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Can We Use Scribbled and Soiled Notes for Transactions ?

Scribbled Notes for Transaction

The advent of popular social media platforms like Facebook, Twitter & WhatsApp has made the public more aware of their surroundings but also made them a victim of fake news & baseless rumours.

One such incident occurred when an ATM spit out notes with “Sonam Gupta Bewafa Hai” scribbled on them. Some miscreants started spreading false facts about the validity of such notes as legal tenders. I also came across such a message on WhatsApp & thus felt the need to write this article.

The rules regarding the validity of a currency note as a legal tender are prescribed by RBI. From time to time, RBI issues notifications to spread awareness among common people. You will be relieved to know that scribbled notes are as good for making transactions as clean notes are. RBI has emphasised this fact several times in the past. Still, it’s not a good habit to write on currency notes. RBI also introduced a policy targeting this matter in 1999. Through its clean note policy, it periodically urges people not to scribble over notes & handle them with care. After all, there are significant costs involved in printing new notes. There are also other costs involved in exchanging soiled or scribbled notes.

Such costs may prompt some banks to occasionally deny acceptance or exchange of such notes. If you have ever faced this problem, you will be happy to know that RBI considers this practice illegal.

Therefore, it has instructed banks to provide facilities for exchange of damaged notes. In 2002, RBI also banned the practice of stapling of note bundles followed by banks & asked them to practice banding of notes instead. So, although scribbled notes are legal currency & soiled notes can be exchanged for free, there are certain limiting conditions. So, I have listed down the rules laid out by RBI regarding this.

How can you exchange soiled & mutilated notes?

Damaged notes have been divided into 3 categories by RBI.

1) Soiled notes

2) Mutilated notes

3) Excessively soiled, brittle, burnt notes

Soiled notes  

If your note is slightly cut or has become dirty, RBI will consider it a soiled note. Any note in the denomination of Rs. 10 & above which is torn into 2 pieces is also considered a soiled note. You can get your soiled notes exchanged over the counter of any public sector bank, any private sector bank, any currency chest or any issue office of RBI. You don’t need to fill any kind of form for doing this.

Mutilated notes    

Not category of notes are mutilated notes. If a note is torn into multiple pieces or has important details missing in it like issuing authority’s name, guarantee & promise clause, signature or water mark, etc. then it is considered a mutilated note by RBI. You can also exchange these notes easily in the same way as soiled notes.

Excessively soiled, burnt, brittle notes      

Notes which are so badly damaged that they cannot withstand normal handling fall into this category. They can only be exchanged at Issue Offices of RBI.

Other facilities for exchange of mutilated notes

Issue offices of RBI provide special facility to make exchange process faster & easier. You can get a TLR (Triple Lock Receptacle) cover there. The cover is used to deposit mutilated notes with details like name, address, denominations of notes deposited, etc. The cover is then kept in a TLR. The admissible exchange value of mutilated notes will be issued to you through a bank draft or pay order. A more convenient way to exchange notes is to send it to any RBI office by registered or insured post.

Penalty on banks

If you visit a bank to get your notes exchanged, the bank has no right to deny your request. If it does so, it can be punished with a penalty of Rs. 10,000.

Fees for exchange

You can get your soiled and mutilated notes for free but there is a limit on this free service. If you exchange more than 20 notes or notes worth Rs. 5,000 in a day, then banks will levy a service charge.

So, next time if you are stuck with a bundle of damaged notes, don’t feel shy in getting them exchanged. Let us know if you found this article useful in the comments below.

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Niteesh Singh
Niteesh Singh
Niteesh is a Tax Researcher and Content Lead at H&R Block (India). He holds an MBA with a specialisation in BFSI domain. In his career spanning over six years, he has helped thousands of people understand taxes in a simple and effective manner. Outside work, Niteesh is an astronomy geek who is also involved in wildlife conservation activities.