The Rule for Exchange of Soiled, Mutilated, and Imperfect Notes in Banks

Updated as per RBI Master circular dated April 3, 2023

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 about the general public. Banks shall ensure that all their branches provide facilities for the exchange of notes and coins not only to their customers but also others.

As per the new direction of RBI, banks are asked to exchange, free of charge, a small number of soiled notes up to 20 pieces with a maximum value of Rs.5000/ presented by a person, over their counter.

Soiled Notes:

A ‘soiled note’ is a note which has to turn out to be dirty due to normal wear and tear and also includes a two-piece note pasted together. Where both the pieces of a note presented should belong to the same note and form the entire note with no essential feature missing.

In case you have soiled notes in excess of 20 pieces or for a value of more than Rs.5000/-, banks may accept them, against receipt, for the value to be credited to your account later. However, banks would levy the service charge for notes presented in bulk (in excess of 20 pieces) towards the exchange of soiled notes. If the tendered value is above Rs.50000/- banks are expected to take the usual precautions in exchange for notes.

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 the Clean Note Policy of RBI.

(b) Such notes received from members of the public shall not be reissued for circulation and be remitted to the 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 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.

Mutilated notes:

When a portion is missing or is composed of more than two pieces, such notes are called ‘Mutilated Notes’.  You may present such mutilated/imperfect notes at bank counters for exchange.  A non-chest branch of a bank should accept a small number of notes up to 5 pieces per day and adjudicate them and pay the value in accordance with Reserve Bank of India (Note Refund) Rules 2009. If the branch is unable to adjudicate the notes on its own, it may receive the notes presented by the depositor against a receipt and send them to its linked currency chest branch for adjudication and pay the value. The branches of banks shall take steps to see that the exchange facilities are not cornered by private money changers or professional dealers of defective notes.

In case of mutilated or imperfect notes to be exchanged in bulk (more than 5 pieces or the value exceeding Rs.5000/-), you are required to send such notes directly to a nearby currency chest branch through insured post giving the details of your a/c no, branch name, IFSC, etc. or you may get them exchanged there in person. Currency chest branches receiving mutilated notes through a bank branch or insured post should credit the exchange value to the account of the sender by electronic means within 30 days of receipt of notes.

Nonacceptance of Brittle or badly burnt charred Notes:

Notes which have turned extremely brittle or are badly burnt, charred, or inseparably stuck up together and, therefore, cannot withstand normal handling, will not be accepted by the bank branches for exchange. Instead, the holders may tender these notes to the concerned Issue Office of RBI where those notes will be adjudicated under a Special Procedure.

Acceptance of small notes and coins:

None of the bank branches shall 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, themes, and designs issued from time to time by the Government of India continue to be legal tender.

Originally posted on 15.07.2016 edited and reposted on 04.04.2023.

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