their Constitution And Functions

Explanation using Example

Imagine a scenario where the Reserve Bank of India (RBI) needs to consider regional economic issues in different parts of India. To address this, the RBI, under Section 9 of the Reserve Bank of India Act, 1934, sets up Local Boards for the North, South, East, and West zones of the country, as specified in the First Schedule of the Act.

Each Local Board is composed of five experts appointed by the Central Government, with a mix of individuals representing the various economic sectors, including cooperative and indigenous banking interests. For instance, the Southern Local Board might include a member from a large cooperative bank in Tamil Nadu, an economist from Kerala, a business owner from Karnataka, and two other regional experts.

These members then elect a chairman from within their ranks to lead the Southern Local Board. After serving a four-year term, the members may be reappointed for another term, but no member can serve more than two terms in total, ensuring fresh perspectives are regularly introduced.

The Southern Local Board's role includes advising the Central Board of the RBI on specific issues affecting the southern region, such as the impact of monsoons on agriculture-based economies or the development of the tech industry. The Central Board may also delegate certain responsibilities to the Local Board, allowing for more regionally focused decision-making within the RBI's overall policy framework.