Introduction
Many of us often end up with torn, dirty or old notes while shopping, traveling, or withdrawing from ATMs. Sometimes, shopkeepers refuse to accept them, leaving us confused about what to do. To solve this problem, the Reserve Bank of India (RBI) has issued a Master Direction on Exchange of Notes and Coins (April 2025).
This direction makes it mandatory for all banks to provide free and simple facilities for exchanging notes and coins. Whether you are a customer of that bank or not, you can walk into any branch and get your damaged notes replaced.
In this blog, we’ll explain in simple language what the new RBI guidelines mean, how you can exchange your notes, which notes are acceptable, and what to do if a bank refuses.
What Facilities Banks Must Provide
According to RBI, all bank branches across India must provide the following services to the public:
- Issue fresh and good quality notes and coins of all denominations.
- Exchange soiled, mutilated, or imperfect notes.
- Accept coins and notes of all legal denominations without discrimination.
This means you don’t need to run to RBI offices anymore. Your nearest bank branch will handle it.
Even if you’re not an account holder in that bank, the branch cannot refuse to exchange your notes.
Coins: What is Legal Tender and What is Not?
- Coins of 50 paise, ₹1, ₹2, ₹5, ₹10 and ₹20 (all designs and themes issued by Government of India) are still legal tender.
- Banks cannot refuse small coins, no matter how inconvenient.
- Coins of 25 paise and below have ceased to be legal tender since June 30, 2011. So, you cannot use or exchange them anymore.
Different Types of Notes and Their Meaning
RBI has given clear definitions to help us understand which notes can be exchanged:
- Soiled Note – A dirty or worn-out note, or a note torn into two pieces but joined together properly. Example: A faded ₹100 note or a two-piece ₹50 note pasted neatly.
- Mutilated Note – A note with a missing portion or more than two pieces stuck together. Example: A ₹200 note where one corner is missing.
- Imperfect Note – A note that is washed, shrunk, altered, or difficult to read, but still in one piece. Example: A ₹20 note where the ink has faded.
- Unfit Notes – Notes that are extremely brittle, burnt, or stuck together. These cannot be exchanged at bank branches and must be sent directly to RBI issue offices.
Step-by-Step Process to Exchange Notes
1. Exchange of Soiled Notes
- If you have up to 20 notes (maximum value ₹5000 per day): Exchange them instantly over the counter at any bank branch, free of cost.
- If you have more than 20 notes or above ₹5000 in value per day: The bank will accept them, issue a receipt, and credit the money to your account within 7 days.
2. Exchange of Mutilated and Imperfect Notes
- If you have up to 10 notes: The bank will check them and give you the money instantly.
- If you have more than 10 notes or above ₹5000 in value per day: The bank will issue a receipt and credit your account later. If the branch cannot check them, they will send it to their linked currency chest branch. Payment must be made within 30 days.
3. Very Badly Damaged Notes
Notes that are burnt, brittle, or stuck together cannot be exchanged at normal branches. You will need to:
- Visit an RBI Issue Office (available in cities like Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Jaipur, etc.), or
- Send the notes by registered/insured post with your bank account details.
Special Cases: When Notes Are Rejected
- Notes with PAY/PAID/REJECT stamps – Already exchanged, cannot be used again.
- Notes with political or religious slogans – Not valid as legal tender.
- Notes deliberately cut or tampered – Will be rejected, and in large cases, reported to police.
- Notes with scribbles or stains – Still valid, but will not be reissued. You can deposit or exchange them at any bank.
Clean Note Policy: Why RBI Cares About Scribbles
RBI wants to maintain clean, neat currency notes in circulation. That’s why:
- Notes with heavy scribbling, stains, or writings should not be passed around.
- Banks will remove them from circulation and send to RBI.
- Citizens are advised not to write on notes as it reduces their life and creates inconvenience.
Grievance Redressal: What If Bank Refuses?
If any bank refuses to accept or exchange your valid notes/coins, you can:
- File a complaint with that bank branch.
- If not resolved within 30 days, approach the RBI Ombudsman under the RBI Integrated Ombudsman Scheme, 2021.
- Complaints can be filed:
- Online: https://cms.rbi.org.in
- By email
- By post: RBI’s Centralised Receipt and Processing Centre, Chandigarh
- Online: https://cms.rbi.org.in
Training, Monitoring & Penalties for Banks
- RBI regularly trains bank officials on how to handle defective notes.
- All branches must display a board saying:
“Soiled / Mutilated Notes and Coins are Accepted and Exchanged Here” - RBI will monitor compliance through surprise inspections.
- Non-compliant banks may face penalties under RBI’s rules.
What Customers Should Remember
- Don’t panic if you have torn or dirty notes – banks must exchange them.
- Don’t accept notes with PAY/PAID stamps or slogans.
- You can exchange notes even if you don’t have an account in that bank.
- Keep transactions small (under 20 notes or ₹5000) for quick exchange.
- For badly damaged notes, directly approach RBI Issue Offices.
Conclusion
The new RBI Master Direction 2025 has made it easier for common people to handle old, damaged, or torn currency notes. Now, you don’t need to run to RBI offices – your nearest bank branch will help you.
By understanding the difference between soiled, mutilated, imperfect, and unfit notes, and following the simple process explained above, you can ensure your money never goes to waste.
This move not only helps citizens but also supports RBI’s Clean Note Policy, ensuring that only clean, good-quality notes remain in circulation.
So next time you get a torn ₹100 or a faded ₹500, don’t worry – just walk into your nearest bank and get it exchanged hassle-free.
FAQs
Q1. Can I exchange notes if I am not a customer of that bank?
👉 Yes, all bank branches must exchange notes and coins for everyone, not just their account holders.
Q2. Are ₹1, ₹2, ₹5, ₹10, and ₹20 coins still valid?
👉 Yes, all these coins are legal tender. Only 25 paise and lower are not valid.
Q3. What if I have burnt or brittle notes?
👉 Such notes cannot be exchanged at normal branches. You must send them to an RBI Issue Office.
Q4. How many notes can I exchange at once?
👉 Up to 20 soiled notes (₹5000 value) or 10 mutilated notes can be exchanged instantly. Beyond that, banks will credit the money later.
Q5. What if a bank refuses to accept my coins?
👉 You can file a complaint with the bank, and if unresolved, approach the RBI Ombudsman online at cms.rbi.org.in.