What changed
RBI has consolidated and updated its Scheme of Penalties for bank branches and currency chests into a single Master Direction, effective April 1, 2024. The direction specifies penalties for shortages in soiled note remittances, counterfeit notes, mutilated notes, and non-compliance with operational guidelines like CCTV maintenance and note sorting machine usage. Penalties are immediate and escalate for repeat offenses.
What it means for you
Banks must tighten their currency handling processes to avoid financial penalties and reputational risk. The scheme reinforces RBI's Clean Note Policy and operational efficiency goals, making compliance non-negotiable. Repeat violations will attract higher penalties, so banks need robust internal controls and regular audits.
What you must do
- Review and update internal procedures for soiled note remittances and currency chest operations to align with the new penalty scheme.
- Ensure all currency chests have functional CCTVs, use note sorting machines for ₹100 and above notes, and conduct surprise verifications as per schedule.
- Train branch staff on penalty implications for shortages, counterfeit notes, and mutilated notes to minimize errors.
- Set up a monitoring mechanism to track repeat violations and escalate corrective actions to avoid enhanced penalties.
Who it affects
All bank branches handling currency, Currency chest operators, Bank compliance and operations 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, the penalty is ₹500 per piece plus the loss amount.
How are repeat violations penalized under this scheme?
For operational guideline violations like non-functioning CCTV, the penalty is ₹5,000 per instance initially. If the same irregularity recurs in consecutive inspection cycles or earlier, the penalty is enhanced to ₹10,000 per instance.
Does this direction apply to all banks or only those with currency chests?
The Master Direction applies to all bank branches and currency chests. It covers deficiencies in customer service related to currency exchange, note sorting, and remittances to RBI.