In India, individuals can go and exchange of their soiled, mutilated defective notes in any banks in all parts of the country. However, the rules are different when it comes to exchanging the notes in small amounts and in bulk.
What are soiled notes
In order to facilitate quicker exchange facilities, the definition of soiled note has been expanded. According to the Reserve Bank of India (RBI) website, “A ‘soiled note’ means a note which has become dirty due to normal wear and tear and also includes a two piece note pasted together wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing. These notes shall be accepted over bank counters in payment of Government dues and for credit to accounts of the public maintained with banks.”
What are mutilated notes
A mutilated note is a note of which a portion is missing or which is composed of more than two pieces. Mutilated notes shall be presented at any of the bank branches. The branches shall take steps to see that the exchange facilities are not cornered by private money changers or professional dealers of defective notes.
Extremely Brittle, Burnt, Charred, Stuck-Up Notes
Notes which have turned extremely brittle or are badly burnt, charred or inseparably stuck up together and, therefore, cannot withstand normal handling, shall not be accepted by the bank branches for exchange. Instead, the holders shall be advised to tender these notes to the Issue Office of Reserve Bank of India concerned where they will be adjudicated under a Special Procedure.
What is the limit for per person to exchange
In cases when an individual presents up to 20 notes with a daily maximum value of Rs 5,000, banks would exchange them for free over the counter.
Where the number of notes presented by a person exceeds 20 pieces or Rs 5,000 in value per day, banks shall accept them against receipt, for value to be credited later. Banks shall levy service charges as permitted. In case tendered value is above Rs 50,000, banks are expected to take the usual precautions.
What happens in case of exchange of mutilated and imperfect notes
When present in small number
Non-chest branches will often evaluate the notes and pay the exchange value over the counter when a person presents up to five pieces of notes.
The notes will be accepted against a receipt and forwarded to the associated currency chest branch for decision-making if the non-chest branches are unable to decide the damaged notes. The person will be notified of the expected payment date on the receipt itself, and it will not be more than 30 days from then. The person will be asked for their bank account information in order to credit the exchange amount electronically.
When presented in bulk
According to the RBI Master Circular April 1, 2022, “Where the number of notes presented by a person is more than 5 pieces but not exceeding Rs 5,000 in value, the tenderer shall be advised to send such notes to nearby currency chest branch by insured post giving his / her bank account details (a/c no, branch name, IFSC, etc.) or get them exchanged thereat in person. All other persons tendering mutilated notes whose value exceeds Rs 5,000 shall be advised to approach nearby currency chest branch. Currency chest branches receiving mutilated notes through insured post shall credit the exchange value to the account of sender by electronic means within 30 days of receipt of notes.”