Polymer notes would reduce costs and be a challenge to counterfeiters
Thanks to the RTI Right to Information) application submitted by activist Subhash
Agrawal, it is now public knowledge that printing small currency note costs big money! It costs a good 10% of the face value to print Rs10 note that gets soiled in no time, because of its high velocity of usage. However, it costs less for higher denominations.
What is important, however, is the tragic admission by Reserve Bank of India (RBI) that there is a 95% increase in counterfeit notes in the country over the past five years, most of which, regrettably, have come via Pakistan, and smuggled through the land borders of Nepal, Bangladesh and of course Pakistan. The smuggled counterfeit
currency notes are of higher denominations, mostly in Rs500 and Rs1,000.
If polymer bank notes are introduced in India, this will eliminate the backlog of unusable worn out bank notes and combat counterfeiting menace.
RBI, according to data available, had initial plans to introduce one billion Rs10 notes “before the end of 2010”. It is not clear as to what has caused this two-year delay so far, as no specific date has been announced for the introduction, even on a pilot basis. However, even assuming one billion Rs10 polymer notes are introduced this year to
the market, balance of the currency, some 95% of the notes in circulation, will continue to be made with traditional cotton bank note paper!
Practically, a quarter century ago, polymer note technology was first developed by Australia which introduced the currency in 1988 and it became the first country in the world to have a complete series of polymer notes by 1996. These polymer notes offer greater security against counterfeiting, last four times longer than the conventional paper notes and are easily recyclable.
It is Note Printing Australia, a wholly-owned subsidiary of the Reserve Bank of Australia that prints these polymer notes for a host of other countries as well, including Bangladesh, Brunei, Chile, Indonesia, Kuwait, Malaysia, Mexico, Nepal, New Zealand, Singapore, Sri Lanka and others.
Considering the volume of Indian currency notes that is in circulation, and bearing in mind the aspirations to become an international currency, what the RBI plans to do, in terms of bringing in the technology into the country so that it can become self-sufficient rather than be an importer are factors that come to our minds, but which are unclear at this stage.
It seems that RBI is conducting some field trials, presumably with Rs10 polymer notes at Mysore, Kochi, Jaipur, Shimla and Bhubaneswar, chosen for their varied geographical locations and climatic conditions, according to the press release as a sequel to Subhash Agarwal’s RTI. However, if this trial is already on, it has been done without fanfare and even those handling these notes may not be in the know of things. Proper and due publicity are essential elements that would elicit intelligent response.
In any case, it is now imperative that polymer rupee notes be introduced without any further delay. There ought to be even more greater urgency in bringing out Rs500 and Rs1,000 value polymer notes as this will be first major step to stop counterfeiting. If it makes economic sense, and minting capacity is available, both Rs5 and Rs10 denominations be wholly made in coins, and paper currency be completely eliminated. If need be, a Rs 25 polymer note can be introduced at a later stage.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)
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