Nine leading cash logistics management companies in the country, accounting for around 90 per cent of the market share, have come together to form a self-regulatory organisation (SRO) to ensure compliance, look into risk mitigation and regulate the functioning of firms.
The SRO named Currency Cycle Association (CCA) has been formed by Cash Management Solutions, Securitrans India, SIS Prosegur, SISCO, Writer Safeguard, Brink's, Secure value India, Radiant Cash Management Services and Logicash Solutions, according to CCA president Anush Raghavan.
The formation of SRO comes after the Reserve Bank of India (RBI) in April issued standards for cash management activities of banks and for a service provider or sub-contractors engaged by the banks for this purpose.
"CCA will greatly enhance driving guidelines outlined by the RBI, mitigating risks that are inherent for this industry," CCA chief executive officer and former executive director of RBI, US Paliwal, said.
CCA will aim to strengthen the guidelines put forward by the RBI and the ministry of home affairs to create a robust framework for the delivery of financial services in the safest, efficient and effective way.
The SRO, formed by nine leading cash management companies, accounting for around 90 per cent of the market share, will also create a common database for the cash logistics management industry, according to Paliwal.
He said other cash management firms can also register with the SRO. Currently, close to Rs 10,000-15,000 crore per day of cash is being moved by cash logistics firms in the country.
"It is critical to maximising the efficiency of cash management as well as the velocity of cash in an economy such as India. The formation of the CCA to regulate companies in this industry is a move in the right direction," Raghavan, who is also the vice-president of CMS Info Systems, said.
In a circular issued in April, the RBI had set eligibility criteria of a minimum net worth of Rs 100 crore for a cash management logistics service provider to be engaged by banks.
A cash logistics company should have a minimum fleet size of 300 fabricated cash vans.
RBI had advised banks to review their existing outsourcing arrangements and bring them in line with these instructions within 90 days from the date of the circular.
(With inputs from agencies.)