**Policy Summary: RBI Specified Bank Notes (SBNs) Deposit Guarantee Scheme**
This policy, reference number RBI201617153 DCM Plg No.138310.27.00201617, issued on November 24, 2016, by the Reserve Bank of India (RBI), introduces a Guarantee Scheme designed to alleviate the strain on bank branches and currency chests caused by the massive accumulation of Specified Bank Notes (SBNs) following demonetization.
The scheme allows banks to deposit SBNs directly with RBI offices located within their jurisdiction. These SBNs will be stored in RBI vaults under the depositing bank's lock and key until processing. The RBI will provide immediate credit to the bank's current account for the deposited SBNs. Any shortages, counterfeit notes, or mutilated notes detected during subsequent processing will be recovered from the concerned bank.
This facility is available to all Public Sector Banks, Private Sector Banks, Foreign Banks, Regional Rural Banks, Urban Cooperative Banks, and State Cooperative Banks at all RBI Issue Offices. Banks are required to enter into an agreement (Annex) with the relevant Regional Office of the RBI to participate in the scheme.
The scheme is effective from November 25, 2016. The annex includes a Guarantee Bond Format, which requires the bank to agree to abide by the conditions imposed by the Regional Director/Chief General Manager. The bank agrees to immediately rectify any deficiencies found in the SBN tenders, including shortages, mutilated notes, built-up notes, and counterfeit notes. The RBI is also authorized to recover these deficiencies by debiting the bank's current account. The undertaking remains valid until revoked by written notice. The Guarantee Bond includes fields for the Bank's Name, Signature of the authorized official, Date, Designation of the Authorized Official, Official ID and Seal No.
Key Entities Referenced
Specified Bank Notes (SBNs): Refers to Legal Tender notes of denominations 500 and 1000 that were withdrawn from circulation.
Reserve Bank of India (RBI): The central bank of India, responsible for monetary policy and regulation of the banking system. It is offering a Guarantee Scheme for SBN deposits.
Public Sector Banks: Banks in India with majority government ownership, addressed in the notification.
Private Sector Banks: Banks in India with majority private ownership, addressed in the notification.
Foreign Banks: Banks operating in India but headquartered in other countries, addressed in the notification.
Regional Rural Banks: Regional Rural Banks in India, addressed in the notification.
Urban Cooperative Banks: Urban Cooperative Banks in India, addressed in the notification.
State Cooperative Banks: State Cooperative Banks in India, addressed in the notification.
RBI/2016-17/153
DCM (Plg) No.1383/10.27.00/2016-17 November 24, 2016
The Chairman / Managing Director/Chief Executive Officer,
Public Sector Banks / Private Sector Banks / Foreign Banks / Regional Rural Banks /
Urban Co-operative Banks / State Co-operative Banks
Dear Sir,
Specified Bank Notes (SBNs) - Deposit under Guarantee Scheme to decongest
the storage facilities at banks
As you are aware there is a massive accumulation of SBNs at branches of banks
and currency chests putting strain on processing capacities and storage facilities.
This is slowing down the deposit of accumulated SBNs into chests.
2. For resolution of the problem it is decided to revive the Guarantee Scheme to
enable deposit of SBNs with RBI. The details of the scheme are as under:
i. Banks may deposit SBNs directly with the offices of RBI under whose
jurisdiction they are located. These SBNs will remain, in the vaults of RBI,
under the lock and key of the depositing banks till taken up for examination.
ii. For the SBNs deposited by banks, RBI will afford credit to their current
accounts maintained with RBI. Thereafter, if any shortage, counterfeit note,
mutilated note, etc. is detected during detailed processing at RBI, the value of
the same will be recovered from the bank concerned.
iii. This facility will be extended to all banks and be available at all our Issue
Offices.
iv. To avail the facility banks need to enter into an agreement (Annex) with
Regional Offices of RBI concerned.
3. The scheme is effective from November 25, 2016
4. Please acknowledge receipt.
Yours faithfully,
(P Vijaya Kumar)
Chief General Manager
Encl.Annex – Guarantee Bond Format
The Regional Director / Chief General Manager
Reserve Bank of India
Issue Department
(Address)
Dear Sir,
In consideration of the Reserve Bank of India consenting to make an immediate
payment of the value of exchange for the Legal Tender withdrawn notes in the
denominations of ` 500 and ` 1000, hereafter referred to as Specified Bank Notes
(SBNs) tendered by us (Name of the Bank) pending detailed examination of the
tender, we (Name of the Bank) hereby agree to abide by the conditions imposed by
the (Regional Director / Chief General Manager) in such cases and at once make
good, without demur, any deficiency that may be found to exist in such tenders in
SBNs including shortages, mutilated notes, built up notes, counterfeit notes, etc. We
also authorise Reserve Bank of India to recover the shortages and other deficiencies
by debit to our current account maintained with the Reserve Bank. The undertaking
will remain in force until revoked by a notice in writing.
Yours faithfully,
For and on behalf of
(Name of the bank)
(Signature of the authorised official) Dated the (Date) day of
(Designation of the Authorised Official) (Month) (Year)
(Official ID / Seal No.)