What changed
The Gujarat High Court, in a case involving refusal of a demand draft with a fraction of a rupee, directed RBI to enforce existing instructions on accepting small denomination notes and coins. RBI has now reiterated these instructions to all banks, mandating strict compliance and warning of stern action for refusal.
What it means for you
Banks must train staff to accept lower denomination notes and coins at all counters, as refusal is now a serious regulatory offense. This reinforces customer rights and could lead to penalties for non-compliant branches. Lenders should review their cash handling procedures to avoid legal or regulatory repercussions.
What you must do
- Issue strict internal circulars to all branches mandating acceptance of small denomination notes and coins.
- Train all counter staff on these instructions and ensure they are fully conversant with compliance requirements.
- Implement monitoring mechanisms to detect and address any refusal incidents promptly.
- Prepare for potential audits or inspections by RBI on compliance with this directive.
Who it affects
All scheduled commercial banks, Bank branch managers and staff, Retail customers and small businesses using cash transactions
What triggered this RBI directive?
A case before the Gujarat High Court involving a bank's refusal to accept a demand draft with a fraction of a rupee led the court to direct RBI to enforce existing rules on accepting small denomination notes and coins.
What are the consequences for non-compliance?
RBI has warned of stern action against any staff member or branch that refuses to accept small denomination notes or coins, which may include penalties or other regulatory measures.
Does this apply to all types of transactions?
Yes, the directive covers all counter transactions where small denomination notes and coins are tendered, including deposits, payments, and other cash dealings.