Exchange small notes at currency chest branches

We all have memories of our parents or grandparents hoarding notes of Re 1 and Rs 2.

These would be neatly stacked in bundles and hidden in the cupboards only to be taken out if someone in the family is going on a pilgrimage or there is a wedding or a birthday in the family.

While gifting cash at such events is routine, forgetting to add the Re 1 over and above the cash amount is considered inauspicious.

It is this Indian custom that cuts across religions, that makes the humble Re 1 so valuable.

But today, you would find it very difficult to find a note of Re 1 or Rs 2 or even Rs 5.

The Reserve Bank of India has stopped printing such notes due to the cost factor.

“The usage of such small value notes is very high and the wear and tear is high. So, they need to be replaced frequently.

"Hence, now these are available in the form of coins," says an official from a public sector bank.

On Wednesday, the RBI said currency notes issued prior to 2005 would be withdrawn from circulation.

It asked people to exchange such notes (of any denomination) at banks from April 1. But these notes will continue to be legal tender.

Similarly, notes of Re 1, Rs 2 and Rs 5, also continue to be legal tender, but given the small denomination it is slightly difficult to exchange them.

Most bank branches will accept Rs 5 notes.

But to exchange notes of Re 1 and Rs 2, you will have to go a currency chests branch.

These branches are present in all cities and all banks have them. Big banks like State Bank of India will have more than one currency chest branches.

Currency chests are select branches of scheduled banks, which are authorised by the RBI to facilitate distribution

of notes and coins.

In these branches, notes and coins are stocked on behalf of the RBI.

These currency chests are expected to distribute notes and coins to other bank branches in their area of operation.

There are 4,211 currency chests and 3,990 small coin depots spread across the country.

Often vendors, small shopkeepers, auto and taxi drivers refuse to accept notes of such small denomination.

This is because such notes that are still in circulation are old and not in good condition.

What is not legal tender anymore are coins of denomination of 25 paise and below.

In 2011, RBI withdrew them from circulation.

Only the RBI will accept them.

So, if you have such coins you have no option but to take them directly to the RBI office in your city. RBI offices are present in all state capitals and important cities in the country.

A bank official jokingly says perhaps they can now fetch more value due to metal content in them.

The RBI carries out the issuance of currency (both banknotes and coins) through its 18 issue offices, one sub-office at Lucknow and a currency chest at Kochi.

Similarly, in case of soiled bank notes, all banks are authorised to accept soiled banknotes for full value.

They are expected to extend the facility of exchange of soiled notes even to non-customers, says the RBI on its website.

The central bank regularly withdraws old currency notes from circulation and replaces them with new note which have enhanced security features.

The latest advisory, issued on Wednesday, asking customers to exchange notes issued prior to 2005 is also part of this.

An official from a public sector bank says the period between 2005 and 2010 saw a lot of fake currency notes come into the system and ideally all notes issued prior to 2010 should be replaced.