Date: 2021-04-01Category: Not ApplicableState: Union GovernmentCountry: India
Master Direction on “Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests based on performance in rendering customer service to members of public
Executive Summary:
This Master Direction from the Reserve Bank of India (RBI) introduces the Currency Distribution Exchange Scheme (CDES) to incentivize bank branches, including currency chests, for providing better customer service related to the exchange of notes and coins. The scheme aims to support the Clean Note Policy objectives. The direction incorporates updated guidelines and circulars on the subject, and will be updated periodically as new instructions are issued.
Key Points / Main Content:
* **Purpose:** To ensure all bank branches provide better customer service regarding the exchange of notes and coins, supporting the Clean Note Policy.
* **Eligibility:** The scheme applies to all bank branches, including currency chests.
* **Financial Incentives:**
* **Currency Chests:**
* Capital Cost: Reimbursement of 50% of capital expenditure (up to ₹50 lakh) for establishing and maintaining currency chests in under-banked states with a population less than one lakh; 100% reimbursement in the North Eastern region.
* Revenue Cost: Reimbursement of 50% of revenue expenditure for the first 3 years; 50% reimbursement for the first 5 years in the North Eastern region.
* **Exchange of Soiled/Mutilated Notes:**
* ₹2 per packet for exchange of soiled notes (up to ₹50 denomination).
* ₹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 chests.
* Banks must ensure coins are distributed to retail customers in small lots.
* **Operational Guidelines:**
* Incentives for soiled notes are paid based on actual receipts at the RBI Issue Office.
* Currency chest branches must distribute incentives to linked branches on a pro-rata basis.
* Incentives for adjudicated notes are paid based on remittances sent to the RBI.
* No separate claims need to be submitted for soiled or adjudicated notes.
* RBI Regional Offices will verify coin distribution through inspections and visits.
Impact Analysis:
* **Bank Branches (including Currency Chests):**
* Impact: Opportunity to earn financial incentives by improving customer service related to currency exchange and distribution.
* Action Required: Implement processes for efficient exchange of notes and coins, proper distribution of coins, and accurate reporting to the RBI. Ensure incentive is distributed appropriately to linked branches on a pro-rata basis.
* **Customers:**
* Impact: Improved access to exchange facilities for soiled/mutilated notes and increased availability of coins at bank branches.
* Action Required: Utilize the improved services for exchanging notes and obtaining coins at bank branches.
* **Reserve Bank of India (RBI):**
* Impact: Supports the Clean Note Policy by incentivizing banks to provide better currency exchange services.
* Action Required: Monitor the effectiveness of the scheme through inspections and review of data. Process incentive payments to banks based on performance. Periodically update the Master Direction with new instructions.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for issuing guidelines and instructions related to currency management.
Currency Distribution Exchange Scheme (CDES): A scheme formulated by the Reserve Bank of India to incentivize bank branches for providing better customer services related to the exchange of notes and coins.
RBI Act, 1934: The Reserve Bank of India Act, which empowers the RBI to issue guidelines for realising the objectives of the Clean Note Policy.
Banking Regulation Act, 1949: An act that empowers the Reserve Bank of India to issue guidelines for banking operations.
Clean Note Policy: An initiative to provide good quality clean notes to the public.
North Eastern region: Refers to the northeastern region of India, which receives special consideration under the CDES scheme.
Mumbai, Maharashtra: City in India where the Department of Currency Management of RBI is located.
Ishan Shukla: Chief General Manager at Reserve Bank of India
भारतीय �रज़व� ब�क
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2021-22/76
Master Direction DCM (CC) No.G-2/03.41.01/2021-22 April 01, 2021
The Chairman/Managing Director/Chief Executive Officer
All Banks
Madam / Dear Sir,
Master Direction on “Currency Distribution & Exchange Scheme (CDES)” for
bank branches including currency chests based on performance in rendering
customer service to 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 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,
(Ishan Shukla)
Chief General Manager
Encl: As above
मुद्रा प्रबंध िवभाग, 4था तल, अमर भवन, पीमाग� एम।., फोट�, मुंबई 400001
Department of Currency Management, 4th Floor, Amar Building, P.M. Road, Fort, Mumbai 400001
फोन/Phone: (022) 2260 3000 / 4000 फै�/Fax: (022) 2266 2442 ईमेल/E-mail: helpdcm@rbi.org.inAnnex
Master Direction 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 a. Capital Cost: Reimbursement of 50% of capital
maintaining currency expenditure subject to a ceiling of ₹ 50 lakh per
chests at centres having currency chest. In the North Eastern region up to
population of less than 1 100% of capital expenditure is eligible for
lakh in under banked reimbursement subject to the ceiling of ₹ 50 lakh.
States
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 a. Exchange of soiled notes – ₹ 2 per packet for
notes/ adjudication of exchange of soiled notes up to denomination ₹ 50
mutilated banknotes over
the counter at bank b. Adjudication of mutilated notes – ₹ 2 per
branches piece
iii) Distribution of coins over i. ₹ 25 per bag for distribution of coins over the
counter 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.