## Report on RBI 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 regarding the Scheme of Penalties for bank branches and Currency Chests for deficiency in rendering customer service. The core purpose of this policy is to ensure proper customer service by bank branches and currency chests, aligned with the Clean Note Policy and enhanced operational efficiency. Key findings include the establishment of a structured penalty system for various irregularities, a defined process for appeals, and a clear assignment of authority for administering the penalties. The document appears to be a comprehensive, updated guideline compilation.
**2. Introduction:**
This report aims to provide an informative overview of the RBI's Master Direction on the Scheme of Penalties for bank branches and Currency Chests for deficiency in rendering customer service to the public. The analysis is based solely on the provided policy text.
**3. Policy Overview:**
This document appears to be a *new* Master Direction, incorporating updated guidelines and circulars on the subject.
**Core Objective(s):**
Based on the text, the core objectives are:
* To ensure all bank branches and currency chests provide better customer service to the public.
* To support the Clean Note Policy.
* To enhance operational efficiency in currency management.
**4. Background and Rationale:**
This is a new policy document compiling existing guidelines and instructions. The policy addresses potential deficiencies in customer service provided by bank branches and currency chests. The policy aims to improve customer service and operational efficiency. The penalties are intended to disincentivize non-compliance with RBI's guidelines and the terms of agreement with RBI.
**5. Key Provisions / Changes:**
This is a new Master Direction, so this section will detail the main components and rules outlined in the text.
* **Penalty Structure:** The document establishes a penalty scheme for various irregularities, including:
* Shortages of notes and coins in soiled note remittances and currency chest balances. Penalties are based on denomination and quantity.
* Detection of counterfeit notes. Penalties are to be levied according to existing DCM FNVD instructions.
* Detection of mutilated notes. Penalties are based on a per-piece rate, irrespective of denomination, in addition to covering the loss.
* Non-compliance with operational guidelines by currency chests, such as non-functioning CCTV, or non-compliance to rules about sorting, verification, and cash documents. Penalties range from 5,000 to 10,000 depending on recurrence.
* Violation of the terms of agreement with the RBI for opening and maintaining currency chests, or deficiency in service. Penalties of 10,000 per violation escalating to 5 lakh in case of multiple instances in a financial year. Specific violations listed include non-issue of coins over the counter, refusal to exchange soiled notes or adjudicate mutilated notes, denial of services to linked branches, and non-acceptance of lower denomination notes.
* Non-replenishment of ATMs. Penalties are to be levied as per existing circulars on the topic.
* **Operational Guidelines:**
* The Officer-in-Charge of the Issue Department of the Regional Office is the Competent Authority to decide on the nature of irregularities.
* A defined appeal process is established, allowing the Controlling Office of the bank branch/currency chest to appeal the decision of the Competent Authority to the Regional Director/Chief General Manager within one month of the debit. Appeals must be made through the CyMCC portal.
* Appeals based on reasons such as new or untrained staff, lack of awareness, or corrective action having been taken will not be considered.
**6. Target Audience and Stakeholders:**
The primary target audience and stakeholders are:
* All banks and their branches, particularly those operating currency chests.
* Members of the public who are customers of these banks.
* RBI officials involved in currency management and supervision.
* Linked bank branches and linked currency chests of other banks.
**7. Implementation Aspects (Inferred):**
* **Responsible Agency/Bodies:**
* Reserve Bank of India (RBI)
* Issue Department of the Regional Office of the RBI
* Banks and their branches, particularly those operating currency chests.
* **Timelines/Procedures:**
* Penalties are to be levied immediately upon detection of irregularities.
* Appeals must be made within one month from the date of debit.
* Surprise verification of currency chest balances must be conducted at bi-monthly and six-monthly intervals.
* The CyMCC portal is the means of communication for waiver requests.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* Improved customer service at bank branches and currency chests.
* Enhanced compliance with the Clean Note Policy.
* Increased operational efficiency in currency management.
* Reduced instances of irregularities related to currency handling.
* Deterrence against non-compliance with RBI regulations.
* Greater accountability of banks in providing services to the public.
**9. Conclusion:**
The RBI's Master Direction on the Scheme of Penalties for bank branches and Currency Chests represents a comprehensive framework for promoting better customer service and operational efficiency within the banking sector. The document establishes a clear penalty structure, defines responsibilities, and sets out procedures for implementation and appeals. This Master Direction is significant as it provides a consolidated and updated set of guidelines that banks must adhere to, ultimately benefiting the public by ensuring better service and adherence to the Clean Note Policy.
Key Entities Referenced
RESERVE BANK OF INDIA: The central bank of India, the issuer of the notification.
RBI Act, 1934: Refers to the Reserve Bank of India Act, 1934, which provides the legal basis for the RBI's functioning.
Banking Regulation Act, 1949: Refers to the Banking Regulation Act, 1949, which regulates the banking industry 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 framework established by the Reserve Bank of India for imposing penalties on bank branches and currency chests for deficiencies in customer service.
Master Direction: A consolidated set of instructions and guidelines issued by the Reserve Bank of India on a specific subject matter. This one pertains to the Scheme of Penalties.
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 within the Reserve Bank of India responsible for currency management.
Currency Chests: Designated bank branches authorized by the Reserve Bank of India to store banknotes and coins on its behalf.
ATMs: Automated Teller Machines, where cash replenishment deficiencies are subject to penalties
DCM FNVD No.G116.01.05202324 dated April 03, 2023: A circular issued by the DCM FNVD regarding counterfeit notes.
Note Sorting Machines NSMs: Machines used for sorting banknotes.
DCMRMMT No. S15311.01.01202122 dated August 10, 2021: A circular related to non-replenishment of ATMs.
Issue Department of the Regional Office: The department responsible for currency management at the regional offices of the RBI. The Officer-in-Charge is the Competent Authority.
Regional Director: A high-ranking official in charge of a regional office of the Reserve Bank of India.
Chief General Manager: A high-ranking official in the Reserve Bank of India.
Officer-in-Charge: The officer in charge of the regional office, who is also the competent authority.
CyMCC portal: Online portal for submitting penalty waiver requests.
भारतीय �रज़व� ब�क
_____________ RESERVE BANK OF INDIA______________
www.rbi.org.in
RBI/2023-24/100
DCM (CC) No.G-3/03.44.01/2023-24 April 03, 2023
The Chairman/Managing Director/Chief Executive Officers
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 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 and enhancing the operational efficiency as
part of currency management. In order to ensure 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 better
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 ₹ 50/- per piece in addition to the loss.
balances
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 Penalty shall be levied in terms of the
soiled note remittances and instructions issued by DCM (FNVD)
currency chest balances. No.G-1/16.01.05/2023-24 dated April
03, 2023iii. Mutilated notes (including ₹ 50/- per piece irrespective of the
deliberately cut notes and built-up denomination in addition to the loss.
notes) detected in soiled note
remittances and currency chest The recovery of loss and imposition of
balances 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 irregularity.
detected by RBI officials e.g.
Penalty shall be enhanced to ₹10,000 in
a) Non-functioning of CCTV, non- case of repetition / recurrence of
compliance with rules / guidelines irregularity during a financial year.
pertaining to CCTV, recording
preservation period and related Penalty shall be levied immediately.
issues.
b) Branch cash / documents kept
in strong room (CC’s vault).
c) Non-utilization 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
Office.
v. Violation of any of the terms of ₹ 10,000 for any violation of agreement
agreement with RBI (for opening or deficiency of service.
and maintaining currency chests)
or deficiency in service in ₹ 5 lakh in case there are more than 5
providing exchange facilities, as instances of violation of
detected by RBI officials e.g. agreement/deficiency in service by the
branch, during a financial year. The levy
a) Non-issue of coins over thecounter to any member of public of such penalty shall be placed in public
despite having 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 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 fromthe 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.