Mumbai: Reserve Bank of India (RBI) on Tuesday advised currency chests to ensure that at least 40% of cash reach rural areas to meet daily needs of people living in villages.
In a notification on its website, the central bank said that banks maintaining currency chests must make 40% cash available daily at modes of cash disbursal such as white label ATMs, rural branches of commercial banks, regional rural banks, district central cooperative banks and post offices.
The RBI said that these measures were taken after observing that banknotes being supplied to these areas were not commensurate with the cash requirements of the population living there.
The RBI in its notification said with the intent of pushing at least 40% of the cash in currency chests to rural areas, banks have been asked to ensure that the currency being sent to these locations are of denominations worth Rs500 and below.
“Existing stock of other denominations notes below Rs100 should be issued liberally. Banks should indent for coins, obtain supply from issue departments of Reserve Bank of India, if required, and ensure supply to public on priority basis," the RBI said.
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In its guidelines, the regulator said that banks must ensure that cash deposits in each district are maintained on the basis of their share in current account savings account (CASA) deposits.
The central bank has allowed banks to maintain deposits on a weekly average basis in these branches, as maintaining daily requirements might become difficult.
The RBI has also asked currency chests to monitor and report daily issuance of currency notes to each of their recipients, to the respective link offices. These link offices should in turn forward it to the RBI’s regional office concerned to facilitate a review.
Link offices “may monitor the daily reports to avoid lumpiness in issuances and to ensure that issuances are evenly," the RBI said in its notification.
The regulator has also asked banks to ensure that off site automated teller machines (ATMs), or those which are independent of a bank branch, receive more cash than on site ATMs in rural areas.
White label ATM companies have been struggling to keep their ATMs open as they haven’t received the cash they require since Prime Minister Narendra Modi announced demonetisation of high-value currency notes.