Currency Management Guidelines Quiz

Questions and Answers

What is the primary objective of the Currency Distribution and Exchange Scheme (CDES)?

To promote the use of digital currency

To enhance customer service at bank branches (correct)

To centralize control of currency distribution

To penalize banks for poor customer service

Which act provides the Reserve Bank of India the authority to issue guidelines for clean note policy?

Financial Management Act, 2007

Banking Regulation Act, 1949

Reserve Bank of India Act, 1934 (correct)

Currency Act, 1888

How are banks incentivized under the Currency Distribution and Exchange Scheme for soiled notes?

Incentives are provided for each soiled note distributed

Incentives are based on customer satisfaction surveys

Banks must submit separate claims for each incentive

Incentives are paid on soiled notes received by the RBI Issue Office (correct)

What type of notes are considered for incentives under the CDES?

Soiled and adjudicated notes Signup and view all the answers

How is the incentive for the distribution of coins calculated within the CDES?

On the basis of net withdrawal from the currency chest Signup and view all the answers

What is not a requirement for banks to receive incentives under the CDES?

Submit a claim for incentives Signup and view all the answers

Which of the following statements about the CDES is true?

The framework encourages better customer service across all bank branches. Signup and view all the answers

The Currency Distribution and Exchange Scheme was formulated in light of which key policy?

Clean Note Policy Signup and view all the answers

Study Notes

Overview of Currency Distribution & Exchange Scheme (CDES)

CDES is established by the Reserve Bank of India to enhance customer service in bank branches, aligning with Clean Note Policy objectives.
Framework includes guidelines aimed at improving currency management and distribution of notes and coins.

Legislative Background

Governed by the Preamble and Section 45 of the Reserve Bank of India Act, 1934, and Section 35A of the Banking Regulation Act, 1949.
Aims to ensure effective implementation of policies related to currency distribution.

Objectives of CDES

Encourage bank branches to provide better services related to currency exchange and distribution.
Promote adherence to the Clean Note Policy by improving the public's experience.

Financial Incentives Structure

Financial incentives available for banks to establish the necessary infrastructure for currency distribution.
Incentives provided for the actual soiled notes received at RBI's Issue Offices, supporting the recycling of currency.
Incentives for adjudicated notes are applicable whether they are sent with soiled note remittances or separately through registered/insured post.
Distribution of coins attracts incentives based on net withdrawals from currency chests.

Claims and Accountability

Banks are not required to submit separate claims for incentives; they are automatically accounted for.
Currency chest branches must distribute incentives on a pro-rata basis to associated branches or chests based on their contributions involving soiled notes or coin distribution.

Verification Process

RBI's Regional Offices carry out inspections and incognito visits to verify the distribution of coins and assess compliance among branches.

Description

Test your knowledge on the Master Direction regarding the framework for incentives related to currency distribution and exchange in bank branches. This quiz covers key concepts from the Reserve Bank of India Act and the Banking Regulation Act, aimed at promoting a clean note policy.