RRBs Must Accept Small Denomination Notes and Coins (2007 Circular)
Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2006-2007/390 · issued 10 May 2007 · ~2 min read
Quick answerRBI circular (2007) directs all Regional Rural Banks to accept small denomination notes and coins without refusal, following a Gujarat High Court directive to RBI. Non-compliance by staff will invite stern action.
The rule, in the simplest words
RRBs must accept small denomination notes and coins without refusal.
Staff must be trained to accept lower denomination notes and coins.
Stern action will be taken against staff who refuse to accept small denomination notes and coins.
How it plays out — a real example
When a customer, Mrs. Patel, comes to the branch with a small denomination note to pay her loan instalment, the payments & clearing officer, Mr. Kumar, must accept it without hesitation. He has been trained to follow the RBI's instructions and knows that refusing the note would be a serious mistake. He smiles and says, 'Thank you, Mrs. Patel. I'll process your payment right away.'
What changed
A Gujarat High Court case involving refusal of a demand draft with a fraction of a rupee led the court to direct RBI to take steps and issue fresh notifications to all banks regarding acceptance of small denomination notes/coins. RBI subsequently issued this circular to all RRBs, instructing them to ensure acceptance and warning of stern action for non-compliance by staff.
What it means for you
RRBs must ensure all branches and staff accept lower denomination notes and coins without exception. This reinforces customer rights and prevents service denials. Banks need to train staff and enforce compliance to avoid penalties.
What you must do
Issue strict instructions to all branches to accept small denomination notes and coins without refusal.
Train all staff on these instructions and ensure they are fully conversant with compliance requirements.
Monitor branch adherence and take stern action against any staff member who refuses to accept such currency.
Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
All Regional Rural Banks (RRBs), RRB branch staff and management, Customers tendering small denomination notes and coins
❓ Common questions
What triggered this RBI circular?
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 take appropriate steps and issue fresh notifications to all banks regarding acceptance of small denomination notes and coins.
What action will RBI take if a branch refuses to accept small notes?
RBI has warned of stern action against any staff member who refuses to accept small denomination notes or coins, as per the circular.
Does this apply only to RRBs or all banks?
This specific circular is addressed to all Regional Rural Banks. The High Court directive was for RBI to issue notifications to all banks, but this circular only covers RRBs.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/390
RPCD.CO.
RRB.BC.No. 89 /03.05.28-B /2006-07
May
10, 2007
The
Chairmen
All Regional
Rural Banks
Dear
Sir
Acceptance
of Small Denomination Notes and Coins
A
case involving refusal by a bank to accept demand draft involving fraction of
a rupee came up before the Honourable High Court of Gujarat, Ahmedabad. The High
Court of Gujarat, taking a serious view of the matter, has directed that appropriate
steps may be taken in the matter as also regarding non-acceptance of small denomination
notes / coins by banks in accordance with law, in the light of the extant instructions
and, if required, issue fresh notifications to all the banks.
2.
You are, therefore, advised to ensure that none of your branches/staff refuse
to accept lower denomination notes and / or coins. You may issue strict instructions
to all branches that the staff concerned should in no case refuse to accept small
denomination notes and coins tendered at the counters. It may also be ensured
that all the staff members are made fully conversant with the instructions in
this regard and also comply strictly with the same. Stern action will be taken
in the event of refusal / non-compliance by any staff member.
3.
Please acknowledge receipt to our concerned Regional Office.
Yours
faithfully,
(C.S.Murthy)
Chief
General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/390 · issued 10 May 2007. The plain-English explanation above is BankPulse’s own independent summary.
Issue strict instructions to all branches to accept small denomination notes and coins without refusal.
Monitor branch adherence and take stern action against any staff member who refuses to accept such currency.
📜 Compliance
Train all staff on these instructions and ensure they are fully conversant with compliance requirements.
Acknowledge receipt of this circular to your respective RBI Regional Office.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Branch Manager at a bank this circular applies to (All Regional Rural Banks (RRBs), RRB branch staff and management, Customers tendering small denomination notes and coins), your first concrete step on “RRBs Must Accept Small Denomination Notes and Coins (2007 Circular)” is: “Issue strict instructions to all branches to accept small denomination notes and coins without refusal.” (RBI issued this 10 May 2007).
Circular: RBI/2006-2007/390 -- RRBs Must Accept Small Denomination Notes and Coins (2007 Circular)
Issued: 10 May 2007
Action required: Issue strict instructions to all branches to accept small denomination notes and coins without refusal.
Action required: Train all staff on these instructions and ensure they are fully conversant with compliance requirements.
Action required: Monitor branch adherence and take stern action against any staff member who refuses to accept such currency.
Action required: Acknowledge receipt of this circular to your respective RBI Regional Office.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3508&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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