Date: 2021-04-01Category: 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
## Report on RBI Master Direction DCM CC No.G-403/35.01/2021-22 on Penal Interest for Currency Chest Transactions
**1. Executive Summary:**
This report analyzes the Reserve Bank of India's (RBI) Master Direction DCM (Department of Currency Management) CC (Currency Chest) No.G-403/35.01/2021-22, issued on April 01, 2021. This is a *new* policy document consolidating and updating guidelines and circulars regarding 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, as inferred from the text, is to ensure discipline among banks in the timely and accurate reporting of currency chest transactions and to maintain the integrity of currency chest balances. The key findings highlight stringent penalties for non-compliance and emphasize the importance of accurate reporting through the CyM CC portal.
**2. Introduction:**
This report aims to provide an informative overview of the RBI's Master Direction DCM CC No.G-403/35.01/2021-22 based solely on the provided text. The report outlines the policy's objectives, key provisions, affected stakeholders, inferred implementation aspects, and expected outcomes.
**3. Policy Overview:**
* Core Objective(s): The core objective, as inferred from the text, is to enforce the Clean Note Policy by ensuring discipline among banks regarding:
* Timely reporting of currency chest transactions.
* Accurate reporting of currency chest transactions.
* Exclusion of ineligible amounts from currency chest balances.
**4. Background and Rationale:**
The policy addresses the potential issues arising from delayed, inaccurate, or non-existent reporting of currency chest transactions by banks. This could lead to discrepancies in the RBI's accounts, inaccurate monetary policy implementation, and potential misuse of funds. The inclusion of ineligible amounts in currency chest balances also inflates the perceived available cash and can lead to similar issues.
**5. Key Provisions / Changes:**
As this is a new policy consolidating existing guidelines, the key provisions outline the requirements and penalties for different types of reporting failures:
* **Reporting of Currency Chest Transactions:** The minimum amount for deposit into or withdrawal from a currency chest is ₹100,000, and thereafter, in multiples of ₹50,000.
* **Reporting Time Limit:** All currency chest transactions must be reported through the CyM CC portal on the same day by 7 pm. Relaxation is considered on a case-to-case basis during strike periods.
* **Penal Interest for Delayed Reporting:** Penal interest is levied on the amount due from the chest-holding bank for the period of delay, calculated on a T+0 basis.
* **Penal Interest for Wrong Reporting:** Penal interest will be levied until the date of receipt of corrected advice by the Reserve Bank. Remittances of fresh notes/notes to the currency chests must *not* be reported as 'deposit' transactions on the portal.
* **Penal Interest for Ineligible Amounts in Chest Balances:** Penal interest is levied when banks enjoy 'ineligible' credit in their current account with the Reserve Bank due to reporting issues. Only cash in the custody of joint custodians and 'freely available' to them is eligible. Cash kept under lock and key of other officials is considered ineligible. 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.
* **Penalty for Wrong Reporting of Soiled Note Remittances:** A penalty of ₹50,000 is levied if soiled note remittances to RBI are wrongly reported as 'withdrawals'.
* **Penalty for Wrong Reporting of Diversions:** A penalty of ₹50,000 will be levied if diversions are reported as Deposit/Withdrawal instead of using the Diversion Module of CyMCC Portal. The CC sending the diversion should initiate the diversion entry and the receiving CC should acknowledge the same.
* **Penalty for Delayed Reporting with Net Deposit:** A flat penalty of ₹50,000 may be levied on the currency chests for delayed reporting irrespective of the value of net deposit.
* **Rate of Penal Interest:** Penal interest is levied at a rate of 2% over the prevailing Bank Rate.
* **Representations:** Representations are considered only for genuine difficulties in hilly/remote areas or those affected by natural calamities. Representations 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.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders are:
* All banks having currency chests.
* The Currency Chests themselves, including their staff and custodians.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** Reserve Bank of India (RBI), Department of Currency Management. Issue Offices are also mentioned as points of contact for representations.
* **Timelines:** Currency chest transactions must be reported by 7 pm on the same day. Representations must be made within a month from the date of debit.
* **Procedures:** Transactions are to be reported through the CyM CC portal. Diversions have to be reported through Diversion Module of CyMCC Portal.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* Improved timeliness and accuracy in the reporting of currency chest transactions.
* Reduced instances of ineligible amounts being included in currency chest balances.
* Enhanced discipline among banks in managing currency chests.
* Better adherence to the Clean Note Policy.
* Improved monetary policy implementation due to accurate data.
**9. Conclusion:**
The RBI's Master Direction DCM CC No.G-403/35.01/2021-22 is a significant policy document aimed at strengthening the management and oversight of currency chest operations by banks. By establishing clear guidelines and stringent penalties for non-compliance, the RBI seeks to ensure the integrity of currency chest transactions, promote accurate reporting, and ultimately support the effective implementation of its monetary policy objectives. The policy's emphasis on technology through the CyM CC portal is crucial for efficient monitoring and enforcement.
Key Entities Referenced
RESERVE BANK OF INDIA: The central bank of India, which issued the master direction.
RBI Act, 1934: Refers to Section 45 of the Reserve Bank of India Act, 1934, which provides the legal basis for the guidelines.
Banking Regulation Act, 1949: Refers to Section 35 A of the Banking Regulation Act, 1949, which provides the legal basis for the guidelines.
Clean Note Policy: A policy of the Reserve Bank of India aimed at ensuring the circulation of clean and genuine banknotes.
Master Direction DCM CC No.G-403/35.01.2021-22: The unique identifier for this Master Direction, relating to currency chest management.
April 01, 2021: The date of issue of the Master Direction.
All Banks having Currency Chests: The target audience of this Master Direction.
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: The subject of this Master Direction.
Ishan Shukla: The Chief General Manager who issued the Master Direction.
Department of Currency Management: The department within the Reserve Bank of India responsible for currency management.
Mumbai 400001: Location of the Department of Currency Management
CyM CC portal: The online portal used by currency chests to report transactions.
Bank Rate: The benchmark interest rate used to calculate penal interest on reporting errors
Issue Office: Refers to a local branch of the Reserve Bank of India.
CRR: Cash Reserve Ratio
SLR: Statutory Liquidity Ratio
भारतीय �रज़व� ब�क
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2021-22/77
Master Direction DCM (CC) No.G-4/03.35.01/2021-22 April 01, 2021
The Chairman/ Managing Director/Chief Executive Officer
(All Banks having Currency Chests)
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 sustain these efforts and to 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,
(Ishan Shukla)
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 Levy of Penal Interest for Delayed Reporting / Wrong
Reporting / Non-Reporting of Currency Chest Transactions and Inclusion of
Ineligible Amounts in Currency Chest Balances
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 should invariably report all transactions through CyM – CC
portal on the same day by 7 pm.
1.2.2 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 to
the Issue Office on the same business day within the time limit prescribed above.
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, penal interest will invariably be levied in all cases of wrong reporting by thecurrency chests. It is expected that currency chests 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. 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. Representations
4.1 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 theIssue Office concerned through the Head / Controlling office of the bank concerned
within a month from the date of debit of the bank concerned.
4.2 In the case of wrong reporting representations for waiver will not be considered.
{cf. para 1.3.2 above}.
4.3 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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