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Ensure at least 40 per cent currency supply to rural areas: Here's RBI's 7-point directive to banks to remonetize rural areas

The Reserve Bank Of India (RBI ) Via A Notification Published On Its Website Has Asked Banks To Supply At Least 40 Per Cent Of Currency To Rural Areas.

News Nation Bureau | Edited By : Gautam Lalotra | Updated on: 03 Jan 2017, 02:52:41 PM
Reserve Bank of India - File Photo

New Delhi:

The Reserve Bank of India (RBI ) via a notification published on its website on Tuesday has asked banks to supply at least 40 percent of currency to rural areas.

In a notification published on its website, the RBI said, "On observing that bank notes, being supplied to rural areas, at present, are not commensurate with the requirements of rural population... With a view to ensure that at least 40% bank notes are supplied to rural areas and to mitigate the issue in a more enduring manner, the banks maintaining currency chests are advised to take the following steps..."

1. Banks should advise their currency chests to step up issuance of fresh notes to rural branches of  RRBs,  DCCBs and commercial banks,  White  Label  ATMs in rural areas and post offices in rural areas on the priority basis which are considered main rural channels of distribution. 

2.  As  the  rural  requirements  could  vary  from  district  to  district  depending  on variations in the rural and urban mix of each district in terms of relative shares in CASA deposits  and  number  of  deposit  accounts,  to  facilitate  a  need-based  approach  in this regard a certain percentage of allocation  has been assigned to  each  district as per Annex 1 depending on the rural and urban mix.

3. Accordingly, all Chests operating in a district must issue bank notes to the above-mentioned distribution channels  in the indicated proportion. The indicated proportion may be maintained on the weekly average basis at each chest level as it may be difficult to stick to the proportion on daily basis.

4. Currency chests must furnish daily issuances to the above categories to their Link Offices (LO) along with chest slips with a weekly summary as at close of business on every Friday. LOs should in turn forward it to the RBI’s Regional Office concerned (reporting format annexed) to facilitate a review. It may be similar to the chest balances reporting mechanism (Annex 2). LOs may monitor the daily reports to avoid lumpiness in issuances and to ensure that issuances are evenly.

5. Chests should issue bank notes in denominations of Rs 500 and below. In particular ATMs, including WLAOs, may be issued Rs 500s and Rs 100s and among ATMs category, Off-site ATMs should be allocated higher proportion of cash as against on site ATMs as they are more important in last mile currency connectivity.

6. Existing stock of other denominations notes below Rs 100 should be issued liberally.

7. Banks should indent for coins, obtain supply from Issue Departments of Reserve Bank of India, if required, and ensure supply to public on priority basis.

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First Published : 03 Jan 2017, 02:39:00 PM