The Reserve Bank of India (RBI) has issued a Master Direction on the use of note sorting machines, mandating operational, quality, and reporting standards for all banks to ensure currency fitness and integrity.
RBI Mandates Standards for Note Sorting Machines
The Reserve Bank of India (RBI) has issued a Master Direction on Note Sorting Machines under Sections 35A and 56 of the Banking Regulation Act, 1949, effective from October 2, 2026. The directive applies to all banks and establishes uniform standards for the procurement, deployment, and operation of note sorting machines (NSMs) to ensure the fitness of banknotes in circulation.
The Master Direction sets out technical requirements including mandatory features such as counterfeit detection, fitness sorting, and serial number capture. Banks must also maintain logs and submit periodic reports to the RBI on machine performance and currency rejection rates. These measures aim to strengthen currency management, deter counterfeiting, and improve the quality of notes in public circulation.
For banking compliance teams, this requires immediate review of existing NSM systems and vendor contracts to ensure alignment with the new directive. Banks must designate appropriate officers for internal monitoring and ensure data captured is preserved per RBI’s record retention norms.
Citations
- Banking Regulation Act, 1949, Sections 35A, 56