Your mutilated banknote is money still: RBI rules for currency exchange

As per RBI (Note Refund) Rules, 2009 no bank can decline to exchange the damaged, mutilated, taped or torn banknotes. Here're RBI rules for exchange you must know.

Soiled, mutilated or imperfect currency notes are not useless. Such notes can be exchanged by any bank branch or Reserve Bank of India (RBI) issue office on the condition that they are not fake.

Importantly, notes on which religious or political slogans are written cease to be legal tender and are not exchangeable. Branches of co-operative banks and regional rural banks (RRBs) are not eligible to exchange mutilated notes.

What is a soiled currency note?

• A currency note that gets stained because of continuous usage and a two-piece tape-pasted currency note that has all essential features intact. A note becomes soiled and crumpled due to gradual deterioration resulting in decoloration, holes, yellowing, and normal wear and tear.

• RBI states, "A note which has become limp or which has developed minor cuts due to wear and tear or which is disfigured by oil, colour, ink, etc. will be treated as a soiled note."

What is a mutilated currency note?

A banknote of which a portion is missing or which has more than two pieces. Mutilated notes may be presented at any of the bank branches. The notes so presented shall be accepted, exchanged and adjudicated in accordance with Reserve Bank of India (Note Refund) Amendment Rules, 2018.

What is an imperfect currency note?

• Any banknote which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.

• In the circular 'Note Sorting Machines - Authentication and Fitness Sorting Parameters', the RBI said a fit note is "a note that is genuine, sufficiently clean to allow its denomination to be readily ascertained and thus suitable for recycling".

• An unfit note is one that is not suitable for recycling because of its physical condition or belongs to a series that the central bank has phased out.

Can banks refuse to exchange damaged currency notes?

According to RBI (Note Refund) Rules, 2009, no bank can decline to exchange or refund torn, damaged, taped or mutilated currency notes. In fact, customers can file an online complaint if a bank refuses to exchange mutilated currency notes and action will be taken against the bank concerned along with a penalty to be paid up to Rs 10,000 in accordance with the RBI's bank notes exchange policy.

Conditions to exchange damaged currency notes - RBI rule

• A face value or denomination and undamaged features or labels decide the amount to be received in exchange for a defective bank note.

• Take a mutilated Rs 2,000 note, which is 109.56 sqcm, for instance. A 44sqcm of Rs 2,000 note will get a half refund and 88 sqcm will yield a full exchange return. Similarly, 78 sqcm part of a torn Rs 200 bank note will be fully refunded, while 39 sqcm will give a half return.  

• Currency notes which are extremely brittle or are burnt, disfigured, charred or inseparably pieced together, shall not be accepted by the bank branches for exchange facility. Instead, the holders are advised to tender these soiled or mutilated notes to the RBI issue office concerned where such notes are adjudicated under a special procedure.

• Bank notes, which are found to be deliberately torn, cut, altered or tampered with, are rejected and not subjected to the payment of exchange value.

 

Highlights of RBI's guidelines for 'exchange facilities of torn and soiled and mutilated currency notes':

• A defective, mutilated or soiled bank note which is slightly cut or stained or of which the essential portions are missing, or notes in the denomination of Rs 10 and above in two pieces can be exchanged without filling any form at any public sector bank (PSB) branch, any currency chest branch of a private sector bank or any RBI issue office.

• People with mutilated currency notes can visit the central bank regional office and deposit the note along with its particulars and other required details including -- name, address, bank account number and denominations of notes deposited, etc., into a box called 'Triple Lock Receptacle' (TLR) in a closed cover.

• The TLR facility is available only for mutilated or cut/torn currency notes and not for soiled notes. The value of mutilated notes gets credited to the bank account through the electronic clearing service.

Essential security features on a currency note (rupee):

• RBI, the sole bank notes issuing authority in India, issued currency notes in the denominations of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 2,000 in the Mahatma Gandhi (New) Series (MGNS) – Nov 2016.

• To facilitate the detection of genuine bank notes, a rupee note contains distinct security features like -- the name of issuing authority, guarantee, RBI signature/seal, windowed security thread, microprinting, promise clause, Ashoka Pillar emblem, angular lines and watermark portrait of Mahatma Gandhi, etc.

Is a currency note made of paper?

The printing of paper-like banknotes in India is made by using 100 per cent cotton, according to RBI. Cotton, which has high longevity and is more sustainable, doesn't tear easily. Currency notes are made from cotton which is a mixture of 75 per cent of cotton and 25 per cent of linen in a gelatin adhesive solution to make the notes last longer.

How can visually-impaired identify currency notes?

The visually challenged can identify the denomination of a note by using the application called 'MANI' (Mobile Aided Note Identifier). The MANI app helps to identify the denominations of banknotes by checking the front or reverse part of the note including half folded notes at various holding angles and in a broad range of light conditions (normal light/daylight/low light etc). However, this app does not authenticate a note as being either counterfeit or genuine.