What changed
RBI observed that despite earlier circulars, forged notes continue to be detected in chest remittances. It now mandates a time-bound plan: banks with up to 100 currency chests must install sorting machines by end-May 2005 and submit an Action Taken Report (ATR) by May 31, 2005; banks with more than 100 chests have until end-November 2005 with ATR by November 30, 2005. The installation program must be reported to RBI's Issue Offices within one month.
What it means for you
Banks must urgently invest in table-top note sorting machines for all chest branches to prevent forged notes from re-entering circulation. This will increase operational costs but reduce RBI penalties and reputational risk from counterfeit detection. Chest branches must now sort notes before remittance, ensuring only reissuable notes go to the public and soiled notes are sent to RBI.
What you must do
- Assess your bank's total currency chest count and classify as ≤100 or >100 to determine the deadline.
- Procure and install table-top note sorting machines of appropriate capacity at all chest branches by the respective deadline.
- Submit the installation program to your Zonal/Circle/Regional Office for reporting to RBI's Issue Offices within one month.
- Ensure sorting machines are used to separate reissuable notes from soiled notes before public issue or RBI remittance.
- Prepare and submit the Action Taken Report (ATR) to RBI by May 31, 2005 (≤100 chests) or November 30, 2005 (>100 chests).
Who it affects
All banks operating currency chests, Chest branch managers and operations teams, Bank procurement and IT departments, RBI Issue Offices
What happens if we miss the installation deadline?
The circular does not specify penalties, but RBI expects strict compliance to curb forged notes. Non-compliance may lead to regulatory action or increased scrutiny of chest operations.
Do we need sorting machines at every branch or only chest branches?
The mandate is specifically for all currency chest branches. Non-chest branches are not covered by this circular, but earlier guidance urged careful examination at receipt.
What capacity of sorting machine is required?
RBI says 'appropriate capacity' but does not define specific throughput. Banks should choose machines that handle their chest's average daily note volume efficiently.