Executive Summary:
This Master Direction outlines penal provisions for deficiencies in reporting currency chest transactions and balances, aiming to enforce discipline and ensure accurate, timely reporting as part of the Clean Note Policy. It details penalties for delayed, wrong, or non-reporting, and inclusion of ineligible amounts. The direction specifies rates of penal interest and competent authorities for handling irregularities.
Key Points / Main Content:
Reporting Procedure:
* Minimum deposit/withdrawal amount is ₹1,00,000, then in multiples of ₹50,000.
* Currency chests must report all transactions through the CyM CC portal by 7 pm on the same day.
* Relaxation in reporting period due to strikes will be considered case-by-case.
Penalties for Reporting Deficiencies:
* Delay in Reporting: Penal interest levied on the amount due from the chest-holding bank for the delay period, calculated on a T0 basis.
* Wrong Reporting: Penal interest 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.
* Inclusion of Ineligible Amounts: Penal interest levied from the date of inclusion until exclusion of ineligible amounts (e.g., cash not freely available to joint custodians).
* Other Deficiencies: Penal measures for shortages, pilferage, fraud, and counterfeit banknotes are based on the prevailing Scheme of Penalties.
Specific Penalties:
* Soiled Note Remittances: A penalty of ₹50,000 is levied if soiled note remittances to RBI are wrongly reported as 'withdrawal'.
* Diversions: A penalty of ₹50,000 is levied for reporting diversions as deposit/withdrawal instead of using the CyM CC portal's Diversion Module.
* Delayed Reporting with Net Deposit: A flat penalty of ₹50,000 is levied for delayed reporting, even with a net deposit.
Rate of Penal Interest:
* Penal interest is levied at 2% over the prevailing Bank Rate for delayed, wrong, or non-reporting and inclusion of ineligible amounts.
Operational Guidelines:
* Competent Authority: The Officer-in-Charge of the Issue Department of the Regional Office is the Competent Authority.
* Appellate Authority: Representations due to genuine difficulties may be made to the Regional Director/Chief General Manager/Officer-in-Charge within a month from the debit date. Waivers will not be considered for wrong reporting, or on grounds of clerical errors, unintentional errors, first time error, inexperience of staff etc.
Impact Analysis:
Banks with Currency Chests:
* Impact: Subject to penalties for incorrect or delayed reporting of currency chest transactions, impacting operational costs and potentially requiring process adjustments.
* Action Required: Ensure strict adherence to reporting procedures, including timely and accurate reporting via the CyM CC portal, proper handling of diversions and soiled note remittances and proper maintenance of chest balances. Implement controls to prevent errors and ineligible inclusions.
Reserve Bank of India (RBI):
* Impact: Responsible for monitoring and enforcing compliance with the Master Direction, including levying penalties and addressing appeals.
* Action Required: Implement procedures for identifying and penalizing non-compliance, handling representations, and updating the Master Direction as needed.
Key Entities Referenced
RBI Act, 1934: Refers to Section 45 of the Reserve Bank of India Act, 1934, which provides the legal basis for the Bank's actions.
Banking Regulation Act, 1949: Refers to Section 35 A of the Banking Regulation Act, 1949, providing further legal basis for the guidelines.
Clean Note Policy: A policy initiative aimed at improving the quality of banknotes in circulation.
Currency Chests: Designated branches of banks authorized to hold currency on behalf of the Reserve Bank of India.
CyM CC portal: A portal for reporting currency chest transactions to the Reserve Bank of India.
Reserve Bank: Refers to the Reserve Bank of India (RBI), the central bank of India.
Issue Department of the Regional Office: A department within a regional office of the Reserve Bank of India responsible for currency management.
Mumbai, Maharashtra: Location of the Department of Currency Management 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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