What changed
This is a revised and updated version of the earlier scheme dated July 1, 2020. The master circular consolidates all previous instructions on penalties for deficiencies in note/coin exchange, soiled note remittances, and currency chest operations. It specifies penalty amounts for various irregularities, including shortages, counterfeit notes, mutilated notes, and non-compliance with operational guidelines.
What it means for you
Banks must ensure strict compliance with Clean Note Policy and operational guidelines for currency chests to avoid immediate penalties. The penalty structure is designed to deter poor customer service, such as refusal to exchange notes/coins or non-use of note sorting machines. Repeated violations attract higher penalties, emphasizing the need for robust internal controls and regular audits.
What you must do
- Train branch staff on proper note/coin exchange procedures and Clean Note Policy compliance.
- Ensure currency chests follow all operational guidelines, including CCTV functioning and bimonthly surprise verifications.
- Implement immediate corrective actions for any detected shortages or mutilated notes to avoid penalty escalation.
- Review and update internal audit processes to detect and prevent counterfeit notes in remittances and chest balances.
Who it affects
All bank branches handling cash exchange, Currency chest operators, Bank compliance and audit teams, Branch managers and customer service staff
What is the penalty for a shortage of a ₹100 note in a soiled note remittance?
For notes of ₹100 and above, the penalty is equal to the value of the denomination per piece, in addition to recovering the loss amount. So for a ₹100 note, the penalty is ₹100 plus the loss.
What happens if a currency chest branch refuses to exchange soiled notes for a customer?
This is considered a violation of the agreement with RBI. The penalty is ₹10,000 for any such violation, levied immediately. If there are more than 5 instances, the penalty is ₹5 lakh and placed in public domain.
Are penalties for mutilated notes different from counterfeit notes?
Yes. For mutilated notes, the penalty is ₹50 per piece regardless of denomination, plus recovery of loss. Counterfeit note penalties follow separate instructions issued by RBI's DCM (FNVD) department.