Banks likely to swamp market with coins soon

The Reserve Bank of India (RBI) has increased the incentives to banks for disbursement of coins, with an aim to enhance coin distribution, particularly in rural areas. Starting September 1, banks will get an incentive of Rs 65 per coin bag, up from Rs 25 per bag earlier. An additional incentive of Rs 10 per bag would be paid for coin distribution in rural and semi-urban areas. The central bank has also allowed business correspondents to distribute coins.

Currency chest branches will have to pass on the incentive to the linked bank and branches for coins distributed by them on a pro-rata basis, an RBI notification said.

Banks advised to provide coins to bulk customers

Banks should enhance the engagement of their BCs for distribution of coins to public and may also incentivise such activities, the notification said, adding that to ensure steady supply of coins to bulk customers and BCs for onward distribution, all banks may ensure that each of their branches maintains a minimum stock of one bag of coins in each denomination.

While disbursement of coins to retail customers through counters of bank branches shall continue, banks are advised to provide coins to bulk customers (requirement of more than one bag in a single transaction) for business transactions. The banks may also use ‘door-step banking’ services for coin distribution to bulk customers, the RBI said.

The banking regulator also advised banks to explore the possibility of engaging the services of cash-in-transit entities for the purpose of distribution of banknotes and coins. RBI reiterated that banks may engage CIT entities to further enhance distribution of coins to the public”.