Region

Jurisdiction

Regulator

2008-07-18

Banking Circular No 4 of 2008 Revised - Amendment- Revised guidelines for currency transactions

Banknotes and coins that are deemed unfit for circulation due to defects or damage should be sorted according to the given categories. Banknotes with tears, missing corners, security thread loose/missing, or other mutations will be considered "UNFIT" and rejected for circulation. Similarly, coins with major scratches, cracks, discoloration, corrosion, tarnish, or counterfeit features will also be categorized as "UNFIT." The sorted banknotes should be packaged into sub-bundles containing 100 banknotes and then bundled into sets of 10 sub-bundles. Each bundle should have a label stating its type (FIT/UNFIT) and the specific denomination, with different colors representing each denomination for standardization purposes. Coin packaging involves placing them into bags with corresponding labels indicating whether they are fit or unfit and their respective denominations. Different colors are assigned to each denomination of coins for easier identification. This process ensures that only serviceable banknotes and coins are circulated within the economy, promoting proper functioning of the financial system.

Kenya

Central Bank of Kenya

CENTRAL BANKI KUU YA BANK OF KENYA KENYA Haile Selassie Aven P. O. Box 60000 - 00200 Nairobi Kenya Telephone: 2860000 Telex: 22324 l 4th July 2008 Banking Circular No. 4 of 2008 (Amendment) To All Chief Executives Commercial Banks

Revised Guidelines For Currency Transactions

Further to our Banking Circular Number 4 of 2008, we hereby amend the circular to accommodate the commercial banks' concerns.

The Bank shall continue receiving banknote and coin deposits from commercial banks in their present form. This arrangement will however continue until 30th September 2008.

Effective 1ª October 2008, all commercial banks shall be required to deposit banknotes and coins that have been sorted into either fit or unfit categories and this should be clearly marked on the boxes and bags delivered to the Central Bank.

As agreed in the meeting held on 12th June 2008, the Bank will endeavour to meet the commercial bank coin needs as requested. Enclosed please find the sorting guidelines.

Director, Currency Operations & Branch Administration Department

Banknotes And Coins Sorting Criteria

1. Objective

The objective of banknote and coin sorting is to:-

Maintain a clean banknote and coin policy at all times throughout the country and beyond wherever Kenya banknotes and coins are in use.
To re-circulate fit banknotes and coins within the Banking system in order to derive maximum usage before soiled, worn-out banknotes and mutilated coins are returned to Central Bank for destruction.
Enhance integrity and confidence of Kenya Currency through disposition of clean and positive currency management.

2. Affected Parties

In order that these objectives are met, all those involved in banknote and coin sorting, while undertaking this process, need to clearly separate fit and unfit banknotes and coins destined for re-circulation and destruction respectively.

3. Standards Of Sorting Criteria

A criterion is here below spelt out to assist all those involved in banknote sorting:-

Banknote status	Sorting Criteria
1	SOILAGE	Condemn if cleanliness is less than 50% compared to a new banknote of the same denomination.
(a) Dirt (b) Stained or discoloured	100%	-	all	to	be	rejected	as
	unserviceable
(c) Graffiti - written on	100%	-	all	to	be	rejected	as
	unserviceable 100% - all	to	be	rejected	as
	unserviceable
(d)	Washed,	bleached	or	stiff
(Genuine and depicting UV bright properties) TEARS
2	100%	-	all	to	be	rejected	as
	unserviceable
(a) Missing corners or tears at the edges (b) Holes - 1mm or wider	100%	-	all	to	be	rejected	as

Banknote status	Sorting Criteria
	unserviceable
(c) Security thread loose or missing	100%	-	all	to	be	rejected	as
	unserviceable
3	MUTILATION	100%	-	all	to	be	rejected	as
	unserviceable (Ensure that	banknote	meets	the
	minimum	criteria	for	exchange	of
	mutilated notes)
OTHERS
4	100%	-	all	to	be	rejected	as
	unserviceable
(a) Staple pins (b) Cello tape or masking tape on	100%	-	all	to	be	rejected	as
banknote	unserviceable
5	GENUINE	BUT	DEPICTS	100%	-	all	to	be	rejected	as
DEFECTIVE PROPERTIES	unserviceable, but submit to CBK for technical analysis and replacement
6	COUNTERFEITS	100% reject as counterfeits. Submit to CBK or law enforcement agent immediately with customer details where available.

The criterion for coin sorting is also spelt out below to assist all those involved in coin

Coin status	Sorting Criteria
1	Mutilated, Cracked, Major Scratch,	100%	-	all	to	be	rejected	as
Damaged or Defaced	unserviceable
2	Discolouration, Corrosion, Tarnish	100%	-	all	to	be	rejected	as
or Oxidised	unserviceable
6	COUNTERFEITS	100% reject as counterfeits. Submit to CBK or law enforcement agent immediately with customer details where available.

sorting:-

4. Packaging And Labeling

Banknotes to be packaged into Sub-bundles and Bundles. A sub-bundle to contain 100 (one hundred) banknotes and a bundle will comprise 10 (Ten) sub-bundles. Complete bundles to be marked using a label showing details of the Bank and clearly marked 'FIT' in the case of serviceable notes and 'UNFIT' in case of unserviceable notes. In order to standardize practice in the industry, the following labelling colours shall be adopted for each denomination:

Denomination	Colour of Label
50/=	Light green
100/=	Light red
200/=	Light yellow
500/=	Light blue
1000/=	White label

Coins should be packaged into bags. All full bags to be marked using a label showing details of the Bank and clearly marked 'FIT' in the case of serviceable coins and 'UNFIT' in case of unserviceable coins.

The following colour tags and pieces per bag have been set in order to standardize

Denomination	Pieces per Bag	Colour of Label
40	1000	Violet
20	1000	Blue
10	2000	Green
5	1000	White
1	2000	Purple
0.50	2000	Yellow
0.10	1000	Cream/Beige
0.05	2000	Red

practice in the industry.

CURRENCY OPERATIONS & BRANCH ADMINISTRATION DEPARTMENT July 2008