When I Give Old Torn and Soiled Notes to a Bank, What Do They Do with Them?
Welcome to the world of banknotes, where every paper and coin has a journey from your pocket to a safer, more sustainable outcome. When an old, tattered, or soiled note makes its way to the bank, it embarks on a detailed process that ensures financial health and environmental sustainability.
Soiled Mutilated Defaced Notes: A Bankers' Perspective
In banking terminology, these damaged notes are called 'soiled mutilated defaced notes,' and they are collected by banks for exchange purposes. Once a sizeable quantity—typically 100 notes or 1000 bundles—is gathered, these notes are sent to the Reserve Bank of India (RBI) or a nearby State Bank of India (SBI) for processing. This exchange process may occur once a year or twice a year, depending on the branch's transactions volume.
The Behind-the-Scenes Process
Before sending these notes to the RBI, banks have a labor-intensive task of recording the serial numbers. These serial numbers can run into several digits and require meticulous documentation. Once recorded, these notes are removed from circulation, and the bank receives a full amount of credit for them.
The notes and coins that are returned from circulation are deposited at the offices of the RBI. Here, the RBI separates the notes and coins that are fit for reissue from those that are unfit. The notes deemed suitable for reissue are reintroduced into circulation, while those that cannot be used are processed further. The process of destruction includes shredding and converting them into materials that can be reused.
The Resurrection of Damaged Notes
The soiled and damaged notes are sent to the RBI's Issue Department via Currency Chests, numbering approximately 4300 across India. Each branch is linked to a particular Currency Chest, and as they deposit their notes, the RBI provides credit to the bank's current account with them.
Currency Chest branches send the soiled and damaged notes to the RBI's Issue Department as remittances. The RBI periodically replenishes the Currency Chests with fresh notes while removing the soiled notes. The damaged notes are processed or counted using sophisticated machines known as the CVPS (Currency Verification Processing System). The notes are then placed in shredding machines, converted into pulp, and used to make various eco-friendly products like paper and dolls. Additionally, CVPS machines detect counterfeit notes and recover their value from the banks.
As per my knowledge, notes and coins returned from circulation are first converted into pulp and then formed into briquettes. These briquettes are used in boilers for energy or recycled into straw boards, a process that promotes a circular economy.
Conclusion
The journey of soiled and damaged banknotes is a testament to the financial system's commitment to both sustainability and security. By recycling damaged notes and converting them into eco-friendly products, the financial sector plays a significant role in reducing waste and promoting a greener future.