What To Do When Bank Refused To Receive Damaged Note?

Paper currency or note is an important and essential part of transaction. But what one can do if he/she finds a damaged note?

What most people do is either they give it to the unexpected person during next truncation. Or they let it put in their wallet for months.

However, there are other options too. Many of them go to bank and exchange it. That’s the best one.

The Reserve Bank of India had given proper guidelines for exchange of damaged notes. Proper conditions were there in which bank accept the note for exchange. And also gave guidelines about what if bank refuses to accept it.

Types of Notes Banks accept in India

There are three broad categories in which banks accept the notes.

  1. Imperfect Notes- Imperfect notes are the notes which are either washed or whose print is rubbed due to some reasons or more use.
  2. Multilated Notes- Multilated Notes are the notes which are fallen apart or torn or put together with torn pieces.
  3. Mismatched Notes- In mismatched notes; the notes which are stuck together by but are of different types are covered.

What kinds of notes bank does not accept?

As per the Rule 6(3) (iii) of Reserve Bank of India (Note Refund) Rules, 2009 the notes on which slogans and messages are written are not considered fit to exchange. These notes also don’t come under legal obligations i.e. writing on notes is not illegal.

Also extremely brittle, burnt & charred notes cannot, mostly which cannot with stand normal handling are not accepted by banks exchange branches. However one can go to concerned issue office where notes go through special procedure.

How much refund?

Also not all the types of note exchange one can get a full refund. This also depends on the terms and policies of RBI.

Where can one exchange?

Every person can exchange note in any branch of bank. Even if he is not the customer of the particular bank.

How much one can exchange?

One can get the refund instantly by the bank if he exchanged less than 20 notes or whose cost is less than 5000. ‘

However, if the cost exceeds 5000 or more than 20 notes, then bank will give you maximum one month time period to give exchanged money.

Any cost for exchange?

As per the Reserve Bank of India (Note Refund) Rules, 2009 and power under Rule 2 (j) of RBI the exchange of notes should be free of cost. No bank can charge money to exchange of notes.

What if Bank refuses to accept?

If bank refused to accept a damaged note then also there are proper guidelines laid down by the Reserve Bank of India.

According to 2016 RBI circular if bank refuses to accept damaged note, it has to pay a penalty of 10,000.

Also a banking Ombudsman Scheme is operation to solve issues regarding banking procedures. It was formed under section 35 of Banking Regulation Act, 1949 in 1995. In this a senior officer named Banking Ombudsman is appointed by Reserve Bank of India to see customer’s complaints. He covers all complaints specified under clause 8 of the Banking Ombudsman Scheme 2006 amended in 2017. In this clause the refusal of damaged note is also covered.

From time to time Reserve Bank also issued circulars to banks to away stapling bundles and introduces bonding. It is done to ensure long life of the currency notes.

So whenever one has face issue of bank not accepting notes he/ she can easily go to the or write a letter or message to office. They will defiantly respond to it. Also if bank found guilty on this and your complain find genuine then bank will be charged with fine of 10,000 Indian rupees.


There are so many rumors regarding the currency notes exchange. However, RBI has already clarified it many times. Still many people are there who are not aware of this.

It is important to everyone to know there rights. They should not only know the right they have to exchange note but also they should be aware of the fact that if bank refuse they also have a right to complain against them.

RBI will impose a huge penalty on the banks if they refuse. This penalty also ensures that such incident will not happen in future because notes are important part of the transaction, everyone need them.

This article is written by Srishti Rajpoot, a law student of Gautam Buddha University, Greater Noida.

Also Read – How to File Complaint Against Bank?

Law Corner

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