How to Exchange Torn or Damaged Banknotes in Pakistan: What SBP Rules Say Banks Must Do
Torn, washed or burnt note? See what SBP rules say banks must accept, what a claim note is and what to do when a branch refuses. Read before you throw it away.
Short answer: Take the note to any bank branch and ask for an exchange. State Bank of Pakistan (SBP) rules fine a branch Rs 10,000 each time it refuses cut, soiled or mutilated notes. A badly damaged note may be treated as a "claim note" and sent to the SBP for a refund, which takes longer.
The Rs 1,000 note that went through the wash. The Rs 500 note torn across when a shopkeeper pulled it from a bundle. Most people throw these away or pass them on to someone else. You do not have to. Money in Pakistan still has a face value, even when it looks bad.
We read the SBP's page on banknotes and currency management, which includes its penalty structure for banks, and an SBP archive FAQ on soiled and mutilated notes. We did not walk into a branch with a torn note, so we have not tested how any single bank behaves at the counter.
Banks must accept cut, soiled and mutilated notes
SBP's penalty table for banks lists a Rs 10,000 fine per instance when a branch does not accept small denomination banknotes, or cut, soiled, mutilated and defective notes. The rule applies to every bank branch, not only to the SBP. You are allowed to ask.
The same table also lists a Rs 2,000 fine when a bank does not accept legal tender coins or does not offer a banknote and coin exchange to the public. These penalties are charged to the bank. They are not a refund to you, but they show the branch has a duty.
The penalty structure sits in Annex A of SBP's FD Circular No. 04 of 2017, dated 14 September 2017, which the SBP still shows on its currency page.
| Condition of the note | What the SBP's pages say | What to do |
|---|---|---|
| Dirty, limp, oily from heavy use | "Soiled" note, an ordinary exchange case | Ask any bank branch to change it |
| Cut fully into two pieces, vertically or horizontally | Treated as a soiled note | Bring both pieces together |
| Torn, burnt, washed, eaten by insects | "Mutilated" note, may need examination | Ask the branch for a claim note receipt |
| Less than half a note | Not payable under the note refund rules | Do not expect an exchange |
| Deliberately cut, altered or defaced | Not payable | Do not expect an exchange |
The last two rows come from an SBP archive FAQ that carries a 2004 date. It is the clearest text we could open. Treat the exact limits as guidance and ask the branch.
How to get a damaged note changed at the branch
Go to a bank branch during opening hours, join the cash counter queue and show the note to the teller. Say it is torn or soiled and ask for exchange. You do not need an account for a small exchange, but bring your CNIC.
- Keep every piece of the note. Do not tape pieces over the serial numbers.
- Go to a branch, not an ATM or a shop. Any bank branch is the right place to ask.
- Show the note at the cash counter and ask to exchange it.
- If the teller says it is a "claim note", ask for a written receipt with the date, note value and serial number.
- Ask when the branch expects an answer, and note the name of the officer.
- If the branch refuses outright, ask for the refusal in writing and go to the next step below.
Whether a note is changed on the spot is the bank's call. In a question put to the SBP, one bank described both options: exchange at the counter and report the note later, or hold the note until credit comes back from the SBP. The SBP told it to follow existing practice and inform the customer.
A claim note goes to the State Bank and takes longer
When a note is too damaged for the teller to judge, the branch treats it as a claim note. The bank does not exchange it on the spot. It sends the note to an SBP Banking Services office. The SBP says refunds are passed under the Note Refund Regulations 1963.
SBP gave this answer to a bank's question: recovery of a claim note's value depends on approval by the authorities at SBP Banking Services offices, and the bank follows the existing practice and tells the customer. The SBP page says its offices process refund cases promptly under internal procedures. It gives no number of days.
So we cannot tell you how long it will take. We would ask the branch and plan for weeks, not days, for a badly burnt or washed note.
What to do if the bank refuses your note
Ask for the refusal in writing, ask for the manager, then lodge a complaint with the bank's complaint unit. If the bank does not fix it, take it to the SBP complaint portal. Say plainly that the SBP penalty rules list cut and soiled notes.
The State Bank's consumer page tells customers to go to the bank's Complaint Management Unit first. It says banks must acknowledge a complaint within 48 hours and give a final reply within 7 working days for minor matters, and in any case within 15 days. Our guide to the SBP Sunwai complaint portal shows how to file the next step, and the Banking Mohtasib guide covers the stage after that.
Keep your complaint short. Give the date, branch, note value, the name of the officer and what was said. A calm, specific complaint gets a faster answer.
Do not rush to exchange old notes that still work
A torn note is a different matter from an old design. On 17 September 2026 the SBP said reports about the discontinuation of the Rs 10 note were baseless, and that any future change would be announced officially with time to exchange. Old notes that are intact remain valid.
We keep the facts on new designs in SBP new currency notes and old note validity. For notes that are only dirty, there is no need to wait for a new series. Exchange them now.
One more caution. Do not accept a torn note from someone and hope to exchange it later at a profit. A note that is less than half, or cut on purpose, may be worth nothing at the bank.
Common questions
Can a bank refuse a torn banknote in Pakistan?
No, not for ordinary tears. The SBP's penalty table fines a branch Rs 10,000 per instance for not accepting cut, soiled or mutilated notes.
Do I need an account to exchange a damaged note?
The SBP pages we read do not say you need one. Bring your CNIC and ask at the cash counter.
What is a claim note?
It is a heavily damaged note that needs special examination. The branch sends it to the SBP for a refund under the Note Refund Regulations 1963.
How long does a claim note refund take?
The SBP page gives no number of days. Ask the branch for a receipt and an expected date.
Will I get less than the face value?
The pages we read do not describe a deduction for payable notes. A note that is less than half is not payable.
Can I exchange notes at the State Bank itself?
The SBP archive FAQ says its Banking Services offices exchange notes and coins at their counters. Check the office timings first.
How we verified this
What we checked, where we read it, and what we could not confirm.
Last checked on Sunday 11 October 2026. We read the SBP page on banknotes and coins including its currency management penalty structure and FAQ, the SBP consumer protection page and an SBP archive FAQ on currency management. The archive document is old, and we could not open the 1963 regulations. Confirm the exact limits at the branch.
About the author
Global Affairs & Political Economy Writer
Muhammad Hatim is a book lover who started writing because he enjoys it. At Pakistan Era he writes about international relations, geopolitics and the global economy, with a particular interest in South Asia and the forces behind current events.
