Executive Summary:
This master circular, effective July 1, 2019, provides a revised and updated scheme of penalties for bank branches and currency chests based on their performance in rendering customer service, particularly regarding the exchange of notes and coins. The scheme aims to ensure better customer service and adherence to the Clean Note Policy. Penalties are imposed for deficiencies such as shortages in remittances, detection of counterfeit/mutilated notes, and non-compliance with operational guidelines.
Key Points / Main Content:
Penalties for Irregularities:
* **Shortages in Soiled Note Remittances/Currency Chest Balances:**
* Denominations up to 50: ₹50 per piece plus the loss amount.
* Denominations of 100 and above: Equal to the value of the denomination per piece plus the loss amount.
* The shortage/loss amount will be recovered immediately.
* Penalty levied immediately upon detection, regardless of the number of pieces.
* **Counterfeit Notes:** Penalties levied as per DCM FNVD No.G1 16.01.05/2019-20 dated July 01, 2019.
* **Mutilated Notes:** ₹50 per piece, irrespective of the denomination, with immediate recovery of the loss amount. Penalty levied immediately upon detection, regardless of the number of pieces.
* **Non-compliance with Operational Guidelines by Currency Chests:** ₹5,000 per irregularity, with potential enhancement to ₹10,000 for repeated offenses. Examples include:
* Non-functioning CCTV.
* Branch cash/documents not kept in the strong room.
* Non-utilization of Note Sorting Machines (NSMs).
* **Violation of Agreement with RBI or Deficiency in Service:** ₹10,000 for any violation or deficiency, or ₹5 lakh if more than 5 instances are detected. Examples include:
* Non-issue of coins over the counter despite having stock.
* Refusal to exchange soiled notes or adjudicate mutilated notes.
* Non-conduct of surprise verification of chest balances.
* Denial of facilities/services to linked branches of other banks.
* Non-acceptance of lower denomination notes.
* Detection of mutilated/counterfeit notes in reissuable packets.
Operational Guidelines:
* **Competent Authority:** The Officer-in-Charge of the Issue Department of the Regional Office where the defaulting branch/currency chest is located.
* **Appellate Authority:** The Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office concerned. Appeals must be made within one month from the date of debit. Appeals based on reasons like untrained staff or lack of awareness will not be considered.
Impact Analysis
Banks and Currency Chests:
* Impact: Financial penalties for non-compliance, increased scrutiny of operations, need for improved customer service and adherence to guidelines.
* Action Required: Review and update internal procedures, ensure staff training on note exchange and handling, improve compliance with operational guidelines, and implement robust monitoring mechanisms.
Members of Public:
* Impact: Improved customer service at bank branches and currency chests, better access to exchange of notes and coins, and adherence to the Clean Note Policy.
* Action Required: Be aware of their rights regarding note exchange and report any violations to the RBI or relevant authorities.
Reserve Bank of India (RBI):
* Impact: Enhanced regulatory oversight and enforcement of the Clean Note Policy, improved efficiency of currency management, and greater accountability of banks and currency chests.
* Action Required: Monitor compliance, conduct audits, and impose penalties as necessary to ensure adherence to the scheme.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking system and currency.
Clean Note Policy: An initiative by the RBI to ensure that only clean and genuine banknotes are in circulation.
Currency Chests: Designated bank branches authorized by the RBI to store and manage currency on behalf of the RBI.
Master Circular: A consolidated directive issued by the RBI, providing updated and comprehensive instructions on a specific subject matter (in this case, penalties for bank branches).
DCM FNVD No.G1 16.01.05/2019-20: Reference to a specific circular issued by the Department of Currency Management, Financial Intelligence Unit, and Vigilance Division (DCM FNVD) of the RBI, dated July 01, 2019, regarding counterfeit notes.
Issue Department of the Regional Office: The department within an RBI Regional Office responsible for currency management and related operations. The Officer-in-Charge is the Competent Authority for deciding on irregularities.
Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office: The appellate authority for decisions made by the Competent Authority regarding penalties on currency chests or bank branches.
Non-compliant Sorting Machines (NSMs): Machines used for sorting banknotes. Penalties apply if they are not used for sorting high denomination notes or notes remitted to chest/RBI
RBI/2019-20/07
DCM (CC) No.G-5/03.44.01/2019-20 July 01, 2019
The Chairman & Managing Director
Chief Executive Officers
All Banks
Master Circular – Scheme of Penalties for bank branches based on performance in
rendering customer service to the members of public
Please refer to the Circular DCM (CC) No.G-4/03.44.01/2018-19 dated July 3, 2018 on
the scheme of penalties.
2. A revised and updated version on the subject is annexed for information and
necessary action.
3. This Master Circular is available on our website www.rbi.org.in.
Yours faithfully
(Manas Ranjan Mohanty)
Chief General Manager
Encl: As aboveAnnex
Master Circular on the Scheme of Penalties for bank branches including currency
chests based on performance in rendering customer service to members of public
1. The Scheme of Penalties for bank branches including currency chests has been
formulated in order to ensure that all bank branches provide better customer service to
members of public with regard to exchange of notes and coins, in keeping with the
objectives of Clean Note Policy.
2. Penalties
Penalties to be imposed on banks for deficiencies in exchange of notes and
coins/remittances sent to RBI/operations of currency chests etc. are as follows:
Sr. Nature of Irregularity Penalty
No.
i. Shortages in soiled note remittances For notes in denomination up to `
and currency chest balances 50
` 50/- per piece in addition to the loss
For notes in denomination of ` 100
& above
Equal to the value of the denomination
per piece in addition to the loss.
In case of shortage in soiled note
remittances/chest balances, the
amount of shortage/loss thereof will be
recovered immediately
Penalty will be levied immediately on
detection of shortage in soiled note
remittances/chest balances,
irrespective of the number of pieces
detected.
ii. Counterfeit notes detected in soiled Penalty on account of detection of
note remittances and currency chest counterfeit notes by RBI from soiled
balances. note remittance of banks and in
currency chest balances shall be
levied in terms of the instructionsissued by DCM (FNVD) No.G-1
/16.01.05/2019-20 dated July 01,
2019.
iii. Mutilated notes detected in soiled ` 50/- per piece irrespective of the
note remittances and currency chest denomination
balances
In case of mutilated notes detected in
soiled note remittances and currency
chest balances, the amount of loss
thereof will be recovered immediately.
Penalty will be levied immediately on
detection of mutilated notes in soiled
note remittances / currency chest
balances, irrespective of the number of
pieces detected.
iv. Non-compliance with operational Penalty of ` 5000 for each irregularity.
guidelines by currency chests
detected by RBI officials
Penalty will be enhanced to ` 10,000
a) Non-functioning of CCTV in case of repetition.
b) Branch cash/documents kept in Penalty will be levied immediately.
strong room
c) Non-utilization of NSMs for sorting
of notes (NSMs not used for sorting
of high denomination notes received
over the counter or not used for
sorting notes remitted to chest/RBI)
v. Violation of any term of agreement ` 10,000 for any violation of
with RBI (for opening and agreement or deficiency of service.
maintaining currency chests) or
` 5 lakh in case there are more than 5
deficiency in service in providing
instances of violation of
exchange facilities, as detected by
agreement/deficiency in service by the
RBI officials e.g.
branch. The levy of such penalty will
a) Non-issue of coins over the be placed in public domain.
counter to any member of public
Penalty will be levied immediately.
despite having stock.
b) Refusal by any bank branch to
exchange soiled notes / refusal by
any currency chest branch to
adjudicate mutilated notes tenderedby any member of public
c) Non conduct of surprise
verification of chest balances, at
least at bimonthly intervals, by
officials unconnected with the
custody thereof and by the officials
from the Controlling Office once in
six months.
d) Denial of facilities/services to
linked branches of other banks.
e) Non acceptance of lower
denomination notes (i.e.
denomination of ` 50 and below)
tendered by members of public and
linked bank branches.
f) Detection of mutilated /counterfeit
notes in re-issuable packets
prepared by the currency chest
branches.
3. Operational Guidelines on levy of penalties –
3.1 Competent Authority –
The Competent Authority to decide the nature of irregularity will be the Officer-in-
Charge of the Issue Department of the Regional Office under whose jurisdiction the
defaulting currency chest/bank branch is located.
3.2 Appellate Authority -
i. Appeal against the decision of the Competent Authority may be made by the
Controlling Office of the currency chest/branch to the Regional Director/Chief General
Manager/Officer-in-Charge of the Regional Office concerned, within one month from
the date of debit, who may decide whether the same can be accepted/ rejected.
ii. Appeals for waiver of penalty made on grounds such as staff being new/untrained,
lack of awareness of staff, corrective action having been taken/will be taken, etc. will not
be considered.
____________