How damaged banknotes cost taxpayers & disrupt ATMs

The Central Bank of Kenya (CBK) has raised concern over a growing trend that may appear harmless but carries real economic consequences: the misuse of Kenya Shilling banknotes for decorative and celebratory purposes.

From cash flower bouquets to ornamental displays, practices that damage currency are quietly costing taxpayers and disrupting everyday banking services.

According to CBK, banknotes are increasingly being folded, rolled, glued, taped, stapled or pinned to create decorative arrangements.

While visually appealing, these practices compromise the integrity of the currency. “Such practices compromise the integrity of Kenya Shilling banknotes and render them unsuitable for circulation,” the Bank noted.

Once damaged, these notes can no longer function efficiently as money, shortening their lifespan and forcing their early removal from circulation.

One of the most immediate impacts is felt by the public at automated teller machines.

Modern ATMs and cash-handling equipment rely on sensors that assess the size, texture and condition of banknotes. Notes damaged by glue, tape or staples often fail these checks.

CBK explained that the use of adhesives, pins, staples, and similar materials damages banknotes and interferes with the efficient operation of cash-handling and processing equipment, including automated teller machines (ATMs).

As a result, machines reject the notes, frustrating customers and increasing downtime for banks.

When banknotes are withdrawn prematurely, they must be replaced. Printing, transporting and securing new currency is expensive, and those costs ultimately fall on the public.

CBK warned that damaged notes lead to the premature withdrawal and replacement of currency, at an avoidable cost to the public and the Bank.

In practical terms, money spent replacing damaged notes could otherwise support public services, financial stability initiatives or currency upgrades.

What begins as a decorative gesture can therefore ripple into broader economic inefficiencies.

CBK has been careful to clarify that gifting cash itself is not prohibited. The issue lies in how the money is handled.

Beyond cost and convenience, there is also a legal dimension. Section 367 of the Penal Code prohibits the defacement or mutilation of currency notes, making such acts an offence under Kenyan law.

CBK’s reminder serves as both a warning and a call for responsible behaviour.

CBK says it will continue public sensitisation and engagement to protect the quality and usability of the Kenya Shilling.