Currency chest is the place where the RBI kept all the excess money of banks under custody. Whenever, RBI prints new currency notes, first it delivers to currency chests and then currency chests deliver these new currency notes to banks. A currency chest is a depositary of RBI. It’s not possible for RBI to reach everywhere so it authorized PSU banks to operate currency chests on its behalf. The bank, however, must maintain separate account independently of the chest which is monitored by RBI. As of March 2016, there were 4102 currency chests and 3783 Small coin depots.
Functions of Currency Chest
- The foremost function of the RBI is to deliver currency notes across the country. It has to distribute new currency notes and recycle old notes, keep cash reserves of banks.
- Currency chest act as networks of currency distribution.
- The other function of currency chest is to facilitate note supply. It helps to undertake smooth supply of currency notes across the country. The cash reserve ratios of commercial banks are also kept at currency chests.
- Currency chest are located at authorized selected branches of scheduled banks they do their function on behalf of RBI and they also store the currency as well as notes.
- The currency chests are expected to distribute banknotes and rupee coins to other bank branches in their area of operation.
- Currency chest also helps in exchanging mutilated notes and withdraw unfit notes.