law: Banking Regulation Act, 1949
  24. Maintenance of a percentage of assets
  (1) After the expiry of two years from the
  
  commencement of this Act, every banking company shall maintain [in India] in
  
  cash, gold or unencumbered approved securities, valued at a price not exceeding
  
  the current market price, an amount which shall not at the close of business on
  
  any day be less than 20 per cent of the total of its [demand and time
  
  liabilities] [in India].
  Explanation: For the purposes of
  
  this section, "unencumbered approved securities" of a banking company
  
  shall include its approved securities lodged with another institution for an
  
  advance or any other credit arrangement to the extent to which such securities
  
  have not been drawn against or availed of.]
  (2) In computing the amount for the purposes
  
  of sub-section (1), the deposit required under sub-section (2) of section 11 to
  
  be made with the Reserve Bank by a banking company incorporated outside India
  
  and any balances maintained in India by a banking company in current account
  
  with the Reserve Bank or the State Bank of India or with any other bank which
  
  may be notified in this behalf by the Central Government, including in the case
  
  of a scheduled bank the balance required under section 42 of the Reserve Bank
  
  of India Act, 1934 (2 of 1934), to be so maintained, shall be deemed to be cash
  
  maintained in India.]
  (2A) (a) Notwithstanding anything contained in
  
  sub-section (1) or in sub-section(2), after the expiry of two years from the
  
  commencement of the Banking Companies (Amendment) Act, 1962 (36 of 1962):-
  (i) a scheduled bank,
  
  in addition to the average daily balance which it is, or may be, required to
  
  maintain under section 42 of the Reserve Bank of India Act, 1934 (2 of 1934),
  
  and
  (ii) every other
  
  banking company, in addition to the cash reserve which it is required to
  
  maintain under section 18, 106[shall maintain in India-
  (A) in cash, or
  (B) in gold valued at a price not exceeding
  
  the current market price or in unencumbered approved securities valued at a
  
  price determined in accordance with such one or more of, or combination, of the
  
  following methods of valuation, namely, valuation with reference to cost price,
  
  market price, book value or face value, as may be specified by the Reserve Bank
  
  from time to time, an amount which shall not, at the close of business on any
  
  day, be less than twenty-five per cent or such other percentage not exceeding
  
  forty per cent as the Reserve Bank may, from time to time, by notification in
  
  the Official Gazette, specify, of the total of its demand and time liabilities
  
  in India, as on the last Friday of the second preceding fortnight;
  (b) in computing the amount for the purposes
  
  of clause (a)-
  (i) the deposit
  
  required under sub-section (2) of section 11 to be made with the Reserve Bank
  
  by a banking company incorporated outside India;
  (ii) any cash or
  
  balances maintained in India by a banking company other than a scheduled bank
  
  with itself or with the Reserve Bank or by way of net balance in current
  
  account in excess of the cash or balance or net balance required to be
  
  maintained under section 18;
  (iii) any balance
  
  maintained by a scheduled bank with the Reserve Bank in excess for the balance
  
  required to be maintained by it under section 42 of the Reserve Bank of India
  
  Act, 1934 (2 of 1934);
  (iv) the net balance
  
  in current accounts maintained in India by a scheduled bank;
  (v) any balance
  
  maintained by a Regional Rural Bank in call or fixed deposit with its sponsor
  
  bank, shall be deemed to be cash maintained in India .
  Explanation: For the purposes of
  
  clause (a) of this sub-section, the market price of an approved security shall
  
  be the price as on the date of the issue of the notification or as on any
  
  earlier or later date as may be notified from time to time by the Reserve Bank
  
  in respect of any class or classes of securities.
  (2B) The Reserve Bank may, by notification in
  
  the Official Gazette, vary the percentage referred to in sub-section (2A) in
  
  respect of a Regional Rural Bank
  (3) For the purposes of ensuring compliance
  
  with the provisions of this section, every banking company shall, not later
  
  than twenty days after the end of the month to which it relates, furnish to the
  
  Reserve Bank in the prescribed form and manner a monthly return showing
  
  particulars of its assets maintained in accordance with this section, and its
  
  demand and time liabilities in India at the close of business on each alternate
  
  Friday during the month, or if any such Friday is a public holiday, at the
  
  close of business on the preceding working day:
  PROVIDED that every Regional Bank shall also
  
  furnish a copy of the said return to the National Bank.
  (4)(a) If on any alternate Friday or, if such
  
  Friday is a public holiday, on the preceding working day, the amount maintained
  
  by a banking company at the close of business on that day falls below the
  
  minimum prescribed by or under clause (a) of sub-section (2A), such banking
  
  company shall be liable to pay to the Reserve Bank in respect of that day's
  
  default, penal interest for that day at the rate of three per cent per annum
  
  above the bank rate on the amount by which the amount actually maintained falls
  
  short of the prescribed minimum on that day; and
  (b) If the default occurs again on the next
  
  succeeding alternate Friday, or, if such Friday is a public holiday, on the
  
  preceding working day, and continues on succeeding alternate Fridays or
  
  preceding working days, as the case may be, the rate of penal interest shall be
  
  increased to a rate of five per cent per annum above the bank rate on each such
  
  shortfall in respect of that alternate Friday and each succeeding alternate
  
  Friday or preceding working day, if such Friday is a public holiday, on which
  
  the default continues.
  (5)(a) Without prejudice to the provisions of
  
  sub-section (3), the Reserve Bank may require a banking company to furnish to
  
  it a return in the form and manner specified by it showing particulars of its
  
  assets maintained in accordance with this section and its demand and time
  
  liabilities in India, as at the close of business on each day of a month; and
  (b) Without prejudice to the provisions of
  
  sub-section (4), on the failure of a banking company to maintain as on any day,
  
  the amount so required to be maintained by or under clause (a) of sub-section
  
  (2A) the Reserve Bank may, in respect of such default, require the banking
  
  company to pay penal interest for that day as provided in clause (a) of
  
  sub-section (4) and if the default continues on the next succeeding working day,
  
  the penal interest may be increased as provided in clause (b) of sub-section
  
  (4) for the concerned days.
  (6)(a) The penalty payable under sub-section
  
  (4) and sub-section (5) shall be paid within a period of fourteen days from the
  
  date on which a notice issued by the Reserve Bank demanding payment of the same
  
  is served on the banking company and in the event of failure of the banking
  
  company to pay the same within such period, the penalty may be levied by a
  
  direction of the principal civil court having jurisdiction in the area where an
  
  office of the defaulting banking company is situated, such direction to be made
  
  only upon an application made by the Reserve Bank in this behalf to the court;
  
  and
  (b) When the court makes a direction under
  
  clause (a), it shall issue a certificate specifying the sum payable by the
  
  banking company and every such certificate shall be enforceable in the same
  
  manner as if it were a decree made by the court in a suit.
  (7) When under the provisions of clause (b) of
  
  sub-section (4) penal interest at the increased rate of five per cent above the
  
  bank rate has become payable by a banking company, if thereafter the amount
  
  required to be maintained on the next succeeding alternate Friday, or if such
  
  Friday is a public holiday, the next preceding working day, is still below, the
  
  prescribed minimum, every Director, Manager or Secretary of the banking
  
  company, who is knowingly and willfully a party to the default, shall be
  
  punishable with fine which may extend to five hundred rupees and with a further
  
  fine which may extend to five hundred rupees for each subsequent alternate
  
  Friday or the preceding working day, as the case may be, on which the default
  
  continues.
  (8) Notwithstanding anything contained in this
  
  section, if the Reserve Bank is satisfied, on an application in writing by the
  
  defaulting banking company, that the banking company had sufficient cause for
  
  its failure to comply with the provisions of clause (a) of sub-section (2A),
  
  the Reserve Bank may not demand the payment of the penal interest.
  Explanation: In this section, the
  
  expression, "public holiday" means a day which is a public holiday
  
  under the Negotiable Instruments Act, 1881 (26 of 1881).