When Govt prints, circulates and burns faulty notes worth Rs30,000 crore

Moneylife Digital Team 20 January 2016

The Nashik Security Press has reportedly burnt 30 crore currency notes of Rs1,000 denomination that had no security thread!

The Nashik unit of Indian Security Press (ISP), owned by state-run Security Printing and Minting Corporation of India (SPMCIL), has reportedly burnt 30 crore faulty notes with a denomination of Rs1,000. This has led to the suspension of five employees, including a manager and deputy manager at SPMCIL's Hoshangabad (Madhya Pradesh) unit.

According to reports, the Reserve Bank of India (RBI) through the Government of India (GoI) had placed an order with the Press to print 50 crore notes of Rs1,000 denomination. After receiving paper with security features from SPMCIL's paper mill, the ISP printed about 30 crore notes. The RBI, after receiving these notes from the ISP, distributed about 20 crore notes to several banks.

However, some people complained to RBI about the missing security thread in these new notes. Few also pointed out the upside down watermark image of Mahatma Gandhi on these notes. The Rs1,000 currency notes have a readable, windowed security thread, alternately visible on the obverse with the inscriptions ‘Bharat’ (in Hindi), ‘1000’ and ‘RBI’, but totally embedded on the reverse.

The RBI then reported this matter to SMPMCIL, whose chairman and managing director MS Rana, set up a three-member enquiry committee.

The Committee headed by TR Gowda, former general manager of ISP's Nashik unit and current in-charge of Hoshangabad unit of SPMCIL, submitted its report. This was followed by suspension of two officials, SR Vajpayee, manager and Ravindra Singh, deputy manager of SMPCIL's Hoshangabad unit. Three employees from ISP, Nashik were also suspended while six supervisors were issued a show cause notice, media reports say.

However, Press Majdoor Sangh, the employee union at Nashik, went on an agitation. On Tuesday, the union, detained Sandeep Jain, general manager of ISP, Nashik for the entire day. According to the union, no employee from Nashik is responsible for printing of faulty currency notes, as there was a fault with the security paper itself. However, the action was taken at the Finance Ministry-level and not at ISP-level, Jain had reportedly told the union leaders.

In an email reply, an official from RBI, said the matter relates with CNP Nashik, which can provide the answers. The CNP NAshik is not under the central bank's control, the official added.

RBI along with the Indian government is responsible for the design, production and overall management of the nation's currency, with an aim to ensure adequate supply of clean and genuine notes.

There are four printing presses that print and supply currency notes to the RBI. These are located at Dewas in Madhya Pradesh, Nashik in Maharashtra, Mysore in Karnataka, and Salboni in West Bengal. The Dewas and Nashik units are owned by SPMCIL, while Mysore and Salboni presses are owned by Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of the RBI.

The Indian government mints coins, which are distributed by the RBI.

Comments

User

Dr Anantha K Ramdas

1 decade ago

Interesting comments on the faulty notes and crores spent in "burning" these notes.

Can somebody recommend a suitable, reliable astrologer with track records to the RBI that they must now expedite the issue of polymer currency notes to replace the paper currency, by consulting him?

We have been talking of polymer currency notes; how in selected cities Rs 10 notes were being "market tested"; how these will outlast paper currency notes by several years; how more than 25 countries have benefited by this switch over and yet we have no firm commitment from Government when they will make the change. On the top of this, fake/counterfeit currency notes made in Pakistan have been smuggled into the country and trying the very best to ruin our economy.

Sacking a few guys just won't do; put them in jail for their lifetime and find out the left-out moles in the security press!

MG Warrier

1 decade ago

I agree with Jayaram's view. Media headlines including here, which mention notes worth Rs30,000 crore sends out a wrong alarm. It looks, the defective 'printed paper' was destroyed. Lapses need to be looked into, which reportedly the press is doing. The paper becomes 'currency' only when it is issued from RBI.

Akshay Kini

Replied to MG Warrier comment 1 decade ago

If it was only security paper I wonder how banks reported the descripency. Once the RBI sends it to banks it is currency.

MG Warrier

Replied to Akshay Kini comment 1 decade ago

From what I read in this story, I quote "The Nashik unit of Indian Security Press (ISP), owned by state-run Security Printing and Minting Corporation of India (SPMCIL), has reportedly burnt 30 crore faulty notes with a denomination of Rs1,000. This has led to the suspension of five employees, including a manager and deputy manager at SPMCIL's Hoshangabad (Madhya Pradesh) unit."
my understanding is that what was burnt had not reached RBI from the press. I have not separately verified facts. If you have, please share information.

P Jayaram

1 decade ago

Granted, the paper received was faulty, the matter should have been found out during the incoming inspection of the faulty paper.Serious oversight and quality lapse. Procedures need to be strengthened.