Date: 2023-04-03Category: Not ApplicableState: Union GovernmentCountry: India
Master Direction on Framework of Incentives for Currency Distribution & Exchange Scheme for bank branches including currency chests based on performance in rendering customer service to the members of public
Executive Summary:
The Reserve Bank of India (RBI) has issued a Master Direction regarding the Currency Distribution & Exchange Scheme (CDES) to incentivize bank branches and currency chests for improved customer service and to further the objectives of the Clean Note Policy. The framework provides financial incentives for setting up infrastructure and facilitating the exchange/distribution of notes and coins. This master direction incorporates updated guidelines and circulars on the subject.
Key Points / Main Content:
Incentives: Banks are eligible for financial incentives/service charges for:
* Opening and maintaining currency chests:
* Capital Cost: Reimbursement of 50% of capital expenditure (up to ₹50 lakh) for setting up currency chests, potentially 100% in the North Eastern region, up to ₹50 lakh in underbanked states.
* 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 notes up to ₹50 denomination at bank branches.
* Adjudication of mutilated notes: ₹2 per piece.
* Distribution of coins: ₹65 per bag. An additional incentive of ₹10 per bag is provided for coin distribution in rural and semi-urban areas, with Concurrent Auditor (CA) certification.
* Cash deposit by non-chest branches: Service charges applicable to non-chest branches under the Linkage scheme:
* Large modern CCs: ₹1.8 per 100 pieces
* Other CCs: ₹0.5 per 100 pieces
Other Operational Instructions:
* Incentives are paid on soiled notes received at the RBI Issue Office.
* Incentives for adjudicated notes are paid upon receipt by the RBI along with soiled note remittances.
* Incentives for coin distribution are based on net withdrawals from the currency chest.
* Currency chest branches must pass on incentives to linked branches/chests on a pro-rata basis.
* Coin distribution will be verified by RBI Regional Offices.
* Instructions issued vide circular DCMCC No.9752703.41.01202122 dated August 27, 2021 remains unchanged.
Impact Analysis:
All Bank Branches including Currency Chests
Impact:
Eligible for financial incentives for providing better customer services related to currency exchange and distribution. Impacted by the framework for incentives titled Currency Distribution Exchange Scheme.
Action Required:
Implement the Currency Distribution Exchange Scheme, ensure proper record-keeping for claiming incentives, and maintain compliance with RBI guidelines.
Reserve Bank of India (RBI)
Impact:
Responsible for overseeing and verifying the implementation of the incentive scheme, conducting inspections, and processing incentive payments.
Action Required:
Monitor the implementation of the scheme, conduct inspections of currency chests and branches, and process incentive claims from banks.
Members of the Public
Impact:
Intended to benefit from improved access to currency exchange and distribution services at bank branches.
Action Required:
Utilize the currency exchange and distribution services provided by bank branches and report any issues or concerns to the respective banks or the RBI.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for issuing guidelines and instructions related to currency management.
RBI Act, 1934: The Reserve Bank of India Act, 1934, which provides the legal basis for the RBI's operations.
Banking Regulation Act, 1949: An act regulating banking companies in India.
Clean Note Policy: An initiative by the Reserve Bank of India to provide good quality currency notes to the public.
Currency Distribution and Exchange Scheme (CDES): A framework of incentives formulated by the Reserve Bank of India to encourage bank branches to provide better customer services related to currency exchange and distribution.
North Eastern region: A region in India comprising of multiple states, receiving special consideration under the incentive scheme.
Currency Chests: Bank branches authorized to hold currency on behalf of the Reserve Bank of India.
Mumbai, Maharashtra: City in India, location of the Department of Currency Management, Central Office of the Reserve Bank of India.
भारतीय �रज़व� ब�क
_____________RESERVE BANK OF INDIA______________
www.rbi.org.in
RBI/2023-24/99
DCM (CC) No.G-5/03.41.01/2023-24 April 03, 2023
The Chairman/Managing Director/Chief Executive Officers,
All banks
Madam / Dear Sir,
Master Direction on Framework of Incentives for Currency Distribution &
Exchange Scheme for bank branches including currency chests based on
performance in rendering customer service to the members of public
In terms of the Preamble to and Section 45 of the RBI Act, 1934 and Section 35 A 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 बढ़ाइएAnnex
Master Direction on Framework of Incentives for “Currency Distribution &
Exchange Scheme (CDES)” for bank branches including currency chests based
on performance in rendering customer service to the members of public
1. The framework of incentives titled Currency Distribution & Exchange Scheme
(CDES) for bank branches including currency chests 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 Charges
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 (inclusive of all taxes). In the North
population of less than 1 Eastern region, up to 100% of capital expenditure
lakh, in underbanked is eligible for reimbursement subject to the ceiling
states of ₹50 lakh (inclusive of all taxes).
b. Revenue cost: Reimbursement of 50% of
revenue expenditure for the first 3 years (inclusive
of all taxes). In the North Eastern region, 50% of
revenue expenditure is eligible for reimbursement
for the first 5 years (inclusive of all taxes).
ii) Exchange of soiled A. Exchange of soiled notes – ₹2 per packet for
notes / adjudication of exchange of soiled notes up to denomination of ₹
mutilated notes over the 50
counter at bank
branches. b. Adjudication of mutilated notes – ₹2 per pieceiii) Distribution of coins. i. ₹65 per bag for distribution of coins.
ii. 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 non-
chest branches under chest branches
Linkage scheme with
a. Large modern CCs1- ₹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 tendered / 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 chest / incognito visits to branches, etc.
vi. Instructions issued vide circular DCM(CC) No.97527/03.41.01/2021-22 dated
August 27, 2021 remains unchanged.
1 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.