Thursday, July 4, 2019
Note for Thought: Exchange of notes and coins
We have all seen a meme in social media wherein it was written in Devanagari script on a Rs. 10 currency note that “Sonam Gupta bewafa hai”, which means Sonam Gupta is unfaithful. It was probably written by some jilted lover to show the frustration on his rejected proposal. Almost everyone has faced a situation when they have got their clothes washed with currency notes in the pocket. I also remember an incident wherein a person offered high value currency notes in a temple near lighted earthen lamps which caught fire and note was significantly burnt. Currency notes are fragile and often these old, torn, burnt notes find way to our pocket while doing day to day transactions.
Most of us try to get rid of these kid of notes by using such notes in transactions at grocery store, petrol pumps and vegetable sellers etc. But little do we know that a person holding such notes has right to get them exchanged at bank branches. The regulator and supervisor of overall financial system in India, Reserve Bank of India (RBI) has issued detailed guidelines for exchange of notes and coins by the general public.
In this Article, I have attempted to define the rights of a person to receive fresh quality notes in exchange of defective notes.
1. In order to understand the scheme of RBI, it is necessary to understand the under which category such notes would fall. But before that, it is to be noted that a customer can get this exchange service at any of banks. It is not necessary that they should hold any account with such bank or branch. Banks are mandated to provide facility for exchange of notes and coins not only to their customers but also to others.
2. For the purpose of discussion, these notes can be categories into three types, i.e. Soiled Notes, Mutilated Notes and Other Defective Notes.
(i) Soiled Note: A soiled note is one which has become old due to normal wear and tear and also includes two-piece note pasted together with no essential feature missing.
In case you receive Soiled Notes, then you may request the bank to deposit Soiled Notes in the bank account maintained at the Bank or use such notes towards payment of Government dues. Banks are mandated exchange Soiled Notes over the counter, free of charge if the number of notes presented are less than 20 or Rs. 5000 in value. However, if the number of notes or value of such note exceeds the aforesaid threshold, then banks may accept them, against receipt, for value to be credited later.
(ii) Mutilated Note: A mutilated note is a note of which a portion is missing or which is composed of more than two pieces.
A person holding mutilated notes can request for exchange of mutilated notes. Such mutilated notes need to be accepted, exchanged and adjudicated in accordance with Reserve Bank of India (Note Refund) Rules, 2009. As per this Rules, mutilated notes need to be adjudicated by prescribed officer of the designated branch of the Bank in the accordance with the rules given thereunder. It is to be noted that value of such mutilated note depends upon the calculation of the area of the single largest undivided piece of the note. It means if a note is torn into three parts, the value of such note shall be corresponding to the area of single largest piece.
In case mutilated branches are not able to adjudicate the notes or number of notes presented is more than 5 but not exceeding Rs. 5000 in value, then nearby currency chest branch needs to be contacted either via concerned branch or directly. In any case, the exchange value shall be received by the concerned person with 30 days of tendering the mutilated notes.
(iii) Other defective Note (i.e. Extremely brittle, burnt, charred, stuck up Notes): Under this category, it includes notes which have turned extremely brittle or are badly burnt, charred or inseparably stuck up together and, therefore, cannot withstand normal handling. Such notes shall not be accepted at the branch. The holder of such notes are required to approach concerned issue office where it shall be adjudicated and exchanged under a special procedure.
3. Coins and small denomination notes: A person use coins at bank branches for either transactions or exchange. No bank branches can refuse to accept small denomination notes and / or coins tendered at their counters. However, it is to be noted that with effect from June 30, 2011, the coins of 25 paisa and below cannot be used as legal tender.
4. Information to general public: In order to ensure that general public has information about exchange facility, all bank branches are required to display at their branch premises, at a prominent place, a board indicating the availability of note and coin exchange facility.
5. Grievance redressal: Any person aggrieved with the services provided by the banks in this regard may approach Banking Ombudsman concerned, following the procedure as laid under Banking Ombudsman Scheme, 2006.
So, next time when you receive defective notes inadvertently, you do not need to get rid of such notes by hiding it in other notes and giving it at Grocery store. Just walk into the nearest branch of any bank and ask them to exchange these notes.
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