law: Banking Regulation Act, 1949
  18. Cash reserve
  (1) Every banking company, not being a
  
  scheduled bank, shall maintain in India by way of cash reserve with itself or
  
  by way of balance in a current account with the Reserve Bank or by way of net
  
  balance in current accounts or in one or more of the aforesaid ways, a sum
  
  equivalent to at least three per cent of the total of its demand and time
  
  liabilities in India as on the last Friday of the second preceding fortnight
  
  and shall submit to the Reserve Bank before the twentieth day of every month a
  
  return showing the amount so held on alternate Fridays during a month with
  
  particulars of its demand and time liabilities in India on such Friday or if
  
  any such Friday is a public holiday under the Negotiable Instruments Act, 1881
  
  (26 of 1881), at the close of business on the preceding working day.
  Explanation : In this section, and
  
  in section 24-
  (a) "liabilities in India " shall not
  
  include-
  (i) the paid-up
  
  capital or the reserves or any credit balance in the profit and loss account of
  
  the banking company,
  (ii) any advance taken
  
  from the Reserve Bank or from the Development Bank or from the Exim Bank 52[or
  
  from the Reconstruction Bank] 19[or from the National Housing Bank] or from the
  
  National Bank 82[or from the Small Industries Bank] by the banking company;
  (iii) in the case of a
  
  Regional Rural Bank, also any loan taken by such bank from its sponsor bank;
  (b) "fortnight" shall means the
  
  period from Saturday to the second following Friday, both days inclusive;
  (c) "net balance in current
  
  accounts" shall, in relation to a banking company, means the excess, if
  
  any, of the aggregate of the credit balance in current account maintained by
  
  that banking company with the State Bank of India or a subsidiary bank or a
  
  corresponding new bank over the aggregate of the credit balances in current
  
  account held by the said banks with such banking company;
  (d) for the purpose of computation of
  
  liabilities, the aggregate of the liabilities of banking company to the State
  
  Bank of India, a subsidiary bank, a corresponding new bank, a Regional Rural
  
  Bank, another banking company, a co-operative bank or any other financial
  
  institution notified by the Central Government in this behalf, shall be reduced
  
  by the aggregate of the liabilities of all such banks and institutions to the
  
  banking company;
  (e) the expression "Co-operative
  
  Bank" shall have the meaning assigned to it in clause (cci) of section 56.
  
  
  (2) The Reserve Bank may, for the purpose of
  
  this section and section 24, specify from time to time, with reference to any
  
  transaction or class of transactions, that such transaction or transactions
  
  shall be regarded as liability in India of a banking company and, if any
  
  question arises as to whether any transaction or class of transaction shall be
  
  regarded for the purposes of this section and section 24 as liability in India
  
  of a banking Company, the decision of the Reserve Bank thereon shall be final.]