Friday, August 12, 2016

Facility for Exchange of Notes and Coins

Facility for exchange of notes and coins at bank branches
(a) All branches of banks should provide the following customer services:

(i)  Issuing fresh / good quality notes and coins,
(ii)  Exchanging soiled / mutilated / defective notes, and
(iii)  Accepting coins and notes.

(b) All branches should provide the above facilities on all working days. The scheme of providing exchange facility by a few select currency chest branches on one of the Sundays in a month will remain unchanged.

(c)  Such facility should be given wide publicity.

(d)  No Branch should refuse to accept small denomination notes / coins.

RBI (Note Refund) Rules, 2009 - Delegation of powers
(a)   No person is entitled as a matter of right to recover the value of any lost, stolen, mutilated or imperfect currency note from the Government or RBI. However, RBI may prescribe the conditions subject to which, the value of such notes may be refunded as a matter of grace.

(b) All branches of banks have been delegated for exchange of mutilated / defective notes free of cost.
Liberalized definition of a Soiled Note
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 belong to the same note with no essential feature missing. These notes should be accepted over the counters.
Such notes should not be re-issued and shall be deposited in currency chests for onward transmission to RBI.

Mutilated Notes – Presentation and Passing
A mutilated note is a note of which a portion is missing or which is composed of more than two pieces. The notes so presented shall be accepted, exchanged and adjudicated at any of the bank branches.

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 may tender these notes to the concerned Issue Office where they will be adjudicated under a Special Procedure.

Procedure for exchange of soiled/ mutilated/ imperfect notes

Exchange of soiled notes

Notes presented in small number: Where the number is up to 20 pieces with a maximum value of Rs.5000 per day, banks should exchange them over the counter, free of charge.

Notes presented in bulk: Where the number exceeds 20 pieces or Rs.5000 in value per day, banks may accept them, against receipt, for value to be credited later. Banks may levy service charges as permitted by RBI.

Exchange of mutilated and imperfect notes

While designated branches may continue to follow the procedure laid down in Part III of NRR, 2009  for exchanging mutilated and imperfect notes and issue receipt for the notes presented for adjudication, non-chest branches are required to follow the following procedure.

Notes presented in small number: Where the number is up to 5 pieces, non-chest branches should follow the above procedure and pay the exchange value over the counter. If such branches are not able to adjudicate the mutilated notes, the notes may be received against a receipt and sent to the linked currency chest branch for adjudication. The probable date of payment should be informed to the tenderers on the receipt itself and the same should not exceed 30 days. Bank account details should be obtained from the tenderers for crediting the exchange value by electronic means.

Notes presented in bulk: Where the number is more than 5 pieces not exceeding Rs.5000 in value, the tenderer should send the notes to nearby currency chest branch by insured post giving bank account details or get it exchanged there in person. All others should approach nearby currency chest branches. Currency chest branches receiving mutilated notes through insured post should credit the exchange value to the account of sender by electronic means within 30 days of receipt of notes.

Tenderers aggrieved with the service provided in this regard may approach Banking Ombudsman.

Notes bearing "PAY"/"PAID" "REJECT" stamps
(a) Every Branch Manager and every Officer-in-charge of the Accounts or Cash Wing shall act as 'Prescribed Officer' to adjudicate the notes received for exchange in accordance with RBI (Note Refund) Rules, 2009. After adjudicating, the Prescribed Officer should record his order by subscribing his initials to the dated 'PAY'/ 'PAID'/ 'REJECT' stamp which should also carry the name of the bank and branch. The stamp should be held under the custody of the 'Prescribed Officer'.

(b)  Mutilated / defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp, if presented for payment should be rejected.

Notes bearing slogans / political messages, etc.
Any note with slogans and message of a political nature written across it ceases to be a legal tender and the claim on such a note will be rejected. Similarly, notes which are disfigured may also be rejected.

Deliberately cut notes
The notes, which are found to be deliberately cut, torn, altered or tampered with, if presented for payment of exchange value should be rejected. The details such as the name of the tenderer, the number of notes tendered and their denominations should be reported to RBI. The matter should also be reported to local police in case a large number of such notes are tendered.

RBI conducts training programmes for 'Prescribed Officers' on a priority basis. These training programmes are intended to provide knowledge in the process of adjudication of defective notes. Hence, it is imperative that the Prescribed Officers are deputed for such programmes.

Display of Notice Board
All bank branches are required to display at a board indicating the availability of note exchange facility with the legend, "SOILED/MUTILATED NOTES ARE ACCEPTED AND EXCHANGED HERE". Banks should provide the facility for exchange of notes and coins to all. However, they should ensure that the note exchange facility is not cornered by money changers / dealers in defective notes.

Disposal of notes adjudicated at bank branches 
The full value paid notes have to be remitted to the chest branches and there from to the concerned Issue Offices together with the next soiled note remittance. The half value paid notes and rejected notes, may either be remitted separately or sent by registered and insured post as and when required.
The full value paid notes will be treated as chest remittance while the half value paid notes and rejected notes will be treated as notes tendered for adjudication and processed accordingly. All chest branches are required to submit a monthly statement to RBI showing the number of notes adjudicated during the month.

Agreement between RBI and commercial banks
(a) The bank branches should accept coins in exchange of notes.
(b)  They should accept coins of all denominations from any member of public without any restriction.
(c)   They should use Coin counting machines or accept coins by weight for large receipts.
Uncurrent Coins
The coins of denomination of 25 paise and below have ceased to be legal tenders. All such coins should be retained in the Small Coin Depots (SCDs) of the bank till further instructions from RBI.

Monitoring and Control
(a) The RMs/ ZMs of the banks may pay surprise visits to the branches and report the position of compliance to the Head Office which will review such reports and take prompt remedial action, wherever necessary.
(b) Any non-compliance shall be viewed as violation of instructions issued by RBI.
Based on RBI Master Circular dated 18/07/2016. For further clarifications please visit ……………. Poppy