Government Mints have been asked to stop production of coins following Reserve Bank of India (RBI) inability to lift the coins from these production units. Sources said this could be partly because of demonetisation and increase in digital transaction that the demands for coins has dipped.
On Wednesday, government-owned Security Printing and Minting Corporation of India Ltd (SPMCIL) issued direction to “immediately stop production of circulation coins,” as they ran out of storage capacity. SPMCIL runs four minting units in Mumbai, Kolkata, Hyderabad and Noida.
An e-mail query sent to the RBI remained unanswered. In its communication reviewed by The Indian Express, SPCMIL said: “The competent authority has decided to stop the production of circulation coins with immediate effect. The compliance report in this regards may be submitted in this regard.” The letter further stated that as on January 8, 2018, “the inventory of 2,528 million pieces of circulation coins is lying across mints.”
Officials familiar with the SPCMIL operations told The Indian Express, the RBI has placed order for over 13 million pieces of coins in 2016-17 while for 2017-18, they had estimated 16 million pieces. “We had minted nearly 7,800 million pieces and it is for the first time, there has been slump in demand. This could be attributed as negative impact of demonetisation,” the official added.
Till 2016, India Government Mints (IGM) were unable to meet the demands of the RBI as can be seen from the reply given by finance minister Arun Jaitley before the Rajya Sabha on May 10, 2016: “there has been a shortfall of coins supplied by the government vis-à-vis indent placed by the RBI.”
In a written reply, he said, “for 2013-14, RBI demanded 12,033 million pieces coins (mpcs) while it received only 7,677 mpcs. In 2014-15, the central banker indented 13,840 mpcs but got only 7,907 mpcs and for 2015-16 the RBI indented 14,240 mpcs but got only 9,258 mpcs.”
Jaitley further informed Rajya Sabha that “the capacity expansion programme of IGMs to produce circulation coins up to 18,000 million pieces has been taken up.”
Officials further said that they have noticed this trend for the first time where despite the RBI’s prediction of increase in volume of coins in circulation, the Central banker is not lifting the cons from government’s mints.
In November 2016, the RBI came out with a circular scotching the rumour that coins are being withdrawn. In another written reply to Parliament question by Samajwadi Party MP Naresh Agarwal, during the winter session, MoS (finance) Pon Radhakrishnan stated, “At present coins of Rs 1, 2, 5, 10 denominations are widely circulated in the market in addition to the small denomination coin of 50 paise, all of which are legal tender.”