<P> The Section 17 of the Act defines manner in which the RBI can conduct business . The RBI can accept deposits from the central and state governments without interest . It can purchase and discount bills of exchange from commercial banks . It can purchase foreign exchange from banks and sell it to them . It can provide loans to banks and state financial corporations . It can provide advances to the central government and state governments . It can buy or sell government securities . It can deal in derivative, repo and reverse repo . </P> <P> The Section 18 deals with emergency loans to banks . The Section 21 states the RBI must conduct the banking affairs for the central government and manage public debt . The Section 22 says that only RBI has the exclusive rights to issue currency notes in India . The Section 24 states that the maximum denomination a note can be ₹ 10,000 (US $160). </P> <P> The section 26 of Act, describes the legal tender character of Indian bank notes . </P> <P> The Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes . </P>

Chapter iii d of the rbi act 1934