Executive Summary:
This master circular, updated as of July 1, 2019, consolidates instructions regarding facilities for the exchange of notes and coins at bank branches. It mandates specific customer services at all bank branches, including exchanging soiled/mutilated notes and accepting coins/notes. The circular details procedures for handling different types of notes and coins, delegation of powers under the RBI Note Refund Rules, and guidelines for monitoring compliance.
Key Points / Main Content:
* **Exchange Facility Mandates:**
* All bank branches must provide facilities for issuing fresh notes/coins, exchanging soiled/mutilated/defective notes, and accepting coins/notes for transactions or exchange.
* Small Finance Banks and Payment Banks have the option to exchange mutilated and defective notes.
* Branches should accept coins, especially ₹1 and ₹2 denominations, preferably by weighment or in sachets of 100.
* These facilities must be available on all working days without discrimination.
* Branches must not refuse small denomination notes/coins.
* **RBI Note Refund Rules, 2009 & Amendments:**
* All bank branches are delegated powers under Rule 2(j) for exchanging mutilated/defective notes free of cost.
* Amendments enable exchange of mutilated notes in the Mahatma Gandhi New series.
* Revisions to the minimum area requirement for single undivided pieces of ₹50 and above notes for full value refunds.
* **Definition of Soiled Notes:**
* Soiled notes now include two-piece notes pasted together, with both pieces from the same note forming the entire note with no essential feature missing.
* Soiled notes should be accepted for government dues and credited to public accounts but not re-issued.
* **Handling Mutilated Notes:**
* Mutilated notes (portion missing or composed of more than two pieces) can be presented at any bank branch.
* They will be accepted, exchanged, and adjudicated per RBI Note Refund Rules, 2009.
* **Unacceptable Notes:**
* Extremely brittle, burnt, charred, or stuck-up notes should not be accepted for exchange at bank branches; holders should tender them to the Issue Office.
* Notes with slogans or political messages are not legal tender and will be rejected.
* Deliberately cut, torn, altered, or tampered notes will be rejected.
* **Exchange Procedures:**
* For up to 20 pieces of soiled notes (max ₹5000), exchange over the counter, free of charge.
* For more than 20 pieces or ₹5000 value, banks may accept against a receipt for later credit, levying service charges if applicable.
* For mutilated/imperfect notes, non-chest branches should adjudicate up to 5 pieces and pay over the counter, or send to a linked currency chest branch.
* For bulk mutilated notes (over 5 pieces, not exceeding ₹5000), advise tenderer to send to nearby currency chest branch by insured post with bank details.
* Currency chest branches must credit the exchange value electronically within 30 days of receipt.
* **"PAY"/"PAID"/"REJECT" Stamps:**
* Branch Managers and Officers-in-charge of Accounts/Cash act as 'Prescribed Officers' for note adjudication.
* 'PAY'/'PAID'/'REJECT' stamps must include bank/branch name and be secured by the Prescribed Officer.
* Notes with these stamps should be rejected if presented again.
* **Uncurrent Coins:**
* Coins of 25 paise and below are no longer legal tender since June 30, 2011.
* **Monitoring and Compliance:**
* Regional/Zonal Managers should conduct surprise branch visits to check compliance.
* Non-compliance will be viewed as a violation of RBI instructions.
Impact Analysis:
* **Bank Branches:**
* *Impact:* Required to provide enhanced customer services for note and coin exchange, adhere to new soiled note definitions and follow revised procedures for handling mutilated notes.
* *Action Required:* Ensure all branches comply with the updated guidelines, train staff on the new procedures, and display notice boards about the exchange facilities.
* **Bank Customers / General Public:**
* *Impact:* Benefit from improved facilities for exchanging notes and coins at all bank branches and clearer guidelines on what types of notes are acceptable.
* *Action Required:* Be aware of the updated rules for exchanging notes, especially regarding deliberately cut notes or notes with slogans. Approach Banking Ombudsman for grievances.
* **Reserve Bank of India (RBI):**
* *Impact:* Responsible for monitoring the compliance of banks and providing training to bank personnel.
* *Action Required:* Conduct training programs for 'Prescribed Officers', monitor bank compliance through reports and inspections, and address any non-compliance issues.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking system and currency management.
Department of Currency Management, Central Office: A department within the Reserve Bank of India responsible for currency management.
Mumbai, Maharashtra: City in India, Location of the Central Office of the Department of Currency Management.
Reserve Bank of India Note Refund Rules, 2009: A set of rules established by the RBI governing the refund or exchange of damaged or imperfect currency notes.
Government of India (GOI): The governing body of the Republic of India.
Master Circular: A consolidated set of instructions or guidelines issued by the RBI on a specific subject matter, in this case, the facility for exchange of notes and coins.
Banking Ombudsman Scheme, 2006: A scheme for redressal of grievances against banks.
Reserve Bank of India Act, 1934: The legislation that established the Reserve Bank of India and defines its powers and functions.
RBI/2019-20/02
DCM (NE) No.G-2/08.07.18/2019-20 July 01, 2019
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-2/08.07.18/2018-19 dated July
02, 2018 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
(Manas Ranjan Mohanty)
Chief General Manager
Encl. As above
मुद्रा प्रबंध �वभाग, केन्द्र�य कायार्लय, चौथीमंिज़ल, अमर �बिल्डगं , सर पी.एम माग,र् पोस्ट बॉक्स सं 1379, मुंबई-400001(भारत)
फोन +91-22-2261 0900 फ़ैक्स : +91-22-2267 0570 ईमेल-: cgmincdcm@rbi.org.in
Department of Currency Management, Central Office, 4th Floor, Amar Building, Sir P.M.Road,Post Box No.1379,
Mumbai - 400 001(India) Tel: +91-22-2261 0900 Fax: +91-22-2267 0570 E-mail: cgmincdcm@rbi.org.inMaster Circular – Facility for Exchange of Notes and Coins dated July 01, 2019
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.
2. Reserve Bank of India (Note Refund) Rules, 2009 - 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
2limitations 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 for exchange of mutilated / defective notes free of
cost.
(c) The Reserve Bank of India (Note Refund) Rules, 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 Reserve Bank of India (Note Refund) Rules, 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
36.1.1 Notes presented in small number: Where the number of notes presented by a
person is up to 20 pieces with a maximum value of Rs.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 Rs.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 Customer Service in Banks
(DBR.No.Leg.BC.21/09.07.006/2015-16 dated July 1, 2015). In case tendered value
is above Rs.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 Reserve Bank of India (Note Refund) Rules, 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 Reserve Bank of India (Note Refund)
Rules, 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 Rs.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
Rs.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 Reserve Bank of India (Note Refund) Rules, 2009. After
4adjudicating 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 Reserve Bank of India (Note Refund)
Rules, 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
bearing PAY/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 bearing slogans / political messages, etc.
Any note with slogans and message of a political 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
Reserve Bank of India (Note Refund) Rules, 2009. Similarly, notes which are
disfigured may also be rejected under Rule 6(3) (ii) of Reserve Bank of India (Note
Refund) Rules, 2009.
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 Reserve Bank of India (Note Refund) Rules, 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
5EXCHANGED 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.
6Master Circular – Facility for Exchange of Notes and Coins dated July 01, 2019
List of circulars / notifications consolidated by the Master Circular
Sr.No Circular / Notification No. Date Subject
1. DCM (NE) 26.06.2019 Acceptance of coins
No.3057/08.07.18/2018-19
2. DCM (NE) 07.09.2018 Amendments to Reserve Bank of India
No.657/08.07.18/2018-19 (Note Refund) Rules, 2009
3. RBI/2017-18/132 DCM 15.02.2018 Acceptance of coins
(RMMT)
No.2945/11.37.01/2017-18
4. DCM(NE)No.120/08.07.18/201 14.07.2016 Facility for Exchange of Soiled/
6-17 Mutilated/ Imperfect Notes
5. DCM(NE)No.3498/08.07.18/20 28.01.2013 Facility for exchange of notes and coins
12-13
6. DCM (Plg). 28.6.2011 Call in from circulation coins of the
No.6983/10.03.03/2010-11 denomination of 25 paise and below
7. DCM (Plg). 31.5.2011 Call in from circulation coins of the
No.6476/10.03.03/2010-11 denomination of 25 paise and below-
complaints reading non-acceptance of
8. DCM (Plg). 09.2.2011 Call in from circulation coins of the
No.4459/10.03.03/2010-11 denomination of 25 paise and below.
9. DCM (Plg). No. 25.1.2011 Call in from circulation coins of the
4137/10.03.03/2010-11 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 24.8.2010 Exchange Facilities by Currency Chest
/2010-11 branches / scheme for providing facilities
12. DCM(NE)No.1612/08.01.01/20 13.9.2009 Notification of Note Refund(Rules), 2009
09-10
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 05.4.2004 Acceptance of coins.
/2003-04
15. DCM(NE)No.310/08.07.18/200 19.1.2004 Providing facilities to public for exchange
3-04 of notes, coins, etc.
16. DCM(RMMT)No.404/11.37.01/ 09.10.2003 Acceptance of coins and availability of
2003-04 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 private
sector banks maintaining currency
chests
720. 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 for
exchange 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.
8