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The Reserve Bank of India (RBI) continues its commitment to maintain transparency and efficiency in currency management. The recent issuance of the Master Direction on Penal Provisions in reporting of transactions/balances at Currency Chests reaffirms RBI’s focus on ensuring accurate and timely reporting of currency transactions.

Detailed Analysis

The Master Direction provides comprehensive guidelines on reporting procedures, time limits, penalties for delayed or incorrect reporting, and operational frameworks for currency chests. Here’s a breakdown of key points:

1. Reporting Procedure:

  • Specifies the minimum deposit and withdrawal amounts for currency chests.
  • Sets strict time limits for reporting transactions through the CyM – CC portal, emphasizing same-day reporting by 7 pm.
  • Addresses reporting procedures during holidays and strikes, ensuring continuity in data submission.

2. Penal Provisions:

  • Levies penal interest for delayed reporting, calculated on a T+0 basis.
  • Imposes penalties for wrong reporting, including erroneous remittance categorization and inclusion of ineligible amounts in chest balances.
  • Defines penalties for reporting soiled note remittances and diversions incorrectly.

3. Rate of Penal Interest: Penal interest is set at 2% over the prevailing Bank Rate for delayed reporting, wrong reporting, and inclusion of ineligible amounts in chest balances.

4. Business Continuity Plan: Provides guidelines for banks to ensure uninterrupted reporting, including user interchangeability within banks and mapping during technical issues.

5. Operational Guidelines: Designates competent and appellate authorities for decision-making and appeals. Specifies the criteria for considering waiver requests, emphasizing genuine difficulties and adherence to prescribed timelines.

Conclusion

The Master Direction on Penal Provisions in reporting of transactions/balances at Currency Chests reinforces RBI’s efforts to maintain the integrity and efficiency of currency management systems. By outlining clear reporting procedures, penalties, and operational guidelines, RBI aims to promote transparency, accuracy, and discipline among banks operating currency chests. Adherence to these directives is crucial for sustaining the integrity of currency management practices and upholding public trust in the banking system.

Reserve Bank of India

RBI/DCM/2024-25/114
DCM (CC) No.G-2/03.35.01/2024-25

April 01, 2024

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

Annex

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 Rs. 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 email 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 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 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 (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 Rs. 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 Rs. 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 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). 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 and levy 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 CC portal, CyM 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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