Date: 2022-04-01Category: 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:
This Master Direction outlines the Framework of Incentives for Currency Distribution and Exchange Scheme (CDES) to encourage bank branches, including currency chests, to improve customer service, furthering the objectives of the Clean Note Policy. It details financial incentives for setting up infrastructure and facilitating the exchange of notes and coins. It incorporates updated guidelines and circulars on the subject and will be updated periodically.
Key Points / Main Content:
* **Currency Distribution and Exchange Scheme (CDES):**
* Aims to incentivise bank branches and currency chests to provide better customer service and support the Clean Note Policy.
* **Incentives for Banks:**
* **Currency Chests:**
* Capital Cost: 50% reimbursement of capital expenditure (up to ₹50 lakh) for new currency chests in underbanked states with a population less than 1 lakh. In the North Eastern region, up to 100% reimbursement is eligible (up to ₹50 lakh).
* Revenue Cost: 50% reimbursement of revenue expenditure for the first 3 years; 5 years for the North Eastern region.
* **Soiled Notes Exchange:**
* ₹2 per packet for exchanging soiled notes over the counter (up to ₹50 denomination).
* ₹2 per piece for adjudication of mutilated notes.
* **Coin Distribution:**
* ₹65 per bag for coin distribution.
* Additional ₹10 per bag for coin distribution in rural and semi-urban areas (requires Concurrent Auditor (CA) certificate).
* **Operational Instructions for Incentive Payments:**
* Incentives are paid based on the receipt of soiled notes at the RBI Issue Office.
* Incentives for adjudicated notes are paid upon receipt of notes sent via registered insured post.
* Banks do not need to submit separate claims for incentives.
* Currency chest branches must distribute incentives to linked branches/chests on a pro rata basis.
* RBI Regional Offices will verify coin distribution through inspections and branch visits.
* Circular DCMCC No.9752703.41.01/2021-22 dated August 27, 2021, remains unchanged.
Impact Analysis:
* **Bank Branches and Currency Chests:**
* Impact: Potential to earn financial incentives for providing currency distribution and exchange services.
* Action Required: Implement the CDES scheme, maintain proper records, and ensure compliance with RBI guidelines.
* **Customers:**
* Impact: Improved access to currency exchange services and coin distribution.
* Action Required: Utilize the enhanced services offered by bank branches and currency chests.
* **Reserve Bank of India (RBI):**
* Impact: Facilitation of the Clean Note Policy and improved currency management.
* Action Required: Oversee the implementation of the CDES scheme and monitor its effectiveness.
Key Entities Referenced
RBI Act, 1934: Refers to the Reserve Bank of India Act, 1934, which empowers the Bank to issue guidelines and instructions related to currency management.
Banking Regulation Act, 1949: Refers to the Banking Regulation Act, 1949, which provides a framework for regulating banking activities.
Clean Note Policy: A policy aimed at maintaining the quality of banknotes in circulation.
Currency Distribution and Exchange Scheme CDES: A scheme formulated to encourage bank branches to provide better customer services related to currency exchange and distribution.
North Eastern region: A geographical area that receives special consideration under the Currency Distribution and Exchange Scheme (CDES), including higher reimbursement rates for capital and revenue expenditure related to currency chests.
RBI Regional Offices: The regional offices of the Reserve Bank of India, responsible for verifying the distribution of coins through inspections and visits.
Master Direction on Framework of Incentives for Currency Distribution Exchange Scheme: A comprehensive set of guidelines and circulars on the Currency Distribution and Exchange Scheme (CDES), providing instructions and updates on the subject.
Mumbai, Maharashtra: Location of Department of Currency Management, RBI.
RBI/2022-23/90
DCM (CC) No.G-3/03.41.01/2022-23 April 01, 2022
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 & 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 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 bank branches
to provide better customer services to the members of public.
2. The Master Direction enclosed incorporates updated guidelines / circulars on the
subject. The Direction shall be updated from time to time as and when fresh
instructions are issued.
Yours faithfully,
(Sanjeev Prakash)
Chief General Manager
Encl: As above
मुद्रा प्रबंध िवभाग, 4था तल, अमर भवन, पीएम। माग�., 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 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 in order to
encourage all bank branches to provide better customer service to the members of
public keeping in view the objectives of Clean Note Policy as part of currency
management.
2. Incentives
As per the scheme, banks are eligible for following financial incentives for setting up
requisite infrastructure and facilitating exchange of notes and coins:
Sr.
Nature of Service Particulars of Incentives
No.
i) Opening of and maintaining a. Capital Cost: Reimbursement of 50% of
currency chests at centres capital expenditure subject to a ceiling of ₹50
having population of less than lakh per currency chest. In the North Eastern
1 lakh in underbanked states. region up to 100% of capital expenditure is
eligible for reimbursement subject to the ceiling
of ₹50 lakh.
b. Revenue cost: Reimbursement of 50% of
revenue expenditure for first 3 years. In the North
Eastern region 50% of revenue expenditure is
eligible for reimbursement for first 5 years.
ii) Exchange of soiled notes/ a. Exchange of soiled notes – ₹2 per packet
adjudication of mutilated notes
for exchange of soiled notes up to the
over the counter at bank
denomination of ₹50.
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.
iii. The incentives shall be paid on the basis of
net withdrawal from currency chest, without
waiting for claims from banks.
3. Other operational instructions on payment of performance-based incentives
i. The incentives shall be paid on the basis of receipt of soiled notes in the Issue
Office of RBI.
ii. Incentive shall 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 RBI.
iii. 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.
iv. The distribution of coins shall be verified by RBI Regional Offices through
inspection of currency chest / incognito visit to branches, etc.
v. Instructions issued vide circular DCM(CC) No.97527/03.41.01/2021-22 dated
August 27, 2021 remains unchanged.