New Policy Ensures Exchange of Worn, Torn, or Defective Currency

Bangladesh Bank has issued new regulations for the exchange of damaged, torn, or otherwise unfit currency notes, providing clarity on how customers can reclaim the full value of their money. Under the updated rules, any note with more than 90 per cent of its original condition intact will be exchanged at its full face value at any bank branch across the country.

However, notes with 90 per cent or less intact, or those heavily soiled, will not be eligible for immediate exchange at bank counters. In such cases, customers must submit the notes to their bank branch, which will forward them to Bangladesh Bank for review. Subject to the central bank’s approval, the redemption process may take up to eight weeks.

The policy, part of the “New Note Refund Regulations” first issued on 9 October, was reinforced last Monday to standardise procedures for all banks. Following the temporary suspension of note exchange services, the central bank has emphasised that every branch of every bank must now provide this service to the public.

Exchange Procedures for Banks

All bank branches are instructed to accept damaged or unfit notes for exchange. Banks failing to provide these services may face regulatory action. The regulations categorise notes into five distinct classes based on usability and condition:

1. Re-circulatable Notes – fit for further circulation.

2. Non-circulatable Notes – unfit for regular use but exchangeable.

3. Torn, Damaged, or Defective Notes – partially usable notes eligible for exchange.

4. Claims Notes – severely degraded notes requiring central bank review.

5. Burnt Notes – notes destroyed by fire, requiring direct application to Bangladesh Bank.

For torn or damaged notes, if more than 90 per cent of the note remains, the full value must be reimbursed immediately. Notes with 90 per cent or less intact, or excessively soiled notes, are classified as “claims notes.” Their redemption requires submission to the central bank, which will determine eligibility and the amount payable, within a maximum of eight weeks.

Burnt notes cannot be exchanged at regular bank counters. Customers must apply to any Bangladesh Bank branch, and the central bank will conduct verification before authorising payment.

The circular also mandates that all banks prominently display notices indicating that they provide exchange services for torn, damaged, or claims notes. Submission of counterfeit or artificially reconstructed notes will lead to action under applicable law.

Summary of New Note Exchange Guidelines