What is Currency Chest?

Currency chests which recently became a buzz word in news after a private security guard looted Rs 4.04 crores from Axis Bank’s currency chest in Chandigarh. Currency chests are branches of selected banks which are authorized by the RBI for stocking rupee notes and coins. RBI advises the Centre on the currency denomination, number of notes to be printed, security features among others. The responsibility to manage the currency in circulation is vested in the RBI.

How the Number of Notes To Be Printed are Determined?

• The number of currency notes to be printed is determined by RBI with the help of a statistical model that takes several factors into consideration including rate of inflation, pace of economic growth, and the replacement rate of soiled notes.
• The Government of India reserves the right for determining the amount of coins to be minted.

More About Currency Chest

• The Currency chests are places where cash for banks and ATM is stored by RBI.
• These currency chests are inspected by representatives of RBI from time to time.
• The currency chests are branches of banks that store the money and are spread across the country.
• Whenever new currency notes are printed by RBI they are first delivered to currency chests. These notes are than delivered to other banks by the banks holding the currency chests.

Who Will Bear The Loss?

• RBI has seen many incidents of money losses due to the theft.
• The entire money in the currency chest belongs to RBI but the loss will be fulfilled by the bank holding the currency chest.
• The bank holding the currency chests is also required to submit a Fraud Monitoring Report to RBI.
• The currency chests holding bank bears the losses as it solely is responsibility of the bank to safeguard the cash. However, RBI reimburses the security expenses to the bank, which includes the transportation of money from one bank to other.

The Distribution of Currency in India

• Reserve Bank of India (RBI) is the central bank with 31 offices across India. Whenever new currency is printed, than banknotes and rupee coins are sent to currency chests and small coin depots respectively.
• India has more than four thousand currency chests that receives the money from RBI. These than distribute the currency notes to bank branches, the coins are distributed by banks that act as Small Coin Depots.
• The country has approx. 3,746 banks that act as small coin depots.