Striking The Right Note
Exchanging soiled and mutilated currency notes for fresh ones has never been an easy task. This has given rise to a number of unauthorised professional dealers who willingly exchange defective and mutilated notes by charging a hefty premium.
In order to facilitate the exchange of such soft currency and redress grievances, the Reserve Bank of India (RBI) Note Refund Rules were first revised and simplified in 1980. All branches of the public sector banks (PSBs) were authorised to provide free exchange facilities to their customers.
Notes that can be exchanged: The RBIs notice contained certain guidelines on the categorisation of soiled and mutilated notes that can be exchanged at any PSB. These are as follows:
A soiled note which has become dirty due to normal wear and tear, including a partially discoloured, obliterated, or washed-out note.
A note in which the mutilation is negligible or immaterial, and all the essential features are present on one undivided piece. Essential features comprise the name of the issuing authority (the RBI or the Government of India) in Hindi or English, the guarantee clause, the promise clause and the signature in Hindi or English, and the Ashoka Pillar emblem.
However, the guarantee clause and the promise clause are not necessary in the case of the Rs 1 note as these are not part of the design of this denomination.
A mutilated note of the denomination of Rs 1, Rs 2 and Rs 5 which is in not more than two pieces with no essential feature missing, and with the complete number identifiable in an undivided area on one of the pieces.
A mutilated note of the denomination of Rs 1, Rs 2 and Rs 5 which is in more than two pieces with the complete number identifiable in an undivided area on one of the pieces, which by itself is not less than half the area of the note.
A mutilated note with the number printed in two places (notes of Rs 10, Rs 20, Rs 50 and Rs 100), which is in not more than two pieces with no essential feature missing, and both the pieces being clearly identifiable as belonging to the same note. Also, the complete number should be identifiable in an undivided area at each of the two places at which it is printed.
Despite these measures, the public continued to experience difficulties in exchanging soiled and defective notes. This led the RBI to issue a circular on December 3, 1996 instructing the chairmen of all PSBs to freely exchange certain types of cut notes at all their branc-hes. The circular identifies the categories of notes to be treated as soiled notes and which need not be subject to adjudication by the prescribed officers under the RBI Rules. They are as follows:-
In single numbered notes, such as Rs 1, Rs 2 and Rs 5, the note presented should not be in more than two pieces, no essential feature should be missing and the complete number should also be identifiable in an undivided area on one of the pieces.
In double numbered notes like Rs 10, Rs 20, Rs 50, Rs 100, and Rs 500 the note presented should not be in more than two pieces and in such notes, the essential features should not be missing, both the pieces should be identified as belonging to the same note and the complete number should be identified in an undivided area at each of the two places at which it is printed.(See the illustrations)
Selected principal branches of major PSBs in each district town including the centres where the RBI issue offices are located have been delegated full powers, which are more or less the same as that with the RBI, under the Note Refund Rules.However, under these rules, claims made by any PSB for lost or stolen notes in the denomination of Rs 500 or upto Rs 500 will not be entertained.
The procedure is, however, different where the denomination of the note is above Rs 500. The claims for lost or wholly destroyed notes can also be made for notes of these denominations. The RBI (Note Refund) Rules has also made provisions for claims regarding lost or wholly destro-yed notes or for imperfect, mutilated, or different half notes joined together.
Cumbersome procedure:
Despite the above provisions, most people admit that getting notes exchanged is still not as easy as it is made to sound. A branch manager of a PSB in Mumbai cited many reasons for this. First, there are administrative constraints. Acceptance and exchange of defective notes involves a lengthy procedure still, no extra staff had been provided for the purpose. Second, if the mutilated notes deposited with their head office did not meet the specifications prescribed by the RBI, then the liability was on the cashier or the manager who initialed the note before exchanging it.
An officer in charge of currency in a PSB currency chest in Mumbai told this writer that their bank branch was often faced with a liability as RBI sometimes did not accept certain types of mutilated notes already exchanged by them. Hence, if the public faces problems while exchanging a soiled and/or mutilated note with a PSB, it should address its complaint to the Chief Officer, RBI, Department of Currency Management, Central Office, New Central Office Building, Mumbai - 400 023.
I may further add here that crore of currency notes are printed every year using advanced printing techniques. As the cost of printing notes is quite high at present, it will be desirable if the public too handles the notes carefully. It is reporte that over 50 per cent of the note pieces in circulation are destroyed annually.
On an average, the life of Rs 1 and Rs 2 notes is 6 to 8 months; Rs 5 and Rs 10 notes is 8 to12 months and of notes bearing denomination of Rs 20 and more the life is between 12 and 24 months. So, the government has to resort to printing of a large number of notes every year at an enormous cost.
It is suggested that besides using superior and more durable paper for the printing of currency notes, the Government should resort to scientific research
and adopt modern technology that can help prolong the life of these notes.
This can be achieved by mixing some plastic material in the paper used for printing of these notes. Alternatively, they may consider putting plastic threads across the length and the breadth of the notes so that they do not get mutilated easily.