Despite the Reserve Bank of India (RBI) issuing advisories and even threatening penal action if banks did not accept coins for public distribution, the Finance Ministry has reviewed complaints that many banks as well as several states have persisted with such “non acceptance”.
The subject of demand deficit and non-acceptance of coins by several banks and thereon, in several states was taken up by a high-level meeting chaired by then Finance Secretary Subhash Chandra Garg on May 22, 2019. Minutes of the meeting, accessed by The Indian Express, reveal that shortage of storage space and the circulation of fake coins, especially Rs 10 coins, have been cited as the main reasons for the problem.
The banks named by officials as being the ones which are not accepting coins are ICICI, HDFC, SBI and PNB. The minutes note, “It has been reported that even banks such as SBI, HDFC, PNB and ICICI are not accepting coins. The reason cited by these banks are space constraint and branch limit issue. Some banks have also mentioned shortage of staff for not taking coins…” The states which were specifically mentioned for being the ones from where grievances have been received for non-acceptance of coins are Uttar Pradesh, Odisha, Karnataka and West Bengal. There are detailed notes about how in Delhi, traders, shopkeepers and common people have been rejecting variants of Rs 10, mostly thinking the coins were fake. The situation, the Finance Ministry has stated, is the same in most of the North-Eastern states, with this logic being recorded, “the reason people generally mentioned is no one is accepting it, so we are also not accepting it …”
At the high-level meeting, the previous attempts of the RBI which directed all banks to immediately instruct their branches to accept coins of all denominations tendered at their branches were also taken up. The minutes read, “the RBI has been receiving complaints about non-acceptance of coins by bank branches. Such denial of service has further induced refusal on part of shopkeepers and small traders, etc to accept coins as payment for goods sold and services rendered causing inconvenience to the public at large…”
Almost identical instructions had been issued by the RBI to the top brass of all banks on February 15 last year wherein they were asked to tell all their branches to accept all coins and that any non-compliance could call for action against the banks, including penal measures. As reported earlier, (The Indian Express, April 14, 2019), at an earlier meeting in the Finance Ministry on the same subject, the RBI had reported that there was a “reverse flow” of coins and that the buildings holding the coins for the central bank were now “on the verge of collapse due to weight.”
At this meeting privatisation of distribution methods and exports were discussed as options to end the coin glut.