How to Exchange Torn Notes at a Bank: RBI Rules Explained

A note that went through the wash, was torn in a crowded bus, or was chewed by a mouse is still money if it is genuine. Many people in Kota pass such notes on with a shrug or lose them to a middleman who “exchanges” them for a cut. You do not need to. This guide explains how to exchange torn notes at a bank under the Reserve Bank of India’s rules, what you will get back, and what to do if a branch refuses.

This guide is about genuine notes. If you suspect a note is counterfeit, see our guide on how to identify fake currency notes instead.

The rules that apply

RBI’s Note Refund Rules set out how genuine notes that are soiled, mutilated or otherwise damaged are exchanged and how much is paid. RBI also issues instructions to banks requiring them to provide the exchange facility to the public. The full rules and current instructions are on RBI’s website; this guide summarises the main points in plain language.

Three kinds of damaged note

1. Soiled notes

A soiled note is one that has become dirty, worn or slightly torn through ordinary use. RBI’s rules also treat a note torn into two pieces as soiled in many cases, as long as both pieces belong to the same note and the cut does not pass through certain key features such as the number panel.

Where: any bank branch, over the counter. You should get the full value.

2. Mutilated notes

A mutilated note is one where a portion is missing, or which is made of more than two pieces.

Where: bank branches that hold a currency chest, and RBI Issue Offices. Ask your bank which nearby branch has a currency chest.

Value: the amount paid depends on the area of the largest undivided piece and the denomination, following tables in the Note Refund Rules. Depending on how much of the note is left, you may get the full value, half value or nothing. The branch decides by applying the rules.

3. Badly damaged notes

Notes that are badly burnt, charred, brittle or stuck together (for example, a bundle that was soaked and dried) cannot be handled safely at a bank counter.

Where: RBI Issue Offices, which examine them under a special procedure. The Issue Office serving Rajasthan is at RBI’s office in Jaipur. You can also ask your bank how to send them.

Notes that may be rejected

• Notes that appear to have been deliberately cut, altered or tampered with.
• Notes with political or other slogans or messages written on them, which RBI’s rules treat differently.
• Notes that are counterfeit: these are impounded, not exchanged.

Step by step at the bank

1. Sort your notes into soiled, mutilated and badly damaged.
2. Keep pieces together in an envelope. Avoid taping or gluing them more than needed.
3. Carry an ID in case the branch asks for one.
4. Go to the counter and say you want to exchange soiled or mutilated notes under RBI’s rules.
5. For mutilated notes, fill any form the branch gives you. You may be paid on the spot or after assessment, sometimes by credit to an account.
6. Count what you get back before leaving, and ask for an acknowledgement if notes are kept for assessment.

What if the branch refuses?

Some branches turn people away, especially at busy times. RBI’s instructions are clear that the facility is for the public, not only account holders.

1. Politely mention RBI’s Note Refund Rules and ask the branch manager.
2. Ask for the refusal in writing, with the reason.
3. Complain to the bank through its grievance channel and keep the complaint number.
4. If the bank does not resolve it, file a complaint on RBI’s Complaint Management System at cms.rbi.org.in.

Do not hand damaged notes to people outside banks who offer to exchange them for a commission. You lose part of the value and have no protection.

Avoiding damaged notes in the first place

• Check change before you leave the counter; refuse notes that are badly torn, and ask for another.
• Do not staple, write on or tape notes. RBI asks the public not to write on notes.
• Keep cash dry during the monsoon, in a zip pouch or a plastic sleeve.
• Pay digitally for larger amounts where convenient, with the checks in our UPI fraud guide.

Coins and ATM notes

• Coins: banks are also expected to accept coins of all legal tender denominations from the public. If a shop refuses a valid coin, the right place to deposit or exchange it is a bank.
• Damaged notes from an ATM: note the date, time and ATM location, keep the ATM slip, and report it to the bank that runs the ATM straight away. The bank should exchange genuine soiled notes dispensed by its own machine.

Some shops in Kota refuse particular coin designs, especially 10 rupee coins, because of rumours that some are fake. RBI has said that all the 10 rupee coin designs it has issued are legal tender; our guide to whether 10 rupee coins are valid explains what RBI has said, which old coins are no longer legal tender and how to complain if a bank refuses coins.

For shopkeepers and stall holders

Small sellers in Kota’s markets often end up with a drawer of damaged notes after a busy festival season. Rather than refusing every damaged note at the counter, sort them weekly and exchange them at a bank. Our small business guide and smart shopping guide cover other everyday money matters for buyers and sellers.

In short

Genuine money keeps its value even when it looks tired. Soiled notes: any bank branch. Mutilated notes: a currency chest branch or RBI. Burnt or stuck notes: RBI Issue Office. And if a branch says no, ask for it in writing and escalate.