What changed
This 2005 master circular consolidates and supersedes all prior instructions on penal interest for currency chest reporting lapses. It introduces a delay beyond three clear working days (including the date of transaction) threshold before penal interest applies, and clarifies that no minimum penal interest amount is stipulated. It also specifies that counterfeit banknotes in chest remittances result in full value debit and penal interest from the date of previous remittance to RBI.
What it means for you
Banks with currency chests must ensure same-day reporting to link offices and next-day consolidated reporting to RBI issue offices to avoid penal interest. The absence of a minimum penal interest floor means even small delays incur charges, emphasizing strict compliance. Counterfeit note detection in chests now carries severe financial penalties and mandatory police FIRs, increasing operational risk for banks.
What you must do
- Ensure all currency chest transactions are reported to link offices on the same day, with consolidated reports to RBI issue offices by the next working day.
- Implement internal controls to prevent wrong reporting, as penal interest applies until corrected advice is received.
- Train chest staff on counterfeit detection and immediate reporting procedures to avoid full-value debits and penal interest.
- Treat half-yearly/annual closing holidays as working days for reporting purposes, but seek RBI relaxation for general/specific strike periods.
Who it affects
All banks with currency chests, Link offices of currency chest banks, Sub-treasury offices reporting directly to RBI issue offices, Bank compliance and treasury operations teams
What is the minimum transaction amount for currency chest deposits/withdrawals?
The minimum amount is ₹1,00,000, and thereafter in multiples of ₹50,000.
What happens if counterfeit banknotes are found in chest remittances?
The entire value of counterfeit notes is debited to the bank's current account, penal interest is levied from the date of the previous remittance, and an FIR must be lodged with the police.
Is there a minimum penal interest amount for delayed reporting?
No, there is no minimum stipulation; penal interest is recovered in all cases to ensure timely and correct reporting.