Have Rs 2000 notes? Take care, here is a reason to worry

Customers are facing a strange situation at banks when they go to exchange torn or soiled Rs 2000 currency notes. The banks are refusing to exchange the soiled notes and are quoting the rule book to justify their stance to customers, saying the Reserve Bank of India (RBI) does not have any rules in place that require banks to exchange torn Rs 2,000 notes. Bank officials manning cash counters are turning away customers saying that they should "hold on to their torn Rs 2,000 notes till RBI comes out with a policy to exchange such notes," said a Business Standard report.
 
The Reserve Bank of India (Note Refund) Rules 2009 on mutilated notes is clear. The rules regarding mutilated notes states, "if the area of the single largest undivided piece of the mutilated note of rupees fifty, rupees one hundred, rupees five hundred and rupees one thousand note presented is at least 70, 75, 80 and 84 square centimeters, respectively, the same may be paid for full value.” The rules further state if the mutilated notes presented to banks is less than these specifications, banks need to pay only half the value on the same.
 
Since these rules pertained to the pre-demonetisation era, banks reportedly seem to be reluctant to apply the rules that pertained to the Rs 1,000 note to the new Rs 2,000 note. 
 
On July 3, 2017, the RBI amended its note exchange rules stating, "In order to facilitate quicker exchange facilities, the definition of soiled note has been expanded. A 'soiled note' means a note which has become dirty due to normal wear and tear and also includes a two piece note pasted together wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing. These notes should be accepted over bank counters in payment of Government dues and for credit to accounts of the public maintained with banks.”

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RBI's new rules clearly define 'a soiled note' irrespective of their denomination, but banks seem to be interpreting it in a way to exclude the Rs 2,000 note from the definition. The report said that the reason for this behaviour of banks is that the RBI's new rules which were announced after the note-ban episode do not specify the Rs 2,000 note in particular.