Reserve Bank of India issues updated master direction on note and coin exchange services and withdraws prior circulars

The Reserve Bank of India issued an updated Master Direction consolidating and revising banks’ obligations to provide facilities for exchange of notes and coins. The direction mandates all bank branches to issue fresh notes and coins, exchange soiled, mutilated and imperfect notes, and accept coins and notes for transactions or exchange so that the public does not need to approach RBI regional offices, and it withdraws earlier circulars and master directions on the subject from the date of issuance. Branches must provide exchange facilities to both customers and non-customers, with Small Finance Banks (up to two years from commencement of business) and Payments Banks able to exchange mutilated and imperfect notes at their option. For soiled notes, banks must exchange up to 20 notes with a maximum value of INR 5,000 per day over the counter free of charge, while larger volumes must be accepted against receipt for later electronic credit within a period not exceeding seven days, with reasonable service charges allowed where permitted under the Reserve Bank of India (Responsible Business Conduct) Directions, 2025. For mutilated and imperfect notes, all branches must accept and adjudicate notes under the Reserve Bank of India (Note Refund) Rules, 2009 (as amended in 2018), normally paying over the counter for submissions up to 10 notes, while bulk submissions above 10 notes or INR 5,000 per day are to be receipted for later credit; where a non-currency chest branch cannot adjudicate, it must route notes to its linked currency chest branch and ensure payment within a period not exceeding 30 calendar days. The direction reiterates that branches must not refuse legal tender coins or small denomination notes, requires coin sachets at counters and a minimum stock of one bag of coins in each denomination at each branch, and requires authenticity checks of banknotes through machines with counterfeit notes handled under the RBI’s counterfeit-note master direction. It also requires banks and White Label ATM Operators to strengthen monitoring of ATM cash availability to prevent cash-outs, sets out customer grievance escalation to the Reserve Bank - Integrated Ombudsman Scheme, 2021 after 30 days without satisfactory bank response, and provides for monitoring by senior bank officers and penalties for non-compliance under RBI’s framework for currency distribution and exchange incentives and penal provisions.