Exchanging Soiled, Mutilated or Defective Currency Notes in India: A Comprehensive Guide
MAS Team | 15 May 2024
In India, individuals have the option to exchange their soiled, mutilated, or defective currency notes at any bank across the country. However, the rules and procedures differ depending on whether the exchange is for small amounts or in bulk. This article aims to provide a comprehensive guide to help individuals navigate the process of exchanging damaged or worn-out currency notes.
Understanding Soiled and Mutilated Notes: According to the Reserve Bank of India (RBI), a 'soiled note' refers to a note that has become dirty due to normal wear and tear, including a two-piece note pasted together, where both pieces belong to the same note and form the entire note with no essential feature missing. On the other hand, a 'mutilated note' is a note that has a portion missing or is composed of more than two pieces.
Extremely Brittle, Burnt, or Charred Notes: Notes that have turned extremely brittle, badly burnt, charred, or inseparably stuck together, and therefore cannot withstand normal handling, shall not be accepted by bank branches for exchange. In such cases, the holders will be advised to tender these notes to the concerned Issue Office of the Reserve Bank of India, where they will be adjudicated under a Special Procedure.
Exchange Limits and Charges:
  1. For individuals presenting up to 20 notes with a daily maximum value of Rs5,000, banks will exchange them for free over the counter.
  2. When the number of notes presented exceeds 20 pieces or Rs5,000 in value per day, banks will accept them against a receipt, and the value will be credited later. Banks are permitted to levy service charges in such cases.
  3. If the tendered value exceeds Rs50,000, banks are expected to take the usual precautions.
Exchange of Mutilated and Imperfect Notes:
  1. When presented in small numbers (up to five pieces), non-chest branches will often evaluate the notes and pay the exchange value over the counter.
  2. If non-chest branches are unable to decide on the damaged notes, they will accept them against a receipt and forward them to the associated currency chest branch for decision-making.
  3. The person will be notified of the expected payment date on the receipt, which will not be more than 30 days from then, and their bank account information will be requested for electronic credit of the exchange amount.
Bulk Exchange: As per the RBI Master Circular dated April 1, 2022, if the number of notes presented is more than five pieces but not exceeding Rs5,000 in value, the tenderer will be advised to send such notes to the nearby currency chest branch by insured post, providing their bank account details (account number, branch name, IFSC, etc.), or get them exchanged in person at the currency chest branch. For those tendering mutilated notes whose value exceeds Rs5,000, they will be advised to approach the nearby currency chest branch directly. Currency chest branches receiving mutilated notes through insured post shall credit the exchange value to the account of the sender by electronic means within 30 days of receipt.
By following these guidelines provided by the Reserve Bank of India, individuals can ensure a smooth and hassle-free process when exchanging their soiled, mutilated, or defective currency notes in India.