Date: 2019-07-01Category: Not ApplicableState: Union GovernmentCountry: India
Master Direction on Currency Distribution & Exchange Scheme (CDES) based on performance in rendering customer service to the members of public (Updated as on January 6, 2020)
Executive Summary:
This Master Direction from the Reserve Bank of India (RBI) outlines the Currency Distribution Exchange Scheme (CDES), designed to incentivize banks to improve customer service regarding the exchange of notes and coins, furthering the objectives of the Clean Note Policy. It details financial incentives available to banks for specific services. The direction was updated as of January 6, 2020, and is effective as of July 1, 2019.
Key Points / Main Content:
* **Purpose:** To ensure all bank branches provide better customer service regarding the exchange of notes and coins, in line with the Clean Note Policy.
* **Eligibility:** The CDES applies to all bank branches, including those with currency chests.
* **Financial Incentives:**
* **Currency Chests:**
* Capital Cost: Reimbursement of capital expenditure for opening and maintaining currency chests in underbanked states with a population of less than 1 lakh; 50% reimbursement (up to ₹50 lakh ceiling) or 100% reimbursement in North Eastern region (up to ₹50 lakh ceiling).
* Revenue Cost: Reimbursement of 50% of revenue expenditure for the first 3 years or 5 years in the North Eastern region.
* **Exchange of Soiled Notes:**
* ₹2 per packet for exchange of soiled banknotes over the counter at bank branches.
* **Adjudication of Mutilated Notes:**
* ₹2 per piece for adjudication of mutilated notes.
* **Distribution of Coins:**
* ₹25 per bag for distribution of coins over the counter.
* Incentives paid based on withdrawal from currency chest.
* Banks should ensure coins are distributed to retail customers in small lots.
* RBI Regional Offices will verify coin distribution through inspections.
* **Operational Guidelines:**
* Incentives are paid on soiled notes actually received in the Issue Office of the RBI; no separate claim submission is needed.
* Currency chest branches must pass on the incentive to linked branches on a pro-rata basis.
* Incentives for adjudicated notes are paid based on notes received via registered insured post; no separate claim is needed.
Impact Analysis:
Banks:
* Impact: Banks can receive financial incentives for providing currency exchange services and opening/maintaining currency chests, especially in underbanked areas. They must also ensure proper distribution of coins.
* Action Required: Implement systems to track and manage soiled notes, mutilated notes, and coin distribution to claim incentives. Pass on incentives to linked branches.
Bank Customers:
* Impact: Improved access to currency exchange services, including soiled and mutilated notes, and coin distribution.
* Action Required: Utilize the currency exchange services at bank branches.
Reserve Bank of India (RBI):
* Impact: Realization of Clean Note Policy objectives through incentivizing better currency distribution and exchange services.
* Action Required: Monitor the effectiveness of the CDES through inspections and review of currency handling practices at bank branches.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for issuing guidelines and instructions related to currency distribution and exchange.
Currency Distribution Exchange Scheme (CDES): A scheme formulated by the RBI to incentivize bank branches for providing better customer service in the exchange of notes and coins.
RBI Act, 1934: The Reserve Bank of India Act, which provides the legal framework for the functioning of the RBI.
Banking Regulation Act, 1949: An act regulating banking companies in India.
Clean Note Policy: A policy of the Reserve Bank of India to provide the public with good quality, clean notes.
North Eastern region: Refers to the northeastern states of India, which receive enhanced incentives under the CDES.
Issue Office of the RBI: The department within the Reserve Bank of India where soiled notes are received and processed.
Manas Ranjan Mohanty: Chief General Manager at Reserve Bank of India
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2019-20/69
Master Direction DCM (CC) No.G-6/03.41.01/2019-20 July 01, 2019
(Updated as on January 6, 2020)
The Chairman and Managing Director /
Chief Executive Officers,
All Banks
Madam / Dear Sir,
Master Direction on Currency Distribution & Exchange Scheme (CDES) based on
performance in rendering customer service to the members of public
In terms of the Preamble, under Section 45 of the RBI Act, 1934 and 35 A of the Banking
Regulation Act, 1949, the Bank issues guidelines / instructions for realising the objectives
of our Clean Note Policy. With a view to sustaining these objectives, the Bank has
formulated a scheme of incentives titled Currency Distribution and Exchange Scheme
(CDES) in order to ensure that all bank branches provide better customer services to
members of public.
2. The Master Direction enclosed incorporates updated guidelines / circulars on the subject.
The Direction will be updated from time to time as and when fresh instructions are issued.
3. This Master Direction has been placed on RBI website at www.rbi.org.in.
Yours faithfully,
(Manas Ranjan Mohanty)
Chief General Manager
Encl: As aboveAnnex
Circular on “Currency Distribution & Exchange Scheme (CDES)” for bank branches
including currency chests based on performance in rendering customer service to
members of public
1. The Currency Distribution & Exchange Scheme (CDES) 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. Incentives
As per the scheme, banks are eligible for the following financial incentives for providing
facilities for exchange of notes and coins:
Sr. Nature of Service Particulars of Incentives
No.
i) Opening of and maintaining a. Capital Cost: Reimbursement of
currency chests at centers having 50% of capital expenditure subject
population of less than 1 lakh in to a ceiling of ₹ 50 lakh per currency
under banked States chest. In the North Eastern region
up to 100% of capital expenditure is
eligible for reimbursement subject to
th e ceiling of ₹ 50 lakh.
b. Revenue cost: Reimbursement of
50% of revenue expenditure for the
first 3 years. In the North Eastern
region 50% of revenue expenditure
will be reimbursed for the first 5
years.
ii) Exchange of soiled notes/
a. Exchange of soiled notes – ₹ 2
adjudication of mutilated
per packet for exchange of soiled
banknotes over the counter at
notes up to denomination ₹ 50
bank branches
b. Adjudication of mutilated notes
– ₹ 2 per piece
1iii) Distribution of coins over counter i. ₹ 25 per bag for distribution of coins over
the counter.
ii. The incentives would be paid on the
basis of withdrawal from currency chest,
without waiting for claims from banks.
iii. Banks may put in place a system of
checks and balances to ensure that
coins are distributed to retail customers
in small lots and not to bulk customers.
iv. The distribution of coins shall be verified
by RBI Regional Offices through
inspection of currency chest / incognito
visits to branches etc.
3. Operational Guidelines to avail performance based incentives –
-
i) The incentives will be paid on the soiled notes actually received in the Issue Office
of the RBI. Banks need not submit a separate claim in this regard. Currency chest branch
will have to pass on the incentive to the linked branches for the soiled notes tendered /
coins distributed by them on a pro-rata basis.
ii) Similarly, incentive will be paid in respect of the adjudicated notes received along
with the soiled note remittances / sent separately by registered / insured post in a sealed
cover to the RBI. No separate claim is required to be made.
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