Chapter III — Central Banking Functions

Section 27: Re-issue of notes

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 27 restricts re-issue of bank notes that are torn, defaced or excessively soiled, subject to the statutory standard and RBI's operational rules.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 27 in 2 minutes

Legal effectSection 27 restricts re-issue of bank notes that are torn, defaced or excessively soiled, subject to the statutory standard and RBI's operational rules.

Operative ruleThe provision protects currency quality and works with RBI's note-refund/exchange framework for damaged notes.

Connected lawA note that cannot be re-issued is not necessarily valueless; refund/exchange entitlement is a separate question under Section 28 and applicable rules.

File evidenceBranch procedures should distinguish fitness for re-issue from entitlement to exchange/refund.

Statutory structure and clause / subsection decode

This map separates the operative limbs of this provision so thresholds, powers, conditions and exceptions are not collapsed into a single summary.

Scope

Section 27 restricts re-issue of bank notes that are torn, defaced or excessively soiled, subject to the statutory standard and RBI's operational rules.

Operative limb

The provision protects currency quality and works with RBI's note-refund/exchange framework for damaged notes.

Legal boundary

A note that cannot be re-issued is not necessarily valueless; refund/exchange entitlement is a separate question under Section 28 and applicable rules.

Worked practical example

Facts. A heavily soiled note may have to be withdrawn from circulation even though the holder can still receive value under the applicable note-refund rules.

Compliance points and common mistakes

Do not decide the issue from the heading alone. Map the facts to the operative words of Section 27 and to each relevant subsection, clause, proviso or explanation shown above.
Keep the statutory question separate from the operational overlay. A note that cannot be re-issued is not necessarily valueless; refund/exchange entitlement is a separate question under Section 28 and applicable rules.
Do not convert an exception, exemption or discretionary RBI/Government power into an automatic entitlement. Record the authority, conditions and effective date.
Where the provision is historical, omitted or repealed, state that status prominently and do not present it as a current compliance obligation.

Connected provisions and instruments

Section 27 has no universal instrument dependency in this package. Add an RBI circular or direction only when its subject, entity and effective date cover the issue being analysed.

Questions and answers

What is the purpose of Section 27?

Re-issue of notes: Section 27 restricts re-issue of bank notes that are torn, defaced or excessively soiled, subject to the statutory standard and RBI's operational rules.

Which statutory limb should be checked first?

Scope - Section 27 restricts re-issue of bank notes that are torn, defaced or excessively soiled, subject to the statutory standard and RBI's operational rules.

What is the next legal boundary?

Operative limb - The provision protects currency quality and works with RBI's note-refund/exchange framework for damaged notes.

What record should support the conclusion?

Section 27 file evidence: Branch procedures should distinguish fitness for re-issue from entitlement to exchange/refund.

Primary sources

Source control for Section 27: use the official consolidated RBI Act for the statutory text and footnotes, then separately reconcile any post-Finance Act 2022 amendment, commencement notification or RBI instrument relevant to the event date.