## Report on Reserve Bank of India's Master Direction on Penal Provisions in Reporting of Currency Chest Transactions
**1. Executive Summary:**
This report analyzes the Reserve Bank of India's (RBI) Master Direction on Penal Provisions in reporting of transactions and balances at Currency Chests (CCs), issued on April 01, 2025. This document consolidates and updates guidelines related to the accurate and timely reporting of currency chest transactions. The core purpose is to reinforce the Clean Note Policy and maintain the integrity of currency management. Key findings highlight the stringent penalties for delayed or incorrect reporting, inclusion of ineligible amounts in chest balances, and specific penalties for errors related to soiled note remittances and diversions. The Master Direction also emphasizes business continuity planning and clarifies the process for handling appeals against levied penalties.
**2. Introduction:**
This report provides an informative analysis of the RBI's Master Direction on Penal Provisions in reporting of transactions and balances at Currency Chests, based solely on the provided policy text. The report aims to elucidate the policy's objectives, key provisions, implementation aspects, and expected outcomes for affected stakeholders.
**3. Policy Overview:**
This is a new Master Direction that consolidates existing guidelines and circulars on penal provisions in reporting of currency chest transactions.
* **Core Objective(s):** As inferred from the text, the core objectives are:
* To ensure timely and accurate reporting of currency chest transactions through the CyMCC portal.
* To reinforce the Clean Note Policy through effective currency management.
* To maintain discipline and integrity in currency chest operations.
* To discourage wrong reporting or delayed reporting of currency chest transactions.
**4. Background and Rationale:**
This Master Direction addresses potential issues arising from inaccurate or delayed reporting of currency chest transactions. The text suggests that such inaccuracies can lead to:
* Incorrect debit/credit entries in banks' current accounts with the RBI.
* Enjoyment of "ineligible" credit by banks due to incorrect reporting, potentially impacting CRR/SLR maintenance.
* Disruptions in currency management efforts.
* The need to reinforce adherence to the Clean Note Policy.
The consolidation of existing guidelines into a Master Direction likely aims to provide a clearer and more accessible framework for banks to follow.
**5. Key Provisions / Changes:**
This is a new policy, so the following are the key provisions:
* **Reporting Procedure:**
* Minimum deposit/withdrawal amount: ₹1,00,000 and multiples of ₹50,000 thereafter.
* Reporting deadline: All transactions to be reported via the CyMCC portal by 7 pm on the same day.
* Specific procedures for reporting on Sundays/holidays when CyMCC is unavailable: reporting consolidated amounts to RBI via email and reporting all transactions on the next working day through CyMCC portal.
* Relaxation for strike situations: considered on a case-to-case basis.
* **Penalties for Delayed Reporting:**
* Penal interest levied on the amount due from the chest-holding bank for the period of delay.
* Penal interest calculated on T+0 basis (from the same business day).
* **Penalties for Wrong Reporting:**
* Penal interest levied until corrected advice is received by the RBI.
* Remittances of fresh/reissuable notes from RBI Note Printing Presses *must not* be reported as 'deposit' transactions.
* **Penalties for Inclusion of Ineligible Amounts:**
* Penal interest levied on ineligible amounts included in chest balances.
* Definition of "ineligible" amounts: cash not in joint custody, outside the vault, not under CCTV coverage, or kept under single lock/unlocked conditions.
* **Penalties for Other Deficiencies:**
* Penal measures for shortages, pilferage, frauds, and counterfeit banknotes handled according to the prevailing Scheme of Penalties.
* **Penalties for Soiled Note Remittances:**
* A penalty of ₹50,000 is levied for incorrectly reporting soiled note remittances to RBI as 'withdrawals'.
* **Penalties for Diversions:**
* All currency chest diversions (between chests of the same bank and chests of different banks) must be reported through the Diversion Module of the CyMCC Portal, with initiating and acknowledging procedures. A penalty of ₹50,000 is levied for incorrectly reporting diversions as 'deposit' or 'withdrawal'.
* **Penalties for Delayed Reporting with Net Deposit:**
* Penal interest is not charged for delayed reporting where the currency chest had reported a net deposit. However, a flat penalty of ₹50,000 will be levied for delayed reporting, irrespective of the value of net deposit.
* **Rate of Penal Interest:**
* 2% above the prevailing Bank Rate.
* **Business Continuity Plan (BCP):**
* Banks are advised to include provisions for the use of the CyMCC portal's user switching capability in their BCP to avoid delayed reporting due to connectivity/technical issues.
* **Competent and Appellate Authorities:**
* Officer-in-Charge of the Issue Department of the Regional Office is the Competent Authority.
* Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office is the Appellate Authority.
* Waiver requests are only considered if made through the CyMCC portal within prescribed timelines.
* Waiver requests in cases of wrong reporting will not be considered.
* Lack of waiver for requests based on arguments like "no utilization of RBI Funds" or "clerical error".
**6. Target Audience and Stakeholders:**
Based on the provided text, the primary target audience and stakeholders are:
* All banks having Currency Chests.
* Joint Custodians of Currency Chests.
* The Reserve Bank of India (specifically the Department of Currency Management and Regional Offices).
**7. Implementation Aspects (Inferred):**
* **Responsible agency/bodies:**
* Reserve Bank of India (RBI).
* Issue Department of the Regional Offices.
* Currency Chest holding banks.
* **Timelines/procedures:**
* Transaction reporting deadline: 7 pm on the same day via the CyMCC portal.
* Reporting procedure for Sundays/holidays.
* Appeal process: representations to be made within one month from the debit date, through the Head/Controlling office, and *only* through the CyMCC portal.
* The CyMCC portal is the primary platform for reporting and handling requests related to the penalties.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes based on the policy's provisions are:
* Improved accuracy and timeliness of currency chest transaction reporting.
* Reduced instances of wrong reporting and inclusion of ineligible amounts.
* Enhanced adherence to the Clean Note Policy.
* Greater discipline and accountability among banks in managing currency chests.
* Reduced financial losses for the RBI due to inaccurate reporting.
* More effective currency management overall.
**9. Conclusion:**
The RBI's Master Direction on Penal Provisions in reporting of transactions and balances at Currency Chests is a significant policy document aimed at ensuring the integrity and efficiency of currency management. By establishing clear guidelines and penalties for non-compliance, the RBI seeks to improve the accuracy and timeliness of reporting, thereby safeguarding the interests of the banking system and the public. The emphasis on technology through the CyMCC portal and business continuity planning further underscores the RBI's commitment to modernizing and strengthening currency chest operations.
Key Entities Referenced
RESERVE BANK OF INDIA: The central bank of India, the issuer of this master direction.
RBI Act: Refers to the Reserve Bank of India Act, 1934. This act provides the legal basis for the Reserve Bank of India's functions and powers.
Banking Regulation Act, 1949: An act that regulates banking companies in India.
Clean Note Policy: An initiative by the Reserve Bank of India to improve the quality of banknotes in circulation.
Master Direction on Penal Provisions in reporting of transactions balances at Currency Chests: The title of the policy document being analyzed, focusing on penalties for reporting errors related to currency chest transactions.
Currency Chests: Facilities maintained by banks to store banknotes and coins on behalf of the Reserve Bank of India.
CyMCC portal: A portal used by currency chests to report transactions to the Reserve Bank of India.
Issue Office of RBI: A regional office of the Reserve Bank of India responsible for currency management.
Sanjeev Prakash: Chief General Manager-In-Charge at the Reserve Bank of India, as indicated in the letter's closing.
Bank Rate: The rate of interest at which the Reserve Bank of India lends money to commercial banks.
Business Continuity Plan: A plan to ensure that a business can continue operating in the event of a disruption.
OfficerinCharge of the Issue Department of the Regional Office: The authority responsible for deciding on irregularities and levying penalties related to currency chest operations.
Regional Director Chief General Manager OfficerinCharge of the Regional Office: The appellate authority for reconsidering decisions related to penalties.
CRR: Cash Reserve Ratio: The percentage of a bank's total deposits that it is required to maintain with the Reserve Bank of India.
SLR: Statutory Liquidity Ratio: The percentage of a bank's total deposits that it is required to maintain in the form of liquid assets such as government securities.
BO Administrator: Back Office Administrator of the bank.
भारतीय �रज़वर् बैंक
_____________RESERVE BANK OF INDIA______________
www.rbi.org.in
RBI/DCM/2025-26/130
DCM (CC) No.G-2/03.35.01/2025-26 April 01, 2025
The Chairman / Managing Director / Chief Executive Officer
(All banks having Currency Chests)
Madam / Dear Sir,
Master Direction on Penal Provisions in reporting of transactions / balances at
Currency Chests
In terms of the Preamble to and Section 45 of the Reserve Bank of India Act, 1934 (RBI
Act) and Section 35A of the Banking Regulation Act, 1949, Reserve Bank of India 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 timely and
accurate reporting of currency chest transactions, instructions on the subject have been
issued from time to time.
2. The enclosed Master Direction incorporates updated guidelines / circulars on the
subject.
Yours faithfully,
(Sanjeev Prakash)
Chief General Manager-In-Charge
Encl: As above
_______________________________________________________________________________________________________________________________________
मुद्रा प्रबंध िवभाग, कें द्रीय कायार्लय, चौथी मंिजल, अमर भवन, सर पी .एम .रोड, मुंबई - 400 001
DEPARTMENT OF CURRENCY MANAGEMENT, CENTRAL OFFICE, AMAR BUILDING, 4TH FLOOR, SIR P M ROAD,
MUMBAI - 400001
फोन TELEPHONE No. 22663000 / 22604000
ई-मेल E-mail : cgmincdcm@rbi.org.in
�हन्द� आसान है, इसका प्रयोग बढ़ाइएAnnex
Master Direction on Penal Provisions in reporting of transactions / balances at
Currency Chests
1. Reporting Procedure
1.1 Reporting of Currency Chest (CC) Transactions
The minimum amount of deposit into / withdrawal from currency chest shall be ₹1,00,000/-
and thereafter, in multiples of ₹50,000/-.
1.2 Time Limit for Reporting
1.2.1 The currency chests shall invariably report all transactions through CyM-CC portal
on the same day by 7 pm.
1.2.2 Opening of Currency Chests on Sundays or Holidays – Reporting in CyM
In case CyM CC portal is available on the day a specific CC is permitted to operate (i.e.
on a local holiday), the CC shall report the transactions in CyM on the same day. In case
CyM-CC portal is not available on the said day (i.e. on a global holiday / 2nd or 4th
Saturdays of the month / Sunday), the CC shall report denomination-wise consolidated
deposit and/ or withdrawal amount and denomination-wise chest closing balance of the
day by 7 pm to the concerned Issue Office of RBI by e-mail and report day’s transactions
on CyM on the next working day.
1.2.3 Relaxation in Respect of Strike in Banks
Relaxation in the reporting period on account of strike situation shall be considered on
case-to-case basis.
2. Delayed Reporting / Wrong 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 chest2
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 / re-issuable notes sent to the currency chests from RBI / Note
Printing Presses are not reported as 'deposit' transactions.
2.1.3 Inclusion of Ineligible Amounts in the Currency Chest Balances
(i) Penal interest shall also 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 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 outside the vault / outside the
coverage of CCTV cameras / cash kept for safe custody in sealed covers for whatever
reasons / in trunks / under single lock / unlocked / in 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 (except 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.3
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 the 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 'withdrawals', 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 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
₹50,000/- shall 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 for net withdrawal / wrong reporting / inclusion of ineligible amounts
in chest balances.
5. Business Continuity Plan
The CyM-CC portal has the capability for switching / interchanging the user within a bank
across the country (user manual is attached for ready reference) for transaction reporting4
and raising other requests. If a CC is unable to access CyM Portal due to connectivity or
other technical issues in that particular CC, the Back Office (BO) Administrator of the
bank can map the user-id of another CC of that bank to the CC having connectivity issues
for making transactions. On completion of the transactions the user rights shall be
restored to the original CC. This functionality would help CCs in avoiding delayed
reporting and consequent punitive action. Proper record of such authorisations shall be
maintained for audit purposes. CC holding banks are advised to include this aspect in
their CC Business Continuity Plan (BCP).
6. Operational Guidelines on Levy of Penalties / Penal Interest
6.1 Competent Authority
The Competent Authority to decide on the nature of irregularity and levy penal interest/
penalty thereof shall be the Officer-in-Charge of the Issue Department of the Regional
Office under whose jurisdiction the defaulting currency chest is located.
6.2 Appellate Authority
6.2.1 Given the business continuity capability provided by the CyM (see paragraph 5
above), 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.
6.2.2 Any penalty / penal interest waiver request shall be considered, only if the
application for the same is made in the CyM-CC portal within the prescribed timelines.
Waiver request in any other mode shall not be considered.
6.2.3 In the case of wrong reporting, representation for waiver shall not be considered.
(cf. para 2.1.2 above).
6.2.4 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 of5
penal interest on grounds that delayed / wrong reporting did not result in utilisation 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, expiry of digital certificate, etc., shall not be considered as valid
grounds for waiver of penal interest.
-------------------------