Banks must enforce minimum eligibility standards as part of their Request for Proposal (RFP) process, IBA said in a report submitted to RBI.
"Only Cash Replenishment Agencies (CRAs) compliant with minimum eligibility standards should be considered fit for outsourcing of services by banks either directly or through MSPs (Managed Service Providers of ATMs)," it said.
A minimum financial networth of Rs 5 crore is fixed for any organisation inclined to undertake cash management services outsourcing work on behalf of the banks, it said.
"However, in view of large quantum of cash load and risk that CRA agencies undertake as also the investment requirements in vaults and cash vans towards risk mitigation, greater financial networth requirement is mandated for CRA agencies to undertake operations on a larger scale," it said.
Recommending financial standards, the report said, a company of networth of not less than Rs 5 crore should be allowed to operate up to 50 cash vans and firms with networth of Rs 25 crore, 51 to 200 cash vans.
Company with networth of 100 crore can operate more than 500 cash vans, it said.
"Defining guidelines for cash managemnt operations will help all operators mitigate risk and improve productivity," said Rituraj Sinha MD SIS Prosegur, a cash logistic company.
Industry welcomes the initiative by RBI to introduce outsourcing guidelines for cash management operations by banks, Sinha who happens to be president Cash Logistics Association of India (CLAI) said.
The report also recommended that banks shall ensure that currency for ATM replenishment are supplied as per clean note policy of the RBI.
To contain instances of reconciliation related disputes Banks, MSPs and CRAs must ensure that end to end reconciliation of all cash transactions are done on a weekly basis, it said.
All disputed transactions must be reconciled and settled as done by two financial institutions asper guidelines issued by the RBI, it added