Laws and sections by number or title, due dates, pages, and updates.
The Reserve Bank of India sets a framework of incentives for currency distribution and exchange to encourage bank branches to provide better customer services under the Clean Note Policy. All scheduled banks operating currency chests and bank branches receive financial incentives and service charges for infrastructure setup, note exchange, mutilated note adjudication, and coin distribution. Banks claim capital and revenue cost reimbursements for opening currency chests in specified hilly and north-eastern regions subject to specific cost ceilings. Non-chest branches pay updated service charges to currency chests for cash deposits under the linkage scheme. The revised service charges take effect on October 1, 2025.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
Ask about this master direction
RBI/DCM/2025-26/136
DCM (CC) No. G-3/03.41.01/2025-26
April 24, 2025
(Updated as on September 29, 2025)
The Chairman / Managing Director / Chief Executive Officer
All banks
Madam / Dear Sir,
Master Direction on Framework of incentives for Currency Distribution & Exchange Scheme for bank branches including currency chests
In terms of the Preamble to and Section 45 of the Reserve Bank of India Act, 1934 (RBI Act) and Section 35A of the Banking Regulation Act, 1949, Reserve Bank of India issues guidelines / instructions for realising the objectives of Clean Note Policy as part of currency management. With a view to furthering these objectives, the Bank has formulated a framework of incentives titled Currency Distribution and Exchange Scheme (CDES) to encourage all the bank branches to provide better customer services to the members of public.
Yours faithfully,
(Sanjeev Prakash)
Chief General Manager-in-Charge
Encl: As above
Annex-I
Master Direction on Framework of Incentives for “Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests
The framework of incentives, titled Currency Distribution & Exchange Scheme (CDES) for bank branches including Currency Chests (CCs), based on performance in rendering customer service to the members of public has been formulated to encourage all the bank branches to provide better customer service to the members of public keeping in view the objectives of Clean Note Policy.
Incentives
As per the scheme, banks are eligible for the following financial incentives / service charges for setting up requisite infrastructure and facilitating exchange / distribution of notes and coins:
| Sr. No. | Nature of Service | Particulars of Incentives / Service Charges |
|---|---|---|
| i | Opening and operating CCs in North Eastern region and at inaccessible / hilly places (as considered by State Governments/ any appropriate authority) of Jammu & Kashmir and Ladakh Union Territories. | a. Capital Cost: |
| Up to 100% of capital expenditure is eligible for reimbursement subject to the ceiling of ₹50 lakh (inclusive of all taxes). | ||
| b. Revenue cost: | ||
| 50% of revenue expenditure is eligible for reimbursement for the first 5 years of CC operations (inclusive of all taxes). | ||
| (The revised instructions would be applicable to new applications for opening of CCs in these areas received on or after the date of Master Direction. Earlier cases on the subject may continue to be processed as per extant guidelines prevalent on the date of submission of application) | ||
| ii | Exchange of soiled notes / adjudication of mutilated notes over the counter at bank branches | a. Exchange of soiled notes – ₹2/- per packet for exchange of soiled notes in the denominations of ₹50/- and below. |
| b. Adjudication of mutilated notes – ₹2/- per piece. | ||
| iii | Distribution of coins | a. ₹65/- per bag1 for distribution of coins. |
| b. An additional incentive of ₹10/- per bag shall be paid for coin distribution in rural and semi-urban areas on the submission of a Concurrent Auditor (CA) certificate to this effect. | ||
| iv | Cash deposit by non-chest branches under Linkage scheme with CCs | Service charge to be levied by the CC on the non-chest branches |
| a. Large modern CCs2 – ₹8/- per 100 pieces. | ||
| b. Other CCs – ₹5/- per 100 pieces. | ||
| Service charge to be levied by the CC on the non-chest branches (to be effective from October 01, 2025) | ||
| a. Large modern CCs2 – ₹11/- per 100 pieces. | ||
| b. Other CCs – ₹8/- per 100 pieces. |
Annex-II
FREQUENTLY ASKED QUESTIONS
Master Direction on Framework of Incentives for “Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests
It is a policy adopted by RBI to ensure availability of good quality banknotes to members of the public.
Capital costs are one-time expenditures incurred for acquiring fixed assets or infrastructure necessary to set up Currency Chest. Revenue costs are recurring expenses incurred on day-to-day operations and maintenance of Currency Chest. The actual nature of expenditure shall be ascertained by the Issue Office concerned at the time of reimbursement of cost to the bank.
Annex-III
Illustrations
Illustration 1: Reimbursement of Capital Expenditure
Capital Cost incurred and claimed by the bank: ₹75 lakh (inclusive of taxes) (A)
Capital Cost to be reimbursed: 100% of (A) (subject to a ceiling of ₹50 lakh per CC) = ₹50 lakh (inclusive of taxes)
Illustration 2: Reimbursement of Revenue Expenditure
| Type of Expenditure claimed | Period | Amount Claimed (inclusive of taxes) (A) | Amount Reimbursed (inclusive of taxes) 50% of (A) | | --- | --- | --- | --- | | Revenue Cost | 1st Year | ₹15 lakh | ₹7.5 lakh | | Revenue Cost | 2nd Year | ₹16 lakh | ₹08 lakh | | Revenue Cost | 3rd Year | ₹16 lakh | ₹08 lakh | | Revenue Cost | 4th Year | ₹17 lakh | ₹8.5 lakh | | Revenue Cost | 5th Year | ₹18 lakh | ₹09 lakh |
Illustration 1: Incentive for Exchange of soiled notes over the counter at bank branches
| Details of Soiled Notes Remittance Received | Denomination | |||
|---|---|---|---|---|
| ₹10 | ₹20 | ₹50 | ₹100 | |
| No. of pieces | 5500 | 6500 | 7500 | 5000 |
| No. of packets | 55 | 65 | 75 | 50 |
| Total discrepancies (Shortage / Mutilated / Counterfeit) in pieces | 110 | 245 | 75 | 245 |
| Total banknotes considered for incentives | 5390 | 6255 | 7425 | NA |
| Total packets considered for incentive | 53 | 62 | 74 | NA |
| Incentive Amount * (before tax) | 106 | 124 | 148 | NA |
* @ ₹2 per packet
Illustration 2: Incentive for adjudication of mutilated notes over the counter at bank branches
| Details of Mutilated Notes received over the counter at bank branches | Denomination | |||
|---|---|---|---|---|
| ₹10 | ₹20 | ₹50 | ₹100 | |
| No. of pieces | 400 | 300 | 370 | 430 |
| Total discrepancies (Shortage / Counterfeit) in pieces | 05 | 10 | 04 | 08 |
| Total pieces considered for incentive | 395 | 290 | 366 | 422 |
| Incentive Amount (before tax) | 790 | 580 | 732 | 844 |
* @ ₹2 per piece
Illustration:
| Denomination (Coin) | Total Pieces (Deposited) | Total Pieces (Withdrawn) | Total Bags (Deposited) | Total Bags (Withdrawn) | Net Standard Bags (Withdrawn) |
|---|---|---|---|---|---|
| ₹2 | 4000 | 2500 | 1.6 | 1 | -0.6 |
| ₹5 | 0 | 7500 | 0 | 3 | 3 |
| ₹10 | 2000 | 4000 | 1 | 2 | 1 |
| Total (Total sum including decimals) | 3.4 | ||||
| Net Bags considered for incentives (Only Full bags considered) | 3 |
Coin Distribution in Urban Area:
Incentive Amount for 3 bags @ ₹65 per bag: ₹195 (before tax)
