The RBI directive establishes a regulatory framework for currency distribution and exchange services, directly addressing cash handling, access, and operational requirements for banks.
The scheme incentivizes bank branches to maintain currency chests and provide cash services, which relates to bank account infrastructure and cash access provisions.
Specialism
This update concerns RBI incentive schemes for currency distribution and exchange services, which falls outside the scope of payments compliance regulation as defined in the taxonomy.
While the directive involves RBI guidance and bank compliance, it does not address payment service provider regulation, transaction processing, or any of the core payments compliance domains covered by the taxonomy.
2026-04-20 08:47:37·pthandapani@vixio.com
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Master Directions - Reserve Bank of India
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TITLE: Reserve Bank of India Issues Master Direction on Currency Distribution and Exchange Scheme Incentives
BODY:
On April 1, 2024, the Reserve Bank of India (RBI) issued a Master Direction establishing a framework of incentives for the Currency Distribution and Exchange Scheme (CDES) for bank branches and currency chests. The directive, issued under Section 45 of the Reserve Bank of India Act, 1934 and Section 35A of the Banking Regulation Act, 1949, aims to support the RBI's Clean Note Policy objectives by encouraging banks to provide improved customer services related to currency distribution and exchange.
The scheme provides financial incentives and service charges across four categories of service. Banks opening and maintaining currency chests in centres with populations below 100,000 in underbanked states are eligible for capital cost reimbursement of 50 percent of expenditure, capped at ₹50 lakh per chest. In the North Eastern region, reimbursement extends to 100 percent of capital costs. Revenue cost reimbursement of 50 percent is available for the first three years, or five years in the North Eastern region. Banks exchanging soiled notes or adjudicating mutilated notes receive ₹2 per packet or piece respectively. Coin distribution attracts ₹65 per bag, with an additional ₹10 per bag incentive for rural and semi-urban distribution. Non-chest branches depositing cash under the linkage scheme with currency chests are charged service fees of ₹8 per 100 pieces at large modern currency chests or ₹5 per 100 pieces at other chests.
Incentives are paid based on soiled notes actually received at RBI Issue Offices and coin distributions verified through RBI Regional Office inspections. Banks need not submit separate claims, with currency chest branches distributing incentives to linked branches on a pro-rata basis.
Master Directions - Reserve Bank of India Skip to main content Selected Selected Language हिंदी Search the Website Search Master Directions ( 234 kb ) Master Direction on Framework of incentives for Currency Distribution & Exchange Scheme for bank branches including currency chests RBI/DCM/2024-25/113 DCM (CC) No.G-3/03.41.01/2024-25 April 1, 2024 The Chairman / Managing Director / Chief Executive Officer All banks Madam / Dear Sir, Master Direction on Framework of incentives for Currency Distribution & Exchange Scheme for bank branches including currency chests In terms of the Preamble to and Section 45 of the Reserve Bank of India Act, 1934 (RBI Act) and Section 35A 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 furthering these objectives, the Bank has formulated a framework of incentives titled Currency Distribution and Exchange Scheme (CDES) to encourage all the bank branches to provide better customer services to the members of public. 2. The enclosed Master Direction incorporates updated guidelines / circulars on the subject. Yours faithfully, (Sanjeev Prakash) Chief General Manager Encl: As above Annex Master Direction on Framework of Incentives for “Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests 1. The framework of incentives, titled Currency Distribution & Exchange Scheme (CDES) for bank branches including Currency Chests (CCs), based on performance in rendering customer service to the members of public has been formulated to encourage all the bank branches to provide better customer service to the members of public keeping in view the objectives of Clean Note Policy. 2. Incentives As per the scheme, banks are eligible for the following financial incentives / service charges for setting up requisite infrastructure and facilitating exchange / distribution of notes and coins: Sr. No. Nature of Service Particulars of Incentives / Service Charges i Opening of and maintaining CCs at centres having population of less than 1 lakh, in underbanked states a. Capital Cost: Reimbursement of 50% of capital expenditure (inclusive of all taxes) subject to a ceiling of ₹50 lakh per CC. In the North Eastern region, up to 100% of capital expenditure is eligible for reimbursement subject to the ceiling of ₹50 lakh (inclusive of all taxes). b. Revenue cost: Reimbursement of 50% of revenue expenditure (inclusive of all taxes) for the first 3 years. In the North Eastern region, 50% of revenue expenditure (inclusive of all taxes) is eligible for reimbursement for the first 5 years. ii Exchange of soiled notes / adjudication of mutilated notes over the counter at bank branches a. Exchange of soiled notes – ₹2/- per packet for exchange of soiled notes in the denominations up to ₹50/- and below. b. Adjudication of mutilated notes – ₹2/- per piece. iii Distribution of coins a. ₹65/- per bag 1 for distribution of coins. b. An additional incentive of ₹10/- per bag shall be paid for coin distribution in rural and semi-urban areas on the submission of a Concurrent Auditor (CA) certificate to this effect. iv Cash deposit by non-chest branches under Linkage scheme with CCs Service charge to be levied by the CC on the non-chest branches a. Large modern CCs 2 – ₹8/- per 100 pieces. b. Other CCs – ₹5/- per 100 pieces. 3. Other operational instructions on payment of performance-based incentives The incentives shall be paid on the soiled notes actually received in the Issue Office of the RBI. Incentive shall be paid in respect of the adjudicated notes received along with the soiled note remittances or sent separately by registered / insured post in a sealed cover to the RBI. The incentive for distribution of coins shall be paid on the basis of net withdrawal from the currency chest. Banks do not need to submit a separate claim for the incentives. Currency chest branch shall pass on the incentive to the linked branches/ chests for the soiled notes deposited / coins distributed / mutilated notes adjudicated by them on pro-rata basis. The distribution of coins shall be verified by RBI Regional Offices through inspection of currency chests / incognito visit to branches, etc. Instructions issued vide circular DCM(CC) No.97527/03.41.01/2021-22 dated August 27, 2021 remain unchanged. 1 For incentive calculation, 5000 pieces of 50 paise coins; 2500 pieces of ₹1, ₹2 or ₹5 coins; 2000 pieces of ₹10 or ₹20 coins would be deemed to constitute one bag. 2 Large modern CCs are those CCs which fulfil the Minimum Standards for a CC as detailed in the circular RBI/2018-19/166 DCM(CC) No. 2842/03.39.01/2018-19 dated April 08, 2019. 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 Archives 2016 2015 Top Back to previous page