What changed
RBI issued an updated Master Circular (DCM CC No.G-5/03.44.01/2022-23) dated April 01, 2022, replacing the April 2021 version. The annex details penalties for specific irregularities, including shortages in soiled note remittances and currency chest balances, counterfeit notes, mutilated notes, operational non-compliance (e.g., CCTV, NSM usage), and service deficiencies like refusal to exchange coins or soiled notes. Note: For service violations, a penalty of ₹5 lakh applies if there are more than 5 instances.
What it means for you
Banks face immediate penalties for shortages in note remittances: ₹50 per piece for notes of denomination up to ₹50, and equal to the value of the denomination per piece for ₹100 and above, in addition to the loss. Non-compliance with CCTV or NSM guidelines attracts ₹5,000 per instance, enhanced to ₹10,000 on recurrence. Service violations, like denying coin exchange or failing to conduct surprise verifications, cost ₹10,000 each, with a ₹5 lakh penalty if more than 5 instances occur.
What you must do
- Ensure all currency chest branches conduct bimonthly surprise verification of balances by officials unconnected with custody, and six-monthly by controlling office officials.
- Verify that Note Sorting Machines are used for sorting all ₹100 and above notes received over the counter or remitted to chest/RBI.
- Train branch staff to never refuse coin exchange, soiled note exchange, or mutilated note adjudication to any member of public.
- Check CCTV systems are functional, comply with recording preservation rules, and that no branch cash/documents are kept in the strong room vault.
- Immediately recover losses and levy penalties on detection of shortages or mutilated notes in remittances.
Who it affects
All scheduled commercial banks with currency chests, Bank branch managers handling cash and customer service, Currency chest in-charge officials, Internal audit and compliance teams
What is the penalty for a shortage of ₹500 notes in a soiled note remittance?
For notes of denomination ₹100 and above, the penalty is equal to the value of the denomination per piece in addition to the loss. So for a ₹500 note, penalty is ₹500 per piece plus the loss amount.
Are there penalties for not using Note Sorting Machines?
Yes. Non-utilization of NSMs for sorting high denomination notes (₹100 and above) received over the counter or remitted to chest/RBI attracts a penalty of ₹5,000 per instance, enhanced to ₹10,000 on recurrence.
What should a branch do if a customer asks for coin exchange?
The branch must issue coins over the counter if stock is available. Refusal to do so is a violation of the agreement with RBI and attracts a penalty of ₹10,000 per instance.