Executive Summary:
This master circular, issued by the RBI on July 1, 2020, outlines the scheme of penalties for bank branches and currency chests based on their performance in rendering customer service, specifically concerning the exchange of notes and coins, in line with the Clean Note Policy. It provides a revised and updated version of the penalty scheme, superseding the circular dated July 1, 2019. The circular is available on the RBI website.
Key Points / Main Content:
* **Purpose:** To ensure better customer service by bank branches regarding the exchange of notes and coins.
* **Scope:** Applies to all bank branches, including currency chests.
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 amount of shortage/loss will be recovered immediately, and the penalty will be levied immediately upon detection, irrespective of the number of pieces.
* **Counterfeit Notes Detected:** Penalty as per instructions in DCM FNVD No.G 216.01.05/2020-21 dated July 01, 2020.
* **Mutilated Notes Detected:** ₹50 per piece, irrespective of denomination. The loss amount will be recovered immediately, and the penalty will be levied immediately upon detection, irrespective of the number of pieces.
* **Non-Compliance with Operational Guidelines by Currency Chests:**
* ₹5,000 for each irregularity.
* ₹10,000 in case of repetition.
* Irregularities include: Non-functioning CCTV, branch cash/documents kept in the strong room, and non-utilization of NSMs for sorting notes.
* **Violation of Agreement with RBI/Deficiency of Service:**
* ₹10,000 for any violation of agreement or deficiency of service.
* ₹5 lakh for more than 5 instances of violation/deficiency.
* Penalties will be placed in the public domain.
* Examples include: Non-issue of coins, refusal to exchange soiled notes or adjudicate mutilated notes, non-conduct of surprise verification of chest balances, denial of facilities/services to linked branches, non-acceptance of lower denomination notes, and detection of mutilated/counterfeit notes in reissuable packets.
Operational Guidelines:
* **Competent Authority:** The Officer-in-Charge of the Issue Department of the Regional Office is the Competent Authority to decide the nature of irregularity.
* **Appellate Authority:** The Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office concerned is the Appellate Authority. Appeals must be made within one month of the debit date. Appeals based on grounds like new/untrained staff or lack of awareness will not be considered.
Impact Analysis
Banks/Bank Branches:
* Impact: Increased scrutiny and potential financial penalties for non-compliance with customer service standards regarding note and coin exchange, handling of soiled/mutilated/counterfeit notes, and adherence to operational guidelines.
* Action Required: Ensure all branches, especially currency chest branches, are fully compliant with the guidelines, conduct regular staff training, and implement robust internal controls to prevent irregularities.
Currency Chests:
* Impact: Direct impact on currency chest operations due to specific penalties related to shortages, handling of notes, and adherence to operational guidelines.
* Action Required: Strengthen security measures, improve note sorting and handling procedures, ensure proper functioning of CCTV and NSMs, conduct regular surprise verification of chest balances, and comply with all terms of the agreement with RBI.
Members of the Public:
* Impact: Improved customer service at bank branches regarding the exchange of notes and coins.
* Action Required: Be aware of their rights regarding the exchange of notes and coins and report any instances of non-compliance to the appropriate authorities.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking system and issuing currency. This document pertains to penalties imposed by the RBI.
Clean Note Policy: A policy aimed at ensuring the circulation of good quality banknotes and coins in India.
Currency Chest: Designated branches of banks authorized by the RBI to store banknotes and coins on its behalf.
DCM FNVD No.G 216.01.05/2020-21: Reference to a circular issued by the Department of Currency Management, Financial Note Verification Division of RBI, dated July 01, 2020, which contains instructions regarding the detection of counterfeit notes.
Issue Department of the Regional Office: The department within a regional office of the RBI responsible for currency management.
Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office: The appellate authority for decisions regarding penalties imposed on currency chests or bank branches.
Master Circular: A consolidated and updated version of existing instructions on a particular subject, issued by the RBI for clarity and ease of reference.
Scheme of Penalties for bank branches: The core subject of the document, outlining penalties for deficiencies in customer service related to exchange of notes and coins.
RBI/2020-21/08
DCM (CC) No.G-1/03.44.01/2020-21 July 01, 2020
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-5/03.44.01/2019-20 dated July 01, 2019 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 For notes in denomination up to ₹ 50
remittances 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.
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 Penalty on account of detection of
soiled note remittances and counterfeit notes by RBI from soiled note
currency chest balances. remittance of banks and in currency chest
balances shall be levied in terms of the
instructions issued by DCM (FNVD) No.G-
2/16.01.05/2020-21 dated July 01, 2020.
iii. Mutilated notes detected in ₹ 50/- per piece irrespective of the
soiled note remittances and denomination
currency chest balances
In case of mutilated notes detected insoiled 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 Penalty of ₹ 5000 for each irregularity.
operational guidelines by
currency chests detected by Penalty will be enhanced to ₹ 10,000 in
RBI officials case of repetition.
a) Non-functioning of CCTV Penalty will be levied immediately.
b) Branch cash/documents kept
in 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 ₹ 10,000 for any violation of agreement or
agreement with RBI (for deficiency of service.
opening and maintaining
currency chests) or deficiency in ₹ 5 lakh in case there are more than 5
service in providing exchange instances of violation of
facilities, as detected by RBI agreement/deficiency in service by the
officials e.g. branch. The levy of such penalty will be
placed in public domain.
a) Non-issue of coins over the
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 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 theofficials 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.