Currency Chest

The depository of the Reserve Bank of India (RBI) is known as the currency chest. It consists of the cash meant for the banks and ATMs. The chests are located on-premises of selected banks all across India. When the RBI prints new notes, they first send them to the currency chests, from where it goes into circulation.

This article will discuss Currency Chest in the context of the IAS Exam.

The candidates can go through the relevant topics useful for their upcoming exams from the links provided below:

What is a currency chest?

  • The whole purpose of the RBI is to deliver currency to the rest of the country. Hence, to facilitate this distribution of money across the nation, the RBI has introduced the concept of currency chests in India. These chests are often located on the premises of several banks, but are regulated by the RBI. They help build the economy’s financial structure in times of adversity.
  • Currency chests help facilitate a good, healthy economy by producing notes circulated in the market for the customers. They act as the caretaker of the Indian currency system.

Currency chests classification in India

There are 3054 currency chests in the country and 2504 small coin deposits. It is segregated based on the banks (Source: RBI):

Currency Chests and Small Coin Depots (as at end-March 2021)

Category

No. of Currency Chests

No. of Small Coin Depots

State Bank of India

1,679

1,432

Nationalised Banks

1,151

886

Private Sector Banks

210

173

Cooperative Banks

5

5

Foreign Banks

4

3

Regional Rural Banks

4

4

Reserve Bank of India

1

1

Total

3,054

2,504

Where are the currency chests located?

The currency chests are located in the branches of the selected banks and are administered by the RBI. The RBI representatives must inspect these currency chests periodically and maintain records that they will share with their senior officials.

Knowing about RBI will help IAS Exam aspirants deal with other topics related to UPSC Indian Economy. This article will hence provide details about RBI and it’s functioning.

What are the main activities of a currency chest?

Currency chests have three main activities: cash movement, inward cash processing, and vaulting. It also means one can do currency chest classification based on its activity:

  • Cash movement – It is the responsibility of the currency chest to know the transit logistics of their cash movement. This could be inward or outward cash movement. A currency chest needs to monitor the transport carrying the cash and make sure that the transportation cost is at a minimum so that it helps the bank branches. They also need to build cooperation among the branches to maintain the required balance.
  • Inward cash processing – This wing comes under the production factory of the RBI. The responsibilities under this wing include maintaining sufficient cash reserves, tracking cash flow, taking care of the safety and security issues, and preparing required regulations for fraud and labour issues.
  • Vaulting – Vaulting is another responsibility of the currency chest; they have the hold and responsibility for the custodians of the vault. Even a minute mess-up in a cash bundle will lead to disciplinary action and will cause financial loss. Their responsibility is to maintain the currency within the vault and keep the RBI under the loop.
  • Apart from these functions, the currency chest should also submit reports whenever needed.

What are the security measures taken for the currency chest?

  • The financial institutions responsible for being a currency chest make the required security measures for the currency chests. The RBI pays the expenses as necessary for security measures to the banks and transportation costs.
  • In case of theft, the RBI has specific categories of loss. If there is any such theft, robbery or fraud from the currency chest, the hosting bank will be held responsible and pay back the lost amount. The concerned bank will also file a Fraud Monitoring Report to the RBI to investigate the case with different aspects of economy, culture and literature.

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Frequently Asked Questions about Currency Chests

How many Currency Chests are available in India?

There are 3054 currency chests in the country at present.

To whom do the currency notes deposited in the currency chest belong?

Currency notes deposited in the currency chest belong to the Reserve Bank Of India.

What is the security arrangement for Currency Chest?

The banks in whose premises the currency chest is situated is responsible for the security arrangement. However, these banks are funded and reimbursed by RBI for the same.

What is a Currency Chest Audit?

In a currency chest audit, an Auditor, duly appointed by RBI, tests the system’s effectiveness and functioning and the currency chest.

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