Have imperfect banknotes? Know how much value would one get in exchange

Do you have imperfect banknotes (damaged, soiled or mutilated currency notes)? Such notes are generally not being accepted in the market for making payments. It can be noted that the Reserve Bank of India (RBI) has mandated public banks to exchange such notes.

But have you ever wondered how much value would you get in exchange of imperfect banknotes?

According to the RBI, the value of an imperfect note may be paid for full value/half value under rules as specified in Part III of Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018]. The details can be accessed by visiting the official website of RBI at www.rbi.org.in → Publications → Occasional.

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What types of banknotes are eligible/not eligible for payment under the Note Refund Rules (NRR)?

As per the amended NRR (2018):

1. Notes up to Rs 20 denominations

i) area of single largest undivided piece of the note > 50% - Full value

ii) area of largest undivided piece of the note =/< 50% - Reject

2. Notes of Rs 50 and above denominations:

i) If area is less than 40% - Reject

ii) If the area is more than or equal to 40% and less than or equal to 80% - Half value

iii) If the area of the single largest undivided pieces is more than 80% - Full value

It can be noted that if the banknote is found to be non-payable then it is retained by the receiving banks and sent to the Reserve Bank where they are destroyed.

Where are soiled/mutilated banknotes accepted for exchange?

All banks are authorized to accept and exchange soiled banknotes for full value. They shall extend the facility of exchange of soiled/mutilated notes to non-customers also.

All branches of commercial banks are authorised to adjudicate mutilated banknotes (which are legal tender) and pay value for these, in terms of the Reserve Bank of India (Note Refund) Amendment Rules, 2018.

Small Finance Banks and Payment Banks may exchange mutilated and imperfect/defective notes at their option.