Law soon for exchange of torn Rs 2,000 and Rs 200 notes

New Delhi: Do not panic if banks have refused to accept your soiled and torn Rs 200 and Rs 2,000 notes.

Banks will soon have to refund you the value of such notes as the government and the central bank are working on amending the rules governing their exchange.

According to reports, this week the ministry of finance and the Reserve Bank of India (RBI) are at an advanced stage of finalising new rules for exchange of torn currency of new denominations. The law ministry is examining the new draft rules.

At present, banks are finding it impossible to exchange soiled Rs 200 and Rs 2,000 banknotes as the rules governing their exchange are yet to be amended. It may be noted that mutilated currency note exchange is governed by RBI Note Refund Rules, 2009, under RBI Act's Section 28. According to the old rules, there are provisions for the exchange of Rs 5, Rs 10, Rs 50, Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.

So, while the RBI has made provisions for the value of soiled or disfigured notes to be refunded to the owner, either in full or as a matter of grace depending on the state of the note, two of the newest denomination not-es were conspicuously absent from the list: Rs 200 and Rs 2,000 notes.

“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,” the central bank had recently told a newspaper, adding that it had written to the finance ministry about the need for amendment in 2017.