Currency Distribution & Exchange Scheme (CDES) For Banks

RBI/2015-16/393 DCM (CC) No.G-10/3352/03.41.01/2015-16 May 05, 2016 The Chairman & Managing Director / Chief Executive Officer, All Banks Madam / Dear Sir, Currency Distribution & Exchange Scheme (CDES) for bank branches based on performance in rendering customer service to the members of public Please refer to our Circular DCM (CC) No.4846/03.41.01/2014-15 dated May 21, 2015 on “The Scheme of Incentives & Penalties – Review”. 2. As advised therein, the scheme of Incentives & Penalties has since been reviewed. On review, it has been decided to segregate the scheme of incentives from penalties as also to revise certain incentives. Accordingly, the new scheme titled “Currency Distribution & Exchange Scheme (CDES)” containing revised incentives is framed and the same is being annexed for information and necessary action. In terms of the above scheme, the performance based incentives will continue to be paid as hitherto w.e.f July 01, 2015; however, the incentives for installation of machines have been restricted to Cash Recyclers & ATMs dispensing lower denomination notes, subject to certain caps on reimbursement of cost per machine and will be effective from the date of the circular. 3. The matter relating to penalties is being reviewed. Pending issue of the same, levy of penalties as under the scheme of Incentives & Penalties issued vide our Master Circular No. G-5/03.39.01/2014-15 dated July 01, 2014, shall remain in force. 4. The circular is available on our website – www.rbi.org.in. Yours faithfully, (P. Vijaya Kumar) Chief General Manager Encl : As above 1 Annex Circular on “Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests based on performance in rendering customer service to members of public 1. The Currency Distribution & Exchange Scheme (CDES) for bank branches including currency chests has been formulated in order to ensure that all bank branches provide better customer service to members of public with regard to exchange of notes and coins, in keeping with the objectives of Clean Note Policy. 2. Incentives As per the scheme, banks are eligible for the following financial incentives for providing facilities for exchange of notes and coins: Sr. No. Nature of Service Particulars of Incentives i) Opening of and maintaining currency chests at centers having population of less than 1 lakh in under banked States a. Capital Cost: Reimbursement of 50% of capital expenditure subject to a ceiling of ` 50 lakh per currency chest. In the North Eastern region upto 100% of capital expenditure is eligible for reimbursement subject to the ceiling of ` 50 lakh. b. Revenue cost: Reimbursement of 50% of revenue expenditure for the first 3 years. In the North Eastern region 50% of revenue expenditure will be reimbursed for the first 5 years. ii) Exchange of soiled notes/ adjudication of mutilated banknotes over the counter at bank branches a. Exchange of soiled notes – ` 2 per packet for exchange of soiled notes up to denomination ` 50 b. Adjudication of mutilated notes – ` 2 per piece 2 iii) Distribution of coins over counter i. ` 25 per bag for distribution of coins over the counter. ii. The incentives would be paid on the basis of withdrawal from currency chest, without waiting for claims from banks. iii. Banks may put in place a system of checks and balances to ensure that coins are distributed to retail customers in small lots and not to bulk customers. iv. The distribution of coins shall be verified by RBI Regional Offices through inspection of currency chest / incognito visits to branches etc. (iv) Installation of Machines which extend cash related retail services to the public like – 1. Cash Recyclers; 2. ATMs dispensing lower denomination notes (i.e. up to denomination ` 100) Note - ATMs distributing higher denominations of ` 500 and above are not eligible for this reimbursement The maximum amount of reimbursement for the machines will be as follows – For Metro / Urban areas – 1. Cash Recyclers – 50% of the actual cost of the machine or ` 2,00,000 whichever is lower 2. ATMs dispensing lower denomination notes (up to denomination ` 100) – 50% of the actual cost of the machine or ` 2,00,000 whichever is lower For Semi-urban / Rural areas – 1. Cash Recyclers – 60% of the actual cost of the machine or ` 2,50,000 whichever is lower 2. ATMs dispensing lower denomination notes (up to denomination ` 100) – 60% of the actual cost of the machine or ` 2,50,000 whichever is lower 3 3. Operational Guidelines to avail the incentives - 3.1 Performance based incentives - i) The incentives will be paid on the soiled notes actually received in the Issue Office of the RBI. Banks need not submit a separate claim in this regard. Currency chest branch will have to pass on the incentive to the linked branches for the soiled notes tendered by them on a pro-rata basis. ii) Similarly, incentive will be paid in respect of the adjudicated notes received along with the soiled note remittances / sent separately by registered / insured post in a sealed cover to the RBI. No separate claim is required to be made. 3.2 Incentives for installation of machines i) The banks intending to purchase various machines as also establish currency chests during the period from July 01st to June 30th of a year, may submit their Annual Plans containing the details of the machines and the cost, to our Issue Offices latest by April 15 of every year on an ongoing basis. Our Issue offices, on receipt of the plans, may advise the maximum amount of reimbursement permissible to each bank for that year. As regards the ensuing year (i.e. July 01, 2016 to June 30, 2017), the proposals may please be submitted latest by May 31, 2016 as a special case. For the current year (July 01, 2015 to June 30, 2016), the banks may indicate their plans for purchase of machines from the date of the circular to June 30, 2016, to our Issue offices by May 31, 2016 separately. ii) The claims for incentives for installation of Cash Recyclers and ATMs dispensing lower denomination notes should be submitted to the respective Issue Office of RBI on quarterly basis within 30 days from the close of the respective quarter through the Link Office of the bank concerned. Such claims may however be submitted only after full payment is made to the vendors for the machines. ___________________