Currency Chest - All you wanted to know

What is it?

Currency chests are branches of selected banks authorised by the RBI to stock rupee notes and coins.

The responsibility for managing the currency in circulation is vested in the RBI. 

The central bank advises the Centre on the number of notes to be printed, the currency denominations, security features and so on. 

The number of notes that need to be printed is determined using a statistical model that takes the pace of economic growth, rate of inflation and the replacement rate of soiled notes. 

The Government has, however, reserved the right to determine the amount of coins that have to be minted.

The RBI offices in various cities receive the notes from note presses and coins from the mints. 

These are sent to the currency chests and small coin depots from where they are distributed to bank branches. 

The RBI has set up over 4,075 currency chests all over the country. Besides these, there are around 3,746 bank branches that act as small coin depots to stock small coins.

Why is it important?

Against the back-ground of the recent events in demonetising ₹1,000 and ₹500 notes, the question that arises is whether the RBI has adequate infrastructure for distributing the notes and if it is being done equitably.

Of the 4,075 currency chests in the country, 2,722 or 67 per cent are held in branches of the State Bank of India and its associate banks.

Other Nationalised banks hold 1,173 chests, taking the share of the PSU banks to 95 per cent.

Private sector banks (160), Co-operative banks (3) and foreign banks (4), regional rural banks (5) do not have a large role to play in stocking currency on behalf of RBI