Home › The Reserve Bank of India Act, 1934 › Chapter II – Incorporation, capital, management and business
Section 18: Power of direct discount
When, in the opinion of the Bank, a special occasion has arisen making it necessary or expedient that action should be taken under this section for the purposes of regulating credit in the interests of Indian trade, commerce, industry and agricultural, the Bank may, notwithstanding any limitation contained in section 17,— (1) purchase, sell or discount any bill of exchange or promissory note though such bill or promissory note is not eligible for purchase or discount by the Bank under that section; or (3) make loans or advances to— (a) a State co-operative bank, or (b) on the recommendation of a State co-operative bank, to a cooperative society registered within the area in which the State cooperative bank operates, or (c) any other person, repayable on demand or on the expiry of the fixed periods, not exceeding ninety days, on such terms and conditions as the Bank may consider to be sufficient.
Source: official text of The Reserve Bank of India Act, 1934 as published on India Code (PDF). All sections of the Reserve Bank of India Act, 1934.