RBI Finalizes Note Sorting Machine Standards

RBI/2009-10/459 DCM(R&D)No.G-26/18.00.14/2009-10 May 11, 2010 The Chairman & Managing Director / Chief Executive Officer All Scheduled Commercial Banks (including RRBs) Scheduled State Co-operative Banks / Scheduled (Primary) Urban Co-op Banks Dear Sir/Madam Installation of Note Sorting Machines – Note Authentication and Fitness Sorting Parameters Please refer to paragraph 5 of our circular DCM. No. Cir. NPD. 3161/09.39.00 (Policy)/ 2009-10 dated November 19, 2009 on the captioned subject enclosing therewith our Directive DCM. No. Dir. NPD/3158/2009-10 of date. 2. We had, vide the above circular, mentioned that machines installed by banks for processing banknotes should conform to the standards / parameters prescribed by Reserve Bank of India from time to time. Accordingly, the draft guidelines on ''Note Authentication and Fitness Sorting Parameters'' were placed on our website on December 23, 2009 seeking comments / views.  After taking into account the comments received from various stakeholders including banks, equipment manufacturers and members of public, the guidelines on ''Note Authentication and Fitness Sorting Parameters'' have been finalized, which are enclosed herewith. 3. The guidelines may be implemented with immediate effect. 4. Please acknowledge receipt. Yours faithfully (S.K. Maheshwari) General Manager Encl : 3 Guidelines on Note Authentication and Fitness Sorting Parameters 1. Introduction A fit note is a note that is genuine, sufficiently clean to allow its denomination to be readily ascertained and thus suitable for recycling. An unfit note is a note that is not suitable for recycling because of its physical condition or belongs to a series that has been phased out by Reserve Bank of India. All the fitness parameters laid down in this document are to be evaluated individually. A note must pass all the fitness parameters to be considered fit for recycling. These parameters provide the minimum standards for cash handling machines used by banks (hereinafter called ‘the machines’). Notes can only be recycled / reissued if they are evaluated as genuine and fit according to these parameters. Authenticity check is a prerequisite for fitness sorting. Fitness sorting can be done only in case of genuine notes. The machines shall be able to identify and separate suspected counterfeits and notes which are unfit for circulation in terms of these standards in a reliable and consistent fashion. The Reserve Bank of India phases out certain series (issue) of notes from circulation from time to time. These notes, though considered legal tender unless otherwise specified, are unfit for recycling. As and when the Reserve Bank of India decides to phase out a specific series (issue) of a specific denomination of notes, the machines shall sort all the phased out notes as unfit, irrespective of their physical condition. 2. Applicability These parameters are applicable to machines operated by banks, either directly by their staff or indirectly by their agents. These machines can be of any of the following: machines which check the authenticity and fitness of notes, i.e. note processing machines / note sorting machines, and machines which check only the authenticity of notes, i.e. note authentication machines. All these machines shall classify the individual notes as either genuine or suspect. 3. Authenticity Check The machines shall perform authenticity check with reference to the features of genuine notes as disclosed by the Reserve Bank of India from time to time. Any note which is not found to be having all the features of a genuine note shall be classified by the machine as suspect. 4. Fitness Sorting As a part of fitness sorting, notes with any visual or physical defects are to be sorted as unfit as per the criteria set out in Table 1 . Table 1: Sorting Criteria

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/459 · issued 11 May 2010. The plain-English explanation above is BankPulse’s own independent summary.

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