The Pune Mahanagar Parivahan Mahamandal Limited (PMPML) has an average daily revenue of about Rs 1.5 crore. Of this amount, which is earned from sale of tickets and passes, about one to two per cent comes in the form of loose change. The transport body collects about Rs 1.5 to 2 lakh in the form of coins of various denominations every day.
The PMPML’s bank — the Central Bank of India — recently said it may not accept all the loose change that the transport body wants to deposit every day. It cited a July 2017 circular issued by the Reserve Bank of India (RBI), that the bank may only accept a maximum Rs 1,000 in the form of loose change per day from a client.
What does the RBI circular state?
The RBI issues a ‘master circular’ about the ‘Facility of Exchange of Notes and Coins’ periodically, laying down the rules and responsibilities for citizens as well as banks for use of currency notes and coins, as well as their exchange, including in cases of defacement, damage or soiling. The directions pertaining to usage of coins as legal tender and their exchange by banks largely draw from The Coinage Act, 2011.
The latest ‘Master Circular on Facility of Exchange of Notes and Coins’, issued on July 3, 2017 by RBI, slightly changes the rules laid down by earlier annual ‘master circulars’ pertaining to exchange of coins. Instead of directing the banks ‘to accept all the coins of all denominations which are legal tender.. from any member of public without any restriction and pay the value in notes,” as it did until July 2017, the latest circular laid down rules about the maximum sum for which various coins can be accepted or exchanged by banks.
As per Section 1 (iii) of the circular, “The coins issued under the authority of section 4 shall be a legal tender in payment or on account, in case of-(a) a coin of any denomination not lower than Re 1, for any sum not exceeding one thousand rupees; (b) a half-rupee coin, for any sum not exceeding Rs 10; (c) any other coin, for any sum not exceeding Re 1: provided that the coin has not been defaced and has not lost weight so as to be less than such weight as may be prescribed in its case.”
This slight change in the circular has enabled banks to turn away customers who may want to make a deposit with a considerable portion in loose coins. Though the cicular was issued last year, in Pune, the Central Bank of India has recently started citing these directives to turn away PMPML’s loose change.
Who does the directive affect the most?
The circular, if strictly adhered to by the banks, affects businesses and services which deal with items of small value, such as intracity transport, paan stalls, confectionery shops, snack centres and tea stalls, among others.
Last year, the issue of surplus loose change had caused an emergency of sorts in Kanpur, with traders’ association holding protests and calling upon Prime Minister Narendra Modi to intervene in the matter. As per one estimate, over Rs 100 crore in coins had been accumulated in Kanpur, which the banks had refused to accept from the traders citing the same RBI circular.
In Pune, only PMPML has come out to report the issue it is facing over the loose change and the bank’s refusal to accept it. Other transport bodies in the city, such as the Maharashtra State Road Transport Corporation (MSRTC) and Indian Railways, told Pune Newsline that they hadn’t faced any such issues. “At the Pune railway station ticket counters, we receive an average of Rs 35-40 lakh in cash, which is deposited in the bank account every day. At the end of the day, we are left with little change in coins. When I checked our transaction with banks for Friday, of the Rs 35 lakh that was deposited with the bank, there was only one Rs 5 coin. On Thursday, of Rs 39 lakh, only Rs 8 was in coins. I was told that the coins that are received from customers are often returned to others as part of the transactions,” said Sanjay Kumar, assistant commercial manager, Pune Division.
At Shivajinagar depot of MSRTC, officials said they receive an average daily revenue of Rs 30 lakh, of which less than Rs 1,000 is in coins.
What do banks say?
Officials with nationalised banks in the city said they usually don’t refuse to accept change from clients, especially if it came from loyal customers who had been the bank for years. However, they said, if the currency chest refused to accept cash from the branch, the staffers didn’t have an option but to refuse to accept the small change from the customer.
“Most of the currency chests are full of cash and accommodating loose change, which takes up a large amount of space, is a major challenge for them. Currency chests are reluctant to accept large amounts of loose change from branches, which in turn refuse to do so from customers. The RBI’s July 2017 circular has enabled them to do so,” said an official of the Central Bank of India.
What can the PMPML do?
Senior PMPML officials, including Chairperson and Managing Director Nayana Gunde, have held meetings with senior officials of the Central Bank of India and requested them to resolve the issue, as the bank’s refusal to accept change was causing great trouble for the transport body. PMPML has also written to RBI officials over the issue.
As PMPML is one of the bank’s major clients, and deposits an average of Rs 45 crore every month, the bank is likely to find a way to accommodate the transport body’s request eventually. “We have been told that the bank is planning to move the loose cash to its currency chest, so that they can accept the change from PMPML like it used to do in the past,” said PMPML officials.
Meanwhile, as much as Rs 20 lakh in coins has piled up at PMPML’s 13 depots in the last fortnight.