The text describes the "Clean Note Policy" adopted by India's Reserve Bank to ensure citizens have access to high-quality currency. It details incentives for banks operating Currency Chests, which are responsible for handling cash transactions and distribution in specific regions or cities:
**Key incentives:**
1. **Capital Cost Reimbursement**: Banks can claim up to 50% of capital costs incurred for setting up a Currency Chest in the North Eastern region's inaccessible hilly places as certified by state governments, capped at INR 50 lakhs including taxes.
2. **Revenue Costs reimbursement**: Banks receive 50% of revenue expenses on annual operations (up to INR 18 lakhs per annum) related to the Currency Chest starting in year two of operation.
3. **Incentives for Soiled Note Exchange**: For exchanging soiled or mutilated notes at banks, a fixed amount is given based on quantity and discrepancies found during exchange.
4. **Mutilated Note Verification Incentive**: A flat rate per mutilated note is rewarded when identified and confirmed over the counter by bank staff.
5. **Coin Distribution**: Banks receive a fixed sum for each bag of coins distributed to customers in urban, semi-urban or rural areas.
These incentives aim to motivate banks to streamline cash management processes, thus improving public access to clear notes and ensuring smooth cash distribution infrastructure across India.
Key Entities Referenced
DCM CC No. G303.41.01202526: Document Control Management Currency Chest Number.
RESERVE BANK OF INDIA: The central bank of India, which issued the policy document.
RBI: Abbreviation for the Reserve Bank of India.
RBIDCM202526136: Reference number of the document.
April 24, 2025: Date of the document.
The Chairman Managing Director Chief Executive Officer All banks: Addressee of the letter.
Master Direction on Framework of incentives for Currency Distribution Exchange Scheme for bank branches including currency chests: Title of the policy document.
Currency Distribution and Exchange Scheme: A scheme formulated to encourage all bank branches to provide better customer services, also referred to as CDES.
CDES: Abbreviation for Currency Distribution Exchange Scheme.
AnnexI: Attachment to the letter containing Master Direction incorporating the updated guidelines circulars on the subject
AnnexII: Attachment to the letter containing Frequently Asked Questions (FAQs)
AnnexIII: Attachment to the letter containing Illustrations
Sanjeev Prakash: Chief General Manager-in-Charge at Reserve Bank of India.
DEPARTMENT OF CURRENCY MANAGEMENT, CENTRAL OFFICE: Department within the Reserve Bank of India responsible for currency management.
MUMBAI 400001: Location of the Central Office of the Department of Currency Management.
Clean Note Policy: A policy to ensure availability of good quality banknotes to members of the public.
Reserve Bank of India Act, 1934: Act governing the Reserve Bank of India.
RBI Act: Abbreviation of Reserve Bank of India Act, 1934
Banking Regulation Act, 1949: Act regulating banking companies in India.
Currency Chests: Bank branches including Currency Chests CCs
CCs: Abbreviation of Currency Chests
North Eastern region: Region in India eligible for CCs incentive
Jammu Kashmir: Union Territory eligible for CCs incentive
Ladakh Union Territories: Union Territory eligible for CCs incentive
Issue Office of the RBI: Office where incentives are paid on soiled notes actually received
DCMCC No.9752703.41.01202122: Circular number related to instructions issued on August 27, 2021
August 27, 2021: Date related to instructions issued on circular DCMCC No.9752703.41.01202122
RBI Regional Offices: Offices responsible for verification of coin distribution through inspection of currency chests
RBI201819166 DCM CC No. 284203.39.01201819: Circular detailing Minimum Standards for a CC dated April 08, 2019
April 08, 2019: Date of the circular RBI201819166 DCM CC No. 284203.39.01201819 detailing Minimum Standards for a CC
Cash Department of lssue Department Manual 2021: Manual related to coins distribution
बेट� बचाओ
ब ेट � प ढ़ ा ओ
भारतीय �रज़वर् बैंक
_______________________ RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/DCM/2025-26/136
DCM (CC) No. G-3/03.41.01/2025-26 April 24, 2025
The Chairman / Managing Director / Chief Executive Officer
All banks
Madam / Dear Sir,
Master Direction on Framework of incentives for Currency Distribution &
Exchange Scheme for bank branches including currency chests
In terms of the Preamble to and Section 45 of the Reserve Bank of India Act, 1934
(RBI Act) and Section 35A of the Banking Regulation Act, 1949, Reserve Bank of India
issues guidelines / instructions for realising the objectives of Clean Note Policy as part
of currency management. With a view to furthering these objectives, the Bank has
formulated a framework of incentives titled Currency Distribution and Exchange
Scheme (CDES) to encourage all the bank branches to provide better customer
services to the members of public.
2. The Master Direction incorporating the updated guidelines / circulars on the subject
is at Annex-I. The Frequently Asked Questions (FAQs) and few Illustrations are at
Annex-II and III respectively.
Yours faithfully,
(Sanjeev Prakash)
Chief General Manager-in-Charge
Encl: As above
_____________________________________________________________________
मुद्रा प्रबंध िवभाग, केंद्रीय कायार्लय, चौथी मंिजल, अमर भवन, सर पी .एम .रोड, मुंबई - 400 001
DEPARTMENT OF CURRENCY MANAGEMENT, CENTRAL OFFICE, AMAR BUILDING, 4TH FLOOR, SIR P M ROAD, MUMBAI - 400001
फोन TELEPHONE No. 22663000 / 22604000 फै� FAX NO. 22662442
ई-मेल E-mail: cgmincdcm@rbi.org.in
िह�ी आसान है, इसका प्रयोग बढ़ाइए ।Annex-I
Master Direction on Framework of Incentives for “Currency Distribution &
Exchange Scheme (CDES)” for bank branches including currency chests
1. The framework of incentives, titled Currency Distribution & Exchange Scheme
(CDES) for bank branches including Currency Chests (CCs), based on performance
in rendering customer service to the members of public has been formulated to
encourage all the bank branches to provide better customer service to the members
of public keeping in view the objectives of Clean Note Policy.
2. Incentives
As per the scheme, banks are eligible for the following financial incentives / service
charges for setting up requisite infrastructure and facilitating exchange / distribution of
notes and coins:
Sr. No. Nature of Service Particulars of Incentives / Service
Charges
i Opening and operating a. Capital Cost: Up to 100% of capital
CCs in North Eastern expenditure is eligible for reimbursement
region and at subject to the ceiling of ₹50 lakh (inclusive of
inaccessible / hilly places all taxes).
(as considered by State b. Revenue cost: 50% of revenue
Governments/ any expenditure is eligible for reimbursement for
appropriate authority) of the first 5 years of CC operations (inclusive of
Jammu & Kashmir and all taxes).
Ladakh Union Territories. (The revised instructions would be applicable
to new applications for opening of CCs in
these areas received on or after the date of
Master Direction. Earlier cases on the subject
may continue to be processed as per extant
guidelines prevalent on the date of
submission of application)
ii Exchange of soiled notes a. Exchange of soiled notes – ₹2/- per
/ adjudication of mutilated packet for exchange of soiled notes in the
notes over the counter at denominations of ₹50/- and below.
bank branches
1b. Adjudication of mutilated notes – ₹2/-
per piece.
iii Distribution of coins a. ₹65/- per bag1 for distribution of coins.
b. An additional incentive of ₹10/- per bag
shall be paid for coin distribution in rural and
semi-urban areas on the submission of a
Concurrent Auditor (CA) certificate to this
effect.
iv Cash deposit by non- Service charge to be levied by the CC on the
chest branches under non-chest branches
Linkage scheme with a. Large modern CCs2 – ₹8/- per 100 pieces.
CCs b. Other CCs – ₹5/- per 100 pieces.
3. Other operational instructions on payment of performance-based incentives
i. The incentives shall be paid on the soiled notes actually received in the Issue
Office of the RBI.
ii. Incentive shall be paid in respect of the adjudicated notes received along with
the soiled note remittances or sent separately by registered / insured post in a
sealed cover to the RBI.
iii. The incentive for distribution of coins shall be paid on the basis of net withdrawal
from the currency chest.
iv. The CC holding banks shall raise invoice to RBI for claiming incentives. All other
instructions issued vide circular DCM(CC) No.97527/03.41.01/2021-22 dated
August 27, 2021 remain unchanged.
v. Currency chest branch shall pass on the incentive to the linked branches for
the soiled notes deposited / coins distributed / mutilated notes adjudicated by
them on pro-rata basis.
vi. The distribution of coins shall be verified by RBI Regional Offices through
inspection of currency chests / incognito visit to branches, etc.
1 For incentive calculation, 5000 pieces of 50 paise coins; 2500 pieces of ₹1, ₹2 or ₹5 coins; 2000 pieces of ₹10
or ₹20 coins would be deemed to constitute one bag.
2 Large modern CCs are those CCs which fulfil the Minimum Standards for a CC as detailed in the circular
RBI/2018-19/166 DCM (CC) No. 2842/03.39.01/2018-19 dated April 08, 2019.
2Annex-II
FREQUENTLY ASKED QUESTIONS
Master Direction on Framework of Incentives for “Currency Distribution &
Exchange Scheme (CDES)” for bank branches including currency chests
1. What is Clean Note Policy?
It is a policy adopted by RBI to ensure availability of good quality banknotes to
members of the public.
2. What is included in capital and revenue cost?
Capital costs are one-time expenditures incurred for acquiring fixed assets or
infrastructure necessary to set up Currency Chest. Revenue costs are recurring
expenses incurred on day-to-day operations and maintenance of Currency Chest. The
actual nature of expenditure shall be ascertained by the Issue Office concerned at the
time of reimbursement of cost to the bank.
3Annex-III
Illustrations
1. Opening and operating CCs in North Eastern region / at inaccessible / hilly places
(as considered by State Governments/ any appropriate authority) of Jammu and
Kashmir/ Ladakh Union Territories:
Illustration 1: Reimbursement of Capital Expenditure
Capital Cost incurred and claimed by the bank: ₹75 lakh (inclusive of taxes) (A)
Capital Cost to be reimbursed: 100% of (A) (subject to a ceiling of ₹50 lakh per CC) = ₹50
lakh (inclusive of taxes)
Illustration 2: Reimbursement of Revenue Expenditure
Type of Period Amount Claimed Amount Reimbursed
Expenditure (inclusive of taxes) (inclusive of taxes)
claimed (A) 50% of (A)
1st Year ₹15 lakh ₹7.5 lakh
2nd Year ₹16 lakh ₹08 lakh
Revenue Cost 3rd Year ₹16 lakh ₹08 lakh
4th Year ₹17 lakh ₹8.5 lakh
5th Year ₹18 lakh ₹09 lakh
2. Incentive for Exchange of soiled notes / adjudication of mutilated notes over the
counter at bank branches:
Illustration 1: Incentive for Exchange of soiled notes over the counter at bank branches
Details of Soiled Notes Remittance Received
Denomination ₹10 ₹20 ₹50 ₹100
No. of pieces 5500 6500 7500 5000
No. of packets 55 65 75 50
Total
discrepancies
(Shortage /
110 245 75 245
Mutilated /
Counterfeit) in
pieces
Total
banknotes
5390 6255 7425 NA
considered for
incentives
Total packets
considered for 53 62 74 NA
incentive
Incentive
Amount * 106 124 148 NA
(before tax)
* @ ₹2 per packet
4Illustration 2: Incentive for adjudication of mutilated notes over the counter at bank branches
Details of Mutilated Notes received over the counter at bank branches
Denomination ₹10 ₹20 ₹50 ₹100
No. of pieces 400 300 370 430
Total
discrepancies
(Shortage / 05 10 04 08
Counterfeit) in
pieces
Total pieces
considered for 395 290 366 422
incentive
Incentive
Amount 790 580 732 844
(before tax)
* @ ₹2 per piece
3. Incentives for distribution of coins:
Illustration:
Denomination Total Total Pieces Total Bags Total Bags Net Standard
(Coin) Pieces (Withdrawn) (Deposited) (Withdrawn) Bags
(Deposited) (Withdrawn)
₹2 4000 2500 1.6 1 -0.6
₹5 0 7500 0 3 3
₹10 2000 4000 1 2 1
Total (Total sum including decimals) 3.4
Net Bags considered for incentives (Only Full bags considered) 3
Coin Distribution in Urban Area: Incentive Amount for 3 bags @ ₹65 per bag: ₹195 (before
tax)
Coin Distribution in Semi-Urban/ Rural Area: Incentive Amount for 3 bags @₹75 per bag:
₹225 (before tax)
Note: In terms of para 5.1 of Chapter 3-Cash Department of lssue Department Manual 2021,
5000 pieces of 50 paise coins; 2500 pieces of ₹1, ₹2 or ₹5 coins; 2000 pieces of ₹10 or ₹20
coins would be deemed to constitute one bag.
5