We have all come across the problem of unknowingly receiving torn or taped notes and not knowing what to do with them. Most of us give up and throw that damaged note in a dark corner of our drawers, trying to cope with the "loss" of money.
But did you know that banks are actually directed by the Reserve Bank of India (RBI) to facilitate all its customers with the option to exchange their damaged notes? In a master circular, published on April 03, 2023, and updated on May 15, 2023, RBI stated, "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 the public so that there is no need for them to approach 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". Every branch of every bank will have to provide this facility on all working days.
What Is A Soiled Note
According to the RBI Master Circular, a 'soiled note' defines 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 nonessential feature missing.
What Is A Mutilated Note
It is such a note in which a portion is missing or which is composed of more than two pieces. Mutilated notes can also be exchanged at any banks as well.
How To Change Such Damaged Notes
1. Exchange Of soiled notes
In case the number of notes presented by an individual is up to 20 pieces, with a maximum value of Rs 5,000 per day, the banks are liable to exchange them over the counter and free of charge.
If the number of notes exceeds 20 and the maximum value is more than Rs 5,000 in a day, banks will accept them in return for a receipt, so that the value of those notes can be credited to the customer later. Banks may also levy service charges, permitted under the Master Circular on Customer Services in Banks, published on July 01, 2015.
2. Exchange Of Mutilated Notes
If the note is torn up into 5 pieces, non-chest branches (banks without a currency chest, which is a secured storage facility for large amounts of cash managed by RBI) can pay the exchange value over the counter. If the torn pieces are more than 5 and the maximum value exceeds Rs 5,000, you will have to post such notes to the nearby currency chest branch along with your bank details (account number, branch name, IFSC code, etc.) or you can get them exchanged in person by visiting the currency chest.
In the circular dated April 03, 2023, and updated on May 15, 2023, RBI stated that "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, what you can do is, you can tender such notes to the Issue Office of RBI concerned, where the value of these notes will be adjusted under a Special Procedure.
