RBI takes steps to remove currency shortage

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The Reserve Bank on Tuesday came out with incentive scheme for banks to ensure distribution of notes and coins to the public, a step which will help in removing shortage of currency in circulation.

Accordingly, the existing scheme of incentives and penalties has been reviewed taking into consideration the recent developments in the area of exchange and distribution of bank notes and coins to the public, RBI said in a statement.

The revised scheme endeavours to provide improved customer service to the common person both by extending higher incentives to the banks as also by expanding the activities covered, with major thrust on technological interventions in the issue and distribution of banknotes and coins, it said.

As per the incentive scheme, banks would get Rs 2 against earlier provision of Rs 1 per packet for exchange of soiled notes in denominations up to Rs 50.

The incentive would be Rs 25 per bag for distribution of coins over the counters, it said.

The incentives would be paid on the basis of net-withdrawal from currency chest, without waiting for claims from banks, it added.

Penalty on account of detection of counterfeit notes by RBI from soiled note remittance of banks and in currency chest balances will be three times the notional value of counterfeit notes, it said.

RBI also directed banks to 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.

The central bank will reimburse 50 per cent of capital expenditure in case of urban/metro centres while for rural and semi urban centres reimbursement would be 75 per cent of capital expenditure.

"As applicable to commercial banks maintaining currency chests would now be applicable to all the scheduled commercial banks, including urban co-operative banks and regional rural banks , it said.

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