RBI/2004/71.

DCM(CC)No.G- 28 / 03.02.01/2003-04.

February 23, 2004

The Chief General Manager / General Manager /

Deputy General Manager

Reserve Bank of India

Issue Department

Ahmedabad/ Bangalore/ Belapur-Navi Mumbai/

Bhubaneshwar/ Bhopal/ Chandigarh/ Chennai/

Guwahati/ Hyderabad/ Jaipur/ Jammu/ Kanpur/

Kolkata/ Lucknow/ Mumbai/ Nagpur/ New Delhi/

Patna/ Thiruvananthapuram.

Dear Sir,

Opening of Currency Chests by public sector banks - Time limit for in-principle and final approvals

In the Management Audit and Systems Inspection Report – 2003 on one of the Offices, Inspection Department has pointed out that certain currency chests approved 'in principle' during the years 2000, 2001 and 2002 were yet to be operationalised and suggested that it would be appropriate, while granting 'in principle' approvals, to fix a time limit for opening of the chests. Paragraph 6 of the Guidelines relating to the opening of Currency Chests by public sector banks forwarded to Regional Offices vide our Circular DCM(CC)No.G-24 /03.39.01 /95-96 dated October 4, 1995 provides a validity period of one year for 'final' approvals.

2. Keeping in view our thrust to enlarge the currency chest network, the matter regarding granting approvals for establishment of currency chests has been reviewed and it has been decided that:

1. All applications for opening of Currency Chests from the public sector banks for which powers have been delegated to the Regional Offices should be processed quickly and 'in-principle' approval granted within a period of two weeks.
2. The 'in-principle' approval may be granted by General Manager of Issue Department and the final approval by Chief General Manager/ General Manager . At Offices where Issue Department is headed by Deputy General Manager, 'in-principle' approval may be granted by him/her and final approval by Chief General Manager (Issue Department ) or Regional Director as the case may be.
3. The 'in-principle' approval should be valid initially for a period of six months and the bank should be advised to report the progress. If the progress is satisfactory or the explanation given by the bank for "no progress" is satisfactory, the validity of the approval may be extended for another period of six months.
4. If no chest is established within the stipulated period of one year, the bank should be required/ advised to make a fresh application.
5. While no compromise should be made on the location of currency chest from security angle, the specifications of height/ area of the strong-room, thickness of walls, ceiling, patrol corridor, etc may be relaxed on merits of each case.
6. While installation of CCTV, desk top sorter, etc are being made compulsory conditions for opening of Currency Chests by private sector/ foreign banks, the same may be prescribed as guidelines for public sector banks.
7. The grant of 'final approval' should not be held up for want of provision of state armed police if the bank concerned undertakes to make its own guarding arrangement as an interim measure, which should be the bank's decision.
8. Under the existing instructions of the Government of India, establishment of Currency Chests within 80 Kms of International Border and in the States of Assam, Nagaland, Manipur, Punjab and Jammu and Kashmir require clearance from Government of India. You may therefore refer such applications to the Director, Government of India, Ministry of Finance, Banking Division, Jeevan Deep, Parliament Street, New Delhi for their clearance before giving in-principle approvals. Such applications need not be sent to Central Office in future.

3. Please acknowledge receipt.

Yours faithfully,

Sd/-+

( P.R.Nair )

General Manager