Cash and its Custody in Banks

In the prevailing law and order situation and other subversive activities carried out by antisocial/extremist organizations in the country mainly targeting the banks, cash, and its custody need stringent security arrangements both for the safety of cash within the Bank and in cash management logistics.

We have covered the topic ‘SECURITY ARRANGEMENTS IN BANKS AND ATMS’ in our previous post about what are all the safety measures required to be maintained in branch premises.

Given the cash held with the service providers and their sub-contractors continue to remain the property of the banks and the banks are liable for all associated risks, the banks shall put in place an appropriate Business Continuity Plan approved by their boards to deal with any related contingencies.

As banks are increasingly relying on outsourced service providers and their sub-contractors in cash management logistics, the Reserve Bank of India has prescribed certain minimum standards for the service providers / sub-contractors who are engaged by the banks for this purpose. The Standards for engaging the Service Provider and its sub-contractors are as under.

The service provider shall have a net worth of ₹ 1 billion at all times. He must have a minimum fleet size of 300 specifically fabricated cash vans (owned/leased).

Security Cash transport vehicles should be the owned or leased vehicle of the service provider or its first-level sub-contractors. 

Besides the driver, the separate passenger compartment of the security cash van must contain seating arrangements for two custodians and two security guards. Both the cash compartment and passenger compartment must be covered with a CCTV.

Cash vans should never be moved without armed guards. The gunmen must carry their weapons in a functional condition along with valid gun licenses. The Service Provider or its first-level sub-contractor should also furnish the list of its employed gunmen to the police authorities concerned.

Every cash van must be GPS enabled and monitored live with geo-fencing mapping with the additional indication of the nearest police station in the corridor for emergencies.

 All the cash vans should have tubeless tyres, wireless (mobile) communication, and Hooters.

The cash vans should not follow the same route and timing every time to ensure that the route of the vehicle is unpredictable.

Cash Van Staff should be rotated and assigned only on the day of the trip. About security, additional regulations/guidelines as prescribed by the Private Security Agencies (Regulation) Act, 2005, the Government of India and the State Governments from time to time must be adhered to.

 Night movement of cash vans should be discouraged. All cash movements should be carried out during daylight. There can be some relaxation in metro and urban areas though depending on the law and order situation specific to the place or the guidelines issued by the local police. If the cash van has to make a night halt, it necessarily has to be in a police station. In the case of inter-state movement, the changeover of security personnel at the border crossing must be pre-arranged.

The cash transport vehicle invariably shall carry proper documentation at all times including a letter from the remitting bank, more particularly for inter-state movement of currency.

 ATM operations should be carried out only by certified personnel who have completed minimum hours of classroom learning and training. The content of such training may be certified by a Self-Regulatory Organisation (SRO) of Cash-in-Transit (CIT) Companies / Cash Replenishment Agencies (CRAs) who may tie up with agencies like National Skill Development Corporation for delivery of the courses.

The staff associated with cash handling should be adequately trained and duly certified through an accreditation process. Certification could be carried out through the SRO or other designated agencies.

Character and antecedent verification of all crew members associated with cash van movement should be done meticulously. Strict background checks of the employees should include police verification of at least the last two addresses. Such verification should be updated periodically and shared on a common database at the industry level. The SRO can play a proactive role in creating a common database for the industry. In case of dismissal of an employee, the CIT / CRA concerned should immediately inform the police with details.

Safe and secure premises of adequate size for cash processing/handling and vaulting:

The “Report of the Working Group to Review Security Arrangements in Banks – July 2004” prepared by IBA covers the security arrangement in banks extensively and minutely. According to the report, banks are expected to equip their branches, ATMs, and Data Centers, with the latest security gadgets like CC TV, X-ray scanners, sensors, time locks, turnstile gates, access control, etc. The working group report, among others, deals with branch location and layout, movement of cash within the cash department, cash transportation, security equipment, security set-up, security system audit, support and expectations from state and central governments, the disaster management plan for banks and fire prevention and protection.

The premises should be under electronic surveillance and monitoring around the clock. Technical specifications of the vault should not be inferior to the minimum standards for Chests prescribed by the Reserve Bank. All fire safety gadgets should be available and working in the vault which should also be equipped with other standard security systems.

To know more Read: HOW HAS CASH BALANCE VERIFICATION DONE IN BANKS?

Further, critical information like customer account data should be kept highly secure. Access to the switch server should be restricted to banks. Interfaces where a bank gives access to the service provider or its sub-contractor to the bank’s internal server should be limited to relevant information and secured.

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