Banknotes - Printing Press (4)

Coins – Mint (4)

RBI Issue Office (19)

Currency Chests (CC) of Banks (4100+)

Bank Branches + ATMs (over 1,10,000 +1,90,000)

Customers and Members of Public, ATM

& DSB Agencies

Fresh Notes Coins

Existing Currency Management Model in India

Fresh/Issuable Notes & Coins Soiled & Mutilated Notes

Surplus Deposits, Soiled & Mutilated Notes

Deposits, Soiled & Mutilated Notes

Number of Currency Chests (CC) (A) 4100

Capex Per CC (Rs. in Cr) 2.50

Opportunity Cost on Capex @ 10% (Rs. in Cr) (B)

0.25

Opex per CC per annum (Rs. in Cr) (C) 2.00

Cost Per CC per annum (Rs. in Cr) (D=B+C)

2.25

Total cost (Rs. in Cr) (E=AxD) 9225.00

Cash Needed for ATMs @ Rs. 0.05 Cr. per ATM per Day

9610.40

Cash Needed by Branch @ Rs. 0.20 Cr. per Branch per Day

21962.20

Cash Deposited by Branches in CC @ Rs. 0.30 Cr. per Branch per Day (F)

32943.30

Cost of Handling Cash per Cr. applied on deposits (in relation to E & F)

9723.15

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Currently • CCs are run by Banks duly regulated by RBI • Largely managed by in-house staff • Huge cost on security • Limited handling of bulk cash by CC/High Cash Inventory at Branches

Fresh/Issuable Notes & Coins

Fresh/Issuable Notes & Coins

Banknotes - Printing Press (4)

Coins – Mint (4)

RBI Issue Office (19)

Large Currency Chests (CC) of Banks (660)

Bank Branches + ATMs (over 1,10,000 +1,90,000)

Customers and Members of Public, ATM

& DSB Agencies

Fresh Notes Only Buffer

Stock

Coins Only Buffer

Stock

Proposed Model for Currency Management

Fresh/Issuable Notes & Coins -

Need based

Soiled & Mutilated Notes

Surplus Deposits, Soiled & Mutilated Notes

Deposits, Soiled & Mutilated Notes

Number of Currency Chests (CC) (A) 660

Capex Per CC (Rs. in Cr) 12.00

Opportunity Cost on Capex @ 10% (Rs. in Cr) (B)

1.2

Opex per CC per annum (Rs. in Cr) (C) 4.50

Cost Per CC per annum (Rs. in Cr) (D=B+C)

5.7

Total cost (Rs. in Cr) (E=AxD) 3762.00

Cash Needed for ATMs @ Rs. 0.05 Cr. per ATM per Day

9610.40

Cash Needed by Branch @ Rs. 0.20 Cr. per Branch per Day

21962.20

Cash Deposited by Branches in CC @ Rs. 0.30 Cr. per Branch per Day (F)

32943.30

Cost of Handling Cash per Cr. applied on deposits (in relation to E & F)

3965.15

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CC

/Lin

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CP

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• PPP model to be allowed for creation of large CCs

per district ( 2 to 4 in large metros and 1 at District HQ ), duly regulated by RBI/Nodal Body Under RBI

• Larger role for Cash Management Companies • High emphasis on electronic security • Extended Working & Processing Hours

Fresh/Issuable Notes & Coins

Fresh/Issuable Notes & Coins

Dir

ect

Rem

itta

nce

fr

om

Min

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Dir

ect

Rem

itta

nce

fr

om

Pre

ss

Imp

act

Reduction in number of CC from 4100 to ~660

Bring in more efficiency by concentration of work at limited centers and larger participation of Cash management Companies

Reduce the cost of handling cash from ~Rs. 9700 to Rs. 4000 per Cr.

Easy implementation/Use of high-end technology for Processing

Cash-in-Transit

Inventory Management for handling cash of Branches/ATMs

Security (Centralized Monitoring System)

Reduction in idle cash holdings at branches

Note:

In Proposed Model also the Physical Cash held at CC to be treated as property of RBI only, the banks to be given Credit/Debit on net-off basis daily as per current practice

The points mentioned above are purely in my personal capacity, the facts and figures quoted above are based on my own experience and the data/detail available in public domain. I have not touched upon the issue of counterfeit notes as the issue is judicial in nature.

0

10

20

30

40

50

Avg Cash PerDay per CC (660proposed Large

CC)

Avg Cash PerDay per CC

(4100 ExistingCC)

Outflow Inflow

Val

ue

in R

s. C

r.