Home › Circulars › RBI/2013-2014/179

Revised Incentives for Banknote and Coin Distribution (August 12, 2013)

Current · Source: Reserve Bank of India · RBI/2013-2014/179 · issued 12 Aug 2013 · ~3 min read

Quick answerRBI has revised the incentive scheme for banknote and coin distribution, effective August 12, 2013. Higher incentives are offered 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 cash-related 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.

The rule, in the simplest words

Banks get ₹2 for each packet of dirty notes (up to ₹50 notes) they take from people and give clean ones.
Banks get ₹25 for each bag of coins they give to customers, but only if they take the coins from a currency chest (a special bank vault).
Banks must give coins in small amounts to regular people, not to big buyers who buy in bulk.
Banks can get back 50-75% of the cost of machines like coin vending machines or cash recyclers (machines that give or take cash).
Only RRBs (rural banks) and UCBs (cooperative banks) can get money back for note sorting machines (machines that sort dirty notes).

How it plays out — a real example

A co-operative bank branch officer in Indore notices customers often complain about not getting coins for small purchases. She uses the new RBI rule to claim ₹25 per bag of coins her branch distributes from their currency chest, and she convinces her manager to buy a coin vending machine, knowing the bank can get 50% of the cost back from RBI. This makes customers happier and saves the bank money.

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

❓ Common questions

Regulatory timeline

Stated effective date effective August 12, 2013
Decoded by BankPulse 2026-06-18 13:30 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

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.

📜 Read the original circular — full text as issued by RBI

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 193 kb ) Distribution of Banknotes and Coins - Review of Incentives and Penalties RBI/2013-2014/179 DCM (CC) No. G- 10/03.39.01/2013-14 August 12, 2013 The Chairman & Managing Directors / Chief Executive Officers All Scheduled Commercial banks (Including RRBs and UCBs) Dear Sir/Madam Distribution of Banknotes and Coins - Review of Incentives and Penalties Please refer to paragraph 109 of the Monetary Policy Statement 2013-14 announced on May 03, 2013 ( extract enclosed ). In this connection, a reference is invited to the Master Circular DCM (CC) No. G – 3/03.39.01/ 2013-14 dated July 01, 2013 on the Scheme of Incentives and Penalties for bank branches including currency chests based on the performance in rendering customer service to members of public. 2. Accordingly, the existing Scheme of Incentives and Penalties has been reviewed taking into consideration the recent developments in the area of exchange and distribution of bank notes and coins to the public. The revised Scheme endeavors to provide improved customer service to the common person both by extending higher incentives to the banks as also by expanding the activities covered, with major thrust on technological interventions in the issue and distribution of banknotes and coins. The details of the revised incentives are enclosed. 3. These instructions come into force with immediate effect. All other instructions contained in the above Master Circular dated July 01, 2013, remain unchanged. 4. Please acknowledge receipt. Yours faithfully, (B. P. Vijayendra) Principal Chief General Manager Encls: As above Extract of Monetary Policy Statement 2013-14 Currency Management Distribution of Banknotes and Coins – Review of Incentives and Penalties 109. In pursuance of the announcement made in the Monetary Policy Statement of April 2012, a roadmap for making available services relating to distribution of banknotes and coins to members of the public by identified branches of banks for improved customer service is being worked out. Revised Scheme of Incentives and Penalties: Sl.No Nature of service Particulars of incentives 1. i) Exchange of soiled notes /adjudication of mutilated bank notes over the counter at bank branches. i) Exchange of soiled notes : ` 2.00/- per packet for exchange of soiled notes in denominations up to ` 50/- ii) Distribution of coins over the counter. (i) ` 25/- per bag for distribution of coins over the counters. (ii) The incentives would be paid on the basis of net-withdrawal from currency chest, without waiting for claims from banks. (iii) Banks may put in place a system of checks and balances to ensure that coins are distributed to retail customers in small lots and not to bulk. (iv) The distribution of coins shall be verified by RBI Regional Offices through inspection of currency chest/incognito visit to branches etc. 2 Establishment of Coin Vending Machines: The existing level of incentive of (a) Reimbursement of 50% of capital expenditure in case of urban/metro centers and reimbursement of 75% of capital expenditure in case of rural and semi urban centers and (b) reimbursement of revenue cost @ ` 25/- per bag, as applicable to commercial banks maintaining currency chests would now be applicable to all the scheduled commercial banks, including urban co-operative banks and regional rural banks (irrespective of whether they maintain currency chests or not). 3 Installation of Machines which extend cash related retail services to the public like – (i) Coin Pouch Vending Machines (ii) Note Packet Vending machines (iii) Cash Acceptors (iv) Cash Recyclers (v) Desktop banknote authenticating machines (vi) ATMs dispensing lower denomination notes. 50% of cost of installation in urban / metropolitan areas and 75% in semi-urban and rural areas. 4 Installation of Note Sorting Machines (NSMs). Applicable only to RRBs and UCBs- 50% of cost of installation in urban / metropolitan areas and 75% in semi-urban and rural areas. 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-2014/179 · issued 12 Aug 2013. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks, Regional Rural Banks (RRBs), Urban Co-operative Banks (UCBs), Currency chest operators, Bank branches handling note and coin exchange), your first concrete step on “Revised Incentives for Banknote and Coin Distribution (August 12, 2013)” is: “Update internal processes to claim incentives based on net withdrawal from currency chests for coin distribution, without waiting for RBI claims.” (RBI issued this 12 Aug 2013).

Circular: RBI/2013-2014/179 -- Revised Incentives for Banknote and Coin Distribution (August 12, 2013)
Issued: 12 Aug 2013
Action required: Update internal processes to claim incentives based on net withdrawal from currency chests for coin distribution, without waiting for RBI claims.
Action required: Implement checks and balances to ensure coins are distributed to retail customers in small lots, not bulk.
Action required: 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.
Action required: Acknowledge receipt of this circular.
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=8304&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.