Banks reissuing soiled notes to beat cash crunch

As per the RBI’s definition, soiled notes are those which have become dirty and slightly cut without its vital information such as number, watermark and governor’s signature being affected. In order to tide over the currency shortage at branch level in urban and rural pockets, public and private sector banks have started issuing soiled notes to their customers by spraying them with perfumes and insecticides before disbursing them.

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Several banks are using these notes to meet the immediate demand for cash. There is no stock of new notes hence banks are now reissuing even the non-issuable notes in certain areas. The shortage of currency notes mounted after the demonetization of Rs 500 and Rs 1,000 bills, which has compelled banks to put soiled currency notes of Rs 50, Rs 20 and Rs 10 denomination back into circulation.Many customers in Delhi complained that they received some of these soiled and almost mouldy currency notes that in the odd case even smelt bad.

According to sources, the stock of valid legal tender has hit a rock bottom at most banks and currency chests. Several bank branches and the currency chests store soiled notes to be remitted to the RBI. But with the sudden announcement of demonetization of 86 per cent of the total notes in circulation, many of the banks, fearing severe shortage of notes, held back the soiled notes in their lockers. “The RBI normally makes pulp of these soiled notes, which can no longer be circulated. But the shortage of the currency is such that these banks have put these soiled notes back into circulation. They are dangerous from the hygiene point of view. These are dirty and fragile notes, which can’t be used further, still we see them into circulation,” said a senior banker.

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