The Reserve Bank of India has issued a consolidated Master Direction setting out the incentive regime for banks’ currency distribution and exchange activities and the penalties and penal interest that apply to bank branches, currency chests and ATMs for service deficiencies and incorrect or late transaction and balance reporting. The directions apply to all banks, with currency chest operational and reporting requirements applying to banks that maintain currency chests, and certain ATM-related penalties extending to White Label ATM Operators. Incentives include reimbursement for opening and maintaining currency chests in the North-Eastern region and in inaccessible or hilly areas of Jammu and Kashmir and Ladakh, with up to 100% of capital expenditure reimbursed subject to a ceiling of INR 50 lakh and 50% of revenue expenditure reimbursed for the first five years for eligible new applications received on or after 25 April 2025. Performance-based service charges cover exchange of soiled notes (INR 2 per packet for denominations of INR 50 and below), adjudication of mutilated notes (INR 2 per piece), and coin distribution (INR 65 per bag plus an additional INR 10 per bag for rural and semi-urban distribution supported by a concurrent auditor certificate), while currency chests may levy service charges on linked non-chest branches for cash deposits (INR 11 per 100 pieces for large modern currency chests and INR 8 per 100 pieces for other currency chests). Penalties include INR 10,000 per instance for branch-level failures to provide note and coin exchange services, escalating to INR 5 lakh where a branch records more than five instances in a calendar year, and INR 10,000 per instance for counterfeit notes dispensed through ATMs or over the counter or for wilful non-impounding, including by White Label ATM Operators. ATM cash-outs of more than ten hours in a month attract a flat INR 10,000 per ATM, with monthly system-generated downtime statements due to the relevant RBI Issue Office within five days of the following month. Transaction reporting through the CyM-CC portal is required by 7 pm on the transaction date (minimum INR 50,000), with penal interest for delayed or wrong reporting set at 2% over the prevailing Bank Rate where ineligible credit is enjoyed and flat penalties of INR 50,000 for specified misreporting and for delayed reporting where the currency chest has a net deposit. The Master Direction takes effect when placed on the RBI website and withdraws previous instructions on incentives, penalties, reporting and ATM cash availability monitoring.
Reserve Bank of India 2026-04-01
Reserve Bank of India issues consolidated master direction on currency distribution incentives and penalties for branches, currency chests and ATMs
The Reserve Bank of India has issued a consolidated Master Direction on incentives and penalties for banks’ currency distribution and exchange activities, covering branches, currency chests and ATMs, and extending certain penalties to White Label ATM Operators. It sets out reimbursement and performance-based service charges for currency chest operations and note and coin services, plus monetary penalties for service deficiencies, counterfeit note dispensing, ATM cash-outs and delayed or incorrect reporting through the CyM-CC portal. The Direction is effective upon publication on the RBI website and supersedes previous instructions.