RBI Encourages Banks to Set Up Cash Processing Centres
Current · Source: Reserve Bank of India · RBI/2009-10/320 · issued 19 Feb 2010 · ~2 min read
Quick answerRBI has accepted a High Level Group recommendation to encourage banks to set up Cash Processing Centres (CPCs) at key locations. CPCs will process high-denomination notes through machines, supporting the Clean Note Policy and reducing cash risks at branches.
The rule, in the simplest words
Banks must set up Cash Processing Centres (CPCs) with machines to check high-denomination notes for fitness and authenticity.
CPCs can serve other banks and non-bank entities like merchant establishments for a fee.
CPCs must conform to RBI's Note Authentication and Fitness Sorting Standards and be subject to RBI inspections at any time.
How it plays out — a real example
A currency-chest / cash officer in Indore, Mr. Kumar, is responsible for setting up a Cash Processing Centre to process high-denomination notes. He ensures that the machines at the CPC conform to RBI's standards and that the centre serves other banks and merchant establishments for a fee, making it a viable and efficient way to manage cash risks at branches.
What changed
RBI issued a directive in November 2009 requiring banks to process Rs. 100 and above notes through machines for fitness and authenticity before issuing them via ATMs or counters. Now, RBI has decided to accept the Group's recommendation to encourage banks to set up state-of-the-art CPCs with enhanced processing and storage capacities to further the Clean Note Policy.
What it means for you
Banks can now set up CPCs at existing currency chest branches, attached to chest branches at different locations, or as standalone centres. CPCs can serve other banks and even non-bank entities like merchant establishments for a fee, making them viable. This reduces overnight cash risks at branches and leverages economies of scale.
What you must do
Evaluate setting up CPCs at key locations to centralize note processing and storage.
Ensure all machines at CPCs conform to RBI's Note Authentication and Fitness Sorting Standards.
Consider offering CPC services to other banks and commercial entities at mutually agreed fees.
Prepare for RBI inspections of CPCs at any time.
Who it affects
All Scheduled Commercial Banks, Currency chest branches, Bank branches handling high denomination notes
❓ Common questions
What types of Cash Processing Centres can banks set up?
Banks can set up three types: a CPC at an existing currency chest branch in the same location, a CPC attached to an existing/new currency chest branch in a different location, or a standalone CPC that provides fitness sorting and authentication services only.
Can CPCs serve other banks or non-bank entities?
Yes, CPCs can serve other banks' branches and charge a reasonable fee at mutually agreed rates. Standalone CPCs can also serve merchant establishments, petrol pumps, etc., handling large cash volumes for a fee.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/320
DCM(Plg)No. G-18 /10.01.03/2009-10
February 19, 2010
The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks
Dear Sir
Setting up of Cash Processing Centres – Recommendation of HLG
We invite your attention to issue of a directive DCM (NPD)No. 3158 /09.39.00(Policy)/2009-10 dated November 2009 (issued under cover of our letter DCM(NPD)No. 3161/09.39.00(Policy)/2009-10 also dated 19 November 2009 enjoining upon the banks to necessarily check/process the notes in the denomination of Rs. 100 and above through Machines for fitness and authenticity, confirming to Standards prescribed by the Reserve Bank from time to time, before their issue through ATM/over counters. The instructions as above were issued by us pursuant to the recommendations of the High Level Group constituted under DG(UT) to look into various currency management practices in vogue.
2. The Group, inter alia, has also recommended setting up of Cash Processing Centres (CPCs) at various key locations with enhanced processing and storage capacities to tap advantages arising out of economies of scale, minimize overnight cash risks at bank branches and to benefit from sophisticated logistics techniques.
3. Since banks may find it difficult to install/maintain machines at all their branches dealing with notes of high denomination, it has been decided to accept the Group's recommendations with respect to CPC and encourage the banks to set up state of the art Cash Processing Centres (CPCs) with substantial processing and storage capacities. This would further RBI's objective of the Clean Note Policy.
4. Banks may consider any of the following three types of Cash Processing Centres (CPCs):
A CPC established at an existing currency chest branch in the same location.
A CPC attached to an existing/new currency chest branch in different location.
A stand alone CPC that provides only fitness sorting and authentication services (i.e. they shall collect mixed notes from the bank branches in the morning and would return the same, after processing/authentication checking/sorting, in the evening as unfit notes, fit/issueable notes (ATM Fit/Counter Fit and suspect notes).
5. To make the CPCs viable and also to take advantage of capacity built up, the CPCs may also serve the branches of other banks which may require its services and charge from them a reasonable fee for the services rendered at mutually agreed rates. The stand alone CPCs could also render services to others such as merchant establishments, petrol pumps, etc. handling large volumes of cash against payment of fees.
6. Machines to be installed at CPC shall confirm to "Note Authentication and Fitness Sorting Standards" prescribed by RBI (DCM).
7. CPC shall be subject to inspection by RBI at any time.
8. Please acknowledge receipt.
Yours faithfully
(R. Gandhi)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/320 · issued 19 Feb 2010. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks, Currency chest branches, Bank branches handling high denomination notes), your first concrete step on “RBI Encourages Banks to Set Up Cash Processing Centres” is: “Evaluate setting up CPCs at key locations to centralize note processing and storage.” (RBI issued this 19 Feb 2010).
Circular: RBI/2009-10/320 -- RBI Encourages Banks to Set Up Cash Processing Centres
Issued: 19 Feb 2010
Action required: Evaluate setting up CPCs at key locations to centralize note processing and storage.
Action required: Ensure all machines at CPCs conform to RBI's Note Authentication and Fitness Sorting Standards.
Action required: Consider offering CPC services to other banks and commercial entities at mutually agreed fees.
Action required: Prepare for RBI inspections of CPCs at any time.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5506&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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