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Currency presentation
The document summarizes the distribution of currency notes and coins across India by the Reserve Bank of India. It notes that India has a large population spread across a vast geographic area. The RBI distributes currency to banks through a network of issue offices and currency chests. Notes and coins are produced by mints and printing presses then transported through RBI offices, chest branches, and commercial banks to the public. The RBI faces challenges in efficiently managing the large volume and wide distribution of currency throughout India.
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Currency presentation
- 1. Reserve Bank ofIndia DISTRIBUTION OF NOTES AND COINS IN INDIA Currency Conference 2002 Honolulu, Hawaii (Some slides have been added in the presentation for clarity)
- 2. Reserve Bank ofIndia Mint Press Issue Offices Chandigarh New Delhi Jaipur Lucknow Kanpur Patna Guwahati Ahamadabad Calcutta Hyderabad Banglore Trivandrum Chennai Mumbai Byculla Bhuaneshwar Nagpur Mysore Nasik Dewas Salboni Noida Mumbai Hyderabad Calcutta Bhopal India – A Huge Country Population: 1 billion North to South: 3,200 km West to East: 3,000 km Area: 3,288,000 sq. km Per-capita Income
- 3. Reserve Bank ofIndia Distribution of Currency -Dimension (value) 0 50000 100000 150000 200000 250000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Rs.2,448 billion, i.e., US $ 49 billion currently
- 4. Reserve Bank ofIndia Distribution of Currency - Dimensions (volume) 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 41 billion pieces in 2002
- 5. Reserve Bank ofIndia Dimensions – Enormous volume of lower denominations % share of denominations 1,2,5 19% 20 2% 50 17% 100 29% 500 3% 1000 0% 10 30% 1,2,5 10 20 50 100 500 1000
- 6. Reserve Bank ofIndia Dimensions – Too little value of the lower denominations % share of denominations 1,2,5 1% 20 1% 50 15% 100 47% 500 28% 1000 3% 10 5% 1,2,5 10 20 50 100 500 1000
- 7. Reserve Bank ofIndia Agencies Involved RBI Banks (chests) MOF Govt Presses Mints Police Railways RBI's Presses
- 8. Reserve Bank ofIndia Flow of Notes & Coins Presses RBI Offices Chest branches Public NOTES 4 Mints 4 mint-linked RBI Offices Chest branches & RBI Offices Public COINS
- 9. Reserve Bank ofIndia Network of Currency Chests RBI is located only in 18 places for currency operations Distribution of notes and coins throughout the country is done through designated bank branches, called chests Chest is a receptacle in a commercial bank to store notes and coins on behalf of the Reserve Bank Deposit into chest leads to credit of the commercial bank’s account and withdrawal, debit
- 10. Reserve Bank ofIndia More on Currency Chest Meets currency requirement of public Withdraws unfit notes Exchange facility from one denomination to another Payment requirement of the Government Exchange of mutilated notes Avoids frequent movement of cash Chest branch operates with minimum cash balance
- 11. Reserve Bank ofIndia Currency Chest Mechanism Net deposit /withdrawal of notes and coins at the chest is reported on daily basis to parent Issue Office Overall deposit or withdrawal leads to credit or debit of bank’s account in RBI Net withdrawal from chests means expansion of currency and deposits means contraction Notes in circulation being the liability of RBI, it adjusts its asset-liability position centrally for such expansion or contraction
- 12. Reserve Bank ofIndia Movement of Treasure Specially built trucks for short distance (journey completed during the day) Railways for long distance Guarded by police Remittance accompanied by officials of RBI to chests Further movement from chest to a branch done by the bank concerned
- 13. Reserve Bank ofIndia How much to print & mint Incremental needs Replacement needs Reserve Needs Statistical analysis and long-term forecast Printing/minting allocated between the presses/mints and delivery schedule decided in advance
- 14. Reserve Bank ofIndia Capacity of Presses & Mints Total annual capacity of Presses: 18 bn Can print up to 28 bn with two shifts Total minting capacity: 4,700 mn RBI’s annual needs: Notes: about 12,000 mn pieces Coins: about 5,000 mn pieces
- 15. Reserve Bank ofIndia Challenges of Distribution Size of the country and volume of currency Security and availability of railway wagons when required Political boundaries defining jurisdiction of Issue Offices lead to sub-optimal logistics Cross movement of currency is unavoidable
- 16. Reserve Bank ofIndia Mint Press Issue Offices Chandigarh New Delhi Jaipur Lucknow Kanpur Patna Guwahati Ahamadabad Calcutta Hyderabad Banglore Trivandrum Chennai Mumbai Byculla Bhuaneshwar Nagpur Mysore Nasik Dewas Salboni Noida Mumbai Hyderabad Calcutta Bhopal Cross-movement of Currency Fresh Notes/Coins from Press/Mint pass on to the banks/public only through RBI offices – hence cross- movement
- 17. Reserve Bank ofIndia Challenges of Distribution (contd) Security- police is preoccupied with other activities of priority Private security is unavailable and not favoured Transport through railways involves enormous coordination of logistics Privatization of transport – introduced recently in respect of coins only
- 18. Reserve Bank ofIndia Supply Bottleneck Scarce Printing capacity for over a decade till 1999 Pace of replacement of old currency was slow leading to deteriorating quality Inefficiencies in arranging return flow of notes as chests hardly sorted notes as fit/unfit Temporary respite through imports in 1997-98 (3.6 bn pieces)
- 19. Reserve Bank ofIndia Problem of plenty - the present transition Enough printing capacity since 1999 Governor announces clean note policy All RBI offices receive enough fresh note supply; vaults full with old and new notes Chests overflowing with soiled/unsorted notes An apparent impasse
- 20. Reserve Bank ofIndia Breaking the impasse Capacity to process and destroy notes in RBI needed to increase so that Stock of soiled notes within RBI could be destroyed releasing vault space Expeditious withdrawal of notes from chests could be initiated
- 21. Reserve Bank ofIndia Breaking the impasse 0 200 400 600 800 1000 1200 2001 July 2001 Sept 2001 Nov 2002 Jan 2002 Mar Special methods announced enabling higher output in processing Installation of processing systems (BPS 1060S) in 9 Offices Shredding & briquetting in all offices Million pieces
- 22. Reserve Bank ofIndia Coin Distribution – Some new steps Mobile van at city centres Distribution through milk cooperatives in the state of Gujarat Through Post Offices in rural areas – a beginning made in Maharashtra Coin dispensing machines in public places and bank branches Issue of notes of lower denominations to bulk users by RBI is compulsorily accompanied by issue of some part in coins
- 23. Reserve Bank ofIndia Early results Clean Note Policy made a success Currency processing systems have stabilized in operation Modernization of mints show results Import of coins and temporary printing of Rs.5 notes has improved the supply position
- 24. Reserve Bank ofIndia Meeting the challenge of distribution The volume should be contained within sustainable levels by Shift in printing from lower to next higher denominations (a perceptible shift already visible) Coinise Rs.10 denomination Try out other substrate for printing – coating of paper or polymer, although currently there is no plan to introduce polymer notes. Banks have been compelled to dispense with the age-old practice of stapling of notes Sorting of notes to get decentralized through banks or processing centres
- 25. Reserve Bank ofIndia Thank you