TITLE: Reserve Bank of India Issues Master Direction on Penal Provisions for Currency Chest Reporting Deficiencies
BODY:
On April 1, 2022, the Reserve Bank of India (RBI) issued a Master Direction on Penal Provisions in deficiencies in reporting of transactions and balances at Currency Chests. The direction, issued under Section 45 of the RBI Act, 1934 and Section 35A of the Banking Regulation Act, 1949, establishes penalties and penal interest for banks that fail to comply with currency chest reporting requirements as part of the RBI's Clean Note Policy.
The Master Direction establishes reporting procedures requiring banks to report all currency chest transactions through the CyM-CC portal on the same business day by 7 pm. The minimum transaction amount is ₹1,00,000, with subsequent transactions in multiples of ₹50,000. Penal interest is levied at 2 percent over the prevailing Bank Rate for delayed, wrong, or non-reported transactions, calculated on a T+0 basis. The direction specifies that penal interest applies to cases where ineligible amounts are included in chest balances, such as cash held in sealed covers or under individual lock and key rather than jointly held by custodians.
The direction also establishes fixed penalties of ₹50,000 for specific violations, including wrongly reporting soiled note remittances as withdrawals, incorrectly reporting diversions as deposits or withdrawals, and delayed reporting where currency chests had net deposits. The Officer-in-Charge of the Issue Department at the relevant Regional Office serves as the competent authority to determine irregularities. Banks may appeal to the Regional Director within one month of penalty notification, though representations for wrong reporting waivers are not considered. The Master Direction consolidates updated guidelines and circulars on the subject and will be updated as fresh instructions are issued.