Bank responsible for damaged notes in ATM | delhi | Hindustan Times
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Bank responsible for damaged notes in ATM

delhi Updated: Dec 11, 2010 23:51 IST
Pushpa Girimaji

I do not know how many of you are clued into the "Note Refund Rules" of the Reserve Bank of India. The rules, meant to facilitate consumers/citizens exchanging cut and mutilated currency notes, are quite detailed and complex, even though the RBI says it has simplified it.

The rules define imperfect notes, mutilated notes, mismatched notes, soiled notes and fix an exchange value for each kind of note at the designated bank branches.

And this value varies depending on the extent of damage. In respect of mutilated notes, for example, it says "if the area of the single largest undivided piece of the note is less than 40%, no value shall be payable and the claim shall be rejected".

I will not go into details because they are quite complicated and lengthy, but suffice it to say the prescribed officer will value it according to these rules and pay that value. Or he may even reject your claim on certain grounds specified in the rules.

Given this scenario, imagine getting torn, mutilated, burnt, cut and pasted notes from an ATM! Well, that's what happened to a reader and if it's happened once, it may well happen again. And the worst part is that the bank, from whose ATM he got those notes, is unwilling to replace them and is even saying the transaction slip does not provide any proof of the ATM having dispensed it!

This is a serious matter and the RBI has to take immediate and deterrent action to prevent recurrence or else this could well happen to other consumers too. The RBI should also ensure that if an ATM dispenses such notes, then the bank should not only replace them immediately, but also pay a hefty amount as costs to the consumer to compensate him or her for the time wasted and money spent in going to the bank and returning those notes.

In fact, the very purpose of going to an ATM would be lost if the consumer is forced to visit the bank premises in order to exchange such notes.

Gurvinder Singh: On December 1, my wife withdrew currency notes of denomination 1,000, 500 and 100 from an ATM. When she was paying the cook's salary, she noticed to her shock that nine of the R 1,000 notes were mutilated. Seven were torn/cut and fixed with cello-tape and two had burnt edges. The home branch showed helplessness in the matter, but told me it will be difficult for me to prove the withdrawal from that particular ATM. The branch under which the ATM comes has not responded to my mail yet. Please suggest a line of action.

Answer: The bank has to take responsibility for the torn/mutilated notes and replace them with good notes. You may not be able to prove that the mutilated notes came out of their ATM, but nor can the bank prove that they did not. So the bank cannot escape its liability. They in fact need to compensate you for their negligence and also investigate into this and inform you as to how this happened. So please write out a formal complaint to the bank as well as the RBI (Go to and click on the icon "For common person" in order to go to the complaint page).

Enclose pictures of the mutilated notes as well as a photocopy of the ATM transaction receipt. Please urge the banking regulator to take stringent action against the bank and send out a clear message that it will not condone such negligence or fraud.