NRR 2009 & Adjudication of
Defective Notes
Detection and Impounding of
FICN
RESERVE BANK OF INDIA
ISSUE DEPARTMENT
HYDERABAD
January 13, 2023
Internal
Reserve Bank of India (Note Refund) Rules, 2009
[As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018]
The facility for exchange of soiled, mutilated and imperfect notes is to be
provided by all banks at all their branches. This is a duty that the banking
system as a whole owes to the public.
Legal Provision - Section 28 r.w. Sec 58 (1) & Sec 58 (2)(q)
• No person as a matter of right can recover value of
▪ Lost
▪ Stolen
▪ Mutilated or
▪ Imperfect notes
• Can be refunded as a matter ofInternal
grace
Soiled Note
a note which has become dirty due to excess usage &
also includes a two-piece note (single cut) pasted together wherein
both pieces presented belong to the same note & form the entire note.
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Soiled Note
a note which has become dirty due to excess usage &
also includes a two-piece note (single cut) pasted together wherein
both pieces presented belong to the same note & form the entire note.
1 2
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Mutilated Note
a note of which a portion is missing or is composed of
more than two pieces
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Mutilated Note
a note of which a portion is missing or is composed of
more than two pieces
1
2
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Imperfect Note
a note which is wholly or partially - obliterated, shrunk,
washed, altered or indecipherable but does not include a
mutilated note.
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Mismatched Note
a note which has been formed by joining a half note of any one note to a half note
of another note.
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Note Refund Rule
Division of Rules
• For notes less than ₹ 50 denomination - i.e., ₹1, ₹2, ₹5, ₹10 & ₹20
• For notes ₹ 50 and above denomination - i.e., ₹50, ₹100, ₹200, ₹500 & ₹2000
Based on “Single Largest Undivided Area”
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₹1 - ₹2 - ₹5
₹10 & ₹20
Area of the
single largest undivided piece
> 50 %
Yes No
Pay Reject
Full Claim
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₹50, ₹100, ₹200, ₹500 & ₹2000
Area of single largest Area of single largest Area of single largest
undivided piece undivided piece undivided piece
> 80% 40% <= Area <= 80% < 40%
PAY FULL PAY HALF
REJECT
VALUE VALUE
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scale
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2 pieces of
₹50, ₹100, ₹200, ₹500 & ₹2000
note consists of two-pieces of the same note &
both pieces, individually, have an area of equal
to or more than 40% of the total area - full value
without treating both pieces separate.
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47% 49%
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Adjudication – Mismatched Notes
Up to ₹ 20
denomination
₹ 50 & above
Area of the single
denomination
largest undivided
piece
Two pieces to be
> 50 % treated as two
separate claims and
No,
Yes,
Reject
dealt accordingly
Pay Full Claim
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Adjudication – Mismatched Notes
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Adjudication- Imperfect Note
May be paid full/ half/ no value as per the rules, provided:
(a) the matter, which is printed on the note has not become
totally illegible.
(b) the Prescribed Officer is satisfied, having regard to the printed
matter which is legible on the note, that it is a genuine note.
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Claims in respect of Burned/Brittle/Termite eaten Notes
Notes which have turned extremely brittle or are badly burnt, charred,
inseparably stuck together and therefore cannot withstand further handling or
which may lose their original identity with the passage of time shall not be accepted
by the bank branches for exchange. The holder/s of such notes may be advised to
tender them to the Claims Section, Issue Department of the Reserve Bank of India
under whose jurisdiction the currency chest falls where such notes will be examined
under Special Procedure.
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Recap
₹1, ₹2, ₹5, ₹10 & ₹20
Only Full Value or Reject
____________________
₹50, ₹100, ₹200, ₹500 & ₹2000
Full Value, Half Value & Reject
check each portion of the note using scale and pay accordingly
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PAY FULL VALUE
Bank Name:
Branch/CC:
Passing Officer Name:
Emp. No:
Date: Sign:
PAY HALF VALUE REJECT
Bank Name: Bank Name:
Branch/CC: Branch/CC:
Passing Officer Name : Passing Officer Name :
Emp. No : Emp. No :
Date : Sign: Date : Sign:
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Instruction to all CCs:
• As and when receiving the full value (mutilated) notes, classify the same
as “Paid Notes” in e-Kuber .
• Store the full value (mutilated) notes separately. These notes should not be mixed
with soiled or issuable notes at any cost.
• While remitting soil notes to RBI, submit these notes in a separate cover along
with details.
• Monthly statements to be submitted to RBI by 5th of succeeding month. (if
NIL, that report should also be submitted without fail)
1) Adjudication of Mutilated Notes and
2) Fake Indian Currency Notes (FICN) detected
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Instruction to all branches:
• Accept all mutilated notes of any denomination from public and adjudicate using the transparent scale.
• Send Full Value (mutilated) notes to your attached Currency Chest (CC).
• Submit Half Value and Reject notes to RBI after preserving 3 months at your branch.
• E.g. if notes are adjudicated in the period of Aug 1 to Aug 31, 2022, all these notes shall be submitted to RBI
(below Address), latest by Dec 1 to 5, 2022 along with details.
The General Manager
Issue Department (Claims Section)
6-1-56, Reserve Bank of India
Near A.G. Office, Saifabad
Hyderabad – 500 004
040 2326 7274 / 75
• Monthly statements to be submitted to RBI by 5th of succeeding month. (if NIL, that report should also
be submitted without fail)
1) Adjudication of Mutilated Notes and
2) Fake Indian Currency Notes (FICN) detected
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Part - II
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Authority to Impound Counterfeit Notes
• The Counterfeit Notes can be impounded by
(i) All Banks
(ii) Issue Offices of Reserve Bank of India.
• Each FICN detected has to be INVARIABLY IMPOUNDED.
• In no case, the Counterfeit Notes should be returned to the tenderer or destroyed
by the bank branches / treasuries.
• Failure - will be construed as willful involvement of the bank and penalty will be
imposed.
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Impounding of Counterfeit Notes
• Counterfeit note, shall be branded with a stamp with a uniform size
of 5 cm x 5 cm (Annex I)
• An acknowledgement receipt in the prescribed format (Annex II)
must be issued to the tenderer, after stamping the note.
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Reporting to Police
For cases of detection of Counterfeit Notes up to 4 pieces,
in a single transaction, a consolidated report in the format
Annex III should be sent by the Nodal Bank Officer to the
police authorities or the Nodal Police Station, along with
the suspect Counterfeit Notes, at the end of the month.
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Reporting to Police
For cases of detection of Counterfeit Notes of 5 or more
pieces, in a single transaction, the Counterfeit Notes
should be forwarded immediately by the Nodal Bank
Officer to the local police authorities or to the Nodal Police
Station for investigation by filing FIR in the prescribed
format (Annex IV)
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Reporting to other bodies
Para 10 of Master Circular on Detection and Reporting of
FICNs of Counterfeit Notes stipulates that Data pertaining to
Counterfeit notes is to be furnished by banks to
• RBI
• FIU-Ind
• NCRB
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Reporting to RBI
Data on Counterfeit Notes detected by all the branches of the bank shall
be reported in the prescribed format, on a monthly basis.
A statement (Annex VI) showing the details of Counterfeit Notes detected
in the bank branches during the month shall be compiled and forwarded
to the Issue Office of Reserve Bank concerned.
A “Nil“ report may be sent in case no counterfeit note has been detected
during the month.
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Reporting to FIU - Ind
Banks are required to report information regarding
detection of FICNs to The Director, FIU-IND, Financial
Intelligence Unit- India, on a monthly basis by 15th of the
succeeding month by uploading the information on the
FINnet Portal.
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Reporting to NCRB
Similarly, data on FICN detection is also to be uploaded
on the website of NCRB, New Delhi.
The web portal of NCRB will generate a Unique Reference
Number (URN), which is to be furnished by banks to the
Police Authorities at the time of lodging FIR / submitting
monthly statements.
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Machine Processing of Notes
As provided in Para 6 of the Master Circular, banks should ensure that
banknotes of ₹100 and above are not put into re-circulation without the
notes being machine processed for authenticity.
Any non-compliance of this requirement will be construed as violation of
RBI instructions.
Counterfeit Notes through the ATMs would be construed as an attempt to
circulate the Counterfeit Notes by the bank concerned.
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Thank You
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