What changed
This 2008 Master Circular revises the 2002 version, consolidating prior circulars on note and coin exchange. It provides a liberalised definition of cut notes for quicker exchange and reaffirms delegation of full powers to designated bank branches under the RBI (Note Refund) Rules, 1975.
What it means for you
Banks must ensure all branches freely exchange soiled and cut notes meeting the liberalised criteria, treating them as soiled notes for chest remittance. Designated branch managers must adjudicate mutilated notes as Prescribed Officers. Extremely brittle or burnt notes should not be accepted; instead, advise customers to tender them to RBI Issue Offices for special handling.
What you must do
- Train cashiers and branch managers on the liberalized cut note definitions for single and double numbered notes.
- Ensure all branches accept soiled and cut notes for government dues and account credits without issuing them back to the public.
- Designate branch managers as Prescribed Officers for adjudicating mutilated notes under the Note Refund Rules.
- Redirect extremely brittle, burnt, or stuck notes to RBI Issue Offices and advise customers accordingly.
- Update internal procedures to deposit unfit notes in currency chests for RBI remittance.
Who it affects
All commercial banks, Branch managers and cash officers, Currency chest operators, Bank customers exchanging notes
What types of cut notes must banks freely exchange?
Single numbered notes (Re.1, Rs.2, Rs.5) in not more than two pieces with complete number on one piece, and double numbered notes (Rs.10 to Rs.1000) in two pieces with same number on each piece, provided no essential feature is missing.
Who adjudicates mutilated notes at bank branches?
The branch manager or officer-in-charge of accounts/cash acts as the Prescribed Officer under the RBI (Note Refund) Rules, 1975, to adjudicate mutilated notes presented for exchange.
What should banks do with extremely brittle or burnt notes?
Banks must not accept such notes for exchange. Instead, advise customers to tender them to the concerned RBI Issue Office, where they will be adjudicated under a special procedure.