Many people in India are not sure what to do with Torn/Mutilated notes, dirty notes, or small coins. Some think banks may refuse them. Based on RBI rules, this is not true. Banks are required to help the public with note and coin exchange.
In this article, we will clearly explain the facility for exchange of notes and coins at bank branches, why it matters, and how it works. The Reserve Bank of India (RBI) has instructed all bank branches across India to provide note and coin exchange services to the public.
This means:
- You do not need to go to RBI offices for normal note or coin exchange.
- You do not need to be an account holder of that bank.
- The service must be provided on all working days, without discrimination.
Key Takeaways
- All bank branches in India must exchange soiled and mutilated notes as per RBI rules.
- You do not need a bank account to use note and coin exchange facilities.
- Small denomination notes and coins cannot be refused by banks.
- Burnt or extremely fragile notes must be taken to RBI Issue Offices.
- Notes with political messages or PAY/PAID stamps are not valid for exchange.
What Services Banks Must Provide
Banks in India are bound by RBI rules to provide certain essential services to the public. From issuing fresh notes and coins to exchanging damaged currency, these services ensure smooth transactions. any people are unaware of their rights when dealing with banks.
Here’s a quick guide to what banks must provide you.
1. Issuing Fresh Notes and Coins
Many beginners hesitate to ask for coins or small notes.
RBI has made it clear that banks must provide them on demand. Banks must give clean, usable notes and coins of all denominations when available.
Example: If you need ₹10 coins or ₹50 notes for shop change, the bank should provide them if stock is available.
2. Exchange of Soiled Notes
A soiled note is a note that has become dirty due to normal use. It also includes a note torn into two pieces and pasted together, as long as:
- Both pieces belong to the same note
- The full note is present
- No important feature is missing
In India, many wrongly think taped notes are invalid.
These notes must be:
- Accepted at bank counters
- Accepted for government payments
- Credited to your bank account
However, banks must not give such notes back to the public again.
Example: A ₹100 note that is dirty and taped in the middle can still be exchanged at a bank counter.
3. Exchange of Mutilated Notes
A mutilated note is:
- A note with a portion missing, or
- A note made of more than two pieces
These notes can also be taken to any bank branch.
The bank will check the note and decide the value as per RBI rules.
Example: If a ₹500 note has one corner missing due to an accident, the bank will examine it and may pay full or partial value.
4. Notes That Banks Will NOT Accept
Some notes cannot be exchanged at normal branches:
- Extremely brittle notes
- Badly burnt or charred notes
- Notes stuck together that cannot be separated
Such notes must be taken to the RBI Issue Office, where a special process is followed.
How the Exchange Process Works
The RBI has laid down clear rules for how banks must handle the exchange of damaged notes. Whether you bring a few soiled notes or a bulk quantity, the process is structured to be fair and transparent.
Mutilated notes too have defined limits and procedures to ensure proper value is returned. Here’s how the exchange process works in practice.
Exchange of Soiled Notes
Small quantity
- Up to 20 notes per day
- Maximum value ₹5,000 per day
- Exchange is done immediately and free of cost
Bulk quantity
- More than 20 notes or more than ₹5,000
- Bank may give a receipt and credit money later
- Service charges may apply
- Extra checks if value exceeds ₹50,000
Exchange of Mutilated Notes
Up to 5 notes
- Bank usually checks and pays immediately
- If not possible, bank sends it to a currency chest
- Payment should happen within 30 days by bank transfer
More than 5 notes
- Up to ₹5,000: sent to currency chest branch
- Above ₹5,000: customer must approach currency chest directly
This process avoids misuse and ensures fair checking.
Coins: What Banks Must Accept
Banks cannot refuse coins, including ₹1 and ₹2 coins.
Coins are preferably accepted by weight, or in packets of 100 coins in polythene sachets
Example: If you bring ₹200 in ₹1 coins, the bank must accept them.
Many people think banks can say no to coins. RBI rules clearly say they cannot.
Notes with Stamps, Writing, or Messages: PAY / PAID / REJECT Stamps
If a note already has a PAY or PAID stamp, it means value was already given once. Such notes cannot be paid again.
Banks must never issue such notes to the public.
Political Slogans or Messages
Any note with political slogans or messages written on it:
- Is not legal tender
- Will be rejected
Similarly, deliberately damaged or tampered notes are rejected and may be reported.
Important Display and Complaint Option
Every bank branch must display a board saying: “SOILED / MUTILATED NOTES AND COINS ARE ACCEPTED AND EXCHANGED HERE”
If a bank refuses service, you can complain under the Banking Ombudsman Scheme. This protection exists to help the public.
Coins of 25 paise and below are no longer legal tender since June 30, 2011. Banks are not required to accept them.
RBI rules clearly protect the public when it comes to cash handling. Banks must exchange soiled notes, mutilated notes, and accept coins without discrimination.
Understanding these rules helps you avoid unnecessary arguments and confusion at bank counters.
We hope this article helped you understand the facility for exchange of notes and coins at bank branches in a clear and practical way.
Frequently Asked Questions About Exchange of Notes and Coins
If you are new to banking rules, cash handling, or RBI guidelines, these FAQs will help clear common doubts. Along with basic questions, we have also included practical, real-life questions that beginners in India often ask after reading about note and coin exchange facilities.
What is the note and coin exchange facility at bank branches?
It is a service where banks exchange damaged, dirty, or torn notes and accept coins from the public. RBI has made it compulsory for all bank branches to offer this service. You do not need to visit an RBI office for normal cases.
Do I need to have a bank account to exchange notes or coins?
No. You do not need to be an account holder of that bank. Any member of the public can walk in and use the note and coin exchange facility.
What is the difference between a soiled note and a mutilated note?
A soiled note is dirty due to normal use, like a note that has become old or stained.
A mutilated note has a missing portion or is torn into more than two pieces. Both can be exchanged, but the process may differ slightly.
How many soiled notes can I exchange in one day at a bank?
You can exchange up to 20 soiled notes per day with a total value of ₹5,000 over the counter, free of charge. If you bring more than this, the bank may issue a receipt and credit the money later.
Will banks accept notes that are taped or pasted together?
Yes, in many cases. If a note is torn into two pieces and pasted together, and both pieces belong to the same note with no important part missing, it is treated as a soiled note and accepted.
Can a bank refuse to accept small denomination notes or coins?
No. Banks are not allowed to refuse small notes or coins, including ₹1 and ₹2 coins. RBI has clearly instructed banks to accept them without discrimination.
What should I do if I have a burnt or extremely fragile note?
Such notes are not accepted at normal bank branches. You will need to approach the RBI Issue Office, where these notes are examined under a special procedure.
Are notes with political slogans or messages still valid?
No. Notes with political slogans or messages written on them are no longer legal tender. Banks will reject them during exchange.
What does a “PAY” or “PAID” stamp on a note mean?
It means the value of that note has already been paid earlier. Such notes cannot be exchanged again and should not be accepted by the public.
What happens if a bank refuses to exchange my notes or coins?
If a bank does not follow RBI rules, you can file a complaint under the Banking Ombudsman Scheme. Keep any receipts or proof if you were asked to submit notes.
Are old coins like 25 paise still accepted by banks?
No. Coins of 25 paise and below stopped being legal tender after June 30, 2011. Banks are not required to accept them.
Why does the RBI insist that banks display a notice about note exchange?
The notice informs the public of their rights and reduces confusion at counters. It also helps prevent banks from denying services that they are required to provide.
Reference: RBI’s Master Circular – Facility for Exchange of Notes and Coins (link)
