**Summary:**
RBI Circular RBI201617164 DCM Plg No. 145910.27.00201617, issued November 29, 2016, addresses the deposit of Specified Bank Notes (SBNs) and their impact on Chest Balance Limits/Cash Holding Limits for all banks maintaining currency chests.
The circular revisits instructions outlined in DCM CC No. 259803.02.05200910 dated October 27, 2009, which previously stipulated that any currency chest balance exceeding the Chest Balance Limit/Cash Holding Limit would be considered the bank's own cash, disallowing inter-chest fungibility.
Due to the substantial deposits of SBNs, the Reserve Bank of India (RBI) has directed that:
* SBNs deposited in currency chests since November 10, 2016, will be considered part of the chest balance within the soiled note category.
* These SBN deposits will *not* be factored into the calculation of the Chest Balance Limit/Cash Holding Limit.
The RBI will review this policy in the second fortnight of February 2017.
For further information, P. Vijaya Kumar, Chief General Manager, can be contacted.
Key Entities Referenced
Reserve Bank of India: The central bank of India, implied by the prefix 'RBI' in the document number.
Specified Bank Notes (SBNs): Bank notes specified by the Reserve Bank of India, subject to the deposit rules outlined in the circular.
Currency Chests: Designated branches of banks authorized to hold currency on behalf of the Reserve Bank of India.
Chest Balance Limit: The maximum amount of currency a bank is permitted to hold in its currency chest.
Cash Holding Limit: The maximum amount of cash a bank is permitted to hold.
DCM CC No. 259803.02.05/2009-10: Reference to a previous circular issued by the Reserve Bank of India, dated October 27, 2009, pertaining to currency chest operations.
November 10, 2016: The date from which SBN deposits are considered part of the chest balance but not reckoned for calculating chest balance and cash holding limits.
P Vijaya Kumar: Chief General Manager at Reserve Bank of India, signatory of the circular.
RBI/2016-17/164
DCM (Plg) No. 1459/10.27.00/2016-17 November 29, 2016
The Chairman / Managing Director/ Chief Executive Officer,
(All banks maintaining currency chests)
Dear Sir,
Deposit of Specified Bank Notes (SBNs) – Chest Balance Limit / Cash Holding Limit
Please refer to our circular. DCM (CC) No. 2598/03.02.05/2009-10 dated October 27,
2009, which inter alia stated that the balance in a currency chest, exceeding the Chest
Balance Limit / Cash Holding Limit will be deemed to be bank’s own cash, not allowing
for inter-chest fungibility.
2. In the wake of deposits of SBNs in massive quantity and accumulations thereof, the
above instructions have been revisited and banks are advised as under:
i. SBNs deposited in the currency chests, since November 10, 2016 will be
considered as part of the chest balance in the soiled note category but such
deposits will not be reckoned for calculating Chest Balance Limit / Cash Holding
Limit.
ii. A review of the above will be taken up in the second fortnight of February 2017.
Yours faithfully,
(P Vijaya Kumar)
Chief General Manager
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