RBI’s Clean Note Policy

In order to increase the life of currency notes, Reserve Bank of India (RBI) issued Clean Note Policy in 2001.

According to the policy: The note packets should not be stapled, while the banding of packets should be done with paper/polythene bands so that the life of the currency notes is increased.cleannote_1
The objective of the Reserve Bank’s Clean Note Policy is to give the citizens good quality currency notes and coins while the soiled notes are withdrawn out of circulation.

  • The RBI instructed the banks to issue only good quality clean notes to the public and not circulate the soiled notes received by them over their counters.
  •  For this RBI installed high speed Currency Verification and Processing Systems (CVPS) machines at all its offices which deal with currency.
  • These machines are capable of processing 50,000-60,000 pieces per hour and soiled notes are distinguished.
  • The watermark is a major security feature. If something is written on it, sorting machines will reject the note as bad.
  • The public should also help in keeping the notes clean. They should not write on the currency notes and any soiled and mutilated notes can be exchanged at the bank counters.
  • The banks are instructed to offer, even to non-customers, good quality notes and coins in exchange for soiled and mutilated notes.

Still the RBI’s Clean Note Policy Remains a Dream

  • Several complaints started getting registered about some currency chest branches in the rural and semi urban areas that they do not accept lower denomination notes.
  • After this, RBI took an action by keeping specific monthly targets for distribution of coins to these currency chests.
  • Reserve Bank requested banks to open one currency chest branch on one Sunday in a month at selected centres to provide currency exchange and distribution of small coins and remove the bad notes.
  • The choice of the centre and the choice of the Sunday in the month should be left to the individual bank to decide.