Issue smaller denomination notes in rural areas: RBI to banks

Moneycontrol Bureau

The Reserve Bank of India (RBI) today said that banks must issue notes in denominations of Rs 500 and below in rural areas. This is to ensure that the bank notes being supplied are commensurate with the requirements of rural population.

“Banks should advise their currency chests to step up issuance of fresh notes to rural branches of RRBs, DCCBs and commercial banks, White Label ATMs (WLAOs) in rural areas and post offices in rural areas on priority basis which are considered main rural channels of distribution,” said RBI.

It said that off-site ATMs should be allocated higher proportion of cash as against on-site ATMs as they are more important in last mile currency connectivity. The RBI further said that the existing stock of other denominations notes below Rs 100 should be issued liberally.

As the rural requirements could vary from district to district depending on variations in the rural and urban mix of each district in terms of relative shares in CASA deposits and number of deposit accounts, the RBI has assigned a certain percentage of allocation has been assigned to each district.

Also, currency chests have been asked to furnish daily issuances to the above categories to their Link Offices (LO) along with chest slips with a weekly summary as at close of business on every Friday.