RBI Issues Master Direction on Currency Chest Incentives and Note Exchange Protocols

The Reserve Bank has introduced a 'Scheme of Penal Interest and Penalties' to ensure high accuracy in reporting Currency Chest (CC) transactions and to upgrade customer service at branches and ATMs.
A uniform penalty of Rs 10,000 per deficiency will be levied for refusal to exchange soiled or mutilated notes, with repeated violations attracting fines up to Rs 5 lakh and public disclosure.
To improve availability of high-quality currency, banks opening CCs in North-Eastern and hilly regions (J&K, Ladakh) will receive 100% capital expenditure reimbursement up to Rs 50 lakh and 50% revenue expenditure support for five years.
New exchange limits allow the public to swap up to 20 pieces or Rs 5,000 worth of soiled notes daily for free, while larger bulk deposits must be processed and paid within seven days.
Perspective: These directives strengthen the 'Clean Note Policy' by decentralizing currency exchange and making it mandatory for all bank branches, regardless of whether they maintain a currency chest.