## Report on RBI Master Direction on Penal Provisions for Currency Chests
**1. Executive Summary:**
This report analyzes RBI Master Direction RBI/2022-23/91 DCM(CC) No.G-403/03.35.01/2022-23, issued on April 01, 2022, concerning penal provisions for deficiencies in reporting transactions and balances at Currency Chests. The core purpose of this Master Direction is to ensure discipline among banks in timely and accurate reporting of currency chest transactions, supporting the Clean Note Policy. Key provisions involve penalties, including penal interest and fixed penalties, for delayed, wrong, or non-reporting of transactions, inclusion of ineligible amounts in chest balances, and incorrect reporting of diversions or soiled note remittances.
**2. Introduction:**
This report aims to provide a comprehensive overview of the Reserve Bank of India's (RBI) Master Direction RBI/2022-23/91 DCM(CC) No.G-403/03.35.01/2022-23, pertaining to penal provisions for reporting deficiencies related to currency chest operations. The analysis is based solely on the content of the provided text.
**3. Policy Overview:**
* This is a new Master Direction.
* **Core Objective(s):** To ensure discipline among banks for timely and accurate reporting of currency chest transactions and to sustain efforts towards a Clean Note Policy.
**4. Background and Rationale:**
* This Master Direction addresses the need for consistent and accurate reporting of currency chest transactions by banks. The policy likely aims to mitigate discrepancies in currency management, prevent misuse of funds, and maintain the integrity of the currency distribution system by ensuring adherence to the Clean Note Policy. The previous instructions were issued from time to time and this Master Direction incorporates updated guidelines circulars on the subject.
**5. Key Provisions / Changes:**
This is a new Master Direction, therefore, the following are the key provisions:
* **Reporting Procedures:** Minimum deposit/withdrawal amount is ₹1,00,000, with subsequent transactions in multiples of ₹50,000. All transactions must be reported via the CyM CC portal by 7 pm on the same day.
* **Penalties for Delayed Reporting:** Penal interest will be levied on the amount due from the chest holding bank for the period of delay, calculated on a T0 basis.
* **Penalties for Wrong Reporting:** Penal interest is levied until corrected advice is received by the Reserve Bank. Remittances of fresh/reissuable notes from RBI press must not be reported as deposit transactions.
* **Penalties for Inclusion of Ineligible Amounts:** Penal interest applies if banks enjoy 'ineligible' credit due to wrong/delayed/non-reporting. Only cash held by joint custodians and freely available is eligible for inclusion in chest balances.
* **Penalties for Other Deficiencies:** Penal measures for shortages, pilferage, fraud, and counterfeit banknotes are based on the prevailing Scheme of Penalties.
* **Penalties for Soiled Note Remittances:** A penalty of ₹50,000 is levied if soiled note remittances to RBI are wrongly reported as 'withdrawal'.
* **Penalties for Diversion Reporting:** Diversions must be reported through the CyM CC Portal’s Diversion Module, not as deposit/withdrawal. A penalty of ₹50,000 is levied for incorrect reporting.
* **Penalties for Delayed Reporting with Net Deposit:** A flat penalty of ₹50,000 will be levied for delayed reporting, regardless of the value of net deposit.
* **Rate of Penal Interest:** Penal interest is levied at 2% above the prevailing Bank Rate.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders are:
* All banks having Currency Chests.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:** The Reserve Bank of India (RBI), specifically the Department of Currency Management and the Issue Department of the Regional Office.
* **Timelines/Procedures:**
* Currency Chests must report transactions by 7 pm on the same day.
* Representations regarding penalties due to genuine difficulties can be made within a month from the debit date, through the Head Controlling office of the bank, except in cases of wrong reporting where waiver representations are not considered.
* **Competent Authority:** The Officer-in-Charge of the Issue Department of the Regional Office determines the nature of irregularity.
* **Appellate Authority:** The Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office handles representations.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this Master Direction are:
* Improved accuracy and timeliness in reporting of currency chest transactions.
* Reduced instances of wrong reporting and inclusion of ineligible amounts in chest balances.
* Enhanced discipline among banks in adhering to currency management guidelines.
* Support for the Clean Note Policy through better management and reporting of currency.
* Reduced operational risks associated with currency chest management.
**9. Conclusion:**
The RBI Master Direction aims to strengthen the currency management system by enforcing strict penalties for reporting deficiencies in currency chest operations. By implementing these measures, the RBI seeks to ensure accuracy, timeliness, and discipline in transaction reporting, ultimately supporting the integrity of the currency distribution system and the Clean Note Policy. The effective implementation of this Master Direction will be crucial for maintaining the stability and efficiency of currency management across the banking sector.
Key Entities Referenced
RBI20222391 DCM CC No.G403.35.01202223: Reference number for the document.
April 01, 2022: Date of the communication.
The Chairman Managing DirectorChief Executive Officer All banks having Currency Chests: Addressee of the communication.
RBI Act, 1934: Refers to the Reserve Bank of India Act, 1934. Section 45 is specifically mentioned.
Banking Regulation Act, 1949: Refers to the Banking Regulation Act, 1949. Section 35 A is specifically mentioned.
Clean Note Policy: A policy aimed at maintaining the quality of banknotes in circulation.
Master Direction on Penal Provisions in deficiencies in reporting of transactions balances at Currency Chests: The subject of the document, providing guidelines on penalties related to reporting errors and discrepancies at currency chests.
Sanjeev Prakash: Chief General Manager who signed the document.
Department of Currency Management: The department within the Reserve Bank of India responsible for currency management.
Amar Building, P.M. Road, Fort, Mumbai 400001: Address of the Department of Currency Management.
CyM CC portal: An online portal for reporting currency chest transactions.
Reserve Bank: Likely refers to the Reserve Bank of India (RBI), the central bank of India.
Issue Office: Refers to the department of RBI responsible for currency issuance.
RBI: Refers to the Reserve Bank of India.
CRRSLR: Cash Reserve Ratio and Statutory Liquidity Ratio. These are reserve requirements that banks must maintain.
Regional Office: Office of the Reserve Bank of India.
Regional DirectorChief General ManagerOfficerinCharge: Officer of the Regional Office of RBI.
RBI/2022-23/91
DCM (CC) No.G-4/03.35.01/2022-23 April 01, 2022
The Chairman/ Managing Director/Chief Executive Officer
(All banks having Currency Chests)
Madam / Dear Sir
Master Direction on Penal Provisions in deficiencies in reporting of transactions/
balances at Currency Chests
In terms of the Preamble to & 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 sustain these efforts
and to ensure discipline among the banks for timely and accurate reporting of currency
chest transactions, instructions on the subject have been issued from time to time.
2. The Master Direction enclosed incorporates updated guidelines / circulars on the
subject. The Direction will be updated 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 Penal Provisions in reporting of transactions/ balances at
Currency Chests
1. Reporting Procedure
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 on account of strike in banks
Relaxation in the reporting period on account of strike situation will be considered on
case-to-case basis.
2. Delayed Reporting / Wrong Reporting / Non-Reporting of Currency Chest
Transactions
2.1 Levy of penal interest
2.1.1 Delay in Reporting
In the event of delay in reporting currency chest transactions, penal interest at the rate
indicated in paragraph 4 of this circular shall be levied on the amount due from the chest
holding bank for the period of delay. Penal interest shall be calculated on T+0 basis i.e.
penal interest shall 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.
2.1.2 Wrong reporting
Penal interest shall 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 shall invariably be levied in all cases of wrong reporting by the
currency chests. It is expected that currency chests would ensure the correctness of
figures reported on the CyM - CC portal. Particular care shall be taken to ensure that
remittances of fresh notes/re-issuable notes sent to the currency chests from RBI/press
are not reported as 'deposit' transactions.2.1.3 Inclusion of ineligible amounts in the currency chest balances
(i) Penal interest shall 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.
(ii) 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 shall be treated as instances of wrong
reporting and shall attract penal interest at the rate specified in paragraph 4.
(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 shall be levied from the date of inclusion of 'ineligible' amounts in chest
balances till the exclusion of such amounts from chest balances.
2.1.4 Penal measures for other deficiencies
Penal measures for shortages in chest balances / remittances, shortages due to pilferage
/ frauds, counterfeit banknotes detected in chest balances / remittances shall be taken on
the basis of prevailing “Scheme of Penalties”.
3. Levy of penalty
3.1 Reporting of soiled note remittances to RBI
Soiled note remittances to RBI shall not be shown as withdrawal by chest(s). In case such
remittances to RBI are wrongly reported as 'withdrawal', a penalty of ₹50,000 shall be
levied irrespective of the value of remittance and period of such wrong reporting.
3.2 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 should not be reported as deposit/withdrawal. A
penalty of ₹50,000 shall be levied for any such wrong reporting.
3.3 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” shall not be charged. However, in order to
ensure proper discipline in reporting currency chest transactions, a flat penalty of ₹50,000shall be levied on the currency chests for delayed reporting, irrespective of the value of
net deposit.
4. 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.
5. Operational Guidelines on levy of penalties/penal interest
5.1 Competent Authority
The Competent Authority to decide the nature of irregularity shall be the Officer-in-
Charge of the Issue Department of the Regional Office under whose jurisdiction the
defaulting currency chest is located.
5.2 Appellate Authority
5.2.1 As the sole criterion for levy of penal interest/ penalty 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. However, representations, if any, on
account of genuine difficulties faced by currency chests especially in hilly/remote areas
and those affected by natural calamities, etc., may be made to the Regional Director/Chief
General Manager/Officer-in-Charge of the Regional Office concerned through the Head /
Controlling office of the bank within a month from the date of debit.
5.2.2 In the case of wrong reporting representations for waiver shall not be considered.
{cf. para 2.1.2 above}.
5.2.3 As the intention behind the levy of penal interest/ penalty is to inculcate discipline
among banks so as to ensure prompt/correct reporting, requests 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., shall not be considered as valid grounds for waiver of penal
interest.
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