**Executive Summary:**
This Master Circular, effective July 1, 2020, consolidates instructions regarding the facility for the exchange of notes and coins at bank branches. It mandates all bank branches to provide services like issuing fresh notes and exchanging soiled/mutilated notes, and it details procedures for handling different types of notes and coins. The circular also outlines the delegation of powers to bank branches under the Reserve Bank of India Note Refund Rules, 2009, as amended.
**Key Points / Main Content:**
* **Exchange Facilities at Bank Branches:**
* All bank branches must provide facilities for issuing fresh notes/coins and exchanging soiled/mutilated/defective notes.
* Small Finance Banks and Payment Banks may exchange mutilated and defective notes at their option.
* Branches must accept coins and notes for transactions or exchange without discrimination on all working days.
* Banks should publicize the availability of these facilities.
* Branches must not refuse small denomination notes/coins. All coins in denominations of 50 paise, 1, 2, 5, 10 and 20 are legal tender.
* **RBI Note Refund Rules, 2009 (as amended):**
* All bank branches are delegated powers under Rule 2(j) of NRR, 2009, for free exchange of mutilated/defective notes.
* Amendments to NRR, 2009, enable exchange of mutilated notes in the Mahatma Gandhi New series and revised the minimum area of the single largest undivided piece of the note required for payment of full value for notes of rupees fifty and above denominations
* **Soiled Notes:**
* Soiled notes, including two-piece notes of the same currency, must be accepted for government dues and account credits but not re-issued.
* **Mutilated Notes:**
* Mutilated notes (missing portion or composed of more than two pieces) must be accepted, exchanged, and adjudicated per NRR, 2009.
* **Unacceptable Notes:**
* Extremely brittle, burnt, charred, or stuck-up notes should not be accepted at branches; holders should tender them to the Issue Office concerned.
* **Procedure for Exchange:**
* For up to 20 pieces of soiled notes (max value 5000) exchange over the counter, free of charge.
* For more than 20 pieces of soiled notes or value greater than 5000, banks may accept them against receipt, for value to be credited later and banks may levy service charges.
* For up to 5 pieces of mutilated notes, non-chest branches should adjudicate and pay over the counter; if unable to adjudicate, send to linked currency chest branch and inform tenderer of payment date (within 30 days).
* For more than 5 pieces of mutilated notes or value greater than 5000, tenderers should send notes to nearby currency chest branch by insured post with bank account details or get them exchanged thereat in person.
* **Stamping of Notes:**
* Branch Managers and Officers-in-charge must act as 'Prescribed Officers' to adjudicate notes and record orders with dated 'PAY,' 'PAID,' or 'REJECT' stamps.
* Notes bearing such stamps from RBI or bank branches should be rejected if presented again.
* **Notes with Slogans/Scribbling:**
* Notes with political/religious messages or slogans are unfit for circulation and claims on such notes will be rejected.
* Bank notes with scribbling stain including colour stain on them continue to be legal tender. Such notes can be deposited or exchanged in any bank branch.
* **Deliberately Cut Notes:**
* Deliberately cut, torn, altered, or tampered notes should be rejected; details should be reported to the Deputy General Manager, Issue Department and local police.
* **Training:**
* Issue Offices conduct training programs for 'Prescribed Officers' of bank branches.
* **Display of Notice Board:**
* All branches must display a board indicating the availability of note and coin exchange facility.
* **Disposal of Adjudicated Notes:**
* Full value paid notes have to be remitted by all branches to the chest branches with which they have been linked.
* All chest branches are required to submit to our Issue Offices a monthly statement showing the number of notes adjudicated during the month.
* **Uncurrent Coins:**
* Coins of 25 paise and below are no longer legal tender since June 30, 2011.
* **Monitoring and Control:**
* Regional/Zonal Managers should conduct surprise visits to branches and report compliance to the Head Office. Noncompliance will be viewed as a violation of RBI instructions.
**Impact Analysis**
* **Bank Branches:**
* *Impact:* Required to provide enhanced exchange facilities for notes and coins, adhere to revised procedures for handling soiled and mutilated notes, and train personnel.
* *Action Required:* Ensure all branches comply with the guidelines, provide adequate training to staff, display necessary signage, and establish monitoring mechanisms.
* **General Public:**
* *Impact:* Greater access to note and coin exchange facilities at all bank branches, and clearer procedures for exchanging soiled and mutilated notes.
* *Action Required:* Be aware of the facilities available at bank branches and the procedures for exchanging notes and coins.
* **Reserve Bank of India:**
* *Impact:* Oversees the implementation of the Master Circular and ensures compliance by banks.
* *Action Required:* Monitor bank compliance through reports and inspections, provide training to bank personnel, and address public grievances related to note exchange facilities.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
Reserve Bank of India Note Refund Rules, 2009: Rules governing the refund of value for lost, stolen, mutilated, or imperfect currency notes, as prescribed by the RBI.
Reserve Bank of India Note Refund Amendment Rules, 2018: Amendments to the Reserve Bank of India Note Refund Rules, 2009.
Government of India: The Union Government of India.
Banking Ombudsman Scheme, 2006: A scheme for addressing grievances related to banking services.
Master Circular on Customer Service in Banks: A master circular providing guidelines on customer service in banks
Small Finance Banks: Financial institutions in India licensed to conduct basic banking activities.
Payment Banks: A type of bank in India that can accept deposits, but cannot grant loans.
RBI/2020-21/07
DCM (NE) No.G-3/08.07.18/2020-21 July 01, 2020
The Chairman and Managing Director /
The Managing Director /
The Chief Executive Officer
All Banks
Madam / Dear Sir
Master Circular – Facility for Exchange of Notes and Coins
Please refer to the Master Circular DCM (NE) No.G-2/08.07.18/2019-20 dated July 01,
2019 containing instructions on the facility for exchange of notes and coins. A revised version
of Master Circular on the subject is annexed for your information and necessary action. This
Master Circular is placed in our website www.rbi.org.in.
Yours faithfully
(Ishan Shukla)
Chief General Manager
Encl. As aboveMaster Circular – Facility for Exchange of Notes and Coins dated July 01, 2020
1. Facility for exchange of notes and coins at bank branches
(a) All branches of banks in all parts of the country are mandated to provide the following
customer services, more actively and vigorously to the members of public so that there is no
need for them to approach the RBI Regional Offices for this purpose:
(i) Issuing fresh / good quality notes and coins of all denominations on demand,
(ii) Exchanging soiled / mutilated / defective notes,*
* Small Finance Banks and Payment Banks may exchange mutilated and defective notes at their
option.
and
(iii) Accepting coins and notes either for transactions or exchange.
It will be preferable to accept coins, particularly, in the denominations of ₹ 1 and 2, by
weighment. However, accepting coins packed in sachets of 100 each would perhaps be more
convenient for the cashiers as well as the customers. Such sachets may be kept at the counters
and made available to the customers.
(b) All branches should provide the above facilities to members of public without any
discrimination on all working days. The scheme of providing exchange facility by a few select
currency chest branches on one of the Sundays in a month will remain unchanged. The names
and addresses of such bank branches should be available with the respective banks.
(c) The availability of the above-mentioned facilities at the bank branches should be given wide
publicity for information of the public at large.
(d) None of the bank branches should refuse to accept small denomination notes and / or coins
tendered at their counters. All coins in the denomination of 50 paise, ₹ 1/-, 2/-, 5/-, 10/- and 20/-
of various sizes, theme and design issued from time to time by the Government of India continue
to be legal tender.
2. Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve
Bank of India (Note Refund) Amendment Rules, 2018] - Delegation of powers
(a) In terms of Section 28 read with Section 58 (2) of Reserve Bank of India Act, 1934, no
person is entitled as a right to recover from the Government of India or RBI the value of any lost,
stolen, mutilated or imperfect currency note of the GOI or banknote. However, with a view to
mitigating the hardship to the public in genuine cases, it has been provided that the RBI may,
with the previous sanction of the Central Government, prescribe the circumstances in, and the
conditions and limitations subject to which, the value of such currency notes or banknotes may
be refunded as a matter of grace.(b) With a view to extending the facility for the benefit and convenience of public, all branches
of banks have been delegated powers under Rule 2(j) of Reserve Bank of India (Note Refund)
Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018]
(hereinafter referred to as NRR, 2009) for exchange of mutilated / defective notes free of cost.
(c) The NRR, 2009 were amended to enable the public to exchange mutilated notes in Mahatma
Gandhi (New) series, which are smaller in size compared to the earlier series. The minimum area
of the single largest undivided piece of the note required for payment of full value for notes of
rupees fifty and above denominations were also revised. The Reserve Bank of India (Note
Refund) Amendment Rules, 2018 have since been notified in the Gazette of India on September
6, 2018.
3. Liberalized definition of a Soiled Note
In order to facilitate quicker exchange facilities, the definition of soiled note has been expanded.
A ‘soiled note’ means a note which has become dirty due to normal wear and tear and also
includes a two piece note pasted together wherein both the pieces presented belong to the same
note and form the entire note with no essential feature missing. These notes should be accepted
over bank counters in payment of Government dues and for credit to accounts of the public
maintained with banks. However, in no case, these notes should be issued to the public as re-
issuable notes and shall be deposited in currency chests for onward transmission to RBI offices
as soiled note remittances for further processing.
4. Mutilated Notes – Presentation and Passing
A mutilated note is a note of which a portion is missing or which is composed of 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 NRR, 2009.
5. Extremely brittle, burnt, charred, stuck up Notes
Notes which have turned extremely brittle or are badly burnt, charred or inseparably stuck up
together and, therefore, cannot withstand normal handling, shall not be accepted by the bank
branches for exchange. Instead, the holders may be advised to tender these notes to the Issue
Office concerned where they will be adjudicated under a Special Procedure.
6. Procedure for exchange of soiled/mutilated/imperfect notes
6.1 Exchange of soiled notes
6.1.1 Notes presented in small number: Where the number of notes presented by a person is up to
20 pieces with a maximum value of ` 5000 per day, banks should exchange them over the
counter, free of charge.
6.1.2 Notes presented in bulk: Where the number of notes presented by a person exceeds 20
pieces or ` 5000 in value per day, banks may accept them, against receipt, for value to be
credited later. Banks may levy service charges as permitted in Master Circular on CustomerService in Banks (DBR.No.Leg.BC.21/09.07.006/2015-16 dated July 1, 2015). In case tendered
value is above ` 50000, banks are expected to take the usual precautions.
6.2 Exchange of mutilated and imperfect notes
6.2.1 While designated branches may continue to follow the procedure as laid down in Part III of
NRR, 2009 (www.rbi.org.in→Publications→Occassional) for exchanging mutilated and
imperfect notes and issue receipt for the notes presented for adjudication, non-chest branches are
required to follow the following procedure for notes presented in small numbers and in bulk.
6.2.2 Notes presented in small number : Where the number of notes presented by a person is up
to 5 pieces, non-chest branches should normally adjudicate the notes as per the procedure laid
down in Part III of NRR, 2009 and pay the exchange value over the counter. If the non-chest
branches are not able to adjudicate the mutilated notes, the notes may be received against a
receipt and sent to the linked currency chest branch for adjudication. The probable date of
payment should be informed to the tenderers on the receipt itself and the same should not exceed
30 days. Bank account details should be obtained from the tenderers for crediting the exchange
value by electronic means.
6.2.3 Notes presented in bulk: Where the number of notes presented by a person is more than 5
pieces not exceeding ` 5000 in value, the tenderer should be advised to send such notes to
nearby currency chest branch by insured post giving his / her bank account details (a/c no,
branch name, IFSC, etc.) or get them exchanged thereat in person. All other persons tendering
mutilated notes whose value exceeds ` 5000 should be advised to approach nearby currency
chest branch. Currency chest branches receiving mutilated notes through insured post should
credit the exchange value to the account of sender by electronic means within 30 days of receipt
of notes.
6.3 Tenderers aggrieved with the service provided by the banks in this regard may approach
Banking Ombudsman concerned, following the procedure as laid under Banking Ombudsman
Scheme, 2006 with the bank /postal receipts as proof for necessary action.
7. Notes bearing "PAY" / "PAID" / "REJECT" stamps
(a) Every Officer-in-charge of the branch i.e. the Branch Manager and every Officer-in-charge
of the Accounts or Cash Wing of the Branch shall act as 'Prescribed Officer' in each branch to
adjudicate the notes received at the branch for exchange in accordance with NRR, 2009. After
adjudicating mutilated notes, the Prescribed Officer is required to record his order by subscribing
his initials to the dated 'PAY'/ 'PAID'/ 'REJECT' stamp. The 'PAY' /'PAID' & 'REJECT' stamps
should also carry the name of the bank and branch concerned and held under the custody of the
'Prescribed Officer' to avoid misuse.
(b) Mutilated / defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp of any RBI Issue
Office or any bank branch, if presented for payment again at any of the bank branches should be
rejected under Rule 6(2) of NRR, 2009 and the tenderer should be advised that the value of such
note/s cannot be paid since the same has already been paid as is evident from the PAY/PAID
stamps affixed on it/them. All bank branches have instructions not to issue notes bearingPAY/PAID stamps to the public even through oversight. The branches should caution their
customers not to accept such notes from any bank or anybody else.
8. Notes with slogans/ scribbling/ stain etc
(a) Notes with slogans, political or religious messages, scribbling, stain (including colour stain)
etc are unfit for usage and circulation and go against Clean Note Policy of RBI.
(b) Such notes received from members of public may not be reissued for circulation. They may
be remitted to currency chest for onward remittance to RBI offices.
(c) Any note with slogans and message of a political or religious nature written across it ceases
to be a legal tender and the claim on such a note will be rejected under Rule 6(3) (iii) of NRR,
2009. Similarly, notes which are disfigured may also be rejected under Rule 6(3) (ii) of NRR,
2009.
(d) All Bank notes with scribbling / stain (including colour stain) on them continue to be legal
tender. Such notes can be deposited or exchanged in any bank branch.
9. Deliberately cut notes
The notes, which are found to be deliberately cut, torn, altered or tampered with, if presented for
payment of exchange value should be rejected under Rule 6(3)(ii) of the NRR, 2009. Although it
is not possible to precisely define deliberately cut notes, a close look at such notes will clearly
reveal any deliberate fraudulent intention, as the manner in which such notes are mutilated will
follow a broad uniformity in the shape/location of missing portions of the notes, especially when
the notes are tendered in large numbers. The details of the case such as the name of the tenderer,
the number of notes tendered and their denominations should be reported thereafter to the
Deputy/General Manager, Issue Department, under whose jurisdiction the branch falls. The
matter should also be reported to local police in case a large number of such notes are tendered.
10. Training
Our Issue Offices conduct training programmes for 'Prescribed Officers' of bank branches on a
priority basis. As the training programmes are intended to provide knowledge and instill
confidence in the Prescribed Officers in the process of adjudication of defective notes, it is
imperative that the Prescribed Officers of the branches are deputed for such programmes.
11. Display of Notice Board
All bank branches are required to display at their branch premises, at a prominent place, a board
indicating the availability of note and coin exchange facility with the legend,
"SOILED/MUTILATED NOTES AND COINS ARE ACCEPTED AND EXCHANGED
HERE" for information of general public. Banks should ensure that all their branches provide
facility for exchange of notes and coins not only to their customers but also others. However,
they should ensure that the note exchange facility is not cornered by money changers / dealers in
defective notes.12. Disposal of notes adjudicated at bank branches
Regarding audit of the notes adjudicated by bank branches, the full value paid notes have to be
remitted by all branches to the chest branches with which they have been linked and therefrom to
the Issue Offices concerned together with the next soiled note remittance in the manner already
laid down. The half value paid notes and rejected notes, which are held by the chest branches in
their cash balance, may either be remitted separately packed together with the full value paid
notes or sent by registered and insured post as and when required. The full value paid notes will
be treated as chest remittance by the Issue Office while the half value paid notes and rejected
notes will be treated as notes tendered for adjudication and processed accordingly. All chest
branches are required to submit to our Issue Offices a monthly statement showing the number of
notes adjudicated during the month.
13. Uncurrent Coins
The coins of 25 paise and below, issued from time to time, ceased to be legal tender for
payments as well as account with effect from June 30, 2011 in terms of Gazette Notification No.
2529 dated December 20, 2010 issued by the Government of India.
14. Monitoring and Control
(a) The Regional Managers / Zonal Managers of the banks may pay surprise visits to the
branches and report the position of compliance in this regard to the Head Office which will
review such reports and take prompt remedial action, wherever necessary.
(b) Any non-compliance in this regard shall be viewed as violation of instructions issued by the
Reserve Bank of India.Master Circular – Facility for Exchange of Notes and Coins dated July 01, 2020
List of circulars / notifications consolidated by the Master Circular
Sr.No Circular / Notification No. Date Subject
1. DCM (NE) No.3057/08.07.18/2018-19 26.06.2019 Acceptance of coins
2. DCM (NE) No.657/08.07.18/2018-19 07.09.2018 Amendments to Reserve Bank of India
(Note Refund) Rules, 2009
3. RBI/2017-18/132 DCM (RMMT) No. 15.02.2018 Acceptance of coins
2945/11.37.01/2017-18
4. DCM(NE)No.120/08.07.18/2016-17 14.07.2016 Facility for Exchange of Soiled/
Mutilated/ Imperfect Notes
5. DCM(NE)No.3498/08.07.18/2012-13 28.01.2013 Facility for exchange of notes and coins
6. DCM (Plg).No.6983/10.03.03/2010-11 28.6.2011 Call in from circulation coins of the
denomination of 25 paise and below
7. DCM (Plg).No.6476/10.03.03/2010-11 31.5.2011 Call in from circulation coins of the
denomination of 25 paise and below-
complaints reading non-acceptance of
8. DCM (Plg).No.4459/10.03.03/2010-11 09.2.2011 Call in from circulation coins of the
denomination of 25 paise and below.
9. DCM (Plg).No.4137/10.03.03/2010-11 25.1.2011 Call in from circulation coins of the
denomination of 25 paise and below.
10. Gazette of India No.2529 20.12.2010 Notification for withdrawal of 25 paise
and below coins
11. DCM(RMMT)No.1277/11.36.03/2010-11 24.8.2010 Exchange Facilities by Currency Chest
branches / scheme for providing
facilities
12. DCM(NE)No.1612/08.01.01/2009-10 13.9.2009 Notification of Note Refund(Rules),
2009
13. RBI/2006-07/349/DCM 25.4.2007 Acceptance of Small Denomination
(NE)No.7488/08.07.18/2006-07 Notes and Coins.
14. DCM(RMMT)No.1181/11.37.01/2003-04 05.4.2004 Acceptance of coins.
15. DCM(NE)No.310/08.07.18/2003-04 19.1.2004 Providing facilities to public for
exchange of notes, coins, etc.
16. DCM(RMMT)No.404/11.37.01/2003-04 09.10.2003 Acceptance of coins and availability of
notes.
17. G-11/08.07.18/2001-02 02.11.2001 Reserve Bank of India (Note Refund)
Rules, 1975 – Delegation of note
exchange powers to currency chest
branches of Public/Private Sector Banks.
18. Cy.No.386/08.07.13/2000-2001 16.11.2000 Reserve Bank of India (Note Refund)
Rules, 1975 – Delegation of full note
exchange powers to currency chest
branches of Public/ Private Sector
Banks.
19. G-67/08.07.18/96-97 18.2.1997 RBI (Note Refund) Rules, 1975,
Delegation of full powers to privatesector banks maintaining currency chests
20. G-52/08.07.18/96-97 11.1.1997 RBI (NR) Rules Scheme of delegation of
powers to PSBs for exchange of
defective notes – Disposal of notes
bearing PAY/PAID stamp.
21. G-24/08.01.01/96-97 03.12.1996 Acceptance of Exchange of Cut Notes –
Liberalization.
22. G-64/08.07.18/95-96 18.5.1996 RBI (NR) Rules – Delegation of full
powers to branches PSBs and publicity
for exchange of defective notes.
23. G-71/08.07.18/92-93 22.6.1993 RBI (NR) Rules – Scheme of delegation
of full powers for exchange of defective
notes to the branches of PSBs –
Publicity.
24. G-83/CL-1(PSB)-91/92 06.5.1992 RBI(NR) Rules – Delegation of powers
to chest branches of PSBs.
25. G-74/CL-(PSB)(Gen)-90/91 05.9.1991 RBI(NR) Rules – Delegation of full
powers there under to PSBs.
26. 5.5/CL-1(PSB)-90/91 25.9.1990 RBI(NR) Rules – Scheme of delegation
of full powers to PSBs.
27. 8/CL-1(PSB)-90/91 17.8.1990 RBI(NR) Rules – Scheme of delegation
of full powers to PSBs.
28. G-123/CL-1(PSB)(Gen)-89/90 07.5.1990 RBI (NR) Rules – Scheme of delegation
of full powers to PSBs (Amendment).
29. G-108/CL-1(PSB)(Gen)-89/90 03.4.1990 RBI(NR) Rules 1989 – Bank notes of
Rs.500/- denomination – Exchange of
defective notes at branches of PSBs.
30. G-8/CL-1(PSB)-89/90 12.7.1989 RBI (NR) Rules – Defective notes
branded with 'To Claims' stamp of RBI
Issue Offices.
31. G.84/CL.1(PSB)-88/89 17.3.1989 RBI(NR) Rules – Delegation of full note
exchange powers to PSBs.
32. G.66/CL.1(PSB)-88/89 09.2.1989 RBI (NR) Rules – Delegation of powers
to PSBs – Training.
33. S.12/CL-1(PSB)-88/89 30.9.1988 RBI (NR) Rules – Deliberately mutilated
notes – Adjudication.
34. G.134/CL-1(PSB)-87/89 25.5.1988 Implementation of the Scheme of
delegation of full powers under RBI
(NR) Rules.
35. 192/CL-1-(PSB)-86/87 02.6.1987 RBI(NR) Rules – Scheme of delegation
of full powers to PSBs.
36. 189/CL.2/86/87 02.6.1987 Defacing currency notes by writing on
them or inscribing messages, slogans
etc. thereon.
37. 185/CL-1(PSB)-86/87 20.5.1987 RBI (NR) Rules – Affixing of 'PAY' and
'REJECT' stamps on defective notes.
38. 173/CL.1/84/85 02.4.1985 Delegation of full powers to PSBs forexchange of defective notes/procedures
of the same.
39. Cy.No.1064/CL.1/76/77 09.8.1976 Facilities to the public for exchange of
soiled notes and slightly mutilated notes.