RBI Master Directions on Note and Coin Exchange Facility
Why in the news
The RBI merged its older instructions into one set of Master Directions so the public can swap currency freely and without discrimination, supporting its Clean Note Policy.
Services every branch must offer
- Fresh currency: good-quality notes and coins in all denominations.
- Soiled and mutilated notes: acceptance and exchange of damaged or imperfect notes.
- Coins: acceptance of coins and notes for transactions or exchange.
- Small denominations: branches cannot decline small notes or coins.
- Applies to customers and non-customers alike.
Classification of unfit notes
| Category | Meaning | Exchange value |
|---|---|---|
| Soiled | Dirty from normal use; includes a two-piece note whose halves belong together with no essential feature missing | Full value |
| Mutilated | A portion is missing, or it consists of more than two pieces | Adjudicated value (full, half or zero) |
| Imperfect | Wholly or partly obliterated, shrunk, washed or altered, not necessarily mutilated | Adjudicated value |
Essential features rule
A note qualifies for refund only if its essential features are intact; otherwise the bank may reject it. These are:
- Issuing authority (Reserve Bank of India)
- Guarantee and promise clause
- Governor’s signature
- Mahatma Gandhi portrait or Ashoka Pillar emblem
- Watermark
Exam angle
- Effective date: April 1, 2026; policy reinforced: Clean Note Policy.
- Year of printing is not listed as an essential feature.
- Soiled notes: full value; mutilated and imperfect: adjudicated value.