RBI Guidelines on Currency

Management
 Introduction
• Under Section 42 of the RBI Act, SCBs are required to maintain 3%
cash balance with RBI of their NDTL which is referred as CRR.
• Cash is a idle asset, RBI does not pay any interest on CRR balances.
• Cash Retention limit is fixed by the Bank for every branch.
• Branches should remit surplus cash without delay so that, such funds
can be profitably employed by Corporate Office in the money market.
• Further, holding of huge balances is not advisable from the security
angle also.
• Arrangements have to be put in place to recoup cash balances
immediately, in case of need, so that the cash maintained by them
during normal times is at minimum.
• All unremunerative business handled by the branches resulting in
accumulation of cash should be reviewed and discouraged.
 Clean Note Policy of RBI
• Banks should do away with stapling of note packet and instead secure note packets
with paper bands.
• 
• Banks should sort notes into re-issuable and non-issuable, and issue only clean
notes to public: and
• 
• Banks should forthwith stop writing of any kind on watermark window of bank
notes. Staff members are advised to follow the directions of RBI strictly and avoid
writing anything on the notes like number of pieces or name / account number of
the customer, etc.
• 
• All branches and currency chests are advised to segregate the notes with
inscription or scribbling on any part of the banknotes as soiled banknotes and
ensure that such notes are not re-circulated.
 Important features of Currency Notes:

• Essential features means the features, including security features,

which are necessary for the identification of a note, namely-
• the name of the issuing authority in Hindi and/or English, that is;
Bank or Government of India, as the case may be;
• the guarantee clause in Hindi and/or in English;
• the promise clause in Hindi and/or in English;
• the signature in Hindi and/or in English;
• the Ashoka Pillar emblem or Mahatma Gandhi portrait, as the case
may be; and
• the water-mark of the Ashoka Pillar emblem or Mahatma Gandhi
portrait, as the case may be.
 The security features of a note, for deciding the genuineness or otherwise, include,

• paper quality
• size and shape of numbers
• security Thread
• intaglio printing
• latent Image in vertical band
• electrotype watermark (in watermark window)
• micro lettering
• fluorescence (number panels and central band)
• optically Variable Ink
• see-through Register, and
• any other security feature that may be introduced by the
Bank.
 Some Definitions
• Imperfect note means any note, which is wholly or partially, obliterated, shrunk,
washed, altered or indecipherable but does not include a mutilated note;
• Mutilated note means a note of which a portion is missing or which is composed
of more than two pieces;
• Mismatched note means a mutilated note which has been formed by joining a
half note of any one note to a half note of another note:
• Soiled note means a note which, has become dirty due to usage and also
includes a two piece note pasted together wherein both the pieces presented
belong to the same note, and form the entire note.
• For the benefit and convenience of the public, RBI has authorized all the
branches of the banks to accept, exchange and pay the admissible exchange
value of mutilated notes in accordance with the RBI (Note Refund) Rules, 2009 or
reject such mutilated notes as are not payable under these Rules.
• The branches shall accept all notes for exchange from any one who wishes to get
his/her mutilated notes exchanged from the branch under the Rules.
• The notes may be accepted over the counter.
 What is Forged Note?

• If during the course of adjudication of mutilated notes, any note is suspected

to be forged or is found to be forged, it should be impounded by the Prescribed
Officer by affixing 'COUNTERFEIT NOTE IMPOUNDED' stamp with his initial
thereon.
 Security features of Indian banknotes

• Watermark: The Mahatma Gandhi Series and Mahatma Gandhi (New) series of
banknotes introduced in 2016 contain the Mahatma Gandhi watermark and an
electrotype mark showing the denominational numeral in the watermark window.
• Security Thread: The Mahatma Gandhi Series and Mahatma Gandhi (New)
series of banknotes of denominations of Rs.100 and above have Machine-readable
windowed demetalised clear text magnetic security thread. The colour of the
thread changes from green to blue when viewed from different angles. In case of
Rs.100 denomination, the thread has a width of 2 mm while for higher
denominations it’s width is 3 mm.
• Rs.2000 notes contain a windowed security thread alternately visible on the
obverse with the inscriptions ‘Bharat’ (in Hindi), ‘2000’ and ‘RBI’, but totally
embedded on the reverse. The Rs.500, 200 and 100 notes have a security thread
with similar visible features and inscriptions ‘Bharat’ (in Hindi), and ‘RBI’. When
held against the light, the security thread on these notes can be seen as one
continuous line. The Rs.10, 20 and 50 notes contain fully embedded windowed
security thread with the inscription ‘Bharat’ (in Hindi), and ‘RBI’. Notes issued
prior to the introduction of the Mahatma Gandhi Series have a plain, fully
embedded security thread.
 Security features of Indian banknotes

• Micro Letter: This feature appears on the vertical band [In MG (New) Series]
on left side and inside the Mahatma Gandhi portrait. It contains the word
‘RBI’, ‘Bharat in Hindi', ‘INDIA' and the denomination. This feature can be
seen well under a magnifying glass.
• Latent Image: On the obverse side of MG (New) Series banknotes of Rs.100
and above denomination, a horizontal band on the bottom left side of the
Mahatma Gandhi’s portrait contains a latent image showing the respective
denomination value in numeral. This feature is also present in MG Series
banknotes of Rs.100 and above (Rs.50 and 20 denomination issued till 2016
as well). However the vertical band is located on the right side of the Mahatma
Gandhi portrait. The latent image is visible when the note is held horizontally
at eye level at an angle of 45 degree.
• Intaglio Printing: The portrait of Mahatma Gandhi, the Reserve Bank seal,
guarantee and promise clause, Ashoka Pillar Emblem, RBI Governor's
signature are printed in intaglio i.e. in raised prints, which can be felt by
touch, in banknotes of Rs.100 and above.
 Security features of Indian banknotes
• Identification Mark: On all notes of Rs.100 and above of the MG (New) Series, a
special feature in intaglio is present on the right side (left side in case of previous MG
Series) of the watermark window. This feature is in different shapes for various
denominations (Rs.100-Triangle, Rs.200-H, Rs.500-Circle, Rs. 2000-rectangle).
Further, different numbers of angular bleed lines (Rs.100-four, Rs.200- four with two
circles in between the lines, Rs.500-five, Rs.2000-seven) on both right and left side of
the note helps the visually impaired to identify the denomination.
• Fluorescence: Number panels and the vertical bands [in MG (New) Series] of the
notes are printed in fluorescent ink. The notes also have optical fibres spread out on
the CWBN paper. These areas exhibit fluorescence when held under UV light.
• Colour Shift Ink: The numeral in banknotes of Rs.200 and above are printed in
colour-shift ink. The colour of the numeral appears green when the note is held flat
but would change to blue when the note is held at an angle.
• See through Register: The denomination printed both on the front (hollow) and back
(filled up) of the note on the left side of the banknotes has an accurate back to back
registration. The denomination will appear as one when seen against the light.
 Detection of Counterfeit Notes
• Banknotes tendered over the counter should be examined for authenticity through
machines.
• No credit to customer’s account is to be given for Counterfeit Notes.
• In no case, the Counterfeit Notes should be returned to the tenderer or destroyed by
the bank branches / treasuries. Failure of the banks to impound Counterfeit Notes
detected at their end will be construed as wilful involvement of the bank concerned in
circulating Counterfeit Notes and penalty will be imposed.
• Impounding of Counterfeit Notes
• Notes determined as counterfeit shall be stamped as "COUNTERFEIT NOTE". Each
such impounded note shall be recorded under authentication, in a separate register.
• Rubber Stamp of 5 cm x 5 cm with the following inscription may be used.

COUNTERFEIT BANKNOTE IMPOUNDED

BANK / TREASURY/ SUB-TREASURY
BRANCH / CURRENCY CHEST
SIGNATURE
DATE
 Issue of Receipt to Tenderer
• When a banknote tendered, an acknowledgement receipt in the
prescribed format must be issued to the tenderer, after stamping
the note as above. The receipt, in running serial numbers, should
be authenticated by the cashier and tenderer. Notice to this effect
should be displayed prominently at the offices / branches for
information of the public. The receipt is to be issued even in cases
where the tenderer is unwilling to countersign it.
 Detection of Counterfeit Notes - Reporting to Police and other bodies

• The following procedure should be followed while reporting incidence of detection

of Counterfeit Note to the Police:
• For cases of detection of Counterfeit Notes up to 4 pieces, in a single transaction, a
consolidated report in the prescribed format should be sent by the Nodal Bank
Officer to the police authorities or the Nodal Police Station, along with the suspect
Counterfeit Notes, at the end of the month.
• For cases of detection of Counterfeit Notes of 5 or more pieces, in a single
transaction, the Counterfeit Notes should be forwarded immediately by the Nodal
Bank Officer to the local police authorities or the Nodal Police Station for
investigation by filing FIR.
• A copy of the monthly consolidated report / FIR shall be sent to the Forged Note
Vigilance Cell constituted at the Corporate Office of the bank.
• Acknowledgement of the police authorities concerned has to be obtained for note/s
forwarded to them both as consolidated monthly statement and for filing of FIR.
• Banks should also monitor the patterns / trends of such detection and suspicious
trends / patterns should be brought to the notice of RBI / Police authorities
immediately.
• Designating Nodal Bank Officer
• Each bank should designate a Nodal Bank Officer, district-wise and notify
the same to the Regional Office of RBI concerned and Police Authorities.
All cases of reporting of Counterfeit Note detection should be done through
the Nodal Bank Officer. The Nodal Bank Officer will also serve as the
contact point for all Counterfeit Note detection related activities.
• Establishment of Forged Notes Vigilance Cell at Head Office of Bank
• Each bank shall establish at its Head Office, a Forged Note Vigilance (FNV)
Cell.
• Provision of Ultra-Violet Lamp and Other Infrastructure
• With a view to facilitating the detection of Counterfeit Notes, all bank
branches / identified back offices should be equipped with ultra-violet
lamps / other appropriate banknote sorting / detection machines.
• The banks shall maintain a daily record of the notes processed through
the Note Sorting machines, including the number of counterfeits detected.
• The banks should also consider providing at least one counting machine
(with dual display facility) for public use at the counter.
• Reporting of Data to RBI /NCRB/FIU-IND
• Data on Counterfeit Notes detected by all the branches of the bank shall
be reported in the prescribed format, on a monthly basis.
• also required to report information on cash transactions where forged
notes have been used as genuine note to The Director, FIU-IND within 7
working days.
• A “nil “report may be sent in case no counterfeit has been detected during
the month.
• Preservation of Counterfeit Notes Received from Police Authorities
• All Counterfeit Notes received back from the police authorities / courts
may be carefully preserved in the safe custody of the bank and a record
thereof be maintained by the branch concerned.
• These Counterfeit Notes at branches should be subjected to verification
on a half-yearly basis and should be preserved for a period of three years
from the date of receipt from the police authorities.
• They may thereafter be sent to the Issue Office of Reserve Bank of India
concerned with full details.
THANKS