THE use of soiled and imperfect notes is so vast in day to day transactions in our state that we often forget to ask why? In other words we can say that we have adapted ourselves to the menace of soiled notes. The circulation of these kinds of notes can be put to a halt when banks stop issuing these notes at their cash counters and at the same time accept these notes from the general public. But it is not happening.
 If you are using public transport, there would be not a single day when you enter into an argument with autowallahs, bus conductors, or even with provisions shopkeeper etc. There would have been countless occasions when you would have cursed one or the other for palming off on you a torn or soiled currency note. With no other easy recourse, you might have handed over the same note at the first available opportunity while shopping.
 From legal point of view, all banks are law-bound to accept and exchange for full value soiled notes that have the stipulated features of valid currency. It is notable that not accepting a valid currency note is an offence tantamount to questioning the financial integrity and solvency of the Government of India, and undermining the confidence of the public in the currency system. Precisely, dishonouring a currency note because it is worn out or torn is an offence. Since the legal tender has been issued by the RBI against the rupee securities of the Government of India, it has to be honoured if it carries the requisite characteristics.
 But we have seen most of the banks operating here are reluctant to exchange soiled notes. So, what's your recourse if the banks refuse to exchange the soiled or imperfect notes? The rules provide that you can first take it up with the bank manager, and if that fails, write to the customer care department of that ban or you can even send your complaint to the Reserve Bank of India’s department of currency management, Even you could also take it up with the banking ombudsman in your city. The RBI has appointed ombudsmen in various cities to redress customer grievances relating to deficiencies in banking services. But it may take years before substantive action is taken. So there is unlikely that you would persevere if all you wanted was to exchange a 100 rupee note.
 Even as there is, of course, a mechanism in place in banks to exchange all soiled, mutilated or imperfect banknotes for value, the banks most of the time ignore to extend this facility to its clients. Reserve Bank of India has asked all banks to set up facilities for exchange of soiled and damaged banknotes. Even the mutilated currency notes, with essential features in tact, can be exchanged at designated branches of the banks.
 The apex bank directive envisages that all currency chest branches of commercial banks are authorised to accept mutilated banknotes and pay value for these, in terms of the Reserve Bank of India (Note Refund) Rules, 2009. The facility has to be extended free of cost.
 According to these rules, soiled banknotes are exchanged for full value. Exchange value of a mutilated banknote depends upon the condition of the note. The value of an imperfect note may be paid for full value / half value under rules as specified for mutilated notes if the matter, which is printed on the note has not become totally illegible and it can be satisfied that it is a genuine note. However, there are certain categories of damaged notes which are not eligible for exchange. A banknote for which the area of single largest undivided piece of note presented is less than or equal to 50 per cent of area of the note for denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20 cannot be accepted for exchange for value. In case of denominations of Rs.50, Rs. 100, Rs. 500 and Rs. 1000, having the area of the note less than 40 per cent, cannot be exchanged. Even a banknote which has been made imperfect or mutilated, thereby causing the note to appear to be of a higher denomination, or has been deliberately cut, torn, defaced, altered or dealt with in any other manner, cannot be exchanged. Besides, the banknotes carrying any extrinsic words or visible representations intended to convey or capable of conveying any message of a political or religious character or furthering the interest of any person or entity, are not exchangeable.
 It is worth mentioning that a bank cannot deny currency note exchange facility to a non-customer. This means that whether one is a customer of that bank or not, bank has to extend note exchange facility to him/her. Remarkably, the RBI rule also says that customers can also use the soiled and cut notes to pay government dues and make deposits in their accounts with the banks. That means, they don’t have to ask for exchange facility, but can directly deposit them in the bank.
 In this regard, J&K Bank, as a front runner to the public cause, has launched Operation Clean-Up - a drive to provide good quality and fresh cash to the general public through its various business outlets and ATMs throughout the country. Under this operation the bank has sorted cash into issuable and non-issuable categories at the business units and currency chests of the bank. Precisely the ultimate objective of the ‘operation’ is to phase out the bad quality cash from the market and ensure only genuine and fresh/good quality notes are circulated in the market. The proper implementation of RBI’s Clean Note Policy has already won appreciation for the bank from the Reserve Bank of India. Under its ‘Clean Currency, Clean Commerce’ campaign, the bank has asked the general public to deposit all soiled notes in the bank and has also advised them not to accept soiled notes at its business units.  So, J&K Bank has carved out an honourable way out for everyone to get rid of soiled and imperfect notes in a most convenient manner.

(The views are of the author & not the institution he works for. Feedback at sajjadbazaz@greaterkashmir.com)

Lastupdate on : Tue, 16 Mar 2010 21:30:00 Makkah time
Lastupdate on : Tue, 16 Mar 2010 18:30:00 GMT
Lastupdate on : Wed, 17 Mar 2010 00:00:00 IST