Exchange of Old Notes and Coins

The Reserve Bank of India has been laying several rules and guidelines in facilitating the exchange of coins and notes. The RBI rules of RBI not only warns on the refusal of accepting the coins and mutilated notes but also urges all banks to present a display a notice board at all of their branches stating, ‘Mutilated Notes Are Accepted and Exchanged Here’.

RBI Definition of Soiled Notes

To make it easier for faster exchange facilities, the RBI has elaborated on the definition of ‘Soiled Note’. As per the definition laid,

Note which has become dirty because of the normal wear and tears
Notes that include two pieces of the same note pasted together without missing out on any information are considered as the Soiled Notes.
The soiled notes must be accepted over bank counters for the payment of government dues and for the public accounts maintained with banks.
These notes shouldn’t be re-issued for public usage. These notes should be deposited to the RBI offices in the currency chests for onward transmission and other remittances.

Mutilated Notes – Demonstration and Transitory

Reserve Bank of India defines the mutilated notes as the notes,

Where one portion of the note is missing or combined with more than two pieces

These notes are accepted and adjudicated at the Issue Offices of RBI or designated bank branches of commercial banks in accordance with the Reserve Bank of India (Note Refund) Rules, 2009.

Badly fragile, burnt, charred, stuck up Notes

Some currency notes are not accepted by the bank branches because

Of the horrible damage due to fire burnt
Of the sticking up of the notes and cannot be separated for usage.

In the above cases, the holders of the damaged currency should tender these notes to the concerned Issuance Office, where it will be dealt with under special procedure.

Guidelines on the Note Exchange Facilities

Fresh guidelines are issued by RBI stating on the facilities of Note Exchange with the Rules reproduced for information and guidance of the branches. On following the guidelines by the branches of the banks across the nation with utmost importance, the need for visiting or approaching the RBI for every such case is not required.

- Meeting the demands for fresh/good quality notes and coins of all denominations,
- Small Finance Banks and Payment Banks can exchange mutilated and defective notes with their own option for exchanging soiled notes, and
- Accepting coins and notes for transactions or exchange preferably with the denomination of ₹1 and 2, by weighment.
- The most convenient form of coin exchange is to maintain a counter enabling the customers to exchange the coins that are grouped in polythene bags of 100 coins in each polythene bags.

The exchange of Note and Coins to the public should be carried out without any discrimination by the branches on all working days. The Exchange facility is accepted for a few selected currency chests on one of the Sundays in a month. On this note, the names and the addresses of such bank branches should be made available by the respective banks.

- A public notice of the above-mentioned facilities at the bank branches should be given wide publicity for information of the public at large.

No bank branch should show hesitation or refuse towards the customers to accept even small denomination notes and coins tendered.

Procedure for exchanging the damaged notes

The damaged notes can be exchanged with the new ones, as per the steps below: Exchange of soiled notes The exchange of soiled notes was categorized into two components:

The bank should exchange the damaged notes without any cost incurred that are presented in a lesser number and with the value range of ₹5000 per day.
The bank accepts the damaged notes, with a credit receipt for the presented notes exceedingly more than 20 numbers or value range of ₹5000 per day.

In case the presented notes are above ₹50000, banks are expected to take the usual precaution to levy service charges as permitted in Master Circular on Customer Service in Banks Exchange of mutilated and damaged notes

The bank branches are designated to follow the procedure as laid in Part III of NRR, 2009, for exchanging the mutilated and damaged imperfect notes.
A receipt is issued from the bank for the small or large number of presented notes for adjudication, non-chest branches are required to undergo the following steps:
For a lesser number of notes presented by a person, say 5 numbers, the non-chest bank pays the exchange value over the counter.
The bank branches take the notes into adjudication as per the procedure framed in Part III of NRR, 2009.
These notes should further be sent to the linked currency chest branch for adjudication
The bank should inform the presenter with a tentative date of payment and that should not exceed more than 30 days.
Bank account details should be obtained from the presenters for crediting the exchange value by electronic means.
For a higher number of notes presented by a person is more than 5 numbers, the presenter should contact the nearby currency chest via insured post by providing their Bank Account details including the Account Number, Branch Name and IFSC Code.
When the persons tendering mutilated notes with value more than ₹5000 should approach the nearby currency chest branch.
The Currency chest branches receiving the mutilated notes through insured post should credit the exchange value to the presenter’s account within 30 days of receipt of notes.
For those presenters who are not convinced with the bank's service can approach the concerned Banking Ombudsman for the necessary action with the Bank and postal receipt as proof.

The coins that are currently ceased According to the Gazette Notification No. 2529, dated December 20, 2010, the Government of India has ceased the legal tendering or presenting of the coins 25 paisa and below for payments.

Notes with slogans and political messages

Under Rule 6(3)(ii) and(iii) of the Reserve Bank of India (Note Refund) Rules, 2009, refers to the rejection of notes that has slogans or political message written across it from being legally tendered.

Notes that are cut purposefully

Under Rule 6(3)(ii) of the Reserve Bank of India (Note Refund) Rules, 2009 the notes presented for payment of exchange value with a purposeful cut, torn or altered are rejected.
The details of the exchange like denominations, name of the tenderer, and the number of notes.
Should be reported thereafter to the Deputy/General Manager, Issue Department, under whose jurisdiction the branch falls.
If a presenter tender large number of purposely damaged notes should be immediately reported to the local police.

Display of Notice Board

‘Soiled/Mutilated Notes And Coins Are Accepted And Exchanged Here’ should be displayed with display board in all bank branches premises stating the facility of the note and coin exchange.
Banks should ensure that all the branches are providing the facility for exchange of notes and coins not only to their customers but also to the non-account holders.