Irked by the number of coins you get through the day, which end up lining your wallet? It isn’t just you — thanks to the general preference for currency notes and a higher production of coins following demonetisation, the Reserve Bank of India (RBI) is now facing a serious problem of plenty.
In meeting after meeting of the Currency and Coin (C&C) Division in the Ministry of Finance, the central bank has been raising the issue of what it describes as the “reverse flow” of coins. As a result, the government is looking at alternative modes of transportation, as well as privatising the distribution of coins. Due to high indents and the slow lifting of coin consignments by the RBI, the potential for exporting coins to countries such as Brazil, Sri Lanka, and the Maldives is also being examined.
Minutes of meetings of the C&C Division accessed by The Sunday Express reveal that the RBI’s representatives have been giving an alarming picture of the coin glut but have, however, assured that whatever quantity of coins have been indented by them will now be lifted.
Minutes of a meeting held on November 22, 2018, show that the RBI has said it is now storing approximately 9 billion coins, while the projected indent given by the RBI to the Security Printing & Minting Corporation of India (SPMCIL) for the year 2019-20 is 3,400 million coins. This, incidentally is only a third of SPMCIL’s production capacity.
The minutes read, “RBI informed that presently there is a reverse flow of coins and there are approximately 9 billion pcs of coins with chest of RBI. The main issue with coins is of storage and the buildings holding
To end the glut of coins, govt mulls privatization of distribution, exports coins are on the verge of collapsing due to weight…”
The same minutes point out that should there be a “longer term reduction in the coin demand”, the indents for coins should be reduced for a longer period and that the SPMCIL can plan for either export of coins and/or a reduction of capacity. This is because the current indents for coins given by the RBI is a staggering 8,700 million pieces for the year 2020-21, and an even higher 9,800 million pieces for 2021-22.
The problem of storage of coins was also discussed at a previous Production Planning Meeting (PPM) held on October 3, 2018. The non-lifting of coins by the RBI due to a shortage of storage was discussed at the meeting.
The minutes of this meeting state: “RBI representative agreed to lift the coins as per the indent but raised the concern about insufficient space with RBI to keep stock of coins. CMD SPMCIL stated that they are exploring alternate ways for distribution of coins.”
While taking up the options for coin distribution, a “non-official” model was discussed, wherein the distribution network would be “privatized by engaging non-regulated entities”, and the government would have to bear an additional cost.
A set of minutes note, “If such an alternate distribution channel may be more efficient and increase the usage of coins in India, necessary legal changes will be brought about.”
Along with this, it was decided that the “viability” of export of coins to Brazil as well as neighbouring countries like Sri Lanka and Maldives would be examined.