Soiled Rs 200, Rs 2000 notes stuck in exchange counter

Mumbai | New Delhi: It has become impossible for banks to exchange soiled banknotes of Rs 200 and Rs 2,000 denomination as the rules governing their exchange are yet to be amended. Exchange of mutilated and imperfect notes is governed by Reserve Bank of India (Note Refund) Rules which are part of Section 28 of the RBI Act. The Act specifies currency notes of Rs 5, Rs 10, Rs 50, Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 denomination, but Rs 200 and Rs 2,000 notes are conspicuously missing from the list. The Rs 2,000 note was issued soon after the demonetisation on November 8, 2016 and the Rs 200 note was launched in August 2017.

There are about Rs 6.70 lakh crore of Rs 2,000 notes in circulation and the Reserve Bank of India has stopped fresh printing of them, economic affairs secretary Subhash C Garg said on April 17.

Bankers say there have been few cases of mutilated notes in the new series but caution this could be an issue if the law is not amended soon.


The central bank claims to have written to the finance ministry about the need for amendment in 2017. But, it is yet to hear from the government, said a person with direct knowledge of the communications. The change has to be made specifically to Section 28 of the Act which deals with ‘recovery of notes lost, stolen, mutilated or imperfect.’ The RBI acknowledged that the new series of notes cannot be exchanged currently.

Reason for Delay not Clear
“Due to change in size of Mahatma Gandhi (New) Series notes, mutilated/imperfect notes in MG (New) series could not be exchanged under the existing rules necessitating amendments to RBI (Note Refund) Rules, 2009.The mutilated/imperfect notes in the MG (New) series can be exchanged after notification of amendments in the official gazette,” RBI said in its response to ET’s queries.

It is unclear why the government is taking so long to carry out the necessary changes. A senior finance ministry official, however, said the government will look at making the necessary changes. “We would do whatever is needed to be done,” the official said, without specifying the timeframe.