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RBI takes steps to curb currency shortage

The revised scheme endeavors to provide improved customer service to the common person

August 14, 2013 10:04 IST | India Infoline News Service
The Reserve Bank of India (RBI) introduced an incentive scheme for banks to ensure distribution of notes and coins to the public.

The objective is to curb shortage of currency in circulation.

The central bank has reviewed the existing scheme of incentives and penalties taking into consideration the recent developments in the area of exchange and distribution of bank notes and coins to the public.

The revised scheme endeavors 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, RBI said in a notification on Tuesday.

According to 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 advised 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. RBI will reimburse 50% of capital expenditure in case of urban/metro centres while for rural and semi urban centres reimbursement would be 75% 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 (irrespective of whether they maintain currency chests or not), it said.

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