The Reserve Bank is empowered under Banking Regulation Act to conduct an inspection of any banking company. The bank may conduct such an inspection at any time. The Central Government may also direct the Reserve Bank to conduct inspection of any bank and Reserve Bank is bound to comply with such a direction. After inspection of the books and accounts of the banking company, a copy of the inspection report has to be given to the banking company.
The directors and officers of a banking company are bound to produce for inspection all books, accounts and other documents in their custody. The inspecting team may also require the bank to furnish any statements or information relating to the affairs of the banking company within the time specified by them. The inspecting officer is authorised to examine any director or officer of a banking company on oath.