## Report on Reserve Bank of India's Master Direction: Scheme of Penalties for Bank Branches and Currency Chests
**1. Executive Summary:**
This report analyzes the Reserve Bank of India's (RBI) Master Direction on the Scheme of Penalties for bank branches and currency chests, as outlined in document RBIDCM202425112 DCM CC No.G103.44.01202425 dated April 01, 2024. The core purpose of this Master Direction is to ensure proper customer service by bank branches and currency chests, aligning with the Clean Note Policy and enhancing operational efficiency through the implementation of a penalty scheme for deficiencies. The key finding is that the scheme imposes specific penalties for various irregularities, ranging from shortages of notes to non-compliance with operational guidelines and violations of agreements.
**2. Introduction:**
This report aims to provide a comprehensive overview of the RBI's Master Direction on the Scheme of Penalties for bank branches and currency chests, based solely on the information provided in the aforementioned document. This analysis will cover the policy's objectives, rationale, key provisions, affected stakeholders, inferred implementation aspects, and expected outcomes.
**3. Policy Overview:**
This is a *new* Master Direction that establishes a Scheme of Penalties.
* **Core Objective(s):**
* Ensure that all bank branches and currency chests provide proper customer service to the public.
* Support the objectives of the Clean Note Policy.
* Enhance operational efficiency in currency management.
**4. Background and Rationale:**
This Master Direction addresses the need to ensure consistent and high-quality customer service at bank branches and currency chests. The rationale, inferred from the text, is that implementing a penalty scheme will incentivize banks and currency chests to adhere to operational guidelines, maintain adequate currency handling practices, and comply with agreements with the RBI. This, in turn, should lead to improved customer service and contribute to the overall effectiveness of currency management.
**5. Key Provisions / Changes:**
This is a New Policy. Therefore, the following details the main components, rules, and actions mandated by the entire provided text:
The Master Direction establishes a penalty scheme for various deficiencies, including:
* **Shortages of notes and coins:** Penalties are levied based on the denomination and quantity of the shortage, in addition to the loss amount.
* **Counterfeit notes:** Penalties are imposed according to DCM FNVD No. G416.01.05/2024-25 instructions.
* **Mutilated notes:** A penalty of ₹50 per piece is levied, regardless of denomination, in addition to the loss.
* **Non-compliance with operational guidelines by currency chests:** Penalties ranging from ₹5,000 to ₹10,000 are imposed for irregularities such as non-functioning CCTV, improper document storage, non-utilization of Note Sorting Machines (NSMs), and failure to conduct surprise verification of currency chest balances. Penalties escalate for repeated offenses.
* **Violation of agreement terms:** Penalties of ₹10,000 per violation, or ₹5 lakh for more than 5 instances in consecutive inspection cycles, are imposed for deficiencies in service provision, such as refusal to exchange notes/coins, denial of facilities to linked branches, and detection of unacceptable notes.
* **Non-replenishment of ATMs:** Penalties are levied based on DCMR/MMT No. S1531/11.01.01/2021-22 circulars and subsequent instructions.
**6. Target Audience and Stakeholders:**
The directly affected stakeholders include:
* All banks operating in India.
* Bank branches, particularly those handling currency.
* Currency chests.
* Members of the public who utilize banking services.
**7. Implementation Aspects (Inferred):**
* **Responsible agency:** The Officer-in-Charge of the Issue Department of the Regional Office of the RBI is the Competent Authority to decide upon the nature of the irregularity.
* **Appellate Authority:** The Regional Director/Chief General Manager/Officer-in-Charge of the Regional Office concerned is the Appellate Authority.
* **Timelines/Procedures:**
* Appeals must be made within one month from the date of debit.
* Penalty waiver requests must be made in the CyMCC portal within prescribed timelines; other modes will not be entertained.
* The recovery of loss and imposition of penalty for shortages and mutilated notes shall be done immediately on detection.
* Surprise verification of currency chest balances should be conducted at bi-monthly and six-monthly intervals.
**8. Expected Outcomes / Impact of Changes:**
The intended outcomes of this Master Direction, based on its provisions, are:
* Improved customer service at bank branches and currency chests.
* Increased compliance with RBI's operational guidelines and agreements.
* Better adherence to the Clean Note Policy, leading to a cleaner and more efficient currency cycle.
* Reduced instances of irregularities in currency handling and management.
* More efficient ATM replenishment.
**9. Conclusion:**
The RBI's Master Direction on the Scheme of Penalties for bank branches and currency chests is a significant step towards enhancing customer service, improving currency management practices, and reinforcing regulatory compliance within the banking sector. The penalty scheme provides a framework for holding banks accountable for deficiencies, ultimately benefiting the public by ensuring access to quality banking services and clean currency. The scheme's significance lies in its potential to foster a culture of responsibility and efficiency within the banking system.
Key Entities Referenced
RESERVE BANK OF INDIA: The central bank of India, the issuer of the document.
RBI Act: Refers to the Reserve Bank of India Act, 1934.
Banking Regulation Act, 1949: Indian law that regulates the banking companies in India.
Clean Note Policy: An initiative by the Reserve Bank of India to improve the quality of banknotes in circulation.
Scheme of Penalties: A scheme formulated by the Reserve Bank of India for imposing penalties on bank branches and currency chests for deficiencies in customer service.
Currency Chests: Designated branches of banks authorized to store banknotes and coins on behalf of the Reserve Bank of India.
Sanjeev Prakash: Chief General Manager at Reserve Bank of India
DEPARTMENT OF CURRENCY MANAGEMENT, CENTRAL OFFICE, AMAR BUILDING, 4TH FLOOR, SIR P M ROAD, MUMBAI 400001: The address of the Department of Currency Management of the Reserve Bank of India.
DCM FNVD No. G416.01.05202425: Reference number for instructions related to counterfeit notes, dated April 01, 2024.
Note Sorting Machines NSMs: Machines used for sorting banknotes.
DCMRMMT No. S15311.01.01202122: Circular number related to non-replenishment of ATMs, dated August 10, 2021.
Officer inCharge of the Issue Department of the Regional Office: The Competent Authority to decide upon the nature of irregularity
Regional Director Chief General Manager OfficerinCharge of the Regional Office: The appellate authority
CyMCC portal: The online portal to apply for penalty waiver.
बेट� बचाओ
बेट� पढ़ाओ
भारतीय �रज़व� ब�क
_____________ RESERVE BANK OF INDIA______________
www.rbi.org.in
RBI/DCM/2024-25/112
DCM (CC) No.G-1/03.44.01/2024-25 April 01, 2024
The Chairman / Managing Director / Chief Executive Officer
All banks
Madam / Dear Sir,
Master Direction – Scheme of Penalties for bank branches and Currency Chests for
deficiency in rendering customer service to the members of public
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 and enhancing
the operational efficiency as part of currency management. In order to ensure that all bank
branches provide proper customer service, the Bank has formulated a Scheme of
Penalties for bank branches including Currency Chests, for deficiency in rendering
customer service to the members of public.
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 the Scheme of Penalties for bank branches and currency
chests for deficiency in rendering customer service to members of public
1. The Scheme of Penalties for bank branches including currency chests has been
formulated in order to ensure that all bank branches / currency chests provide proper
customer service to the members of public / linked bank branches keeping in view the
objectives of Clean Note Policy and enhancing operational efficiency.
2. Penalties
Penalties to be imposed on banks for deficiencies in remittances sent to RBI, compliance
with operational guidelines and Memorandum of Agreement, exchange of notes and
coins, operations of currency chests, replenishment of cash in ATMs, etc., are as follows:
Sr.
Nature of Irregularity Penalty
No.
i. Shortages of notes in soiled note For notes in denomination up to ₹50
remittances and shortages of notes
and coins in currency chest balances ₹50/- per piece in addition to the loss.
For notes in denomination of ₹100 &
above
Equal to the value of the denomination
per piece in addition to the loss.
For coins in all denominations
Equal to the value of the denomination
per piece in addition to the loss.
The recovery of loss and imposition of
penalty shall be done immediately on
detection of shortage, irrespective of
number of pieces.
ii. Counterfeit notes detected in soiled Penalty shall be levied in terms of the
note remittances and currency chest instructions issued by DCM (FNVD) No.
balances
G-4/16.01.05/2024-25 dated April 01,
2024.iii. Mutilated notes (including deliberately ₹50/- per piece irrespective of the
cut notes and built-up notes) detected denomination in addition to the loss.
in soiled note remittances and currency
chest balances The recovery of loss and imposition of
penalty shall be done immediately on
detection, irrespective of number of
pieces.
iv. Non-compliance with operational Penalty of ₹5,000/- for each instance of
guidelines by currency chests detected irregularity.
by RBI officials e.g.
Penalty shall be enhanced to ₹10,000/-
a) Non-functioning of CCTV, non- in case of repetition / recurrence of
compliance with rules / guidelines irregularity in consecutive inspection
pertaining to CCTV, recording cycles or earlier.
preservation period and related issues
Penalty shall be levied immediately.
b) Branch cash / documents kept in
strong room (CC’s vault)
c) Non-utilisation of Note Sorting
Machines (NSMs) for sorting of notes
(NSMs not used for sorting of high
denomination notes, i.e. notes of
denomination ₹100 and above,
received over the counter or not used
for sorting notes remitted to chest /
RBI)
d) Non-conduct of surprise verification
of currency chest balances - at (i)
bimonthly intervals by officials
unconnected with the operations of
currency chest, and (ii) six-monthly
intervals by officials from the
Controlling Officev. Violation of any of the terms of ₹10,000/- for any violation of
agreement with RBI (for opening and agreement or deficiency of service.
maintaining currency chests) or
deficiency in service in providing ₹5 lakh in case there are more than 5
exchange facilities, as detected by RBI instances of violation of agreement /
officials e.g. deficiency in service by the currency
chest / branch in consecutive
a) Non-issue of coins over the counter inspection cycles or earlier. The levy of
to any member of public despite having such penalty shall be placed in public
stock. domain.
b) Refusal by any bank branch to Penalty shall be levied immediately.
exchange soiled notes / refusal by any
currency chest branch to adjudicate
mutilated notes tendered by any
member of public.
c) Denial of facilities / services to linked
branches / linked CCs of other banks.
d) Non acceptance of lower
denomination notes (i.e. denomination
of ₹50 and below) tendered by
members of public and linked bank
branches for exchange / deposit.
e) Detection by RBI of mutilated, built
up, counterfeit notes in re-issuable
packets prepared by the currency
chest branches.
vi. Non-replenishment of ATMs Penalty shall be levied in terms of
provisions of circular DCM(RMMT) No.
S153/11.01.01/2021-22 dated August
10, 2021 and instructions issued
subsequently.
3. Operational Guidelines on levy of penalties
3.1 Competent Authority
The Competent Authority to decide upon 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 / bank branch is located.3.2 Appellate Authority
i. Appeal against the decision of the Competent Authority may be made by the Controlling
Office of the currency chest / branch to the Regional Director / Chief General Manager /
Officer-in-Charge of the Regional Office concerned, within one month from the date of
debit, who shall decide whether the same can be accepted / rejected. Penalty waiver
request would be considered only if the application for the same is made in the CyM-CC
portal within the prescribed timelines. Waiver requests in any other mode shall not be
entertained. Appeals shall not be made in routine manner.
ii. Appeals for waiver of penalty made on grounds such as staff being new / untrained,
lack of awareness, corrective action having been taken / shall be taken, etc., shall not be
considered.