Executive Summary:
The Reserve Bank of India (RBI) issued a Master Direction regarding the Currency Distribution and Exchange Scheme (CDES) to promote better customer service in currency management, aligning with the Clean Note Policy. This framework provides financial incentives and service charges for bank branches, including currency chests, for setting up infrastructure, exchanging soiled notes, and distributing coins. The updated guidelines and circulars are incorporated in this master direction, effective April 1, 2024.
Key Points / Main Content:
* **Purpose:** To encourage bank branches to provide better customer services and further the objectives of the Clean Note Policy.
* **Currency Distribution and Exchange Scheme (CDES):** A framework of incentives for bank branches and Currency Chests (CCs) based on performance in rendering customer service.
* **Incentives:** Banks are eligible for financial incentives/service charges for:
* **Opening and Maintaining CCs:**
* Capital Cost: Reimbursement of 50% of capital expenditure up to ₹50 lakh per CC in centers with a population less than 1 lakh. Up to 100% reimbursement for underbanked states in the North Eastern region.
* Revenue Cost: Reimbursement of 50% of revenue expenditure for the first 3 years; 50% for the first 5 years in the North Eastern region.
* **Exchange of Soiled Notes:** ₹2 per packet for exchange of soiled notes (denominations up to ₹50 and below).
* **Adjudication of Mutilated Notes:** ₹2 per piece.
* **Distribution of Coins:** ₹65 per bag; additional ₹10 per bag for coin distribution in rural and semi-urban areas (upon CA certificate submission).
* **Cash Deposit by Non-Chest Branches under Linkage Scheme with CCs:**
* Large modern CCs: ₹8 per 100 pieces.
* Other CCs: ₹5 per 100 pieces.
* **Operational Instructions:**
* Incentives are paid on soiled notes received at RBI Issue Offices.
* Incentive for adjudicated notes paid on notes received with soiled note remittances or sent separately.
* Incentive for coin distribution is based on net withdrawal from currency chests.
* Currency chest branches must pass on incentives to linked branches/chests on a pro-rata basis.
* RBI Regional Offices will verify coin distribution through inspections and visits.
* Circular DCMCC No.975/2703.41.01/2021-22 dated August 27, 2021 remains unchanged.
Impact Analysis:
* **Bank Branches (including Currency Chests):**
* Impact: Opportunity to earn financial incentives by improving currency distribution and exchange services.
* Action Required: Implement and adhere to the guidelines of the CDES to avail incentives.
* **Customers/Public:**
* Impact: Improved access to currency exchange and distribution services at bank branches.
* Action Required: Utilize the enhanced services offered by bank branches for exchanging soiled notes and obtaining coins.
* **Reserve Bank of India (RBI):**
* Impact: Furthers the Clean Note Policy objectives and ensures efficient currency management.
* Action Required: Monitor and verify the implementation of the CDES by banks through inspections and audits.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for issuing guidelines and instructions for currency management.
Currency Distribution Exchange Scheme: A scheme by the Reserve Bank of India to incentivize bank branches for providing better customer services related to currency exchange and distribution.
RBI Act, 1934: Refers to the Reserve Bank of India Act, 1934, which provides the legal basis for the Reserve Bank of India's operations.
Banking Regulation Act, 1949: An act that empowers the Reserve Bank of India to issue guidelines and instructions to banks.
Clean Note Policy: An initiative by the Reserve Bank of India to improve the quality of banknotes in circulation.
Mumbai, Maharashtra: Location of the Central Office, Department of Currency Management of the Reserve Bank of India.
North Eastern region: Area in India which gets higher reimbursement for capital and revenue expenditure.
Issue Office of the RBI: The department within the Reserve Bank of India responsible for receiving soiled notes and managing currency issuance.
बेटी बचाओ
बेटी पढ़ाओ
भारतीय �रज़व� ब�क
_______________________ RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/DCM/2024-25/113
DCM (CC) No.G-3/03.41.01/2024-25 April 1, 2024
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 enclosed Master Direction incorporates updated guidelines / circulars on the
subject.
Yours faithfully,
(Sanjeev Prakash)
Chief General Manager
Encl: As above
_____________________________________________________________________
मुद्रा प्रबंध िवभाग, क�द्रीय काया�लय, 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 ।1
Annex
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. Nature of Service Particulars of Incentives / Service
No.
Charges
i Opening of and a. Capital Cost: Reimbursement of 50% of
maintaining CCs at capital expenditure (inclusive of all taxes)
centres having population subject to a ceiling of ₹50 lakh per CC. In the
of less than 1 lakh, in North Eastern region, up to 100% of capital
underbanked states expenditure is eligible for reimbursement
subject to the ceiling of ₹50 lakh (inclusive of
all taxes).
b. Revenue cost: Reimbursement of 50% of
revenue expenditure (inclusive of all taxes) for
the first 3 years. In the North Eastern region,
50% of revenue expenditure (inclusive of all
taxes) is eligible for reimbursement for the first
5 years.
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 up to ₹50/- and below.
bank branches b. Adjudication of mutilated notes – ₹2/-
per piece.2
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. Banks do not need to submit a separate claim for the incentives. Currency chest
branch shall pass on the incentive to the linked branches/ chests for the soiled
notes deposited / coins distributed / mutilated notes adjudicated by them on
pro-rata basis.
v. The distribution of coins shall be verified by RBI Regional Offices through
inspection of currency chests / incognito visit to branches, etc.
vi. Instructions issued vide circular DCM(CC) No.97527/03.41.01/2021-22 dated
August 27, 2021 remain unchanged.
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.