What changed
This is a revised Master Circular dated April 1, 2021, superseding the July 1, 2020 version. It consolidates existing instructions on note and coin exchange facilities, including updated references to the Reserve Bank of India (Note Refund) Amendment Rules, 2018. No new policy changes are introduced; it serves as a comprehensive reference for banks.
What it means for you
Banks must ensure all branches actively provide fresh notes, exchange soiled/mutilated notes, and accept coins/notes for transactions. Small Finance Banks and Payment Banks have the option to exchange mutilated/defective notes. The circular reinforces that coins of 50 paise, ₹1, ₹2, ₹5, ₹10, and ₹20 remain legal tender, and banks cannot refuse them. Delegated powers under Note Refund Rules allow free exchange of mutilated notes, reducing customer dependency on RBI offices.
What you must do
- Ensure all branches offer note/coin exchange services on all working days without discrimination.
- Accept small denomination notes and coins, including ₹1 and ₹2 coins, preferably by weighment or in sachets of 100.
- Publicize the availability of these facilities widely for customer awareness.
- Train staff on the Reserve Bank of India (Note Refund) Rules, 2009 (as amended) for free exchange of mutilated/defective notes.
Who it affects
All scheduled commercial banks, Small Finance Banks, Payment Banks, Currency chest branches, Bank customers and public
Are banks required to exchange mutilated notes for free?
Yes, all bank branches have delegated powers under the Note Refund Rules, 2009 (as amended) to exchange mutilated/defective notes free of cost. Small Finance Banks and Payment Banks may do so at their option.
Can banks refuse to accept small denomination coins like ₹1 or ₹2?
No. All coins of 50 paise, ₹1, ₹2, ₹5, ₹10, and ₹20 are legal tender. Banks must accept them for transactions or exchange, and it is preferable to accept ₹1 and ₹2 coins by weighment.
What is the purpose of this Master Circular?
It consolidates and updates previous instructions on note and coin exchange facilities, ensuring banks provide these services actively to reduce public reliance on RBI offices.