The Reserve Bank of India (RBI) on Tuesday directed banks maintaining currency chests to ensure that at least 40% of all banknotes are supplied to rural areas, and specified that issued banknotes should be in denomination of R500 or below.
“On observing that banknotes, being supplied to rural areas at present, are not commensurate with the requirements of rural population, some steps have already been initiated. With a view to ensure that at least 40% banknotes are supplied to rural areas and to mitigate the issue in a more enduring manner,” it said.
The RBI said 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 and post offices in rural areas on a priority basis.
“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 depending on the rural and urban mix,” the central bank said.
Accordingly, all chests operating in a district have been asked to issue banknotes to these distribution channels and the indicated proportions may be maintained on a weekly average basis at each chest level as it may be difficult to stick to the proportion on a daily basis.
“Currency chests must furnish daily issuances to their link offices along with chest slips with a weekly summary at close of business on every Friday. LOs should, in turn, forward it to the RBI’s regional office concerned to facilitate a review,” the central bank said.