Date: 2019-07-01Category: Not ApplicableState: Union GovernmentCountry: India
Master Direction on Levy of Penal Interest for Delayed Reporting / Wrong Reporting / Non-Reporting of Currency Chest Transactions and Inclusion of Ineligible Amounts in Currency Chest Balances (Updated as on October 03, 2019)
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**Report: Analysis of RBI Master Direction DCM CC No.G-403/35.01/2019-20 on Penal Interest for Currency Chest Transactions**
**1. Executive Summary:**
This report analyzes the Reserve Bank of India (RBI) Master Direction DCM (Department of Currency Management) CC (Currency Chest) No. G-403/35.01/2019-20, issued on July 1, 2019, and updated on October 3, 2019, concerning the levy of penal interest for delayed, wrong, or non-reporting of currency chest transactions and the inclusion of ineligible amounts in currency chest balances. The core purpose of this Master Direction, as inferred from the text, is to ensure discipline among banks in the timely and accurate reporting of currency chest transactions, supporting the RBI's Clean Note Policy objectives. Key findings indicate a comprehensive framework for penalizing reporting lapses and the inclusion of ineligible funds, aiming to improve accuracy and adherence to reporting protocols.
**2. Introduction:**
This report provides an informative overview of RBI Master Direction DCM CC No. G-403/35.01/2019-20, based solely on the provided text. The report aims to outline the policy's objectives, key provisions, target audience, inferred implementation aspects, and expected outcomes.
**3. Policy Overview:**
* This is a *New Policy* establishing guidelines related to currency chest transactions.
* **Core Objective(s):** As inferred from the text, the core objective is to enforce discipline among banks to ensure timely and accurate reporting of currency chest transactions, supporting the Clean Note Policy.
**4. Background and Rationale:**
Since this is a new policy, the likely problem/issue addressed is the need for stricter regulations and enforcement regarding currency chest transaction reporting. The RBI aims to improve the accuracy and timeliness of reporting by banks, preventing errors and ensuring accountability. The policy seems to address the risks associated with inaccurate or delayed reporting, such as potential misuse of funds or difficulties in monetary policy implementation.
**5. Key Provisions / Changes:**
As this is a New Policy, the following are the main components, rules, and actions mandated:
* **Reporting of Currency Chest Transactions:**
* Minimum deposit/withdrawal amount: ₹1,00,000, and thereafter in multiples of ₹50,000.
* Link Offices must report transactions through the CyM CC portal by 7 pm on the same day.
* Sub-Treasury Offices (STOs) must report directly to the RBI Issue Office by 7 pm on the same day.
* Relaxation may be granted in case of strikes on a case-to-case basis.
* **Levy of Penal Interest:**
* Delay in reporting: Penal interest levied on the amount due from the bank for the period of delay.
* Wrong reporting: Penal interest levied until corrected advice is received by RBI. Fresh notes/notes to currency chests cannot be reported as 'deposit' transactions.
* Inclusion of ineligible amounts: Penal interest levied when banks enjoy 'ineligible' credit due to wrong/delayed/non-reporting. Ineligible amounts include cash not freely available to joint custodians.
* Penal measures will also be taken in cases of shortages in chest balances/remittances, shortages due to pilferage/frauds, counterfeit banknotes detected in chest balances/remittances as per the prevailing Scheme of Penalties.
* **Levy of Penalty (Fixed Amount):**
* ₹50,000 penalty for wrongly reporting soiled note remittances to RBI as withdrawals.
* ₹50,000 penalty for reporting diversions as Deposit/Withdrawal. All currency chest diversions should be reported through the Diversion Module of CyMCC Portal.
* ₹50,000 penalty for delayed reporting even when currency chests had net deposits.
* **Rate of Penal Interest:**
* 2% over the prevailing Bank Rate for delayed/wrong/non-reporting and inclusion of ineligible amounts.
* **Applicability:**
* Instructions apply to currency chests at treasuries/sub-treasury offices.
* **Representations:**
* Reconsideration requests for delayed reporting may be considered for genuine difficulties (hilly/remote areas, natural calamities).
* Waiver requests for wrong reporting will not be considered.
* Pleas for waiver based on clerical errors, unintentional mistakes, or lack of impact on RBI funds will not be considered.
**6. Target Audience and Stakeholders:**
Based on the text, the direct target audience and stakeholders are:
* All Banks having Currency Chests (Chairman, Managing Director, Chief Executive Officer)
* The Director of Treasuries, State Governments
* Currency Chest Link Offices
* Sub-Treasury Offices (STOs)
**7. Implementation Aspects (Inferred):**
* **Responsible agency/bodies:** Reserve Bank of India (RBI), specifically the Issue Office and Department of Currency Management. The banks themselves are also responsible for implementing the policy.
* **Timelines/procedures:**
* Reporting deadline: 7 pm on the same day of the transaction.
* Penal interest calculation: T+0 basis (same business day).
* Representations must be made within a month from the date of debit.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes are:
* Improved accuracy and timeliness in reporting currency chest transactions.
* Reduced instances of wrong reporting and inclusion of ineligible amounts.
* Greater discipline among banks in adhering to reporting guidelines.
* Enhanced efficiency of currency management by the RBI.
* Support for the Clean Note Policy objectives.
* Reduced risk of fund mismanagement related to currency chest operations.
**9. Conclusion:**
RBI Master Direction DCM CC No. G-403/35.01/2019-20 establishes a comprehensive framework for penalizing lapses in currency chest transaction reporting. By imposing penal interest and penalties for various violations, the RBI aims to improve the accuracy, timeliness, and overall discipline of banks in managing currency chests. The policy underscores the importance of accurate reporting for effective currency management and the success of the Clean Note Policy. This Master Direction is significant as it provides clear guidelines and consequences for non-compliance, promoting accountability within the banking sector and supporting the integrity of the currency management system.
Key Entities Referenced
RBI20192068: Document identifier
Master Direction DCM CC No.G403.35.01201920: Master Direction identifier
July 01, 2019: Initial publication date of the Master Direction
October 03, 2019: Date of last update to the Master Direction
All Banks having Currency Chests: Addressees of the Master Direction
The Director of Treasuries State Governments: Addressees of the Master Direction
Master Direction on Levy of Penal Interest for Delayed Reporting Wrong Reporting NonReporting of Currency Chest Transactions and Inclusion of Ineligible Amounts in Currency Chest Balances: Subject of the Master Direction
Section 45 of the RBI Act, 1934: Legal basis for the Master Direction
35 A of the Banking Regulation Act, 1949: Legal basis for the Master Direction
Bank: Refers to Reserve Bank of India
Clean Note Policy: RBI's policy aimed at providing good quality currency notes to the public
RBI website: Website of Reserve Bank of India
www.rbi.org.in: URL for the Reserve Bank of India website
Manas Ranjan Mohanty: Chief General Manager
CyM CC portal: Portal for reporting currency chest transactions
SubTreasury Offices STOs: Reporting offices for currency chest transactions
Issue Office of the Reserve Bank: Recipient of transaction reports from Sub-Treasury Offices
Issue Department: Department within Reserve Bank of India
Scheme of Penalties: Penalties for cash shortages, pilferage, fraud, and counterfeit banknotes
Diversion Module of CyMCC Portal: Module for reporting currency chest diversions
Bank Rate: Prevailing rate for calculating penal interest
CRRSLR: Cash Reserve Ratio and Statutory Liquidity Ratio
RBI/2019-20/68
Master Direction DCM (CC) No.G-4/03.35.01/2019-20 July 01, 2019
(Updated as on October 03, 2019)
1. The Chairman & Managing Director/Chief Executive Officer
(All Banks having Currency Chests)
2. The Director of Treasuries
(State Governments)
Madam / Dear Sir
Master Direction on Levy of Penal Interest for Delayed Reporting / Wrong
Reporting / Non-Reporting of Currency Chest Transactions and Inclusion of
Ineligible Amounts in Currency Chest Balances
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 our Clean Note Policy. With a view to sustaining these efforts and ensure
discipline among the banks on timely and accurate reporting of currency chest
transactions, we have issued instructions on the subject.
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,
(Manas Ranjan Mohanty)
Chief General Manager
Encl : As aboveAnnex
1. Penal interest for Delayed Reporting / Wrong Reporting / Non-Reporting of
Currency Chest Transactions
1.1 Reporting of Currency Chest Transactions
The minimum amount of deposit into / withdrawal from currency chest will be ` 1,00,000
and thereafter, in multiples of ` 50,000.
1.2 Time limit for Reporting
1.2.1 The currency chests / Link Offices should invariably report all transactions through
CyM – CC portal on the same day by 7 pm.
1.2.2 The Sub-Treasury Offices (STOs) should report all transactions directly to the
Issue Office of the Reserve Bank by 7 pm on the same day.
1.2.3 Relaxation in respect of strike period in banks
Relaxation in the reporting period on account of strike situation will be considered
on case-to-case basis.
1.3 Levy of penal interest –
1.3.1 Delay in Reporting -
In the event of delay in reporting currency chest transactions, penal interest at the
rate indicated in paragraph 3 of this circular will be levied on the amount due
from the chest holding bank for the period of delay. Penal interest will be
calculated on T+0 basis i.e. penal interest will be levied in respect of transactions
not reported by currency chests / Link Offices to the Issue Office on the same
business day within the time limit prescribed above.
Penal interest will also be charged for delay in reporting by STOs directly linked to
Issue Department of the circle.
1.3.2 Wrong reporting
Penal interest will be levied in respect of cases of wrong reporting in the same
manner till the date of receipt of corrected advice by Reserve Bank. As
debits/credits to banks' current accounts are raised on the basis of the
transactions reported by the currency chests / Link Offices, penal interest will
invariably be levied in all cases of wrong reporting by the currency chests. It is
expected that currency chests / Link Offices would ensure the correctness of
figures reported on the CyM - CC portal. Particular care should be taken to ensure
that remittances of fresh notes/notes to the currency chests are not reported as
'deposit' transactions on the portal.1.3.3 Penal interest for inclusion of ineligible amounts in the currency chest
balances
(i) Penal interest will be levied in all cases where the bank has enjoyed 'ineligible'
credit in its current account with Reserve Bank on account of wrong reporting /
delayed reporting / non-reporting of transactions. Penal measures will also be
taken in cases of shortages in chest balances / remittances, shortages due to
pilferage / frauds, counterfeit banknotes detected in chest balances / remittances
as per the prevailing “Scheme of Penalties”.
(ii) Further, only cash held in the custody of joint custodians and 'freely available' to
them is eligible for inclusion in the chest balances. Thus, cash kept for safe
custody in sealed covers for whatever reasons/cash in trunks/bins under the lock
and key of any official/s other than the Joint Custodians or bearing a third lock put
by any official in addition to the two locks of the Joint Custodians is not eligible for
being included in the chest balances. If such amounts are included in the chest
balances, these will be treated as instances of wrong reporting and will attract
penal interest at the rate specified in Para 3.
(iii) In all the above cases (excepting shortages in chest balances / remittances,
shortages due to pilferage / frauds, counterfeit banknotes detected in chest
balances / remittances), penal interest will be levied from the date of inclusion of
'ineligible' amounts in chest balances till the exclusion of such amounts from chest
balances. Penal measures for shortages in chest balances / remittances,
shortages due to pilferage / frauds, counterfeit banknotes detected in chest
balances / remittances will be taken on the basis of prevailing “Scheme of
Penalties”.
2 Levy of penalty
2.1 Reporting of Soiled note remittances to RBI
Soiled note remittances to RBI should not be shown as withdrawal by chest/s /
link offices. In case such remittances to RBI are wrongly reported as 'withdrawals',
a penalty of ` 50,000 will be levied irrespective of the value of remittance and
period of such wrong reporting.
2.2 Reporting of diversions in CyM – CC portal
All currency chest diversions (both between chests of the same bank and
between chests of different banks) have to be reported through ‘Diversion Module’
of CyM-CC Portal. The CC sending the diversion should initiate the diversion
entry. The receiving CC should acknowledge the same. Diversions must not be
reported as Deposit/Withdrawal. A penalty of ` 50,000 will be levied for such
wrong reporting.2.3 Delayed reporting where currency chests had “Net Deposit”
Penal interest at the prevailing rate for delayed reporting of the instances where
the currency chest had reported “net deposit” may not be charged. However, in
order to ensure proper discipline in reporting currency chest transactions, a flat
penalty of ` 50,000 may be levied on the currency chests for delayed reporting
irrespective of the value of net deposit.
3. Rate of penal interest
Penal interest shall be levied at the rate of 2% over the prevailing Bank Rate for
the period of delayed reporting/wrong reporting/non-reporting /inclusion of
ineligible amounts in chest balances.
4. Levy of penal interest in respect of currency chests at treasuries
The above instructions shall be applicable to currency chests at treasury/sub-
treasury offices also.
5. Representations
5.1 As the sole criterion for levy of penal interest for delayed reporting is the number
of days of delay, there should ordinarily be no occasion for banks to request for
reconsideration of the Reserve Bank's decision in individual cases. However,
representations, if any, on account of genuine difficulties faced by chests
especially in hilly/remote areas and those affected by natural calamities, etc., may
be made to the Issue Office concerned through the Head / Controlling office of the
bank concerned within a month from the date of debit of the bank concerned.
5.2 In the case of wrong reporting representations for waiver will not be considered.
{cf. para 1.3.2 above}.
5.3 As the intention behind the levy of penal interest is to inculcate discipline among
banks so as to ensure prompt/correct reporting, pleas by banks for waiver of
penal interest on grounds that delayed/wrong/non-reporting did not result in
utilization of the Reserve Bank's funds or shortfall in the maintenance of
CRR/SLR or that they were the result of clerical mistakes, unintentional or
arithmetical errors, first time error, inexperience of staff etc., will not be
considered as valid grounds for waiver of penal interest. Further, we will take a
serious view of all such lapses.
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