Clean Note Policy: Modified incentive scheme for banks

In pursuance with its Clean Note Policy, the RBI today came out with a modified Currency Distribution & Exchange Scheme (CDES) under which banks will be given incentives for exchanging soiled banknotes, distributing coins and installing ATMs.
"CDES for bank branches including currency chests has been formulated in order to ensure that all bank branches provide better customer service to members of public with regard to exchange of notes and coins, in keeping with the objectives of Clean Note Policy," RBI said in a notification.
According to the incentive scheme, RBI will reimburse 50 per cent of the capital expenditure for opening and maintaining currency chests at centres having population of less than 1 lakh in under-banked states.

While, 100 per cent capital expenditure will be eligible for reimbursement for the north eastern region of the country.
For exchange of soiled notes there will be an incentive of Rs 2 per packet for exchange of soiled notes up to Rs 50 denomination.
For distribution of coins over the counter, an amount of Rs 25 per bag will be reimbursed to banks.

There will also be incentive for ATMs dispensing cash of lower denominations below Rs 500. However, this will not be available for dispensing notes of Rs 500 or Rs 1,000.
The maximum reimbursement will be 50 per cent of the actual cost of the machine or Rs 2 lakh, whichever is lower.

The incentive will be 60 per cent of the actual case, in case the branch is located in semi-urban or rural areas.
The new scheme has been formulated by segregation the scheme of Incentives & Penalties which was formulated in May 2015, Reserve Bank said.
The RBI further said matter relating to penalties are under review and the till the new scheme is announced, the old instructions will hold good.