**Summary:**
RBI Circular RBI201617147 DCM Plg No.134110.27.00201617, issued on November 22, 2016, addresses concerns regarding fraudulent practices related to the withdrawal of legal tender status of existing ₹500 and ₹1000 Specified Bank Notes (SBNs). The circular, addressed to the Chairman/Managing Director/Chief Executive Officer of Public Sector Banks, Private Sector Banks, Foreign Banks, Regional Rural Banks, Urban Cooperative Banks, and State Cooperative Banks, alerts these institutions to instances of bank branch officials colluding with individuals to engage in fraudulent activities during the exchange of SBNs for cash and the deposit of SBNs into accounts.
The Reserve Bank of India (RBI) advises banks to immediately cease such fraudulent practices through increased vigilance and to take decisive action against any officials found to be involved. Banks are instructed to strictly adhere to all previously issued guidelines regarding the exchange and deposit of SBNs. To ensure compliance and facilitate potential audits, bank branches are required to maintain detailed records of:
1. Denomination-wise details of SBNs and the total value of non-SBN notes deposited into each deposit or loan account from November 10, 2016, onwards.
2. Customer-wise and denomination-wise records of SBNs exchanged by both walk-in and regular customers.
Banks must be prepared to provide this information at short notice. The circular requests acknowledgement of receipt and is issued by P. Vijaya Kumar, Chief General Manager.
Key Entities Referenced
RBI: Reserve Bank of India, the central bank of India, issuer of the notification.
Specified Bank Notes (SBNs): Refers to the 500 and 1000 Rupee notes that were demonetized.
Public Sector Banks: Banks in India with majority government stake.
Private Sector Banks: Banks in India that are privately owned.
Foreign Banks: Banks with headquarters in other countries but operating in India.
Regional Rural Banks: Regional Rural Banks in India.
Urban Cooperative Banks: Urban Cooperative Banks in India.
State Cooperative Banks: State Cooperative Banks in India.
RBI/2016-17/147
DCM (Plg) No.1341/10.27.00/2016-17 November 22, 2016
The Chairman / Managing Director/Chief Executive Officer,
Public Sector Banks / Private Sector Banks / Foreign Banks / Regional Rural Banks /
Urban Co-operative Banks / State Co-operative Banks
Dear Sir,
Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Specified
Bank Notes (SBNs) – Fraudulent Practices
It has been brought to our notice that at certain places, few bank branch officials, in
connivance with some miscreants, are indulging in fraudulent practices while
exchanging SBNs in cash / accepting SBN deposits into account.
2. Banks are, therefore, advised to ensure that such fraudulent practices are stopped
forthwith through enhanced vigilance and take stern action against officials involved
in such activities.
3. Banks should ensure strict compliance with the instructions issued with regard to
exchange of SBNs as also deposit of such notes into the accounts of their
customers. Towards the same, the bank branches are required to maintain proper
record of the following;
i. Denomination-wise details of Specified Bank Notes and aggregate value of
non-SBN note deposited in the account of each deposit or loan customer from
November 10, 2016 onwards.
ii. Customer-wise and denomination-wise record in respect of SBNs exchanged
by walk-in and regular customers.
Banks should also be in readiness to provide these details at short notice.
4. Please acknowledge receipt.
Yours faithfully,
(P Vijaya Kumar)
Chief General Manager