What changed
The existing incentive and penalty scheme for bank branches and currency chests has been reviewed and revised, effective from August 12, 2013. Key changes include higher incentives for exchanging soiled notes (₹2 per packet for denominations up to ₹50) and distributing coins (₹25 per bag), with payments based on net withdrawal from currency chests. The revised scheme extends incentives for coin vending machines to all scheduled commercial banks, including RRBs and UCBs, regardless of whether they maintain currency chests. Other machines (coin pouch vending, note packet vending, cash acceptors, cash recyclers, desktop authenticating machines, ATMs dispensing lower denomination notes) are eligible for 50-75% cost reimbursement, but this is not explicitly extended to RRBs/UCBs without currency chests. Note Sorting Machine reimbursement is applicable only to RRBs and UCBs.
What it means for you
Banks can now claim higher incentives for customer-facing currency services, which should improve service quality and reduce public complaints about note and coin availability. The expansion of incentives to cover technological interventions like coin vending machines and cash recyclers encourages banks to invest in automation, potentially lowering operational costs over time. However, banks must ensure coins are distributed in small lots to retail customers and not to bulk buyers, with RBI verifying compliance through inspections and incognito visits.
What you must do
- Update internal processes to claim incentives based on net withdrawal from currency chests for coin distribution, without waiting for RBI claims.
- Implement checks and balances to ensure coins are distributed to retail customers in small lots, not bulk.
- Consider investing in coin vending machines, note sorting machines (for RRBs/UCBs), and other cash-handling tech to avail of 50-75% cost reimbursement as per scheme.
- Acknowledge receipt of this circular.
Who it affects
All Scheduled Commercial Banks, Regional Rural Banks (RRBs), Urban Co-operative Banks (UCBs), Currency chest operators, Bank branches handling note and coin exchange
What is the incentive for exchanging soiled notes?
Banks receive ₹2 per packet for exchanging soiled notes in denominations up to ₹50, as per the revised scheme.
Are RRBs and UCBs eligible for incentives on coin vending machines?
Yes, the revised scheme extends incentives for coin vending machines to all scheduled commercial banks, including RRBs and UCBs, even if they do not maintain currency chests.
How will RBI verify compliance with coin distribution rules?
RBI Regional Offices will verify through inspections of currency chests and incognito visits to branches to ensure coins are distributed to retail customers in small lots.