Date: 2016-07-20Category: 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
Executive Summary:
This Master Direction outlines guidelines on levying penal interest for delayed, wrong, or non-reporting of currency chest transactions, and for including ineligible amounts in currency chest balances. It aims to ensure discipline among banks in timely and accurate reporting, supporting the Clean Note Policy. The direction applies to all banks with currency chests and is effective from July 20, 2016, and will be updated as needed.
Key Points / Main Content:
Reporting of Currency Chest Transactions:
* Minimum deposit/withdrawal amount is ₹1,00,000, and thereafter in multiples of ₹50,000.
* Currency chests must report transactions through ICCOMS by 9 PM on the same day via the Secured Website (SWS) to their link offices.
* Link offices must report consolidated positions to Issue Offices by 11 PM on the same day.
* Sub-Treasury Offices (STOs) must report directly to the Reserve Bank's Issue Office by 11 PM on the same day.
* Diversions in ICCOMS must be reported in columns "2A and 4A" without delay, not as "Withdrawal" and "Deposit."
Penal Interest for Delays/Wrong Reporting:
* Penal interest is levied for delays in reporting, calculated on a T+0 basis (reporting to Issue Office by 11 PM).
* Penal interest is charged for delays in submission of chest slips by single-chest STOs.
* Penal interest is applied for wrong reporting until corrected advice is received by the Reserve Bank.
* Remittances of soiled notes to RBI or diversion to other chests must not be reported as withdrawals; a penalty of ₹50,000 will be levied for wrong reporting of this nature.
* There is no limit on the maximum penal interest that can be charged.
Ineligible Amounts in Currency Chest Balances:
* Penal interest is levied for 'ineligible' credit in banks' current accounts due to reporting errors.
* Only cash held by joint custodians and 'freely available' can be included in chest balances.
* Penal interest is applied from the date of inclusion until exclusion of ineligible amounts.
* Penal measures for shortages in chest balances/remittances, pilferage/frauds, and counterfeit banknotes will be based on prevailing penalty schemes.
General:
* Penal interest rate is 2% above the prevailing Bank Rate.
* Instructions apply to currency chests at treasuries/sub-treasury offices.
* Representations for reconsideration are generally not accepted for delayed reporting unless due to genuine difficulties (hilly/remote areas, natural calamities).
* Waiver requests for wrong reporting are not considered.
* Grounds like clerical errors, unintentional mistakes, or staff inexperience are not valid for waiver of penal interest.
Impact Analysis:
Banks with Currency Chests:
Impact: Subject to penal interest for delayed, wrong, or non-reporting of transactions and inclusion of ineligible amounts in currency chest balances. Must ensure timely and accurate reporting to avoid penalties.
Action Required: Implement systems and controls to ensure accurate and timely reporting of all currency chest transactions, and to prevent the inclusion of ineligible amounts in chest balances.
Link Offices:
Impact: Responsible for consolidating and reporting currency chest positions to the Issue Offices. Liable for penal interest if they report incorrect figures.
Action Required: Ensure the correctness of figures reported by the respective currency chests.
Sub-Treasury Offices (STOs):
Impact: Required to report transactions directly to the Reserve Bank's Issue Office and are subject to penal interest for delays or inaccuracies.
Action Required: Implement processes to ensure timely and accurate reporting of transactions to the Issue Office.
Reserve Bank of India (RBI):
Impact: Responsible for monitoring and enforcing compliance with reporting requirements and levying penal interest where applicable.
Action Required: Update the master direction as and when fresh instructions are issued.
Key Entities Referenced
RBI Act, 1934: The Reserve Bank of India Act, 1934, under Section 45, provides the legal basis for the RBI to issue guidelines and instructions related to currency management and banking operations.
Banking Regulation Act, 1949: Section 35 A of the Banking Regulation Act, 1949, empowers the Reserve Bank of India (RBI) to issue directives to banking companies.
Clean Note Policy: A policy of the Reserve Bank of India (RBI) aimed at improving the quality of banknotes in circulation.
Currency Chest: Designated branches of banks authorized by the Reserve Bank of India (RBI) to store banknotes and coins on behalf of the RBI.
ICCOMS: Stands for Integrated Computerized Currency Operations and Management System. It is the system through which currency chest transactions are reported.
Secured Website SWS: The secure platform used by currency chests to upload transaction data to their respective link offices.
Issue Office of the Reserve Bank: The designated office of the Reserve Bank of India (RBI) responsible for currency management in a particular region.
Sub-Treasury Offices STOs: Government treasury offices that report currency transactions directly to the Issue Office of the Reserve Bank.
RBI/DCM/2016-17/35
Master Direction DCM(CC) No.G -2/03.35.01/2016-17 July 20, 2016
1. The Chairman & Managing Director/Chief Executive Officer
(All Banks having Currency Chests)
2. The Director of Treasuries
(State Governments)
Dear Sir/Madam
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 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,
(P. Vijaya Kumar)
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
Rs.1,00,000/- and thereafter, in multiples of Rs.50,000/-.
1.2 Time limit for Reporting
1.2.1 The currency chests should invariably report all transactions through ICCOMS on
the same day by 9 PM by uploading data through the Secured Website (SWS) to
their respective link offices. Link offices should invariably report the consolidated
position to the Issue Offices latest by 11 PM on the same day.
1.2.2 The Sub-Treasury Offices (STOs) should report all transactions directly to the
Issue Office of the Reserve Bank by 11 PM on the same day.
1.2.3 Relaxation in respect of strike period in banks
Relaxation in the reporting period on account of general/specific strike situation
will be considered on case-to-case basis.
1.3 Levy of penal interest for delays
1.3.1 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 Link Office to the Issue Office by 11 PM on the same business day. However,
Reserve Bank may at its discretion grant appropriate grace period in the matter of
levy of penal interest.
1.3.2 Penal interest will also be charged for delay in submission of chest slips in the
case of single chest / STOs directly linked to Issue Department of the circle.
1.4 Wrong reporting and levy of penal interest
Penal interest will be levied in respect of all 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 figures reported in the Link Office
Statements, penal interest will invariably be levied in all cases of wrong reporting in the
Link Office Statements even if the reporting was done correctly in the chest slips. It is
expected that Link Offices would ensure the correctness of figures reported by the
respective currency chests. Particular care should be taken to ensure that remittances offresh notes/notes to the currency chests are not reported as 'deposit' transactions in the
Link Office Statements.
1.5 Reporting of Soiled note remittances to RBI / diversion to other chests
Soiled note remittances to RBI /diversion to other currency chest/s should not be shown
as withdrawal by chest/s / link offices. In case such remittances are wrongly reported as
'withdrawals', a penalty of Rs.50,000/- will be levied irrespective of the value of
remittance and period of such wrong reporting.
1.6 Reporting of diversions in ICCOMS
As regards reporting of diversion/s in ICCOMS, they must be reported in the column "2A
and 4 A" i.e. the chest receiving the diversion should report under 2 A and the remitting
chest should report the amount under 4A in the chest slip without any delay. Diversion
amounts, even to the chest of the same bank should not be reported under "Withdrawal"
and "Deposit" columns i.e. 4E and 2E (which are for currency transfer transactions).
1.7 Maximum penal interest to be charged
There is no stipulation regarding the maximum amount of penal interest leviable for
wrong/delayed reporting. As the intention is to ensure timely and correct reporting of
chest transactions, penal interest will be recovered in all applicable cases, irrespective of
the amount of the transaction concerned/amount of penal interest subject to rounding off
the penal interest amount to the nearest Rupee.
2. Penal interest for inclusion of ineligible amounts in the currency chest
balances
2.1 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”.
2.2 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.
2.3 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”.
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 1.4 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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