Reserve Bank of India Act, 1934
21A. Bank to transact government business of States on agreement
(1) The Bank may by agreement with the government of any state undertake-
(a) all its money, remittance, exchange and banking transactions in India, including in particular, the deposit, free of interest, of all its cash balances with the Bank; and
(b) the management of the public debt of, and the issue of any new loans by, that State.
(2) Any agreement made under this section shall be laid, as soon as may be after it is made, before Parliament.