TITLE: Reserve Bank of India Establishes Penalty Scheme for Bank Branches and Currency Chests for Customer Service Deficiencies
BODY:
On April 3, 2023, the Reserve Bank of India (RBI) issued a Master Direction establishing a comprehensive penalty scheme for bank branches and currency chests that fail to provide adequate customer service to the public. The scheme was issued under Section 45 of the RBI Act, 1934 and Section 35A of the Banking Regulation Act, 1949, and applies to all banks operating in India.
The penalty scheme addresses deficiencies across multiple operational areas, including remittances to the RBI, compliance with operational guidelines, note and coin exchange operations, currency chest operations, and automated teller machine (ATM) cash replenishment. Specific penalties include: ₹50 per piece for shortages of notes in denominations up to ₹50, with penalties equal to the denomination value for higher denominations and coins; ₹50 per piece for mutilated notes irrespective of denomination; ₹5,000 per instance of non-compliance with operational guidelines such as non-functioning closed-circuit television (CCTV) systems or failure to conduct surprise verification of currency chest balances, escalating to ₹10,000 for repeated violations; and ₹10,000 for violations of service agreements, increasing to ₹5 lakh where more than five instances occur during a financial year.
The scheme designates the Officer-in-Charge of the Issue Department at the relevant Regional Office as the competent authority to determine the nature of irregularities and impose penalties. Banks may appeal decisions to the Regional Director or Chief General Manager within one month of penalty debit through the Currency Management-Currency Chest portal. Appeals based on staff inexperience or lack of awareness are not considered for waiver. Penalties are levied immediately upon detection of irregularities and are placed in the public domain for transparency purposes.