DCM (NE) No.G-1/08.07.18/2016-17
July 18, 2016
The Chairman and Managing Director /
The Managing Director/
The Chief Executive Officer
Madam / Dear Sir
Master Circular – Facility for Exchange of Notes and Coins
Please refer to the Master Circular DCM (NE) No.G-2/08.07.18/2015-16 dated July 01, 2015
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.
(P. Vijaya Kumar)
Chief General Manager
Encl. As above
Master Circular – Facility for Exchange of Notes and Coins dated July 18, 2016
1. Facility for exchange of notes and coins at bank branches
All branches of banks in all parts of the country should 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, and
(iii) Accepting coins and notes either for transactions or exchange.
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.
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
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 for exchange of
mutilated / defective notes free of cost.
3. Liberalized definition of a Soiled Note
order to facilitate quicker exchange facilities, the definition of
soiled note has been liberalized. 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
4. Mutilated Notes – Presentation and Passing
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
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
concerned Issue Office where they will be adjudicated under a Special
6. Procedure for exchange of soiled/ mutilated/ imperfect notes
6.1 Exchange of soiled notes
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.
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 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 Rs.5000 in value, 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.
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
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 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
(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.
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
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
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
bank branches are required to display at their branch premises, at a
prominent place, a board indicating the availability of note exchange
facility with the legend, "SOILED/MUTILATED NOTES 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
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. Agreement between RBI and commercial banks
(a) The bank branches should accept coins in exchange of notes.
They should accept coins of all denominations which are legal tender
under the Indian Coinage Act, 2011 from any member of public without any
restriction and pay the value in notes.
(c) They should use Coin counting machines or accept coins by weight for large receipts, as hitherto to facilitate the customers.
14. Uncurrent Coins
coins of denomination 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. All such coins
should be retained in the Small Coin Depots (SCDs) of the bank till
further advise from Reserve Bank of India.
15. Monitoring and Control
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.