What changed
RBI introduced a contingency facility allowing banks to withdraw cash from RBI to replenish ATMs during a full banking sector strike (excluding RBI) or a natural calamity. Previously, only free interbank ATM usage was mandated, which was insufficient during widespread disruptions. Banks must follow specific procedures including agreements with outsourcing agencies and standing instructions for debit.
What it means for you
This gives banks a safety net to keep ATMs operational when normal cash supply chains break. It reduces reputational risk and customer complaints during emergencies. Banks need to set up agreements with authorized cash logistics providers and maintain standing instructions with RBI to use this facility quickly.
What you must do
- Enter into an agreement with a designated outsourcing agency complying with RBI's outsourcing guidelines (DBOD circular B.P. 40/21.04.158/2006-07).
- Provide RBI a standing instruction (Letter of Authorization) to debit your current account for cash handed to the agency.
- On each withdrawal, submit a bearer cheque payable to 'Ourselves' with recipient's signature attested on the obverse, plus a letter stating it's a special case.
- Contact your Deposit Accounts Department at RBI to finalize operational modalities.
- Inform RBI promptly if you change your outsourcing agency.
Who it affects
All commercial banks, Cash management and ATM replenishment teams, Deposit Accounts Department of RBI, Outsourcing agencies handling cash logistics
What is the maximum cash I can withdraw per transaction under this facility?
The ceiling is Rs 10 crore per transaction. However, you can use the facility multiple times on the same day if more cash is needed for ATM replenishment.
Who decides if a strike or calamity qualifies as an emergency?
The Regional Director of RBI for the respective state is the final authority to declare an emergency and allow the facility.
Do I need a separate agreement with an outsourcing agency?
Yes, you must have an agreement with a designated outsourcing agency that complies with RBI's guidelines on managing risks and code of conduct in outsourcing of financial services.