## Report on RBI Master Direction: Penal Provisions in Reporting of Transactions/Balances at Currency Chests
**1. Executive Summary:**
This report analyzes a Reserve Bank of India (RBI) Master Direction concerning penal provisions related to the reporting of transactions and balances at currency chests. The core purpose is to ensure timely and accurate reporting of currency chest transactions by banks, supporting the RBI's Clean Note Policy. Key findings include the specification of penal interest for delayed and incorrect reporting, penalties for specific reporting errors, and the introduction of business continuity measures to prevent reporting failures. The policy targets all banks operating currency chests and aims to enforce discipline in reporting practices.
**2. Introduction:**
This report provides an overview and analysis of the RBI Master Direction DCM (Department of Currency Management) CC No. G403.35.01/2023-24, issued on April 03, 2023, regarding penal provisions in the reporting of transactions and balances at currency chests. The analysis is based solely on the provided policy text.
**3. Policy Overview:**
This is a new Master Direction consolidating updated guidelines and circulars on the subject.
* **Core Objective(s):** The primary objective is to ensure timely and accurate reporting of currency chest transactions by banks. This, in turn, supports the broader objective of the RBI's Clean Note Policy.
**4. Background and Rationale:**
This is a new policy. The policy addresses the need for accurate and timely reporting of currency chest transactions. The text suggests that inaccurate or delayed reporting may be a recurring issue, prompting the RBI to implement stricter penal measures. The focus on "sustaining these efforts" (referring to the Clean Note Policy) implies that accurate currency chest reporting is vital to the success of this policy.
**5. Key Provisions / Changes:**
This is a new policy, so these are the key features of the entire provided text.
* **Reporting Requirements:**
* Minimum deposit/withdrawal amount: ₹1,00,000 and multiples of ₹50,000 thereafter.
* Reporting deadline: All transactions must be reported through the CyM CC portal by 7 pm on the same day.
* **Penalties for Delayed Reporting:**
* Penal interest is levied on the amount due from the chest-holding bank for the period of delay.
* The penal interest is calculated on a T0 basis (i.e., from the same business day).
* **Penalties for Wrong Reporting:**
* Penal interest is levied until the corrected advice is received by the RBI.
* Specific examples of wrong reporting include:
* Reporting fresh/reissuable notes received from RBI note printing presses as "deposit" transactions.
* Inclusion of ineligible amounts in currency chest balances (e.g., cash not held in joint custody or not freely available).
* Reporting soiled note remittances to RBI as withdrawals (Penalty of ₹50,000).
* Reporting diversions between currency chests as deposit/withdrawal (Penalty of ₹50,000).
* **Penalties for Inclusion of Ineligible Amounts:**
* Penal interest is levied from the date of inclusion until the exclusion of such amounts.
* Cash kept outside the vault or not under proper custody is considered ineligible.
* **Penalties for Net Deposit Delayed Reporting:**
* Flat penalty of ₹50,000 for delayed reporting, even if the currency chest reported a net deposit.
* **Rate of Penal Interest:**
* 2% over the prevailing Bank Rate.
* **Business Continuity Measure:**
* Banks can use the CyM CC portal to switch users between currency chests in case of connectivity or technical issues. Banks are advised to include this functionality in their Business Continuity Plan (BCP).
* **Waiver Request:** Any penalty/penal interest waiver request shall be considered, only if the application for the same is made in the CC portal within the prescribed timelines. Waiver request in any other mode shall not be considered.
**6. Target Audience and Stakeholders:**
The primary target audience is all banks having currency chests in India. Therefore, all associated staff responsible for managing and reporting currency chest transactions are directly affected.
**7. Implementation Aspects (Inferred):**
* **Responsible agency:** The Reserve Bank of India (RBI), specifically the Department of Currency Management. The Officer-in-Charge of the Issue Department of the Regional Office is the Competent Authority to decide on the nature of the irregularity.
* **Timelines and Procedures:**
* Reporting deadline: 7 pm on the same day of the transaction.
* Appeals for reconsideration (in specific circumstances): Must be made within one month from the date of debit, through the Head Controlling Office of the bank.
* Waiver request in the CC portal must be made within the prescribed timelines.
**8. Expected Outcomes / Impact of Changes:**
The intended outcomes include:
* Improved timeliness and accuracy in currency chest reporting.
* Reduced instances of incorrect reporting and inclusion of ineligible amounts.
* Greater adherence to the RBI's guidelines for currency management.
* Enhanced discipline among banks in managing currency chest operations.
* Reduce reporting failures due to technical issues because of business continuity measures.
**9. Conclusion:**
The RBI Master Direction on penal provisions for currency chests reporting is a significant step towards enforcing discipline and accuracy in currency management. By clearly defining penalties for various reporting errors and delays, the RBI aims to ensure that banks adhere to the prescribed guidelines and contribute to the effectiveness of the Clean Note Policy. The business continuity provisions also acknowledge practical challenges and offer a mechanism to mitigate reporting failures. This policy is likely to have a considerable impact on the operational procedures of banks managing currency chests.
Key Entities Referenced
RESERVE BANK OF INDIA: The central bank of India, the issuer of this Master Direction.
RBI Act, 1934: The Reserve Bank of India Act, 1934, which grants the RBI authority.
Banking Regulation Act, 1949: An act related to the regulation of banking in India, providing the RBI with certain powers.
Clean Note Policy: A policy of the Reserve Bank of India related to currency management, aiming to ensure the circulation of clean and genuine banknotes.
Master Direction on Penal Provisions in reporting of transactions balances at Currency Chests: The title of the document being analyzed; it outlines penal provisions for reporting discrepancies at currency chests.
Currency Chests: Designated branches of banks authorized to hold stock of banknotes and coins on behalf of the RBI.
CyM CC portal: A portal used by currency chests to report transactions to the Reserve Bank of India.
Issue Office: An office of the Reserve Bank of India that receives reports from currency chests.
RBINote printing presses: Facilities where banknotes are printed for the Reserve Bank of India.
Scheme of Penalties: A pre-existing scheme that dictates penal measures for specific deficiencies related to currency chests.
Bank Rate: The standard rate at which the Reserve Bank of India provides financial assistance to banks.
Back Office BO Administrator: The administrator responsible for managing user access and configurations in the CyM CC portal.
CC Business Continuity Plan BCP: A plan for ensuring business continuity of Currency Chest operations in the event of disruptions.
Officerin Charge of the Issue Department of the Regional Office: The competent authority for deciding on irregularities related to currency chests.
Regional DirectorChief General ManagerOfficerinCharge of the Regional Office: The appellate authority to whom representations can be made regarding decisions of the Reserve Bank.
CRRSLR: Cash Reserve Ratio and Statutory Liquidity Ratio, regulatory requirements for banks.
भारतीय �रज़व� ब�क
_____________RESERVE BANK OF INDIA______________
www.rbi.org.in
RBI/2023-24/101
DCM (CC) No.G-4/03.35.01/2023-24 April 03, 2023
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 RBI Act, 1934 and Section 35 A 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
Encl : As above
मुद्रा प्रबंध िवभाग, क�द्रीय काया�लय, 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 फै� FAX NO. 22662442
ई-मेल E-mail : cgmincdcm@rbi.org.in
िह�ी 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 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 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 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/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 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 (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 '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/wrong reporting/inclusion of ineligible amounts in chest balances.
5. Business Continuity Measure
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). If a CC is unable to
report daily transactions in 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 reporting of daily
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. 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 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 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 representations 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 of
penal interest on grounds that delayed/wrong 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, expiry of digital certificate etc., shall not be considered as valid
grounds for waiver of penal interest.
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