RBI Reaffirms Validity of ₹500 Notes, Offers Clear Guidelines on Exchanging Damaged Currency

The Reserve Bank of India (RBI) has reiterated that ₹500 notes remain fully valid legal tender, amid widespread rumors of their possible demonetisation. In a recently highlighted clarification, the central bank emphasised that no decision has been made to phase out the denomination.

To ensure public confidence, the RBI has also provided detailed guidance on identifying genuine ₹500 notes. Key security features include a portrait of Mahatma Gandhi, a visible watermark of his image alongside the denomination, and a blue security thread. The notes also carry micro-lettering and raised print to aid verification, including for visually impaired users.

Importantly, the RBI’s “Clean Note Policy” mandates that banks accept soiled, stained, or partially deteriorated currency. Under these rules, notes that are torn, taped, or discoloured but still retain their essential features can be exchanged at any bank branch, even if the depositor does not have an account there.

In cases of more severe damage — such as burnt, brittle, or heavily charred notes — banks refer them to the RBI’s designated Issue Offices. These offices assess the extent of damage and determine whether a refund or replacement is possible.

To curb counterfeiting and fraud, businesses and cash-handling staff are urged to familiarize themselves with the security features of ₹500 notes. The RBI also recommends using counterfeit-detection tools, such as ultraviolet light, and training staff to spot fake currency. Suspicious notes should be reported to the bank or local authorities immediately.