Cash Management – Clean Note Policy
Clean Note Policy: The usage of stapling is causing mutilation of notes and shortening the life of the currency. RBI prohibited the banks from stapling currency notes under section 35A BR Act with an objective to provide clean notes to public. As per policy, Banks should
- Issue clean notes to the public and accept small denominations such as Rs.1/, Rs.2/- & Rs.5/-.
- Not issue number cut notes to public. Any deviation in this regard attracts penalty.
- Desist from writing anything whatsoever on the Bank Notes.
- Educate the customers and members of the public in this regard.
- Ensure sorting all notes by branches and only Clean Notes/issuable notes are put into circulation amongst general public.
- Ensure that branches are not hoarding any Fresh Notes and coins and to be distributed to the customers.
RBI has issued following plan of action with regard to withdrawal of all old series of Banknotes issued prior to 2005:
- All older series of bank notes issued prior to 2005 would be acceptable for all kinds of monetary transactions only till March 31, 2014
- Thereafter, the public will be required to approach branches which would provide them exchange facilities on an ongoing basis
- These notes will continue to be legal tender
- From July 01, 2014, to exchange more than 10 pieces of Rs. 500 and Rs. 1000 notes, branches should obtain proof of identity and residence from noncustomers.
All branches are advised to provide exchange facilities to stop re-issue of older series banknotes issued prior to 2005. The notes so accepted are deposited to Currency Chests.
Counterfeit Notes: In order to combat the menace, RBI has issued guidelines to all Banks/Financial Institutions on detection and impounding of counterfeit notes. It is necessary that
- Currency notes received are carefully examined and impound counterfeit notes wherever detected to curb circulation of such notes to public.
- Counterfeit Notes detected shall be branded with a stamp (size of 5 cm x 5 cm) “Counterfeit Bank Note” with branch/office name, date and signature.
- Branch/Office is required to issue acknowledgement to the tenderer of counterfeit note and it should be signed by the tenderer of counterfeit notes and counter cashier with details such as serial number, denomination and number of pieces.
- FIR is required to be filed in case where the counterfeit notes found are five pieces and above in a single transaction and acknowledgement is to be obtained from the concerned police authorities. However, in other cases, a consolidated report is to be sent to Police once in a month.
- RBI reimburses to the extent of 25% of the notional value of the counterfeit notes of Rs.100 denomination & above, detected and reported to RBI/Police.
- All Counterfeit Notes received back from police authorities are to be preserved in the safe custody of the branch / office for a period of 3 years. Thereafter, these notes are to be sent to the concerned issue office of RBI with full details.
- In no case, the Counterfeit Notes should be returned to the tenderer or destroyed by the bank branches / treasuries.
- Banks should put in place adequate safeguards / checks before loading currency notes in ATMs.
Cash Remittances: Cash movement takes place from one branch to another branch and branch to currency chest and vice versa on a regular basis. Branches / Offices are required to be adhered the following guidelines since it is an important and sensitive one. The guidelines are as under:
|Remittance||Staff / Security Personnel to be accompanied|
|Below Rs.50 lakh||One Clerk / Officer with 1 Sub-staff and 1 Security Guard (if available at the branch)|
|> Rs.50 lakh & < Rs.100 lakh||One Officer, 1 Sub-staff and 2 Armed Guards|
|Rs. 100 lakh & above||One Officer, 1 Sub-staff and Armed Police Escort|
|Security Escort for cash remittances by Cash Vans|
|Up to Rs.200 lakh||To be escorted by 2 Bank Guards|
|> Rs.200 lakh & up to Rs.1000 lakh||To be escorted by 3 Bank Guards|
General Precaution in Remittances:
- Remittance is to be done in Cash Van or Four Wheeler Vehicles. Cash Van must have Alarm system and Fire Extinguishers.
- Avoid Three Wheeler Vehicles. Two Wheeler Vehicles should not be used.
- Cash Remittance may be done on foot provided the distance is short (within the complex) and the remittance must not be over Rs.2 lakhs.
- Cash must be carried in Steel Boxes only.
- Armed Guard must sit in front.
- Remittance is to be done during Day time only.
- Probationary Officers are not to be detailed for cash remittance.
- In case of non availability staff, a clerk can be substituted for sub-staff and an offer for a clerk.
Surprise Verification of Cash at Branches: All Branch Heads should carry out verification of cash of their respective branches every month, at different dates of the month with total confidentiality. The verification should also be rotated every month i.e. once before commencement of office hours, another time at the middle of the day and sometimes at the close of the office hours. Besides the above, branches are subject to surprise verification of cash by controlling offices once in a quarter. Surprise verification report shall cover the aspects such as maintenance of Cash Movement / Key Movement / Cash Discrepancy Registers, maintenance of cash beyond retention limit, maintenance of Bait Money and shortage/excess of cash, if any. Wherever cash position is in excess of Cash Retention Limit, the entire cash on hand should invariably be verified by the Branch Manager and necessary endorsement should be recorded thereof.
Surprise Verification of Cash at Currency Chests: The balances of each currency chest should be verified at least once in a month by an officer not connected with the custody of the chest. A record of such verification should be maintained in a register at each chest. Two percent of balances in each denomination of Rs. 100/-, Rs. 500/- and Rs. 1000/- may be verified through Note Sorting Machines. The balances may be verified once in six months by the officials from the Controlling Office of the bank by packets and bundles and five percent of the balances in all denominations should be verified through Note Sorting Machines. The officials from Controlling Office after verifying the balances may send the original balance certificate to the Nodal Officer for Currency Management at Head Office, Operations Department. Non-conformity to the above would attract penalty.
Incentives & Penalties: RBI introduced scheme in the month of September 2008 for providing incentives to banks for extending enhanced services in the area of mutilated/soiled notes & coin distribution and levying penalties for deficiency in providing services to members of the public. (Cir no. 158 Ref 55/13 dt.19.07.12)
|1||Adjudication of Mutilated Bank Notes||Rs.2/- per piece|
|2||Exchange of Soiled Notes||One rupee per packet in Rs.5/- Rs.10/- Rs.20/- and Rs.50/- denomination|
|3||Distribution of Coins over the counter||Rs.25/- per bag.|
|4||Establishment of coin vending machines||Capital Cost-Urban/Metro Centers 50% - Rural & SU centers 75% Operational cost @ Rs.25 per bag.|
|Scheme on Penalties|
|Shortage in soiled note remittances and currency chest balances||Rs.50/- per piece in addition to the loss (shortage) in case of notes in denomination up to Rs.50/-. However, for notes in denomination of Rs.100/- and above, the penalty is equal to the value of the denomination per piece in addition to the loss.|
|Counterfeit notes detected in soiled note remittances and currency chest balances||Equal to the value of the counterfeit note in addition to the loss.|
|Mutilated notes detected in soiled note remittances and currency chest balances||Rs.50/- per piece irrespective of the denomination.|
|Non compliance of operational guidelines such as non-functioning of CCTV, non utilization of NSMs and keeping branch cash / documents in strong room.||Rs.5000/- for each irregularity. Penalty will be enhanced to Rs.10000/- in case of repetition.|
|Violation of norms during RBI inspection viz., i) Non issue of coins over the counter to any member of public, despite having stock. ii) Refusal to exchange soiled notes/ adjudicate mutilated notes tendered by any member of public. iii) Not conducting surprise verification of chest balances, at least at bimonthly intervals by officials unconnected with the custody thereof. iv) Denial of facilities/services to linked branches of other banks. v) Non acceptance of lower denomination notes (Rs.10/- Rs.20/- and Rs.50/-) tendered by members of public and linked bank branches. vi) Detection of mutilated / counterfeit notes in ‘reissuable’ packers prepared by the chest.||Rs.10,000/- for any violation of agreement in this regard/deficiency of service Rs.5.00 lakhs in case there are more than 5 instances of violation by the branch. The same will be placed in public domain.|
RBI during their Incognito visits to Branches may levy penalty with regard to non adherence of above guidelines and the same will be recovered from the officials responsible for such lapses. Hence all branches have to follow the laid down norms scrupulously without any deviation.