This Report No.4 of the Committee on Procedures and Performance Audit on Public Services (CPPAPS) deals with Currency Management: Services Relating to Individuals (Non-Business). The Department of Currency Management (DCM) is entrusted with the task of organising the movement of currency and related matters and the actual interface with the public is undertaken through the Regional Offices. The Committee is aware that there are many important issues relating to currency management. The approach of the Committee is, however, to examine the interface of the Common Person with the Reserve Bank of India (RBI) and the commercial banks. Keeping this mandate in view the Committee has concentrated on such procedures and practices, which impinge directly or indirectly on the Common Person.

1.2 The Committee’s Report is based on discussions with DCM and the Regional Director (RD), Mumbai and on an examination of the various communications by the DCM and the Committee’s own observations on the working of the Mumbai Regional Office; in addition the Committee has undertaken on the spot visits to some banks. The Committee recognises that there can be disparate experiences in the regions and the services provided vary in quality from bank to bank. Again, the systems and methods could vary from region to region.

1.3 The Committee would need to address a number of issues after extensive visits to a number of regions. Nonetheless, based on a comprehensive examination of the DCM communications, the operation of the Regional Office Mumbai and select banks, the Committee has made a number of self-contained recommendations on which the RBI could consider appropriate action without waiting for subsequent reports.

1.4 Chapter 2 of the Report provides an Overall Perspective on Currency Operations. Chapter 3 deals with the Travails of the Common Person Seeking Facilities from RBI and Banks Relating to Notes and Coins. Chapter 4 provides a recapitulation of the Committee’s Observations/Recommendations.

1.5 Since its inception the Committee has held 14 formal meetings and a large number of informal meetings.

1.6 The Committee had the benefit of discussions with Deputy Governor Smt. K.J. Udeshi Executive Director Shri P.K. Biswas, Chief General Manager-in-Charge DCM Shri V.R. Gaikwad, and Shri H.K. Soni Nodal Officer. The Committee also had extensive discussions with the Regional Director Mumbai Office Shri M.P. Kothari. Shri Vinay Baijal, General Manager provided excellent support to the Committee in the drafting of the Report and moreover undertook arduous field work assessing the services provided by the banks. Smt. S.A. Talpade, Private Secretary and Shri G.K. Koshti, Typist provided strong secretarial support to the Committee and met exacting deadlines. The Department of Government and Bank Accounts provided invaluable administrative support.

2.1 The RBI’s function of distribution of currency and its management is enshrined in the RBI Act, 1934. A reference to the legal framework and the obligations of the RBI enables a better appreciation of the RBI’s role.

2.2 Section 27 of the RBI Act, enjoins upon the RBI that:

The RBI has been given powers under Section 28 of the Reserve Bank of India Act to frame rules for refund of value of such notes:

Exchange value of torn, mutilated, soiled and defective currency notes is set out in terms of RBI Note Refund Rules. With an intention of extending the exchange facility to the public "at their door steps", RBI has also delegated these powers to bank branches. The facility is to be extended free of charge by the bank branches.

2.3 The RBI is under legal obligation in terms of Section 39 of the Reserve Bank of India Act to exchange currency notes of the Government of India and bank notes into coins and to exchange coins into currency notes of the Government of India and bank notes:

1. The Bank shall issue rupee coin on demand in exchange for bank notes and currency notes of the Government of India, and shall issue currency notes or bank notes on demand in exchange for coin which is legal tender under the Indian Coinage Act, 1906 (3 of 1906).
2. The Bank shall, in exchange for currency notes or bank notes of two rupees or upwards, supply currency notes or bank notes of lower value or other coins which are legal tender under the Indian Coinage Act, 1906 (3 of 1906), in such quantities as may, in the opinion of the Bank, be required for circulation; and the Central Government shall supply such coins to the Bank on demand. If the Central Government at any time fails to supply such coins, the Bank shall be released from its obligations to supply them to the public."

At the time of granting permission to banks to open Currency Chests or Small Coin Depots the RBI enters into an agreement with the bank concerned which forms the basis for the RBI to direct these banks to supply coins in exchange of notes and vice versa. The RBI also directs these banks to exchange torn, soiled and mutilated notes in accordance with the RBI Note Refund Rules.

2.4 The Committee takes note with satisfaction that, in recent years, with the help of concerted efforts by RBI and government, the chronic shortages of notes and coins have been largely alleviated and to that extent the severe hardships faced by the Common Person have been eased. The RBI Annual Report for 2001-02 provides pertinent information on the resolving of the currency/coin shortage. The supply of notes and coins during 2001-02 were only marginally below the indent (given the clime of shortages there would have been a tendency for the indent to over-estimate the demand). Again, the Annual Report for 2001-02 shows that progressively coins of Rs.2 and Rs.5 denominations were replacing notes of the same denomination (Annex IA and B). It is unfortunate that the Annual Report for 2002-03 economises on information and, as such, data comparable to the Annual Report for 2001-02 are not available. The Committee strongly recommends that the transparency introduced in the RBI Annual Report for 2001-02 on currency management should be replicated in the Annual Report for 2003-04 as it is important to reveal the indent and supply as also separate information on notes and coins where there is a parallel circulation.

2.5 The Committee recognises that major measures have been taken under the Clean Note Policy, resulting in a significant improvement in the quality and availability of notes. The Currency Verification and Processing Systems have been introduced which are capable of sorting notes based on denomination, design and level of soiling and there is on-line destruction of notes unfit for circulation. Moreover, non-stapling of notes has been implemented. The Committee commends the measures relating to the Clean Note Policy and the Currency Verification and Processing Systems and these measures provide succour to the Common Person seeking facilities at RBI/banks.

2.6 The Committee observes, with some element of regret, that for certain operations the woes of the Common Person far from being alleviated are probably accentuated in the recent period. The Committee is concerned that while the initiatives by the government and RBI have eased the overall shortages of yesteryear, in the absence of continuing upgradation of the output capacity it is conceivable that shortages could reemerge. The Committee has observed that there are already segments of shortages in certain denominations and therefore, recommends that concerted efforts should be made to eliminate, or at least minimise, the shortages in the incipient stages.

2.7 The secular fall in the Currency/M₃ ratio from 58 per cent in 1951-52 to 16 per cent in 2003-04 is unlikely to show any significant fall in the foreseeable future (Annex II). Again the GDP to currency ratio (i.e. the velocity) has not shown any significant increase. In fact, velocity has fallen in India in the more recent period which also indicates that any perceptible economising in the use of currency is unlikely. These indicators point to continuing strong demand for currency and the Committee recommends that the RBI needs to put in place measures to meet the rising demand.

2.8 Given the inevitable depreciation in the value of currency, as a result of inflation, progressive coinisation is an inexorable process. The Nayak Committee (1989) had recommended that the coinisation of the Rs.10 note should be taken up in due course. The Committee recommends that the government and RBI should work towards an early introduction of the Rs.10 coin.

2.9 The Committee would like to stress that long periods of parallel supply of notes and coins of the same denomination is not sustainable. The Committee strongly recommends that the Rs.5 note should be quickly phased out. In the absence of phasing out of the Rs.5 note, the RBI’s attempt to blend demand for Rs.5 denomination partly in notes and partly in coins would be infructious as there would be round-tripping of the Rs.5 coins back to the RBI counters. The Committee was made to understand that the RBI commitment to exchange coins for notes and vice versa does not stipulate the denomination of notes to be provided. The Committee recommends that when Rs.5 coins are presented they should be exchanged into higher denomination notes. The Committee recognises that there are some pressures to continue the Rs.5 note. Yielding to such pressures could result in a sub-optimal currency management policy. The Committee, therefore, recommends a strong and unequivocal policy to totally phase out the Rs.5 note.

2.10 The Committee has concerns about the way the DCM goes about issuing instructions and the follow up thereon. The DCM admits that the banks have not fully followed instructions despite reiteration by the RBI. The Committee recommends that where RBI instructions are violated strong adverse action should be taken or if the RBI has reason to believe that the banks’ non-implementation is justified the RBI should withdraw its instructions. The Committee stresses that it is not the severity of the penalty that is relevant but the putting in the public domain the imposition of the penalty. The Committee strongly recommends that the RBI should review its instructions and where the instructions are retained violation should invite adverse action and such action should be put in public domain. Moreover, the Committee recommends that the Currency Chest Agreement (both existing and new) should be revised so that there is a provision for a monetary penalty for non-compliance with RBI instructions.

2.11 The DCM has issued some Master Circulars but these do not cover all issues. The Committee recommends that in the area of notes and coins there must be clear cut Master Circulars written in intelligible language and there should be a 12 months sunset clause on all circular instructions.

2.12 The Committee is of the view that the DCM – Regional Offices relationship should be reviewed and the system of internal instructions should be revamped. The Committee recommends that the DCM should not try to micro manage the Regional Offices particularly as the Regional Directors are accountable for the operations of their offices.

2.13 The Committee has had a close look at the functioning of the Mumbai Regional office and the Committee is of the considered view that the operational efficiency of the Banking Hall of the Mumbai Regional Office is sub-optimal. In the event, the Common Person visiting the Mumbai Regional Office faces an obstacle race with virtual guerilla warfare making it impossible for individuals to conduct their legitimate business. The Committee has detailed in Chapter 3 specific difficulties faced by the Common Person.

2.14 The Mumbai Regional Office has, in the past, used strong-arm and humiliating tactics while dealing with individuals trying to get entry into the Banking Hall (this has been corroborated by the Hussain Committee Report). The Committee is of the view that resorting to strong-arm tactics when dealing with a crowd of say 30 persons, at opening time, is reprehensible. While the Committee notes that the Mumbai Regional Office has, in the more recent period, turned more emollient, the Committee questions the ab initio need for strong-arm tactics. The Committee recommends that a Systems Study of the Mumbai Regional Office, Banking Hall, arrangements should be commissioned to an outside specialised agency which would surely be able to resolve the bottlenecks to smooth flow of transactions.

2.15 The Committee recognises that the pressure in the Mumbai Regional Office relates essentially to Money Changers and their agents and a system of accreditation could be introduced to control any unruly behaviour. The Committee recommends that the problem of Money Changers needs to be studied in depth. The simultaneous provision of services to individuals and Money Changers results in considerable inconvenience to the Common Person. The Committee recommends that the RBI should consider suitable measures to separate location/time for services to Money Changers and other individuals.

2.16 The endeavour should be to meet the overall demand in full rather than rationing which results in the kind of problems the Mumbai Regional Office faces. The Committee reiterates that shortages, if any, should be rectified in the incipient stages and these problems should not be allowed to snowball.

2.17 The Committee would like to caution that while it has commented at length on the Mumbai Regional Office, the Committee has yet to visit other Regional Offices. As such, inter-Regional Office comparisons based on this Report would not be appropriate.

2.18 The Committee appreciates that DCM has prepared a Citizens’ Charter for Currency Exchange Facilities. The Committee notes that the Charter does not find place in the Currency segment of the RBI website nor does it find place in the Regional Office segment of the site. The Committee observes, with distress, that the Citizens’ Charter for Currency Exchange Facilities, as made available by DCM (Annex III), when compared with the Citizens’ Charter by other Departments is sketchy and lacks precision and there is an absence of a prescribed time frame for dispensing various facilities. The Committee recommends that the Citizens’ Charter for Currency Exchange Facilities needs to be revamped into a meaningful and comprehensive document written in easily understandable language and the document should be freely available to customers visiting the RBI Banking Halls.

3.1 This chapter focuses on the problems faced by individuals in their transactions with the RBI and banks relating to notes and coins. While repeated efforts have been made to provide facilities to individuals the overall position still cannot be said to be satisfactory. It is unfortunate that the Common Person is still left with the feeling that provision of new notes is a privilege which is provided only to select clients who have a contact with RBI/bank officials. The Committee recommends that access to new notes should not be a restricted privilege but also be available to the Common Person.

3.2 Currently, the Note Exchange Facility is available at the Currency Chest maintaining branches of all banks and at all branches of public sector banks (Master Circular on Note Exchange Facility {Ref. DCM (NE).No.G-2/08/07. 18/2002-03 dated July 5,2003- Annex IV}.One of the terms of the delegation of authority to the bank branches is that they should prominently exhibit a notice that soiled currency notes and notes with slight mutilation are freely exchanged at the bank branch. Anecdotal experience available to the Committee suggests that many bank branches do not display such notices in their premises. The Committee has witnessed some improvement in the recent period as the RBI has gone into a strong overdrive in the past three months.

3.3 The list of bank branches which are to provide the Note Exchange Facility is to be made available at the Enquiry counter of all offices of the RBI. Such a list was initially not available at the Mumbai Regional Office but on a query by the Committee a list was subsequently made available. The list provided by the RBI Mumbai Regional Office restricted the list to only the Currency Chest branches which conflicts with the DCM Master Circular of July 5, 2003 which refers to currency chest branches of all banks and to all branches of public sector banks. Moreover, the Mumbai Regional Office list did not initially provide the addresses of these branches. Subsequent to the Committee’s queries, the Mumbai Regional Office has displayed in the Banking Hall the list of addresses of Currency Chest bank branches providing these facilities. In the case of some other Regional Offices the full addresses are provided in the list, while in the case of some Regional Offices virtually no information is provided on such bank branches (this information was obtained from the Internet). The Committee recommends that the grey area relating to the specified branches where the Note Exchange Facility is available should be unequivocally clarified by the RBI to ensure that the Common Person is not subject to hardships.

3.4 The Exchange of Notes at the bank branches is subject to a post- facto audit. A verification of the paid and rejected notes is made by a team of RBI officials visiting branches at periodic intervals. The RBI team is required to send details of the wrongly paid notes to the Issue Department which in turn recovers the value of such notes by debit to the account of the bank under advice to the branch. Any torn, soiled or mutilated note paid by any bank branch is, therefore, subject to review by the RBI and as such the existing procedure has an inherent risk for branch officials passing the notes for payment which is reflected in reluctance of commercial bank branch officials to accept torn, soiled and mutilated notes. It is in the light of this systemic risk that the Report on Customer Service in Reserve Bank of India by the former Executive Director, RBI, Shri S.A Hussain observed that:

"One of the major reasons for such reluctance is that the notes adjudicated are subject to audit by RBI team, and if any paid note violates RBI Note Refund Rules, the amount is recovered from the salaries of the banks’ staff who have authorised the payment. In order to encourage the staff of public sector banks to accept cut/mutilated notes for exchange, the relevant rules may be further simplified for easy understanding and application."

The present Committee strongly recommends that the RBI Note Refund Rules should be written in easily understandable language. The Committee has also observed that the Note Refund Rules though frequently referred to in various communications on the RBI website do not find a place on the website. The Committee recommends that the Note Refund Rules should be put on the website and the RBI should launch periodic public education campaigns to give wide publicity to the Note Refund Rules by inserting advertisements in regional and national dailies and also by way of printed posters to be displayed in bank branches.

3.5 Though the supply of fresh notes is reportedly quite close to the indent, a packet of fresh notes still remains a prized possession; this leads the Committee to believe that the gap between indent and supply has not as yet been closed. One needs to know some one in a bank branch or RBI to get a packet of fresh notes. The scramble to get a place in the queue outside the RBI just before the opening time indicates that the demand for fresh notes outstrips the supply. As a result, the fresh note packets at times command a premium. With such conditions prevailing in a metropolitan city like Mumbai it is difficult to believe that a Common Person in a semi urban or rural area would have an access to a packet of fresh notes. The Committee strongly recommends that RBI should immediately review the existing system and practices relating to supply of fresh note packets at the RBI counters with a view to ensuring that all genuine needs of individuals are met without any hassle and that fresh notes are equitably distributed throughout the country without special favours only to known customers. It is important that the Common Person should have access to fresh notes in reasonable supply both at bank branches as well as the RBI counters. The Committee recommends that the RBI market intelligence should periodically survey the kind of premia charged by Money Changers to the Common Person. If the supply is dispersed the chances of premia would be less.

3.6 The Committee notes that DCM had commissioned the Administrative Staff College of India (ASCI), Hyderabad to conduct a study to assess the availability of coins and fresh notes (the report of the study was submitted in June 2003). Some excerpts from the report are at Annex V. Findings of the ASCI study are very useful and the Committee recommends that DCM should revisit the findings and take appropriate action to remove the "inconveniences" experienced by the public in using banks for obtaining their requirement of notes and coins including exchange of soiled and mutilated notes, and as also uncurrent and current coins.

3.7 The anecdotal evidence directly gathered indicates that the Common Person faces considerable hurdles in the exchange of soiled notes. The Committee has observed that the Mumbai Regional Office insists on the customer pasting paper on the torn portion of a note. The purpose for such pasting of paper is not clear. Moreover, obtaining the precise form of paper to be pasted is a privilege and furthermore gum/water are not readily available at the Mumbai Regional Office. The Committee feels that these are elementary facilities available at every post office and the RBI Offices should not be found wanting in the provision of these simple facilities. The Committee constrained to say that the Committee Members have themselves failed in their endeavour to exchange soiled notes at the counters of the RBI Mumbai Regional Office. The Committee has noted that in such branches of banks which provide these facilities the customer is not subject to undue hardships. Many banks do not insist on such pasting and the overall service is provided without hassles. The Committee recommends that the whole issue of pasting of notes should be reviewed by the RBI.

3.8 The Committee observes that the Common Person faces considerable difficulty in tendering uncurrent coins both at the RBI and the banks. In many banks this facility is just not available. The Committee’s direct experience at the RBI Mumbai Regional Office, Banking Hall has been that repeated visits were required before a single transaction in uncurrent coins for a few rupees could be put through. The Committee, however, notes that in recent weeks the DCM has been actively following up this issue with banks which, hopefully, could improve the situation.

3.9 DCM vide its letter dated January 19, 2004 (Annex VI) addressed to all currency chest maintaining bank branches advised that the customers should be given the facility of (a) meeting their demands for fresh/good quality notes and coins of all denominations, (b) exchanging soiled notes, (c) adjudicating mutilated notes, and (d) accepting coins and notes either for transactions or in exchange. It further adds that these services should be provided more actively and vigorously to the members of the public so that "there is no need for them to approach the RBI Regional Offices only for this purpose". At the same time as and when the question of RBI getting out of the retail business of exchange of notes/coins is being debated a strong argument is put forth that under the RBI Act issue and management of currency is one of the Central Banking functions of the Bank. These conflicting stances need to be resolved.

3.10 The DCM has made available to the Committee, in a tabular form, items classifying various facilities. The Committee observes that many of the facilities set out by the DCM are repetitive and reflect the absence of scrapping outdated circulars and this renders an assessment difficult. Nonetheless, the Committee has endeavoured to give brief comments/ recommendations in the tabular material set out in Annex VII. The Committee cautions that that the Report as a whole would need to be considered and the tabular material provides only a truncated view. Some of the items provided by DCM and the Committee’s Observations/ Recommendations are set out below:

The Committee’s observations /recommendations are as follows:

You can

(i) Exchange your notes and coins in the denominations of your choice subject to limits indicated at the public exchange counters.

(ii) Exchange your soiled notes at the specified Counters subject to the limit indicated per tender.

(iii) Either get your torn/cut/mutilated currency notes exchanged across the counter subject to the provisions laid down in the RBI (Note Refund) Rules. In force OR by depositing the same at Triple Lock Receptacle counter, in the specified cover available free of cost.

The exchange value thereof as admissible under the rules will be remitted to you within 15 days.

2. All exchange facilities are available free of charge.

3. You are assured of prompt and courteous service throughout specified banking hours.

4. Please contact the Officer-in-Charge of the Grievances Redressal Cell in person or write to him at your convenience for any Suggestions/Complaints about the above facilities.

5. The facilities are also available at the following branches of public sector banks maintaining currency chests /small coins depots, (List of such branches is available with the Enquiry Officer).

(Released by the Department of Currency Management, Reserve Bank of India)

Source: RBI, Department of Currency Management.

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ANNEX IV

G-2 /08.07.18/2002-03

5th July, 2002

Dear Sir,

As you are aware, the Reserve Bank of India has, from time to time, issued a number of circulars containing instructions to banks on note exchange facility to be provided to the members of public. In order to enable the banks to have all the instructions at one place, it has been decided to consolidate the same. Accordingly, we enclose a Master Circular prepared on the subject for your information and taking appropriate action, where required.

Yours faithfully,

(Dr. N. Krishna Mohan)
General Manager

In terms of Section 28 read with Section 58(2) of Reserve Bank of India Act, 1934, no person is entitled as a right to recover from the Government of India or RBI the value of any lost, stolen, mutilated or imperfect currency note of the GOI or bank note. However, with a view to mitigating the hardship to the public in genuine cases, it has been provided that the RBI may, with the previous sanction of the Central Government, prescribe the circumstances in, and the conditions and limitations subject to which, the value of such currency notes or bank notes may be refunded as a matter of grace.

With a view to extending the facility for the benefit and convenience of public, all currency chest branches have been delegated powers under Reserve Bank of India (Note Refund) Rules for exchange of torn/mutilated/ defective notes.

2. In order to facilitate quicker exchange facilities, the following types of soiled and cut notes should be freely exchanged by all bank branches including non-chest branches. They should also be accepted over bank counters in payment of Government dues and for credit of accounts of the public maintained with banks.

I. Single numbered notes - Re.1/-, Rs.2/- & Rs.5/-

Note presented should not be more than two pieces. No essential feature of the note should be missing and complete number should be available in an undivided area on one of the pieces.

II. Double numbered notes - Rs.10/-,Rs.20/-
Rs.50/-, Rs.100/-,Rs.500/- & Rs.1000/-

The note presented should not be more than two pieces. No essential feature of the note should be missing. Both the pieces should be of the same note i.e. the complete number in an undivided area on each piece should be the same.

The above types of notes will be treated as soiled notes and be packeted alongwith soiled notes. These unfit notes shall, in no case, be issued to the public as reissuable notes but shall be deposited in currency chests for onward transmission to RBI offices as chest remittances.

[Ref.DCM.No.G-24/08.01.01/96-97 dated 03.12.1996]

The branches should caution their customers not to accept such notes from any bank or anybody else. [Ref. Memorandum of Procedure to be followed by Public Sector Banks and Circulars DCM.No.185/CL.1(PSB)-86/87 dated 20.5.87 and No.52/08.07.18/ 96-97 dated 11.1.97]

5. The notes, which are found to be deliberately cut or tampered with, if presented for payment of exchange value should be rejected under Rule 5(2)(ii) of the RBI (NR) Rules. Although it is not possible to precisely define deliberately cut/mutilated notes, a close look at such notes will clearly reveal any deliberate fraudulent intention, as the manner in which such notes are mutilated will follow a broad uniformity in the shape/location of missing portions of the notes, especially when the notes are tendered in large number. The details of the case such as the name of the tenderer, the number of notes tendered and their denominations should be reported thereafter to the Deputy/General Manager, Issue Department, under whose jurisdiction the branch falls. The matter should also be reported to local police in case a large number of such notes are tendered. The branches should ensure that the note exchange facility is not cornered by private money changers/professional dealers in defective notes. [Ref.Cir.No.S-12/CL.1(PSB)-88/89 dated 30.9.88 and No.8/ CL.1(PSB)-90/91 dated 17.8.90]

6. Our Issue Offices have instructions to conduct training programmes for 'Prescribed Officers' of currency chest branches on a priority basis. It should be ensured that only officers who are designated as 'Prescribed Officers' are deputed for training. As the training programmes are intended to provide knowledge and instil confidence in the Prescribed Officers in the process of adjudication of defective notes, it is imperative that the Prescribed Officers of the concerned branches do attend the programmes. [Ref.Cir.No.220/CL1(PSB)-85/86 dated 31.5.86]

Thus, the notes of Rs.1000/- denomination will be adjudicated under RBI (NR) Rules in the same way as notes of Rs.10/-, Rs.20/-, Rs.50/-, Rs.100/- and Rs.500/- are presently adjudicated.

[Press Release dated 6.10.2000]

[Ref.Cir.No.G.82/CL.1(PSB)-87/88 dated 12.1.88 and G.74/CL. (PSB)Gen-90/91 dated 5.6.91]

10. All chest branches are required to submit to our Issue Offices quarterly statements showing the number of notes adjudicated by them. In the absence of information regarding accumulation of paid notes awaiting audit at chest branches, it is not possible for Issue Offices to finalise quarterly audit programmes. It has also been reported to us that a large number of currency chest branches have either not implemented the scheme or have implemented it on a restricted scale, thereby causing undue hardship to the members of public. In view of this, you are advised to issue the following instructions to all your currency chest branches.

1. The scheme should be introduced forthwith at the chest branches where it is yet to be started.
2. There should not be any restrictions as to the number of days in a week on which the facility will be available, i.e. the facility should be made available throughout the business hours on all working days.
3. Notes paid by non-currency chest branches under limited powers must be accepted for exchange irrespective of whether such branches are of the same bank or otherwise.
4. The adjudicated notes should be kept distinctly separate and under no circumstances be mixed up with soiled notes balances held in the currency chest.
5. The record of notes adjudicated/reimbursed must be kept in the DN.2 register properly and up-to-date at the chest branches.
6. Quarterly statements indicating accumulations of notes adjudicated/exchanged and pending audit by RBI audit teams must be sent within 15 days from the close of the quarter.

[Ref.Cir.No.G.83/CL.1(PSB)-91/92 dated 6.5.92 and
G-11/08.07.18/2001-02 dated 2.11.2001]

All currency chest branches and all the branches of the public sector banks are requested to extend their maximum co-operation by exercising the authority vested in them fully and without reservation as this would result in providing better customer service to the public at large.

[Ref.Cir.No.NE.386/08.07.13/2001-02 dated 16.11.2000]

The above instructions are issued in consolidation of all instructions issued earlier by RBI in regard to the exchange of defective notes.