Section 30 of RBI Act : Section 30: Powers Of Central Government To Supersede Central Board

Explanation using Example

Imagine that the Reserve Bank of India (RBI) is required by law to maintain a certain level of foreign exchange reserves to stabilize the currency market. However, the RBI fails to do so, leading to extreme volatility in the foreign exchange rates, which negatively impacts the economy. The Central Government, upon reviewing the situation, believes that the RBI has not fulfilled its obligations as per the Reserve Bank of India Act, 1934.

Consequently, the Central Government issues a notification in the Gazette of India declaring the RBI's Central Board to be superseded. The notification states that a newly appointed committee will now oversee the RBI's operations. This committee is granted all the powers that the Central Board previously had, including the authority to make necessary policy changes to stabilize the currency market.

Following this, the Central Government prepares a detailed report explaining the reasons for superseding the RBI's Central Board and the measures taken to address the issue. This report is then presented before Parliament within three months of the notification, ensuring transparency and accountability for the government's actions.