July 02, 2007
1.The
Chairman & Managing Director/
Chief
Executive Officer
(All
Banks having Currency Chests)
2.
Directors of Treasuries
(State
Governments as per list enclosed)
Dear
Sir/Madam,
Master
Circular - Levy of Penal Interest for Delayed Reporting / Wrong Reporting / Non-Reporting
of Currency Chest Transactions and Cases involving Shortages/Inclusion of Counterfeit
Banknotes in Chest Balances / Chest remittances.
In
supersession of all existing instructions/guidelines relating to levy of penal
interest for delayed reporting/wrong reporting/non-reporting of currency chest
transactions and cases of shortages / inclusion of counterfeit banknotes in the
chest balances, the following fresh instructions / guidelines are issued:
a)
Reporting of Currency Chest Transactions
b)
The minimum amount of deposit into/withdrawal from currency chests will be Rs.1,00,000
and thereafter, in multiples of Rs.50,000/-.
c)
Time limit for reporting
(i)
The currency chests should invariably report all transactions to the Link Office
on the same day and the Link Office in turn should report the consolidated position
to the Issue Office positively on the next working day. The Sub-Treasury Offices
should report all transactions direct to the Issue Office of the Reserve Bank
on the same day.
(ii)
However, in Issue circles where external accounting of ICCOMS has gone live, chest
transactions should invariably be reported on the same day by uploading over the
SWS latest by 11 PM.
d)
Relaxation in respect of strike period in banks
Relaxation
in the reporting period on account of general / specific strike situation will
be considered. Further, as normal internal work is carried out on holidays observed
for half-yearly / annual closing by banks, these days should be treated as working
days for the purpose of reckoning the permissible reporting period.
e)
Levy of penal interest for delays
(i)
In the event of delay beyond three clear working days (including the date of transaction)
in reporting of figures relating to a particular chest in the Link Office statement,
or delay in submission of the chest slip in the case of single chest or STOs directly
linked to Issue Department of the circle, penal interest at the rate indicated
in paragraph 3 ibid will be levied for the period of delay excluding the date
of transaction and date of receipt of figures/chest slip. Such penal interest
will be levied on the amount due from the chest holding bank.
(ii)
In the Issue circles where external accounting of ICCOMS has gone live, penal
interest will be calculated on T+0 basis i.e. penal interest will be levied in
respect of transactions not reported by Link Office to the Issue Office by 11
PM on the same business day. However, till the new system stabilizes, the Bank
may at its discretion grant appropriate grace period in the matter of levy of
penal interest.
f)
In case of persistence/continued delays/discrepancies in reporting, Regional Offices
of the Bank will take up the matter with controlling offices after issuing suitable
warnings to the currency chests concerned.
g)
Wrong reporting and levy of penal interest
Penal
interest will also be levied in respect of all cases of wrong reporting in the
same manner till the date of receipt of corrected advice by the Bank. It is expected
that Link Offices should ensure the correctness of figures reported by the respective
currency chests.
h)
Counterfeit banknotes in remittances received from currency chests
In case counterfeit banknotes are found in remittances from currency chests, entire
amount equal to the value of counterfeit banknotes will be debited to the bank's
current account and penal interest will be levied on the amount of counterfeit
banknotes from the date of previous remittance to RBI. FIRs will also be lodged
with the Police in all cases of detection of counterfeit banknotes in chest remittances.
i)
Reissuable banknotes in remittances received from currency chests
In case reissuable bank notes are found to be in excess of 5% in any soiled note
remittance, the entire remittance will be returned to the bank at its cost besides
debiting the amount of the remittance to the account of the bank maintained with
the Reserve Bank of India.
j)
Minimum penal interest to be charged
There is no stipulation regarding the minimum amount of penal interest leviable
for wrong/delayed reporting. As the intention is to ensure timely and correct
reporting of chest transactions, penal interest will be recovered in all applicable
cases, irrespective of the amount of the transaction concerned / amount of penal
interest subject to rounding off the interest amount to the nearest Rupee.
2.
Shortages in currency chest balances due to pilferage / frauds or otherwise
and inclusion
of
amounts of safe custody deposits in 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 discrepancies in chest balances/reporting
of transactions (wrong/delayed/non-reporting, shortages in chest balances/remittances,
counterfeit banknotes detected in chest balances/remittances). Further, only cash
held in the custody of and 'freely available' to the Joint Custodians is eligible
for inclusion in the chest balances. Thus, cash kept for safe custody in sealed
covers for whatever reason/cash in trunks/bins under the lock and key of any official/s
other than the Joint Custodians or bearing a third lock put by any official in
addition to the two locks of the Joint Custodians is not eligible for being included
in the chest balances. Such amounts, if included in chest balances will attract
penal interest.
In
all the above cases, penal interest will be leviable from the date of inclusion
of 'ineligible' amounts in chest balances/date of occurrence of shortage till
the exclusion of such amounts from chest balances. Otherwise penal interest may
be levied from the date of last remittance (discrepancies detected in remittances)/last
verification of cash balances by RBI/bank's own/Government inspectors (discrepancies
in chest balances).
3.
Rate of penal interest
The
penal interest shall be levied at the rate of 2% over the prevailing Bank Rate
during the period of irregularity.
4.
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.
5.
Representations
As
the sole criterion for the levy of penal interest will be the number of days of
delay, there should ordinarily be no occasion for banks to request for reconsideration
of the Bank's decision in individual cases. However, representations, if any,
on account of genuine difficulties faced by chests especially in hilly / remote
areas and other chests affected by natural calamities, etc., should be made only
to the Issue Office concerned. As the intention behind the levy of penal interest
is to inculcate discipline among banks so as to ensure prompt / correct reporting,
pleas by banks such as non-utilization of the Bank's funds, no shortfall in the
maintenance of CRR/SLR, clerical mistake, unintentional or arithmetical error,
first time error, etc., will not be considered as valid grounds
for waiver of penal interest.
This
Master Circular is available on our website www.rbi.org.in.
Yours
faithfully
(U.S
Paliwal)
Chief General
Manager