Executive Summary:
This master circular issued by the RBI on July 20, 2016, outlines the scheme of penalties imposed on bank branches and currency chests for deficiencies in customer service related to the exchange of notes and coins. It aims to ensure better customer service in line with the Clean Note Policy. The circular segregates penalty provisions from incentive schemes and is effective immediately.
Key Points / Main Content:
Penalties for Irregularities:
* Shortages in Soiled Note Remittances:
* Denominations up to ₹50: ₹0.50 per piece plus the loss.
* Denominations of ₹100 and above: Equal to the denomination value per piece plus the loss.
* Shortages of 100 pieces and above per remittance will be immediately debited.
* Counterfeit Notes: Penalties will be levied as per DCM circular DCM FNVD No.77616.01.05201516 dated August 26, 2015.
* Mutilated Notes: ₹0.50 per piece, irrespective of denomination. Mutilated notes of 100 pieces and above per remittance will be immediately debited.
* Non-Compliance by Currency Chests: ₹5,000 per irregularity, enhanced to ₹10,000 for repeated offenses. Immediate penalties for:
* Non-functioning CCTV.
* Branch cash documents kept in the strong room.
* Non-utilization of NSMs for sorting notes.
* Violation of Agreement Terms: ₹10,000 for any violation of agreement or deficiency in service, and ₹5 lakh for more than 5 instances of violation. Examples include:
* Non-issuance of coins over the counter.
* Refusal to exchange soiled notes or adjudicate mutilated notes.
* Non-conduct of surprise verification of chest balances.
* Denial of 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: Officer-in-Charge of the Issue Department of the RBI Regional Office.
* Appellate Authority: Regional Director of the Regional Office concerned; appeals must be made within one month of the debit date.
* Grounds for Waiver: Appeals based on staff being new/untrained or lack of awareness will not be considered.
Impact Analysis:
Banks (All Branches and Currency Chests):
* Impact: Subject to financial penalties for deficiencies in customer service and non-compliance with operational guidelines.
* Action Required: Ensure strict adherence to the guidelines for exchanging notes and coins, maintaining currency chest operations, and providing customer service. Implement regular monitoring and training programs for staff.
RBI (Regional Offices, Issue Department):
* Impact: Responsible for monitoring and enforcing the penalty scheme, handling appeals, and ensuring compliance.
* Action Required: Implement procedures for assessing penalties, handling appeals, and ensuring consistent application of the guidelines.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for issuing circulars and regulating banks, and currency chests.
Currency Distribution and Exchange Scheme (CDES): A scheme by RBI to incentivize better customer service related to currency exchange. It has been revised to separate incentives from penalties.
Clean Note Policy: An initiative to ensure better quality of banknotes in circulation. The penalty scheme supports the objectives of this policy.
Currency Chests: Designated branches of banks authorized to hold stock of notes and coins on behalf of the RBI. Penalties are applicable to them for irregularities.
Issue Department of the Regional Office: The department within a regional RBI office that is responsible for handling currency matters. The Officer-in-Charge of this department is the Competent Authority to decide the nature of irregularity.
Regional Director of the Regional Office: The appellate authority to whom the Controlling Office of the currency chest branch can appeal against the decision of the Competent Authority.
Non-Soiled Note Sorting Machines (NSMs): Machines used for sorting notes, and the non-utilization of which can lead to penalties.
Master Circular Scheme of Penalties: A document outlining penalties for bank branches based on performance in rendering customer service to the members of public
RBI/2016-17/23
DCM (CC) No.G-3/03.44.01/2016 – 17 July 20, 2016
The Chairman & Managing Director
Chief Executive Officers
All Banks
Madam / Dear Sir,
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-10/03.41.01/2015-16 dated May 05, 2016 on
the revised scheme of incentives titled – CDES i.e. Currency Distribution and Exchange
Scheme.
2. As advised therein, the provisions of incentives have now been segregated from
those of penalties. Accordingly, the scheme of Penalties is annexed for information and
necessary action.
3. This Master Circular is available on our website www.rbi.org.in.
Yours faithfully
(P. Vijaya Kumar)
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.No. Nature of Irregularity Penalty
i. Shortages in soiled note remittances For notes in denomination upto `.50
and currency chest balances
`.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.
Shortages of 100 pieces and above
per remittance shall be debited
immediately. Penalty may be levied
on reaching a limit of 100 pieces in
a cumulative manner.
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 instructions
issued by DCM vide circular DCM
(FNVD) No.776/16.01.05/2015-16
dated August 26, 2015.
1iii. Mutilated notes detected in soiled note ` 50/- per piece irrespective of the
remittances and currency chest denomination
balances
Mutilated notes of 100 pieces and
above per remittance shall be
debited immediately. Penalty may
be levied on reaching a limit of 100
pieces in a cumulative manner.
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 with ` 10,000 for any violation of
RBI (for opening and maintaining agreement or deficiency of service.
currency chests) or deficiency in service
` 5 lakh in case there are more than 5
in providing exchange facilities, as
instances of violation of
detected by RBI officials e.g..
agreement/deficiency in service by the
a) Non-issue of coins over the counter branch. The levy of such penalty will
to any member of public despite having be placed in public domain.
stock.
Penalty will be levied immediately.
b) Refusal by any bank branch to
exchange soiled notes / refusal by any
currency chest branch to adjudicate
mutilated notes tendered by 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.
2d) 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 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.
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