What is a Currency Chest?
India is the seventh-largest country by geographical area, the second-most populous country with over 1.18 billion people. The Reserve Bank of India is responsible for issuing coins and notes to the public on demand and for maintaining the quality of the notes issued. Several agencies are involved in the printing and distribution of the currency (notes and coins of various denominations). Some of them are Govt. mint, RBI press, Government press and banks designated as currency chests.
In order to satisfactorily discharge this duty without recourse, the RBI maintains currency chests of its own at treasuries and branches of the banks at all important centres. The currency notes printed at the press flow to the RBI offices and from the RBI office to these currency chests before they reach the public. The same is for coins which are minted in 4 mints then taken to 4 mint related RBI offices from where they are taken to currency chests to distribute in the market.
In summary: Distribution of notes and coins throughout the country is done through designated bank branches, called chests. Chest is a receptacle in a commercial bank to store notes and coins on behalf of the Reserve Bank. Deposit into chest leads to credit of the commercial bank’s account and withdrawal, debit.
The Functions of the Currency Chests are:
1. The major functions of the currency chests are:
2. To meet currency requirement of public
3. To withdraw unfit notes
4. To provide exchange facility from one denomination to another
5. To make payment requirement of the Government
6. To exchange the mutilated notes
7. To avoid frequent movement of cash
Apart from having its own chests at certain places, RBI also has arrangements with other banks which are entrusted with custody of the currency notes and coins for the same purpose.