Currency chest

Currency chest is a functional unit of a bank to store cash. Customers deposit cash in the bank branches and these branches cannot store the cash when it accumulates and exceeds the cash holding limit of the branch. A bank has so many branches and there is a need to collect these excess cash for security, monetary, regulatory and logistic purpose.

It is not safe to keep the bulk cash in the bank branches for the security reason but in Currency Chest, the cash is guarded by the Security either outsourced or state police protection. Monetary purpose of the existance of currency chest is due to the idleness of the money when it is kept inside the bank branches, as idle money not fetch any interest.Regulatory purpose is to preserve the CRR (Cash Reserve Ratio) with the RBI. Logistic purpose of a currency chest is to monitor the cash stock of the bank branches and mobilise the cash resource to deficit branches and collect the excess idle cash from the branches.

Currency Chest is the unit of a bank which are institutionalized to store the excess cash from the branch inward remittance without losing the interest revenue and not keeping the money idle in the branches and to ensure proper money logistic management within the set of branches which a currency chest serves. Moreover this storage facility helps a bank to maintain its CRR (Cash Reserve Ratio) with the RBI as per the guideline.
Mother of Indian Currency
Re-production of Pure Currency from the crude currency, the currency which is in circulation that can have mutilated or fake currencies. Currency chest is a small scale factory which reproduces the quality or fit currency notes from the notes which are remitted by the customers and recirculates the good notes to the market. Thus Currency Chest (CC) facilitates a good and healthy economy to our country. It is the caretaker of Indian currency system where RBI is the father of Indian Currency. So there is no wrong in calling CC as the Mother of Indian Currency.
Guard of economy
During the process of extraction, a CC may get fake notes and CC reports the instance to RBI , NCRB and Nodal police units on a monthly basis. Thereby CC facilitates the regulatory, executive, administrators and law makers for their decision making. Yes, CC is the whistle blower to the Government for one of the dangerous organized crimes in India which may damage the economy otherwise. CC may fit well with the title "Guard of economy".
The CC activities find similarities with the RBI cash department somewhere. The entire functional division of a CC can be categorized into the following :
CORE ACTIVITIES
1. Movement of Cash (Inward and Outward) (discussed above)
2. Processing of the Inward Cash (discussed above)
3. Vaulting (taking cash out in morning and keeping processed cash in night)
SUB ACTIVITIES
1. Cash in Transit logistics- A CC is allocated some geographical area for its service depending upon its cash holding limit and the normal cash flow trends. Route to be managed in such a way that the transportation cost must be minimum for the cash need of its branches. Tracking of vehicle is another area where a CC devotes its time.
2. Liaison with branches for co operation and regulation of all the branches under its(CC) command area for maintaining required balance in the branch vault at the day end.
3. Processing itself a separate wing which looks like a production factory. You can see huge machines as in RBI inside the CC processing centre. This machine is made in such a way to filter out the good notes. Here all the production management theories are applicable like maintaining the sufficient raw material(Inward Cash), tracking the inflow of cash , Machine calibration, efficiency of Machine and labour, tracking the proportion of the quality notes out from the processing, fake note registry, scientific management of process and procedures, Five S, Safety issues, Security issues, Fraud responsive and resilience efforts, labour issues etc.
4. Vaulting is a major activity of a CC and it holds primary accountability and responsibility to the vault custodians. The vaulting is all about mathematics which means even a fault or error of a single cash bundle may cause disciplinary action of severe intensity and may cause financial loss also. However job includes mainly taking out bundles for branch payment in the morning and receipt of bundles from branches before closing. Other functions covers the maintenance of soiled currency(not fit for circulation) within the vault , i.e it must not be accumulated inside the vault and effort must be taken to remit to the RBI for destruction, called Shredding process. So many reports are to be given to RBI like verification reports, balance certification report etc.
5. In addition to the above said activities, CC need to share and submit so manydaily/monthly/yearly and as and when need reports also.
Other important activities taking place inside a CC
a. Vendor Management - so many vendors are needed like vendor who provides service of armed security, Cash in transit, house keeping, processing labours , auditors etc. A proper balanced management is needed as this is the area which need expertise because a healthy relationship with the vendors and vendor staffs make the CC safe and profitable.
b. Risk Management - High risk area as heavy value transactions are taking place hourly. So a thorough risk foreseen and mitigation is needed.
c. Marketing - Having a good relation with other banks within and outside the command area is required to regulate your cash stock.
d. Income generation - RBI has allowed to generate income by processing the other banks cash those who do not have CC facility. This make the CC a revenue generation unit.
e. Compliance with all the regulators like RBI, District Collector's meeting, labour laws etc
f. Infrastructure /Asset upkeep- One of the important area as this marks the very existence of the CC. It includes security infrastructure like camera, security ammunitions, code, SOPs; physical infrastructures like computer, fire extinguisher, other heavy machineries like note counting machine, Bundling machine, AC etc.
RBI Reporting
The final activity must be reporting to RBI for the day's transactions with the help of RBI application called CCRS( Computerized CC Reporting System) and RBI website for the uploading of the SFMS (Structure Financial Messaging System) reports.

Main Menu

See Also

Main Menu