RBI/2023-24/101

DCM (CC) No.G-4/03.35.01/2023-24 April 03, 2023

The Chairman/ Managing Director/Chief Executive Officer

Madam / Dear Sir

Master Direction on Penal Provisions in reporting of transactions/ balances at

In terms of the Preamble to and Section 45 of the RBI Act, 1934 and Section 35 A of the
Banking Regulation Act, 1949, Reserve Bank of India issues guidelines / instructions for
realising the objectives of Clean Note Policy as part of currency management. With a view
to sustain these efforts and to ensure timely and accurate reporting of currency chest
transactions, instructions on the subject have been issued from time to time.

2. The enclosed Master Direction incorporates updated guidelines / circulars on the

Yours faithfully,

(Sanjeev Prakash)
Chief General Manager

E nel: As above
 Annex

Master Direction on Penal Provisions in reporting of transactions/ balances at

1. Reporting Procedure

1.1 Reporting of Currency Chest Transactions

The minimum amount of deposit into / withdrawal from currency chest shall be ?1,00,000
and thereafter, in multiples of ?50,000.

1.2 Time lim it fo r Reporting

1.2.1 The currency chests shall invariably report all transactions through CyM - CC portal
on the same day by 7 pm.

1.2.2 Relaxation in respect o f strike in banks

Relaxation in the reporting period on account of strike situation shall be considered on

2. Delayed Reporting / W rong Reporting o f Currency Chest Transactions

2.1 Levy o f penal interest

2.1.1 Delay in Reporting

In the event of delay in reporting currency chest transactions, penal interest at the rate
indicated in paragraph 4 of this circular shall be levied on the am ount due from the chest
holding bank for the period of delay. Penal interest shall be calculated on T+0 basis i.e.
penal interest shall be levied in respect of transactions not reported by currency chests
to the Issue Office on the same business day within the time limit prescribed above.

2.1.2 W rong Reporting

Penal interest shall be levied in respect of cases of wrong reporting in the same manner
till the date of receipt of corrected advice by Reserve Bank. As debits/credits to banks'
current accounts are raised on the basis of the transactions reported by the currency
chests, penal interest shall invariably be levied in all cases of wrong reporting by the
currency chests. It is expected that currency chests would ensure the correctness of
figures reported on the CyM - CC portal. Particular care shall be taken to ensure that
remittances of fresh/re-issuable notes sent to the currency chests from RBI/Note printing
presses are not reported as 'deposit' transactions.
2.1.3 Inclusion o f ineligible am ounts in the currency chest balances

(i) Penal interest shall be levied in all cases where the bank has enjoyed 'ineligible' credit
in its current account with Reserve Bank on account of wrong reporting / delayed reporting
of transactions.

(ii) Only cash held in the custody of joint custodians and 'freely available' to them is eligible
for inclusion in the chest balances. Thus, cash kept outside the vault/ outside the
coverage of CCTV cameras/ cash kept for safe custody in sealed covers for whatever
reasons/ in trunks/ under single lock/ unlocked/ in bins under the lock and key of any
official/s other than the Joint Custodians or bearing a third lock put by any official in
addition to the two locks of the Joint Custodians, is not eligible for being included in the
chest balances. If such amounts are included in the chest balances, these shall be treated
as instances of wrong reporting and shall attract penal interest at the rate specified in
paragraph 4.

(iii) In all the above cases (excepting shortages in chest balances / remittances, shortages
due to pilferage / frauds, counterfeit banknotes detected in chest balances / remittances),
penal interest shall be levied from the date of inclusion of 'ineligible' amounts in chest
balances till the exclusion of such amounts from chest balances.

2.1.4 Penal measures fo r other deficiencies

Penal measures for shortages in chest balances / remittances, shortages due to pilferage
/ frauds, counterfeit banknotes detected in chest balances / remittances shall be taken on
the basis of prevailing "Scheme of Penalties”.

3. Levy o f penalty

3.1 Reporting of soiled note remittances to RBI

Soiled note remittances to RBI shall not be shown as withdrawal by chest(s). In case such
remittances to RBI are wrongly reported as 'withdrawals', a penalty of ?50,000 shall be
levied irrespective of the value of remittance and period of such wrong reporting.

3.2 Reporting of diversions in CyM - CC portal

All currency chest diversions (both between chests of the same bank and between chests
of different banks) have to be reported through ‘Diversion Module’ of CyM-CC Portal. The
CC sending the diversion should initiate the entry. The receiving CC should acknowledge
the same. Diversions should not be reported as deposit/withdrawal. A penalty of ?50,000
shall be levied for any such wrong reporting.
3.3 Delayed reporting where currency chests had “ Net Deposit”

Penal interest at the prevailing rate for delayed reporting of the instances where the
currency chest had reported "net deposit” shall not be charged. However, in order to
ensure proper discipline in reporting currency chest transactions, a flat penalty of ?50,000
shall be levied on the currency chests for delayed reporting, irrespective of the value of
net deposit.

4. Rate o f penal interest

Penal interest shall be levied at the rate of 2% over the prevailing Bank Rate for the period
of delayed reporting/wrong reporting/inclusion of ineligible amounts in chest balances.

5. Business C ontinuity Measure

The CyM CC portal has the capability for switching/ interchanging the user within a bank
across the country (user manual is attached for ready reference). If a CC is unable to
report daily transactions in CyM Portal due to connectivity or other technical issues in that
particular CC, the Back Office (BO) Administrator of the bank can map the user id of
another CC of that bank to the CC having connectivity issues for reporting of daily
transactions. On completion of the transactions the user rights shall be restored to the
original CC. This functionality would help CCs in avoiding delayed reporting and
consequent punitive action. CC holding banks are advised to include this aspect in their
CC Business Continuity Plan (BCP).

6. Operational Guidelines on levy of penalties/penal interest

6.1 Competent A uthority

The Competent Authority to decide on the nature o f irregularity shall be the Officer-in-
Charge of the Issue Department of the Regional Office under whose jurisdiction the
defaulting currency chest is located.
6.2 Appellate A uthority

6.2.1 Given the business continuity capability provided by the CyM (see paragraph 5
Above), there should ordinarily be no occasion for banks to request for reconsideration of
the Reserve Bank's decision. However, representations, if any, on account of genuine
difficulties faced by currency chests especially in hilly/remote areas and those affected by
natural calamities, etc., may be made to the Regional Director/Chief General
Manager/Officer-in-Charge of the Regional Office concerned through the Head /
Controlling office of the bank within a month from the date of debit.

6.2.2 Any penalty/penal interest waiver request shall be considered, only if the application
for the same is made in the CC portal within the prescribed timelines. Waiver request in
any other mode shall not be considered.
6.2.3 In the case of wrong reporting representations for waiver shall not be considered,
{cf. para 2.1.2 above}.

6.2.4 As the intention behind the levy of penal interest/ penalty is to inculcate discipline
among banks so as to ensure prompt/correct reporting, requests by banks for waiver of
penal interest on grounds that delayed/wrong reporting did not result in utilization of the
Reserve Bank's funds or shortfall in the maintenance of CRR/SLR or that they were the
result of clerical mistakes, unintentional or arithmetical errors, first time error,
inexperience of staff, expiry of digital certificate etc., shall not be considered as valid
grounds for waiver of penal interest.