Tuesday, November 03, 2009

On Currency notes

This post is the result of a forward SMS i got yesterday. It goes this way...

Pls don't write anything in our Indian Nationl currency notes.. Bcoz every year our govt is facing 2000 crore loss due to this.!! Pls spread it to All Indians.

I don't know how true it is but I certainly feel its a bad habit to write on anything that isnt writable. Ex: Currency Notes, Bus seats, Compound walls, lamp posts, whatever...

Well, atleast here in Bengalooru, BBMP is doing a good job in tackling the issue of illegal hoardings and writings on public walls by drawing paintings/artifacts and fining the illegals.

Lets concentrate more on currency notes for today.

Well, you might all have seen this. Drawing mustaches and beards on our infamous M. K. Gandhi, making him look like a punk such things are on a side while, writing personal messages, writing numerals on the other.

Let alone common man, even the bank officials are doing this. They count the bundle twice or thrice, after thorough checking, they'll write the count on the topmost bill. Now, whom should we blame? I've seen this in all banks including Axis, Vijaya, Corporation, HDFC, HSBC... what not?

All this made me search for information on the lifecycle of currency notes. After 10 minutes of searching, I found this interesting link from Reserve Bank of India (hereby referred RBI). I strongly suggest you all read that page to know more about Indian notes and coins. Do read it. I should thank the SMS to visit such an informational link.

After reading it, Here are the major points I inferred:

1. Actual money is just coins (Rupee coins and small coins).

2. All the banknotes/currency notes we deal with are mere readymade cheques provided by the RBI. Its like we asking the RBI governor to pay the payee the amount on the note. Its obvious. One can't carry bulky 500/1000 coins everywhere to pay up things. Technically banknotes have no value. The only advantage of a cheque might be the freedom to specify an amount which is fixed here. (Try giving it to a person outside the country, or a person who knows nothing of notes, he'll just throw it as a piece of paper)

3. Number of coins to be minted is decided by the Government of India while the number of currency notes to be printed is decided by the RBI.

4. Decision as to how many notes to be printed is taken based on the requirement for meeting the demand for banknotes due to inflation, GDP growth, replacement of soiled banknotes and reserve stock requirements. RBI also insists the Government of India in the number of coins to be minted every year.

6. We also had notes with 5000 and 10000 denominations for huge transactions which were last demonetized by 1978 (May be during Emergency??)

7. After Independence, we actually had three series of banknotes,
(i). Ashoka Pillar notes: Old notes which you might have seen, Now they've become obsolete. These were introduced in 1950 and continued till 1996.
(ii). Mahatma Gandhi series (MG series for short) produced in the period of [1996, 2005]
(iii). MG 2005 series produced since 2005 till date (2009).

8. How exactly is money transferred from RBI branches to currency chests and small coin chests.

9. Notes marked with a '*' (star/asterisk) in the number panel are actually reprinted ones, meaning notes with the serial number barring the star was already printed but was scrapped and reprinted because it was soiled/mutilated/imperfect.

Lot more...

After all this, what is the major cost of printing/reprinting of a currencynote?

1. RBI has to collect the soiled/mutilated/imperfect notes, keep track of it.
2. cost of producing the amount of paper (number of trees cut/machine cost etc)
3. Make sure that there are no notes with the same serial number. This means RBI should get the old note, scrap it and then print a new one. This might seem simple but in fact it isnt.

To be on the better side, all we can do is to lessen the number of notes getting printed every year. saving paper, saving money, saving time etc... What has RBI gotta say about it?

They say, about clean note policy [copy pasting with due respect to RBI].

G) Clean Note Policy:

Reserve Bank of India has been continuously making efforts to make good quality banknotes available to the members of public. To help RBI and banking system, the members of public are requested to ensure the following:

    • Not to staple the banknotes
    • Not to write / put rubber stamp or any other mark on the banknotes
    • Store the banknotes safely to prevent any damage

What is the harm in us following such simple norms? They are simple things if we regularise in our lives, make sthe job of the bank a bit simpler... aint it?

Here are a few guidelines I would suggest for the interested.

1. Try to store it at max in a single fold. Preferrably in your billfold or wallet (whatever you call it). Do not fold it more than once.

2. Do not staple. use rubber bands instead.

3. If you work in a counter where transactions are very frequent and you've got to know the number of notes in every bundle, Instead of writing it on the banknote itself, attach a piece of paper to the rubberband, write the count/amount on the paper instead.

4. Do not press any seal onto banknotes.

Here are a few more guidelines to prevent soiling/mutilating:

1. Before washing clothes, thoroughly check all its pockets for valuables.

2. Do not carry sharp edged things inside your billfold. This might mutilate banknotes.

3. Store banknotes in less humid places.

Please suggest more guidelines which I might have missed.


chintu said...

Thanks buddy i'm new to all this blog stuff but that was quite an effort you have put in gatherin all that info ...keep it goin.. Ha i'll spread that message wit my friends:-)

Sandesh Karanth said...

Well, Sure... spread it on... keep visiting...

Hasan said...

Great Work!

really great!
Hats off to U!!!

musheer said...

dude all i can say is u ve put lotsa effort in collectin dat all in one info .... Thank u .... Ws useful for me .....

Sandesh Karanth said...

That effort gets paid getting such comments... Thanks. Keep visiting.

Chaithu'sViews said...

gr8 effort... good to know such valuable points...

Chaithu'sViews said...

gr8 effort... good to know such alueble things abt our currency. tahnks buddy!!!!