Under Section 35(1) of the Banking Regulation Act, 1949, the Reserve Bank may, and on being directed to do so by the Central Government shall, cause an inspection of a banking company and its books and accounts to be made by one or more of its officers. After such inspection, the Reserve Bank is required to:

Section 35(1) expressly mandates that the Reserve Bank shall supply to the banking company a copy of its report on such inspection. This right ensures that the inspected bank has an opportunity to know the findings and, if adverse action is contemplated, to make a representation. Under sub-section (4), the Reserve Bank shall (if directed by the Central Government) or may report to the Central Government on the inspection, and the Central Government may thereafter prohibit the bank from accepting fresh deposits or direct the RBI to apply for winding up. Sub-section (5) empowers the Central Government to publish the report or relevant portions in the public interest. Section 35(1A) additionally provides for scrutiny, which is less intrusive than a full inspection.