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Chapter III — Central Banking Functions

Section 28: Recovery of notes lost, stolen, mutilated or imperfect

Reviewed by CA Nikhil Gupta · Last reviewed 18 September 2026

Section 28 authorises RBI to make rules, with Central Government sanction, governing the circumstances and conditions in which value may be refunded for lost, stolen, mutilated or imperfect bank notes, and protects RBI from compulsory payment outside the rules.

Operative provisionOfficial sources mappedProvision-specific decode

Finin2min - Section 28 in 2 minutes

Legal effectSection 28 authorises RBI to make rules, with Central Government sanction, governing the circumstances and conditions in which value may be refunded for lost, stolen, mutilated or imperfect bank notes, and protects RBI from compulsory payment outside the rules.
Operative ruleThe section creates a discretionary/rules-based refund framework rather than an unconditional debt claim for every damaged note.
Connected lawUse the current RBI Note Refund Rules and operational directions for denomination, area, authenticity and mutilation tests.
File evidenceFor a claim, record the note pieces, identifiers where available, extent of damage and the rule applied by the receiving branch.

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 28 authorises RBI to make rules, with Central Government sanction, governing the circumstances and conditions in which value may be refunded for lost, stolen, mutilated or imperfect bank notes, and protects RBI from compulsory payment outside the rules.

Operative limb

The section creates a discretionary/rules-based refund framework rather than an unconditional debt claim for every damaged note.

Legal boundary

Use the current RBI Note Refund Rules and operational directions for denomination, area, authenticity and mutilation tests.

Worked practical example

Facts. A customer presenting half of a damaged note should be assessed under the current refund-rule criteria; Section 28 alone does not state the payable percentage.

Compliance points and common mistakes

Connected provisions and instruments

Section 28 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 28?

Recovery of notes lost, stolen, mutilated or imperfect: Section 28 authorises RBI to make rules, with Central Government sanction, governing the circumstances and conditions in which value may be refunded for lost, stolen, mutilated or imperfect bank notes, and protects RBI from compulsory payment outside the rules.

Which statutory limb should be checked first?

Scope - Section 28 authorises RBI to make rules, with Central Government sanction, governing the circumstances and conditions in which value may be refunded for lost, stolen, mutilated or imperfect bank notes, and protects RBI from compulsory payment outside the rules.

What is the next legal boundary?

Operative limb - The section creates a discretionary/rules-based refund framework rather than an unconditional debt claim for every damaged note.

What record should support the conclusion?

Section 28 file evidence: For a claim, record the note pieces, identifiers where available, extent of damage and the rule applied by the receiving branch.

Primary sources

Source control for Section 28: 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.