Why Banks are not accepting coins?

We have come across many people complaining that many banks are not accepting the coins. Common people who tender coins, specially the ones who have small amounts to deposit are many a times turned back saying the banks are not accepting the coins. Even small merchants have also been denied taking the coins and hence, they do not accept coins from the customers.

As of in India, there are Rs. 1, Rs. 2, Rs. 5 and Rs. 10 coins and all of these are legal tenders in India as per RBI guidelines. There are several designs for each of these denominations. But, Rs. 10 is a special case where they are not being accepted by most of the people (including merchants).

Why small denomination coins are not accepted?

One of the major reasons we have understood why banks do not accept small denominations (such as Rs. 1 and Rs. 2 coins) is because of storage concerns. Accepting coins means that they have to be counted while accepting and then later they require lot of space and generally are heavy when stored in large quantities. Hence, these logistic issues become nightmare for these banks and in turn means lots of operational inefficiencies.

And, when merchants are turned back by the banks, merchants do not accept the coins from general public as they too are faced with the same logistic issues. It becomes a vicious circle in this way and people get stuck with lots of coins.

Why merchants and general public are not accepting Rs. 10 coins?

In India, as of now there are at least 14 designs of Rs. 10 coins are in circulation which are all legal tenders. Here are a few of these designs:

Rs. 10 Design# 1 and Design# 2
Design# 3 – Mata Vaishno Devi Shrine Coin
Design# 4

From the above, the major problem is being faced with the Design# 2, the one that does not have new Rupee symbol ‘₹’. But, believe it or not, this is a legal tender. It is just that because someone thinks it is not a genuine coin and some people stop using it, the ones who are holding face the problem and in turn stop accepting themselves and the problem snow-balls into a big problem.

What is RBI’s mandate to bank for accepting coins?

The Reserve Bank of India (RBI) has issued multiple notifications / circulars to the banks to accept the coins from all customers and should in no case (unless they are actually counterfeit) should deny accepting the coins. Here is the latest circular issued on 26th June 2019 which clearly states:

“…it was advised that none of the bank branches should refuse to accept small denomination notes and / or coins tendered at their counters. However, Reserve Bank continues to receive complaints about non-acceptance of coins by bank branches. Such denial of service has reportedly, in turn, led to refusal on the part of shopkeepers and small traders, etc., to accept coins as payment for goods sold and services rendered causing inconvenience to the public at large. You are, therefore, once again advised to immediately direct all your branches to accept coins of all denominations tendered at their counters either for exchange or for deposit in accounts.”

Source: RBI circular titled “Acceptance of coins” dated June 26, 2019 via www.rbi.org.in

Basis the above one should know that the banks are supposed to accept all designs of Rs. 10 coins. And, if anyone is still facing this issue, the are probable steps one can take

  • Put a complaint to Bank Manager about reluctant cashier / teller if they are not accepting the coins
  • If the Bank Manager is helpful, put a complaint to the Bank’s head office. Banks generally have dedicated departments to handle complaints
  • In case the above does not work there is a facility to file a complaint with Banking Ombudsman and the RBI

As for shopkeepers not accepting coins the one thing you should do is to educate them about the issue. It is more a case of unawareness and not knowing what are their rights in terms of depositing coins at the banks. The more awareness will spread, lesser we will face the issue of shopkeepers not accepting the coins.

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