What are soiled, mutilated and imperfect banknotes? Soiled note means a note which has become dirty due to normal wear and tear and also includes a two piece note pasted together wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing. Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces. Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote. What is Clean Note Policy? Reserve Bank of India has been continuously making efforts to make good quality banknotes available to the members of public. To help RBI and the banking system towards this objective, the members of public are requested to ensure the following: Not to staple the banknotes; Not to write/put rubber stamp or any other mark on the banknotes; Not to use banknotes for making garlands/toys, decorating pandals and places of worship or for showering on personalities in social events, etc. Where are soiled/mutilated banknotes accepted for exchange? All banks are authorized to accept and exchange soiled banknotes for full value. They shall extend the facility of exchange of soiled/mutilated notes to non-customers also. All branches of commercial banks are authorised to adjudicate mutilated banknotes (which are legal tender) and pay value for these, in terms of the Reserve Bank of India (Note Refund) Amendment Rules, 2018. Small Finance Banks and Payment Banks may exchange mutilated and imperfect/defective notes at their option. How much value would one get in exchange of soiled/mutilated bank notes? Soiled bank notes and mutilated banknotes are exchanged for full value. The value of an imperfect note may be paid for full value/half value under rules as specified in Part III of Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018] For denominations of less than Rs 50, the area of the single largest undivided piece of the note presented is more than 50 percent of the area of respective denomination, rounded off to the next complete square centimeter. For denominations of Rs 50 and above, the area of the single largest undivided piece of the note presented is more than 80 percent of the area of respective denomination, rounded off to the next complete square centimeter. If the undivided area of the single largest undivided piece of the note presented is equal to or more than 40 percent and less than or equal to 80 percent of the area of the respective denomination rounded off to the next complete square centimeter, half the value of the note is payable. A mutilated banknote in denominations of Rs 50 and above, can be exchanged for full value, if, denominations consist of a note composed of two pieces of the same note and the two pieces, individually have an area equal to or more than 40 percent of the total area of the note in that denomination. Banknotes in denominations of Rs 1, Rs 2, Rs 5, Rs 10 and Rs 20, cannot be exchanged for half value. What types of banknotes are not eligible for payment under the Note Refund Rules? The following banknotes are not payable under the Reserve Bank of India (Note Refund) Rules 2018. A banknote for which: Notes up to ₹20 denominations : area of largest undivided piece of the note =/< 50% For denominations of Rs 50 and above, the area of the single largest undivided piece of the note is less than 40 percent, no value shall be payable. A banknote which: Notes which have turned extremely brittle, charred or inseparably stuck up together and, therefore, cannot withstand normal handling Notes with slogans, political or religious messages, scribbling, stain (including colour/oil stain) etc. are unfit for usage and circulation and go against Clean Note Policy of RBI. The notes which are found to be deliberately cut, torn, altered or tampered with Process for exchange of soiled/ mutilated/ imperfect notes Notes presented in small number: Where the number of notes presented by a person is up to 20 pieces with a maximum value of ₹5000 per day, banks shall exchange them over the counter, free of charge. Notes presented in bulk: Where the number of notes presented by a person exceeds 20 pieces or ₹5,000 in value per day, banks shall accept them against receipt, for value to be credited later. The probable date of payment shall be informed to the tenderers on the receipt itself and the same shall not exceed 7 days. Bank account details shall be obtained from the tenderers for crediting the exchange value by electronic means. Master Circular Facility for Exchange of Notes & Coins. Source: RBI