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How to Deal With Mutilated and Soiled Banknotes?

Updated on May 4, 2020
PrateekJain24 profile image

Preteek Jain is a banking professional who has practical knowledge about the overall currency handling process.


Many people have a bad habit when handling currency notes. They usually write on the note or fold it. Sometimes, people will bind banknotes that will deteriorate and reduce their durability and longevity.

To eliminate such a scenario and increase the life of currency notes, RBI has introduced 'Clean Note Policy' in 2001. There are many people around us who aren't aware of such a policy. This should be followed in order to preserve the currency notes for a longer time.

Soiled and Mutilated Banknotes

Due to constant usage, the banknotes become soiled, dusty, and lose their actual colour. These types of notes are called soiled banknotes.

On the other hand, mutilated notes are those where a substantial part of the note is missing. They are assembled by joining several pieces, which together form an entire note. The two pieces that belong to the same note, pasted together to form a complete note, are called mutilated notes.


The main intention of introducing this policy was to make clean and good quality notes available to the public. In addition, they wanted to stop distributing damaged quality banknotes to the public. This policy is quoted as mandatory policy that banks must adhere to.


As per the policy, bundles of banknotes should not be tacked by stapler pins. They should be bound by polythene tape, paper, or rubber bands. In this way, the life of such packets will increase substantially.

First, banks need to sort paper money into two types i.e, issuable and non-issuable. Clear instructions are given by the government to all the banks that they should not give soiled notes over the counter. RBI advised citizens to avoid writing anything on the notes, and do not deteriorate notes by applying oil, and water on them.

All banks covered under article 35 (a) of the 'Banking Regulation Act' of 1949 have to comply with the Clean Note Policy. Otherwise, the license of the banks will be cancelled, or they will also be punished. Hence, banks should provide notes of good quality to the public in return to their spoiled or mutilated notes.

Technical Advancement

In order to eliminate bad quality banknotes, RBI has introduced automated machines. These machines has the ability to identify and sort several damaged banknotes at a time. The technology introduced for this purpose is called currency verification and processing system. Compare with manual verifying and sorting damaged banknotes practices, the machine has high accuracy and significant velocity in it.

The Reserve Bank of India has installed these machine in 42 centres of their currency issuance office. Also, many offices are furnished with this machine to detect soiled notes quickly.

Currency verification and processing systems have some unique features enabled in it to detects notes with unwanted writing or unusual watermarks. These types of notes are rejected automatically by the machine.

Awareness Among People

The embracing of this policy is made nationwide. There are still some people who don’t know about this policy and ruining the initiative. It is utmost important to take due care of our currency notes issued by RBI in order to run the economy smoothly. Those who spoil and damage notes quality, need to become aware of this policy. The harmful effects of damaged banknotes in the market will shrink economic growth. Whosoever will avoid following these measures will be punished by the court of law.


Clean note policy was constituted and conveyed in 2001. Still, it is not fully carried out in common practice. Earlier banks provide high-quality notes in return to old notes from customers by manual examination. But now banks are using technology to improve quality inspection of banknotes.

It is important to preserve the currency notes properly for the overall growth of the economy. The new currency note issuance process is very lengthy and costly. It's important to diminish new note issuance request very frequently. We should become aware of proper manners to handle the banknotes. Every person should abide by the proper process of handling currency notes. This will support our economy to rise and grow. Thank you for patiently reading. Please share your thoughts over the topic in the comment box.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Prateek Jain


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    • Sowrabha Mahesh profile image


      11 months ago from Bengaluru

      Hi Prateek! As a former Banker was delighted to read your article. All the key points were covered neatly.And yes it is the responsibility of each citizen to abide buy these rules. Articles like yours will immensely benefit the general population most of whom are unaware of these rules. Thanks for an interesting topic.

    • Arnaba Saha profile image

      Arnaba Saha 

      11 months ago from New Delhi

      Hello Prateek Ji,

      Being a daughter of a banker and now, a sister of a banker, I was well aware of the Clean Note Policy. Your hub reminded me of the day, my father gave us a proper list of good practices to handle notes.

      In fact, many times I tried to convey the same message whenever I saw bad note- handling practices. But most people didn't pay any heed to my concerns. Hopefully, hubs like these will be able to raise awareness in such pertinent issues.

      Thanks for this well- written and informative hub. Keep up the good work.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      That's really great Swati mam that use avoid taking mutilated notes. Even if you have taken soiled or mutilated notes, fell free to exchange them with your nearest bank without any fees or charges. This is completely a free service and gives right to citizens to ask banks for exchanging their bad quality currency notes.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      Thank you Natasha for your thoughtful comment. I am.glad that you liked the article and you are sharing it with other. This is a minor initiative by me to share this information with all of us in order to make them aware of the policy. Hereby, i request everyone to use currency notes properly and also guide others about this policy.

    • Kh swati profile image

      Swati Khandelwal 

      11 months ago from Nainital

      Hi prateek, although I don't know much about the same but I also sometimes get mutilated or soiled notes from someone i return it immediately to him if i realsed the same or otherwise, change it from the bank. Thanks for your valuable and informative article.

    • Natasha Tungare profile image

      Natasha Tungare 

      11 months ago from India

      Prateek this is such a useful topic and a must know one! I shared it with my mother as she is a bank officer and she loved this article! Keep writing more such informational writeups

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      Thank you Poonam mam for your valuable comment. I am glad that you liked the article. There are many initiative that goverment took for economic growth. But unfortunately due to some people who aren't aware of them ruin the policy. Hence, i am on a mission to guide them and make them aware through my articles.

    • Poonam-Malik profile image


      11 months ago from Faridabad

      A very informative article on an important topic. You are right, general public is not aware of the Clean Note Policy.

      Although I have yet to see an individual staple a bunch of notes, I remember getting stapled bundles of 100 notes from the bank. But ATMs have changed all that.

      Keep sharing information on such useful topics.

    • profile image

      Ananya Singhal 

      11 months ago

      You did a a good job Prateek, I really appreciate u for this

    • sachnikh profile image

      Nikhil Sharma 

      11 months ago from India

      I always try my best to keep and handle banknotes very carefully. But didn't know that there was actually a policy of the same. Thank you for sharing this less-known information with us Prateek. Many times people don't realize it, but whenever they are mishandling the banknotes, they are shrinking a part of the economy and impacting the overall cashflow.

      When I receive any soiled banknotes from a vendor or a shop, I try my best to ask them to replace and give a new one. However, many times, it's not possible. In that case, I collect those notes and use them in places like the wholesale vegetable market. To ensure the flow of good-quality notes, both banks and people should come and work together.

      Thanks once again for writing this informative article, Prateek.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      11 months ago from Madhya Pradesh, India

      Thank you Simran for wonderful comment. I appreciate that you read and comment on this article. Yes you are right, we are going digital but still the importance of currency notes cannot be ignored. That's why the Reserve Bank of India has initiated and appealed from citizens to handle the Bank notes with precaution and do not spoil them more damage them with dust, oil or water. Keep reading and exploring.

    • Simran Malhotra29 profile image

      Simran Malhotra 

      11 months ago from India

      Hi, I found this article very informative , thanks for sharing with us useful information about such a fantastic policy run by RBI. As there are many digital mode to make payments but still payment via currency notes covers major portion. Hence it's duty of citizens also to maintain life of currency notes though initiatives are taken by banks to replace soiled and mutilated notes.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      12 months ago from Madhya Pradesh, India

      Thank you Krishna sir for supporting me on raising this issue. Also, Reserve Bank of India had been also directed citizens to avoid any kind of folding or rolling the currency notes but still some people don't follow their guidelines. This article is also an initiative to aware others on how to treat their currency notes properly.

    • hmkrishna profile image

      Halemane Muralikrishna 

      12 months ago from South India

      Mr Prateek, you have a race real problem in the social environment. Licking the notes for counting, rolling it and pushing it into the pockets, writing on the notes, holding you to the way which you wish very bad habits. You have raised in the right social evil.


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