Tuesday, July 26, 2016

Penalties for bank branches -customer service to members of public

Sr. No.
Nature of Irregularity
Shortages in soiled note remittances and currency chest balances
For notes in denomination upto Rs.50
Rs.50/- per piece in addition to the loss

For notes in denomination of Rs.100 & above
Equal to the value of the denomination per  piece  in  addition  to  the  loss.

Shortages of 100 pieces and above per  remittance  shall  be  debited immediately. Penalty may be levied on reaching a limit of 100 pieces in a cumulative manner.

Counterfeit  notes  detected  in  soiled note remittances and currency chest balances.
Shall  be levied  in  terms  of  the  instructions issued  by  DCM
Mutilated notes detected in soiled note remittances and currency chest balances
Rs  50/- per piece irrespective of the denomination
Mutilated notes of 100 pieces and above  per  remittance  shall  be debited immediately. The penalty may be levied on reaching a limit of 100 pieces in a cumulative manner.
Non-compliance with operational guidelines by currency chests
a)         Non-functioning of CCTV
b)            Branch  cash/documents  kept  in strong room
c)         Non-utilization of NSMs for sorting of notes
Penalty of Rs 5000 for each irregularity, which will be enhanced to Rs.10,000 in case of repetition.

Penalty will be levied immediately.
Violation of terms of agreement with RBI  or deficiency in service in providing exchange facilities:
a)       Non-issue of coins over the counter despite having stock.
b)       Refusal  by  any  bank  branch  to exchange soiled notes / refusal by any currency  chest  to  adjudicate mutilated notes tendered public
c)       Non conduct of surprise verification of chest balances, at least at bimonthly intervals, and by the officials from the Controlling Office once in six months
d)       Denial of services to linked branches of other banks
e)       Non acceptance of lower denomination notes tendered by public and linked bank branches
f)        Detection of mutilated /counterfeit notes in re-issuable packets prepared by the currency chest branches.
Rs   10,000   for   any   violation   of agreement or deficiency of service.

Rs 5 lakh in case there are more than 5 instances of violations of in service by the branch.

The levy of such penalty will be placed in public domain.

Penalty will be levied immediately.

Operational Guidelines on levy of penalties

Competent Authority –
Officer-in-Charge of the Issue Department of the Regional Office.

Appellate Authority -
i.                Appeal may be made by the Controlling Office to the Regional Director, within one month from the date of debit.

ii.              Appeals for waiver of penalty made on grounds such as staff being new/untrained, lack of awareness of staff, corrective action having been taken/will be taken, etc. will not be considered.
Based on RBI Master Circular dated 20/07/2016. For further clarifications please refer www.rbi.org.in ………….Poppy


Sunday, July 24, 2016

Penal Interest for Delayed /Wrong /Non-Reporting of Currency Chest Transactions

Reporting of Currency Chest Transactions
The minimum amount of deposit /withdrawal from currency chest will be Rs.1,00,000/- and thereafter, in multiples of Rs.50,000/-.

Time limit for Reporting
The currency chests should report all transactions through ICCOMS on the same day by 9 PM to their respective link offices. Link offices should report the consolidated position to the Issue Offices by 11 PM on the same day.

The Sub-Treasury Offices (STOs) should report all transactions directly to the Issue Office of the Reserve Bank by 11 PM on the same day.

Relaxation in respect of strike period in banks
Relaxation will be considered on case-to-case basis.

Levy of penal interest for delays
In the event of delay, penal interest will be levied on the amount due for the period of delay. Penal interest will be calculated on T+0 basis i.e. on transactions not reported by 11 PM on the same business day. However, Reserve Bank may grant grace period.

Penal interest will also be charged for delay in submission of chest slips in the case of single chest / STOs directly linked to Issue Department of the circle.

Wrong reporting and levy of penal interest
Penal interest will be levied in cases of wrong reporting in the same manner till the date of receipt of correct advice. Debits/credits to banks' current accounts are raised on the basis of the figures reported in the Link Office Statements. Penal interest will be levied in all cases of wrong reporting in the Statements even if the reporting was done correctly in the chest slips. Remittances of fresh notes/notes to the currency chests are not to be reported as 'deposit' transactions in the Link Office Statements.

Reporting of Soiled note remittances to RBI / diversion to other chests
In case soiled note remittances to RBI or diversion to other currency chests are shown as withdrawals then a penalty of Rs.50,000/- will be levied.

Reporting of diversions in ICCOMS
The chest receiving the diversion should report under 2 A and the remitting chest should report under 4A in the chest slip immediatly.

Maximum penal interest to be charged
There is no stipulation regarding the maximum amount of penal interest leviable.

Penal interest for inclusion of ineligible amounts in the currency chest balances

Penal interest will be levied in all cases where the bank has enjoyed 'ineligible' credit in its current account with RBI on account of wrong, delayed or non-reporting of transactions. Penal measures will also be taken in cases of shortages in chest balances or remittances, shortages due to pilferage or frauds, counterfeit banknotes as per the prevailing “scheme of Penalties”.

Cash kept for safe custody is not eligible for being included in the chest balances. If such amounts are included in the chest balances, these will be treated as instances of wrong reporting.

In all the above cases penal interest will be levied from the date of inclusion in chest balances till the exclusion of such amounts from chest balances. Excepting shortages in chest balances / remittances, shortages due to pilferage / frauds, counterfeit banknotes detected in chest balances / remittances where the penal measures will be taken on the basis of prevailing “scheme of Penalties”.

Rate of penal interest

Penal interest shall be levied at 2% over the prevailing Bank Rate.

Levy of penal interest in respect of currency chests at treasuries

The above instructions shall be applicable to currency chests at treasury/sub-treasury offices also.


Representations on account of genuine difficulties, may be made to the Issue Office through the Controlling office of the bank within a month from the date of debit.

In the case of wrong reporting representations for waiver will not be considered.  

Requests by banks for waiver of penal interest on grounds that delayed/wrong/non-reporting did not result in
·       Utilization of the Reserve Bank's funds or
·       Shortfall in the maintenance of CRR/SLR or
·       They were the result of clerical mistakes, unintentional or arithmetical errors,
·       First time error,
·       Inexperience of staff etc.,
will not be considered as valid grounds for waiver of penal interest. Further, RBI will take a serious view of all such lapses.
Based on RBI Master Directions dated 20/07/2016. For further clarifications, Please refer www.rbi.org.in ………… Poppy