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Chapter 2 - RBI and Monetary Policy

Monetary Policy of RBI

Monetary Policy

Monetary policy is the process by which central bank, the monetary authority of a country, controls
the supply of money in the economy. In India, Reserve Bank (RBI) is the sole authority to frame
the monetary policy.

As per the recommendations of Urjit Patel Committee, RBI adopted the release of monetary policy on bi-
monthly basis, i.e., bi-monthly monetary policy.

Operating Target and Operating Procedure of Monetary Policy

To understand the Monetary Policy of RBI, you have to understand the following terms specified by it -

1. Policy Rate
The fixed overnight repurchase rate (repo rate) under the Liquidity Adjustment Facility (LAF) is
the single monetary policy rate.

2. Operating Target
The Weighted Average Call-money Rate (WACR) is the operating target of monetary policy.
Note that Call money is the overnight funds that are lent by one bank to another bank.

3. Operating Procedure
Once the policy rate is announced in the bank's statements on Monetary policy, the operating
procedure aims at modulating liquidity conditions so as to achieve the operating target (meaning - anchor
the call money rate around the policy rate / repo rate). This is the first leg of monetary policy transmission
to the financial system and the economy.
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4. Liquidity Management
RBI uses the pro-active liquidity management mechanism to achieve the operating target. The main
features of this framework, which was announced on August 22, 2014, and implemented since September
5 are as follows -

a. Assured Liquidity Operations -

Assured access to central bank liquidity of 1 % of bank's Net Demand and Time Liabilities
(NDTL) (meaning Demand deposits - Current and Savings; and Time deposits - Term and Recurring).
This 1 % comprises -

0.25 % of NDTL provided through overnight fixed repo auctions, conducted daily at the policy
rate (repo rate), and
0.75 % of NDTL provided through 14-day variable rate term repo auctions, conducted
on every Tuesday and Friday.

b. Fine-tuning Operations -
Fine-tuning operations through variable rate repo / reverse repo auctions of maturities ranging
from overnight to 28 days, to even out frictional liquidity mismatches that occur in spite of assured
Liquidity Operations

c. Open Market Operations (OMO) -

Outright OMO through auctions and anonymous screen-based trading on the Negotiated Dealing System -
Order Matching (NDS-OM) platform to mange enduring liquidity mismatches

d. Special Operations -
Special Operations are also conducted on holidays to help market participants tide over pressured arising
from one-off events such as tax payments, government spending, balance sheet adjustments and payment
and settlement requirements.

5. Standing Facilities

a. Marginal Standing Facility (MSF) -

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A Marginal Standing Facility (MSF) allows market participants to access central bank liquidity at the end
of the day (including Saturdays), even after providing assured and fine-tuning operations.

Under MSF, up to 2 % of their (market participant's) stipulated Statutory Liquidity Ratio (SLR) holdings
of government securities in addition to excess SLR as collateral at a rate set at 100 basis points
(bps) above the policy rate (meaning - MSF rate = Repo rate + 1 %)

b. Reverse Repo -
Fixed rate daily overnight - reverse repo auctions are conducted at the end of the day (including Saturdays)
to allow market participants to place their surplus liquidity with the RBI at a rate set at 100 bps
below the policy rate (meaning - Reverse Repo rate = Repo rate - 1 %). It operates as a de facto standing
facility.

Note that the MSF rate and the fixed overnight reverse repo rate define an informal corridor for
limiting intra-day variations in the call rate.

1st Monetary Policy - April 7, 2015

RBI governor Shri Raghuram Rajan has decided to keep the policy rate and cash reserve ratio unchanged.
Followings are the current rates -

Repo rate (policy rate) - 7.5 % (rate charged by RBI to banks)

Reverse Repo rate = Repo rate - 1 % = 6.5 % (rate at which RBI pays interest to banks)
MSF rate = Repo rate + 1 % = 8.5 % (rate charged by RBI to banks)
Bank rate = 8.5 % (rate charged by RBI to banks)
Cash Reserve Ratio (CRR) - 4 % (percent amount to be stored with RBI, in terms of account
balance or reserves)
Statutory Liquidity Ratio (SLR) - 21.5 % (percent amount to be stored with itself, in terms of golds
or government securities - cannot be lent to public)
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Open Market Operations (OMO)

Open Market Operations (OMO)
If the central bank of a country, on behalf of the government, raises money from the open market by
selling government securities, or inject money supply in the market by purchasing the government
securities, then it will be known as Open Market Operations (OMO).

Note the term Open Market Operations: it simply means operations (selling/buying government securities)
performed in the Open Market. OMO performs a major role in Monetary Policy.

In India, Reserve Bank of India (RBI), on behalf of Union government, performs this Open Market
Operation.

Purpose of OMO

Adjust the liquidity condition in the market on a durable basis -

a. If there is excess liquidity in the market - RBI will sale the government securities, thereby
sucking out the rupee liquidity
b. If the liquidity conditions are tight (i.e., less liquidity) - RBI will buy the government
securities from the market, thereby releasing liquidity into the market
Government raises money from the market, when it needs money for governance purpose.

Government Securities
There are several government securities with different maturity dates, which are used for different purposes,
as follows -

Treasury Bills (T-Bills)

Cash Management Bills (CMBs)
Dated Government Securities
State Development Loans (SDLs)
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Example
RBI on November 2014, announced to sell Rs. 12,000 crore government securities/bonds through Open
Market Operations (OMO) to mop up liquidity from the market.

As part of the OMO, RBI would sell securities maturing in 2017 (bearing interest rate of 8.07 %), 2020 (7.8
%), 2022 (8.08 %) and 2027 (8.26 %).

Market Stabilization Scheme (MSS)

MSS Background

In the year 2004, Foreign Institutional Investors (FIIs) started buying Indian stocks in dollars. This
resulted in an oversupply of USD in Indian market.

To counter this, RBI started buying USD, and in return, supply equivalent amount of Indian Rupees (INR) in
the market. This action resulted in over-liquidity in Indian market (due to rupee supply), and at the same time
massive increase in forex reserves (due to dollar purchase).

This liquidity overhang situation forced the government to mop up the Rupees from the market by
creating MSS Bonds.

Market Stabilization Scheme (MSS)

Under this scheme, RBI, on behalf of government, raises money from the market by providing government
securities, like Treasury Bills, Dated Securities, etc.

But the difference is - the raised money doesn't go to the government account (as in normal cases). Instead,
the money is stored in separate Market Stabilization Scheme Account (MSSA). The sole purpose of this
scheme is to suck out the over-liquidity from the market (as in the above situation), not for government
expenditure.
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Monetary Policy Report - April 2015

Macroeconomic Outlook

The prospects for growth in 2015-16 have improved for the followings -

The broad-based decline in retail inflation since September 2014

Plans announced in the Union Budget 2015-16 to step up infrastructure investment
Depressed Commodity prices
Upbeat financial market conditions

Retail inflation is projected to remain below 6 % in 2015-16, within the target set for January
2016 (Inflation targeting).

Persisting slack in the economy and restrained input costs should sustain dis-inflationary impulses, unless -

Disrupted by reversal in global commodity prices, and/or,

Deficiency in the South-west monsoon

Outlook for Inflation

CPI Inflation will remain below the target of 6 % for January 2016, hovering around 5 % in the first half
of 2015-16, and a little above 5.5 % in the second half.

Uncertainties surrounding commodity prices, monsoon and weather-related

disturbances, volatility in prices of seasonal items and spillovers from external developments
through exchange rate and asset price channels are reflected in a 70 % around the baseline
inflation projection of 5.8 % for Q4 of 2015-16.

Outlook for Growth

Real GDP growth for 2014-15 was projected by RBI at 5.5 %. The Central Statistical Office (CSO)'s
provisional estimates of GDP (base: 2004-05) tracked projected path up to Q2 of 2014-15.
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The new GDP data (rebased to 2011-12) released by the CSO at the end of January 2015 and on February
9, came as a major surprise as it produced significantly higher growth at constant prices.

Data revisions and their after-effects are not unique to India, but the magnitude of the gap in real GDP
growth rates between the old and the new series for 2013-14 and 2014-15 has complicated the setting
of monetary policy. Undoubtedly, the new GDP data embody better coverage and improved methodology as
per international best practices. Yet these data cloud an accurate assessment of the state of the business
cycle and the appropriate monetary policy stance.

Gross Value Added (GVA)

GVA + taxes on products - subsidies on products = GDP

Growth at basic prices for 2015-16 is projected at 7.8 %, with risks evenly balanced around
this baseline forecast. For 2016-17, real growth in GVA at basic prices is projected at 8.1 %.

Balance of Risks

The baseline paths projected for growth and inflation are subject to realization of a set of underlying
assumptions, under plausible risk scenarios, as below -

Sharp Increase in Crude Oil Prices - Global crude oil prices are assumed to increase
gradually over the forecast horizon in the baseline projection.
Below Normal Monsoon in 2015-16 - As against the normal monsoon assumption in the baseline,
there is a risk of monsoon turning out to be deficient in 2015.
Depreciation of the Rupee - Uncertainties surrounding the exchange rate persist.
Easing of Food Inflation - Headline inflation could also undershoot from the baseline, if food
inflation moderates by more than what is envisaged
Crude Oil Price Declining Further - If crude oil prices decline below the baseline by USD 15-
20 per barrel in the near-term as a result of excess supply conditions / low global demand in a stable
geo-political environment - inflation would come down.
Revision in CSO's GDP Estimates - Considerable uncertainty surrounds the advance
estimates of GDP growth for 2014-15 and information on real economic activity to Q4 is expected
to be better captured in the revised estimates, which would be released around the end of May 2015.
Pick-up in Investment Demand - If the boos to investment expenditure announced in the Union
Budget for 2015-16 helps in crowding in private investment, and correspondingly, if investment
demand picks up, GDP growth will rise considerably.
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Revision of Consumer Price Index (CPI)

Beginning January 2015, the CSO revised the base year of the CPI to 2012 (from 2010 = 100).
The weighting patterns of the revised series is based on the 2011-12 Consumer Expenditure Survey (CES
2011-12), of the National Sample Survey Office (NSSO), which is more representative and recent than
the CES 2004-05 used for the old series.

Settlement Systems of India

India has two main electronic funds settlement system for one-to-one transactions -

1. National Electronics Funds Transfer (NEFT)

2. Real-time Gross Settlement (RTGS)

Transactions can be bulk (meaning one-to-many or many-to-one transactions) and repetitive (regularly
happening, like monthly) in nature. This type of transactions are routed through Electronic Clearing Service
(ECS), and of two types -

1. ECS Credit
2. ECS Debit

National Electronics Funds Transfer (NEFT) - one-to-one

NEFT payment system facilitates one-to-one funds transfer. In this system, individuals,
firms and corporate can electronically transfer funds from any bank branch to
any individual, firm or corporate, having an account with any other bank in the country which is NEFT-
enabled.

Note that, recipient should have a bank account (so that transfer can be traced), but the person who
is transferring fund need not have any account, but in that case, there is a maximum transfer limit of Rs.
50,000 (for this walk-in customers, need to provide their identity documents).
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But if he/she transfer fund from an account, then there is no limit of maximum transfer, though per
transaction max limit is Rs. 50,000. e.g., For transferring Rs. 1 lakh through NEFT, there will be 2
transactions.

Note that NEFT settles transactions on net-basis and works in hourly batches. Currently, there
are 12 batches (8 am to 7 pm) on weekdays and 6 batches (8 am to 1 pm) on Saturdays. Banks wait and
collect all the transactions made within an hour, and then settles the transaction (not individually, known
as netting). For an example, if you make a transaction on 8:30 am, then your settlement will wait till
the hourly batch of 9 am, and at 9:00 am, your transaction will be settled.

Transaction Costs -

No inward transaction cost for NEFT

But for outward transactions -

Up to Rs. 10,000 - maximum Rs. 2.5 + Service Tax

Above Rs. 10,000 to Rs. 1 lakh - maximum Rs. 5 + Service Tax
Above Rs. 1 lakh to Rs. 2 lakhs - maximum Rs. 15 + Service Tax
Above Rs. 2 lakhs - maximum Rs. 25 + Service Tax

Real-Time Gross Settlement (RTGS) - one-to-one

In this system, settlements are done on real-time (meaning, instantly, or without delay, note that NEFT need
to wait for an hourly batch) and on gross basis (meaning, individually, transaction will not be netted with
others like NEFT which are settled in hourly batches). RTGS is the fastest possible money transfer system
through the banking channel.

Note that RTGS is meant for high-value transactions, and there is a minimum transaction limit of Rs. 2
lakhs (no upper limit). All the transactions go through the books of RBI.

RBI on Dec 15, 2014, increased RTGS total business hours from 7 hours 30 minutes to 12 hours. Now
the business hour will be 8 am to 8 pm on weekdays against the earlier 9 am to 4:30 pm.
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Transaction Costs -

No inward transaction cost for RTGS

But for outward transactions -

Rs. 2 lakhs to Rs. 5 lakhs - maximum Rs. 30 per transaction

Above Rs. 5 lakhs - maximum Rs. 55 per transaction

ECS Credit - one-to-many (single debit, multiple credit)

ECS Credit facility is used by an institution, where it needs to pay several recipients on a regular basis (may
be monthly). Here single debit is made on the payers account and multiple credit is made to
the beneficiaries or recipients.

For example, for paying salary, dividend, pension, etc. one can use this ECS Credit facility
(e.g., employers account is debited once, and several employees are paid salary, by crediting their accounts)

ECS Debit - many-to-one (multiple debit, single credit)

ECS Debit facility is used by an institution, for raising debits to a large number of accounts. E.g., bill
payment for consumers of utility services (like electricity bills deducted from bank accounts of several
customers, and credited to the electricity supplier's account), periodic investments in mutual
fund, insurance premium, etc.

Note:- that there are several other payment systems, like Immediate Mobile Payment System (IMPS, need
to register mobile number), Aadhaar-enabled Payment System (AEPS, need an Aadhar card), etc.
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Financial Inclusion
World Bank report shows that approx. 2.5 billion (250 crore) working-age adults globally - more than half of
the total adult population of the world - have no access to the formal financial services delivered by
regulated financial institutions.

Instead they depend on informal systems which bear high risks. They turn to the moneylender for credit,
buy livestock as a form of savings, etc. It is evident that appropriate financial services can
help improve household welfare and spur small enterprise activity.

Financial Inclusion
Financial Inclusion process is the conscious effort of the government or central bank of a country
to deliver financial services to the excluded sector of the society (by including them).

The Government of India and the Reserve Bank of India (RBI) have been making efforts to
promote Financial Inclusion as a major national objective of the country. Some of the efforts -

Nationalization of banks
Building up of robust branch network of Scheduled Commercial Banks (SCBs), Co-
operatives and Regional Rural Banks (RRBs)
Introduction of mandated Priority Sector Lending (PSL) targets
Lead bank schemes
Formation of Self Help Groups (SHGs) and Joint Liability Groups (JLGs)
Permitting Banking Correspondents (BCs) to be appointed by banks to provide door step
delivery of banking services
Zero Balance accounts like Basic Savings Bank Deposit Accounts (BSBDAs), Small
Accounts, Jan-Dhan Accounts, etc.

The primary objective of all above initiatives is to reach the financially excluded sector of India.

Financial Inclusion data sources

Financial Inclusion data is presented on 5 major sources, as follows -

National Sample Survey Organization (NSSO) survey results

Population Census of government (currently 2011 census)
CRISIL-Inclusix index
RBI study on 'Financial Inclusion' in India
World Bank 'Financial Access Survey' results
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RBI Policy Initiatives

RBI advised all banks to open BSBDA accounts with facilities like no minimum balance, ATM
facility, etc.
Relaxed and simplifed KYC norms - to facilitate easy opening of bank accounts, especially
for Small Accounts with balances not exceeding Rs. 50,000, etc.
Simplified Branch Authorization Policy - Domestic Scheduled Commercial Banks (SCBs) are
permitted to freely open branches in Tier-2 to Tier-6 center (population less than 1 lakh) under
general permission, subject to reporting to RBI, etc.
Mandatory Branches in Un-banked villages - bank are directed to allocate at least 25 % of total
number of branches to be opened during the year in un-banked (Tier 5 and Tier 6) rural centers
Opening of intermediate brick and mortar structure - for effective cash management,
documentation, customer grievance redressal, etc - Micro branches to be opened in rural area, and
can be operated by Business Correspondents
Financial Literacy Centers (FLCs) - to literate customers in financial matters, etc.
Licensing of New Banks - with aim to further spread the banking services

JLG and SHG

Joint Liability Group (JLG)

Before understanding JLG, you have to know, what are different types of liability.

Jointly Liable - Suppose, two ore more persons have some liability (e.g., taken a loan). Then for
a jointly liable system, they each are fully liable to the loan (meaning if one is unable to pay, then
other is fully liable to pay the whole amount of loan)
Severally Liable - In this type of liability, each is liable only to his own portion of
the liability (i.e., loan) (meaning if one is unable to pay for whatever reason, other will not be sued,
or bothered, he will be liable for only his portion of loan)

Therefore, JLG is an informal group (comprising around 4-10 person) for the purpose of availing bank
loan on individual basis (Severally Liable) or through group mechanism against mutual guarantee (Jointly
Liable).
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Generally, the members of JLG would engage in a similar type of economic activity in
the Agriculture and Allied Sector. The members would offer a joint undertaking to the bank that enables
them to avail loans. They support each other in carrying out their occupational and social activities.

Self Help Group (SHG)

SHG is a small voluntary group (less that 20) of poor people, generally from the same economic background.
They promote small savings among their members, and make a common fund, which is kept in a bank.

SHGs comprise poor people, and they generally do not have access to formal financial institutions (banks).
So this concept helps them to directly connect with banks. Also they act as the forum for the members to
provide space and support each other.

Currently there are several SHG bank linkage program for this purpose.

Money Laundering
Money Laundering

Laundering means concealing/hiding the origins of money, that are obtained through illegal means,
violating the laws of land. It often involves transfers to/from foreign banks or legitimate businesses to hide
the illegal nature of the money, and make it appear as obtained form legitimate source.

In broad sense, Money Laundering is the process of converting Black Money into White Money.

Civil or Criminal Offense?

Often we talk about Black Money that are stashed abroad, mainly to avoid high taxes of the land. These
money could have legitimate or illegitimate origin.

If these are achieved through legitimate sources, but to avoid taxes, are stored in foreign countries, then we
simply call these as Black Money (not considered as Money Laundering). This is a case of civil offense.
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But in Money Laundering, the Black Money must involve a predicate crime, such as the violation of IPC,
etc, and is considered as criminal offense.

Stages of Money Laundering

Money Laundering involves three distinct stages, as follows -

1. Placement
Illegitimate money / Dirty Money is collected and placed into a legitimate financial institution, generally in
the form of cash (a way to hide trace). This stage is known as Placement of Illegitimate money.

2. Layering
Layering is the stage, where the illegitimate money is processed through several financial transactions to
change its form and hide its trace, so that it is difficult to follow and find its source.

It may consist of -

Bank to bank transfer

Wire transfer between different accounts, possibly in different names and in different countries
Changing the nature of currency
Purchasing other instruments, or assets to change the form of money, etc.

3. Integration
In this stage, the illegitimate money returns to the mainstream economy as a legitimate one. This may involve
a final bank transfer to the account of the business, where the launderer wants to invest. In this stage,
the legitimate-looking money is difficult to trace back to its illegitimate source.

Prevention of Money Laundering Act, 2002 (PMLA)

The PMLA, 2002 is the principal framework in India to combat money laundering cases. It defines money
laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.
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Some features -

RBI, SEBI and IRDA have been brought under the PMLA, making the provision of this act to be
applicable to all the financial institutions in India, including banks, MFs, Insurance companies, etc.
The monitoring agency of Anti-Money Laundering activities in India is the Financial Intelligence
Unit (FIU-IND). It is an independent body reporting directly to the Economic Intelligence Council
(EIC), headed by the Finance Minister.
Punishment includes imprisonment up to 3 - 7 years, with fine up to Rs. 5 lakh.

Banks' Obligations

To follow the KYC norms properly

Maintain records for - nature and value of the transaction, single or series of transactions, keep
record for 10 years, etc.
Verify and maintain the records of identity of all clients, etc.

Issuance of Currency
According to RBI Act 1934, Section 22, RBI has the sole right to issue bank notes of all denominations.
RBI is responsible for the design, production and management of the currency of India, with the goal of
ensuring an adequate supply of clean and genuine notes.

The responsibility for coinage vests with the Government of India on the basis of The Coinage Act, 2011.
RBI acts as an agent of government which merely distributes the coins in the market.

Denominations
Currently, RBI has issued currency notes in the denomination of Rs. 10, 20, 50, 100, 500 and 1000. However,
it can issue notes with denomination up to Rs. 10,000, as per the provision of RBI Act, 1934.

Coins are presently being issued by the government in the denomination of 50 paise, Re. 1, Rs. 2, 5, and 10.
Coins up to 50 paise are called 'Small coins' and Rupee 1 and above are called 'Rupee coins'. Coins can be
issued up to the denomination of Rs. 1000 in terms of The Coinage Act, 2011.
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Liabilities

Small and Rupee Coins - Government of India

Rupee One banknote - Government of India (signed by Finance Secretary)
Banknotes above Rupee One - Reserve Bank of India (signed by RBI Governor)

Minimum Reserve System to issue currency

India adopted Minimum Reserve System in the tenure of RBI governor Sir Benegal Rama Rau in 1957. In
this system, RBI is required to maintain a minimum reserve of Rs. 200 crore in gold and forex, of which at
least Rs. 115 crore should be in gold form (earlier India followed Proportional Reserve System) to
issue currency in India.

Determination of volume and value of banknotes to be printed

RBI based on the demand requirement indicates the volume and value of banknotes to be printed each year
to the government which get finalized after mutual consultation.

The quantum of banknotes to be printed depends on the followings -

Requirement for meeting the demand of banknotes

GDP growth
Inflation rate
Replacement of Soiled and Mutilated notes
Reserve Stock requirements, etc.

Notes and Coins production

Notes are printed at 4 Printing Presses, located at - Nashik, Dewas, Mysore and Salboni
Coins are minted at 4 Mints, located at - Mumbai, Noida, Kolkata and Hyderabad

Currency circulation
RBI currently manages the currency operations through its -
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19 Issue Office located at - Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh,

Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New
Delhi, Patna, Thiruvananthapuram
A wide network of Currency chests

The Issue offices receive fresh banknotes from the printing presses of RBI, and then send the notes to the
designated branches of commercial banks.

Currency Chest - RBI has authorized select commercial bank branches to establish currency chests, which
would act as storehouses for banknotes and rupee coins on behalf of RBI. These chest branches are
expected to distribute banknotes and rupee coins to other bank branches in their area of operation.

Small Coin Depot - Some bank branches are authorized by RBI to establish Small Coin Depot to
store Small coins (i.e., below Rupee 1 coins), which will distribute the coins in their area of operation.

Clean Note Policy

Problems to deal with

Stapling on note bundles

Writing number of note pieces in loose packets on watermark windows, disfiguring the
watermark impression and rendering it difficult for easy recognition
Banks do not sort notes into - Re-issuables and Non-issuables - while issuing to public
Issuing Soiled notes to public

- Therefore to address these problems of currency handling, RBI came up with its 'Clean Note Policy'

Clean Note Policy

No stapling of any note packet and instead secure note packets with paper bands
Banks should sort notes into - Re-issuables and Non-issuables
Banks should forthwith stop writing of any kind on watermark window of bank notes
Issue only Clean Notes to public
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Soiled and Mutilated Notes

Soiled Notes

Soiled notes are those notes -

became dirty
slightly cut
in the denomination of Rs. 10 and above, which are in two pieces. However, the cut should not pass
through the number panels

Soiled notes can be exchanged at -

counters of public sector bank (PSB) branch

currency chest branch of a private sector bank
Issue office of RBI

Note that, there is no need to fill any type of form to exchange Soiled Notes. Also note that the exchange is
in full value, meaning you will get the whole amount of the soiled note in exchange.

Mutilated Notes

Mutilated notes are those notes -

are in pieces (more than two)

essential portions are missing. Essential portions are - name of issuing authority, guarantee,
promise clause, signature, Ashoka Pillar emblem / portrait of Mahatma Gandhi, water mark

Mutilated notes are exchanged at the same places described above (for Soiled notes), without filling any
type of form.

However, note that the exchange value can be in full or part, according to RBI (Note Refund)
Rules. (depending on the mutilation of the notes, you will get the value)

Also, there is another exchange facility for mutilated notes, referred to as Triple Lock Receptacle (TLR). (Put
the mutilated notes in a TLR cover along with details, and deposit it in the TLR box at RBI Issue Office.
Amount will be returned by means of a bank draft or pay order).
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Excessively Soiled, Brittle, Burnt Notes

Notes which have become excessively soiled, brittle, or burnt can be exchanged only at Issue Office of RBI.
(need to approach to the Officer-in-charge of the Claims Section, Issue Department of RBI).