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distribution of notes and coins in india

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distribution of notes and coins in india
Recent Technological Developments in
Indian Banking
(Currency Management)
Vepa Kamesam
Deputy Governor
Reserve Bank of India
at
Central Bank of Sri Lanka, Colombo
on August 20, 2003
India – A Huge Country
Jammu
Chandigarh
Noida
New Delhi
Jaipur
Lucknow
Guwahati
Kanpur
Bhopal
Ahamadabad
Patna
Salboni
Dewas
Kolkata
Population: 1 billion
Nagpur
Mumbai
Nasik
Bhuaneshwar
Mumbai
Belapur
North to South: 3,200 km
Hyderabad
West to East: 3,000 km
Hyderabad
Press
Mysore
Banglore
Chennai
Area: 3,288,000 sq. km
Mint
Issue Offices
Trivandrum
Reserve Bank of India
2
Circulation of Currency –
Dimension (value)
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
300000
250000
200000
150000
100000
50000
0
Reserve Bank of India
3
Circulation of Currency –
Dimensions (volume)
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Reserve Bank of India
4
Dimensions –
Enormous volume of lower
denominations
% share of denominations
1000
0%
500
5%
1,2,5
15%
10
25%
100
31%
50
19%
20
5%
1,2,5
10
20
50
100
500
1000
As on April 2003
Reserve Bank of India
5
Dimensions –
Too little value of the lower
denominations
% share of denominations
1000
6%
1,2,5
1%
10
3%
20
1%
50
13%
500
35%
As on April 2003
100
41%
Reserve Bank of India
1,2,5
10
20
50
100
500
1000
6
Agencies Involved
Reserve Bank of India
7
Flow of Notes & Coins
NOTES
Chest branches
Public
COINS
Chest branches & RBI
Offices
Public
RBI Offices
4 mint-linked RBI Offices
Presses
4 Mints
Reserve Bank of India
8
Movement of Treasure
Secured Vehicles by road
Railways where connections available
Guarded by state armed police
Remittance accompanied by Bank’s Staff
Reserve Bank of India
9
Movement of Treasure – contd.
Further movement from chest to a branch
done by the bank concerned
Out sourcing of coin remittance through
private transport operators
Distribution of coins through Post Offices
and state transport authorities in addition to
banks
Reserve Bank of India
10
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
Reserve Bank of India
11
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:
Coins:
about 12,000 mn pieces
about 4,000 mn pieces
Reserve Bank of India
12
Challenges of Distribution
Size of the country and volume of currency
Political boundaries defining jurisdiction of
Issue Offices lead to sub-optimal logistics
Security considerations
Reserve Bank of India
13
Cross-movement of Currency
Jammu
Chandigarh
Noida
New Delhi
Jaipur
Lucknow
Guwahati
Kanpur
Bhopal
Ahamadabad
Patna
Salboni
Dewas
Calcutta
Kolkata
Nagpur
Mumbai
Nasik
Bhuaneshwar
Mumbai
Belapur
Hyderabad
Hyderabad
Mysore
Banglore
Chennai
Fresh Notes/Coins from
Press/Mint pass on to the
Press
banks/public only through
RBI offices – hence crossMint
Issue Offices movement
Trivandrum
Reserve Bank of India
14
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
Reserve Bank of India
15
Problem of plenty - the present transition
Enough printing capacity since 1999
Governor announces Clean Note Policy
All RBI offices receive enough fresh note
supply;
Accumulation of soiled / unsorted notes at
currency chests
Capacity to process and destroy notes in
RBI needed to be increased
Reserve Bank of India
16
Breaking the impasse
Special methods adopted enabling higher
output in processing
Installation of 48 Currency Verification and
Processing Systems in 18 Offices
27 Shredding & Briquetting Systems in all
offices
Reserve Bank of India
17
Mechanisation of Note Processing
Operations
Currency Verification and Processing systems
each with a capacity to process 50000 - 60000
thousand notes per hour
Capable of counting, authenticating, sorting
into fit/unfit and online shredding of unfit
notes
Disposal of soiled notes in environmental
friendly manner through Shredding &
Briquetting Systems
Reserve Bank of India
18
Mechanisation of Note Processing
Operations – contd.
In pursuance of Clean Note Policy Commercial
Banks are in the process of installing Desk-Top
Sorters at their Currency Chest branches
Installation of Note Counting Machines Coin
Dispensing Machines at all Issues Offices for better
customer service
Installation of Coin Dispensers by Commercial
banks at public places like, Railway Stations, petrol
pumps
Reserve Bank of India
19
Early results
Currency Verification and Processing
Systems have stabilized in operation
Modernization of mints has shown results
Import of coins and temporary printing of
Rs.5 notes has improved the supply position
– return flow of coins envisaged
Effects of Clean Note Policy perceived
Reserve Bank of India
20
Meeting the challenge of distribution
The volume should be contained within
sustainable levels by
Shift in preference from lower to higher
denomination notes
Coinise Rs.10 denomination
Banks have been directed to dispense with
the age-old practice of stapling of notes
Reserve Bank of India
21
Thank You
Fly UP