August 11, 2016 1:07:40 am
Thieves cut through the roof of a railway coach in Tamil Nadu on Monday to escape with soiled notes worth Rs 5.75 cr belonging to India’s central bank. As the police investigate, SHAJI VIKRAMAN tells the story of how the currency travels from the presses to the RBI and banks, and to your hands.
Where are currency notes printed in India? Are there separate facilities for the production of paper and metal currency?
Notes are printed at four locations. The Security Printing and Minting Corporation of India Limited (SPMCIL), owned by the Government of India, has facilities in Nashik, Maharashtra, and Dewas, Madhya Pradesh, while the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a fully-owned subsidiary of the Reserve Bank of India, has a press each at Mysore in Karnataka and Salboni in West Bengal. The two BRBNMPL units together produce 16 billion pieces of currency notes annually; the SPMCIL, which is under the administrative control of the Department of Economic Affairs in the Ministry of Finance accounts for 40% of the notes circulated. The coins come from separate mints run by the Corporation in Mumbai, Hyderabad, Kolkata and Noida.
Which areas do each of these facilities serve? On what basis are these areas decided?
Each currency note press or mint typically serves areas close to its own geographical location. Thus, the press in Mysore will cater to the RBI and to banks spread across the South, while the Nashik press handles the demand in the Western region. The Salboni unit serves the Eastern region and the Dewas unit, Central India. The intention is to ensure that notes are not transported over long distances, and the attendant risks are reduced.
So, how does the currency’s journey from the printing facilities deeper into India progress? How does the RBI decide how — and how much — to send, and where?
The RBI finalises a yearly allotment for currency notes, and then puts it up to the printing presses on the basis of several factors including potential GDP growth for the next year. In the absence of a network running across the length and breadth of the country, the RBI deals with authorised banks — mainly public sector banks, and some private banks — under an agreement to handle the needs of currency in specific areas.
The printed currency is transported to over 20 offices of the RBI — its issue departments as they are called — countrywide, and to some banks that have what are called currency chests to handle remittances. One estimate is that there are over 4,000 currency chests across the country. So, for instance, RBI’s Nagpur office could send cash to the currency chest of the State Bank of India in Buldhana district, and SBI would then cater to the needs of currency for that region on behalf of the central bank. All banks, including co-operative banks in the area, would approach SBI for their currency requirements. Banks that have currency chests are paid a small sum for this service that they provide.
Interestingly, when these currency remittances are made, and sent to the issue departments of the RBI across the country, they are stored in fresh note vaults. At that point, a note is just a piece of paper from an accounting point of view, or in value. When a bank approaches the RBI with a demand for currency notes, the banking department of the RBI’s regional office, which is in charge of providing notes to the public for circulation, provides eligible securities to the issue department to back this. Only after this internal accounting by the RBI has been completed are these fresh currency notes treated as in circulation.
And what sort of transportation facilities and security cover does the money get as it travels?
There are clearly laid-down rules for the transportation and handling of currency notes. It is always secret, and under adequate protection from the police of various states. The RBI pays the police for the security cover. Currency can be transported either by trains or by road — when going by trains, transportation is usually by the slower trains that allow wagons to be loaded, unlike express trains. The SPMCIL has captive railway treasury wagons or carriages for transporting treasury consignments.
Okay, and how much money typically moves in each consignment?
It depends on the demand in an area. There is no break-up for branches or ATMs; these are decided by banks in an area, depending on demand.
And how are soiled notes — of the kind that were stolen from the Salem Express on Monday night — transported?
The process is the same as for fresh notes; police always provide security cover. In this case, the thieves seem to have simply outsmarted the cops. On Wednesday, investigators were suggesting the possibility of an inside job involving either bank or police officials, and executed with the help of people with specialised technical skills.
Okay, but what happens to the soiled notes that are withdrawn from circulation?
Soiled notes that are found to be unfit for circulation are sent by banks from various parts of the country to the regional offices of the RBI where they are processed on high-speed currency verification machines that take into account the quantity and quality, before destroying the notes online. Once a soiled note is transported back to the RBI, it is again just a piece of paper without any value. So, technically, the soiled notes that were being transported from Salem had no value — but should they find their way back into circulation, they will be legal tender again. It isn’t as though the RBI has a system of replacing an equivalent value of soiled notes. Both the printing of new currency and the withdrawal of soiled notes are ongoing processes.
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