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Currency Notes found floating in Ganga river near Narghat of Kotwali Police Station in Uttar Pradesh

Similar incidents have occurred in many states where people have either thrown or burned the money

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Indian currency notes. Pixabay

November 11, 2016: The Uttar Pradesh Police said the exact number of the currency notes could not be ascertained. They were spotted by people bathing in the river near Narghat of Kotwali police station.

As the news spread, police force was sent to the spot. A probe was ordered into the matter. (IANS)

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RBI maynot have been Authorised to Issue Currency Notes of Rs 2,000 and Rs 200

the Reserve Bank Of India (RBI) does not seem to have any official records to prove that it had authorised the issue of new currency notes in denominations of Rs 2,000 and Rs 200, after demonetisation

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authorised to issue currency notes
Reserve Bank of India doesnot have any proof to have been authorised to issue currency notes. Wikimedia.

Mumbai, Oct 28: In what could be a bizarre situation, the Reserve Bank Of India (RBI) does not seem to have any official records to prove that it had authorised the issue of new currency notes in denominations of Rs 2,000 and Rs 200, after demonetisation, according to documents available through RTI.

“As per RTI replies provided by the RBI, the country’s central bank has apparently not published any Government Resolution (GR) or a circular till date to issue the new Rs 2,000 and recently, the Rs 200 currency notes,” says Mumbai-based RTI activist M.S. Roy.

Authorised to Issue Currency Notes.
Rs. 2000 note was issued by RBI who maynot ahve been Authorised to Issue Currency Notes. Wikimedia.

A May 19, 2016 document — roughly around six months before demonetisation — shows that the RBI’s Central Board of Directors approved a proposal put forth by its Executive Director on May 18, 2016.

This (proposal) pertained to the new designs, dimensions and denominations of future Indian bank notes, and the Board resolved to forward it to the central government for approval, as per extracts of the minutes of that Board meeting.

Essentially, this was carrying forward an earlier such proposal made on July 08, 1993 to introduce a new family of Indian bank notes of Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500 of reduced sizes.

This old proposal (July 08, 1993) was approved at an RBI Central Board Of Directors meeting on July 15, 1993 as per a memorandum dated August 3, 1993 sent from RBI’s Central Office, Mumbai, to the Chief Officer, Department Of Currency Manager (RBI Mumbai), which was signed by the then Executive Director, A P Aiyer.

As per that proposal (of July 8, 1993), these new Indian currency notes of reduced size were to incorporate several fresh and enhanced security features in order to check counterfeiting, according to the same August 3, 1993 memorandum (quoted above).

Roy had also filed a separate RTI query on February 27, 2017, asking for documentation about photographs of Mahatma Gandhi which are not being printed on the Re 1 notes, but were being printed on all currency notes of denominations ranging from Rs 5 to Rs 2,000.

In reply to this particular query, the RBI provided resolutions of its board meetings held on July 15, 1993, July 13, 1994 and May 19, 2016.

authorised to issue currency notes
RBI had issued notes with no proof if authorised to issue currency notes. Wikimedia.

However, these resolutions talk about design features merely for Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500, all of which bear the photographs of the Father of the Nation.

None of these RBI board resolutions make any references about design features or Mahatma Gandhi photographs for denominations of Rs 1,000, Rs 2,000 and now, the latest entrant to the Indian bank notes family, the Rs 200 currency note.

Hence, Roy said that if the RBI board resolutions never even discussed design features or Mahatma Gandhi photographs to be incorporated in Rs 1,000 notes (discontinued after demonetisation), Rs 2,000 denomination notes (introduced on November 8, 2016) and the subsequent Rs 200 notes (introduced in mid-2017), it clearly indicates that no official approval was granted.

He questioned that if no approval was granted for issuing these denominations, who authorised these denominations, their design, printing and distribution.

“If there has been no approval by the RBI Board, no supporting GR or any other known documentation in the public domain, then there is a big question mark about the legal validity and official (monetary) status of these notes — namely Rs.200 and Rs.2,000. The matter merits an independent investigation,” Roy said.

However, if such approvals do indeed exist, then the RBI and government must explain why these documents were not made available despite an RTI query or why they were not in the public domain. (IANS)

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Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

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Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

New Delhi, November 3, 2017: The backbone of India’s manufacturing sector — micro, small and medium enterprises (MSMEs) — had not yet recovered from the demonetisation move when the Goods and Services Tax (GST) came in to add to the pain, according to industry stakeholders.

“The base of the MSME pyramid is comprised of informal sector, which has traditionally done business in cash. With withdrawal of cash, this market seized up for a quarter or so. They (MSMEs) are limping back to normality,” Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small and Medium Enterprises (FISME), told IANS.

“The recovery is slow because of the new disruption in the form of GST. In the short term, there could be loss of business opportunities because of lack of capital in the informal markets,” he said.

Bhardwaj said that the housing sector, which had more than 60 product categories linked to MSMEs, was drastically hit, both directly and indirectly.

According to D.S. Rawat, Secretary General of Assocham, except for some payment gateways, most of the sectors lost out.

“The impact of demonetisation would have evaporated, but the GST roll-out issues are being braved by some sectors, particularly the SMEs and the traders,” Rawat told IANS.

In the Economic Watch report by Ernst & Young for September 2017, demonetisation has been blamed for an adverse impact on the economy in the short run, as its “benefits are yet to overtake” the costs.

“The government and people at large did have to bear considerable costs in the immediate aftermath of demonetisation. Some of these costs may be difficult to quantify, but objective evidence of the short-term costs is available in at least some important dimensions,” the report said.

“There was an erosion of growth, output and employment,” it added.

The overall economic growth is still contested, however, as some argue that the downward spiral in gross domestic product (GDP) growth preceded demonetisation.

“Though the GDP growth has been lower post the exercise, it will not be fair to conclude that demonetisation was the only factor responsible for this. The growth had started slowing right after the third quarter of 2016-17 and the trend continued post-November as well,” said Ranen Banerjee, Partner-Public Finance, Economics and Urban, at PwC India.

Others like the EY’s report indicate that demonetisation resulted in a “tangible adverse impact” on GDP growth.

“Real GDP growth has been falling steadily quarter after quarter since the fourth quarter of FY16, when it was nine per cent. It fell to 5.7 per cent in first quarter FY18, a decrease of 3.3 percentage points,” the report pointed out.

“The two quarters that can be considered as the demonetisation quarters in FY17 were the third quarter of FY17 and fourth quarter of FY17. In these two quarters, the GDP growth rate fell to seven per cent and 6.1 per cent, respectively.”

It mentioned that the downward trend in growth preceded demonetisation and was largely caused by an investment slowdown.

On the industrial production front, in December 2016, the Index of Industrial Production (IIP) had contracted by 0.4 per cent from a 13-month high of 5.7 per cent reported for November.

However, it rose 2.7 per cent in January 2017. The latest IIP figures for August showed that factory output grew 4.3 per cent against the same month last year on the back of robust mining and electricity sector growth.

According to the Ministry of Statistics and Programme Implementation, manufacturing output in the country in July 2017 had grown marginally by 1.2 per cent.

“The event clearly pushed the economy towards a higher degree of digitisation and financial inclusion. Accordingly, the digital finance sector seems to have gotten a push while over the longer term financial services should be the biggest gainer,” said Anis Chakravarty, Lead Economist, Deloitte.

(Rohit Vaid can be reached at rohit.v@ians.in)

(Editors: The above article is part of a series of demonetisation stories leading up to November 8)

–(IANS)

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New Rs 200 notes: It may take ATMs three months to dispense Rs 200

Will all the 2.25 lakh ATM machines across India would be recalibrated?

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Wait for 3 more months as ATM recalibration is not yet done
Wait for 3 more months as ATM recalibration is not yet done. Wikimeida
  • Reserve Bank of India (RBI) did issue a statement saying that the supply of the new Rs 200 notes would soon be ramped up
  • The entire process of recalibration can be completed within 90 days without affecting the regular functionality of ATMs to a large extent
  • The ATM companies said that they were expecting to receive official communication on recalibration of ATMs soon
New Delhi, September 4, 2017: While the RBI launched the new Rs 200 notes a week ago, it may take up to three months for ATMs to start dispensing the new denomination currency “new Rs 200 note” as it will involve a huge exercise of recalibration.

What are ATM companies saying about when will the new Rs 200 notes come into the market?

Some banks have even asked the ATM companies to begin testing the new Rs 200 notes for recalibration of the machines, though they have not got supplies of the new Rs 200 notes/ currency. Only last year, the banks were involved in the recalibration of ATM machines after the demonetization of high-value currency notes in November.
ATM manufacturing companies said that they have not received any directive from the RBI regarding the recalibration of ATMs for the new Rs 200 note. They disclosed that some banks have at an informal level have asked them to start testing of the new note since it is of a different size.

 

When will the supply of the new Rs 200 notes see an increase?

Reserve Bank of India (RBI) did issue a statement saying that the supply of the new Rs 200 notes would soon be ramped up but has not given any time-frame by which it will be available in adequate numbers.

 It is yet to be seen whether all the 2.25 lakh ATM machines across India would be recalibrated for dispensing the new Rs 200 notes.

 

 avi B Goyal, Chairman, and Managing Director, AGS Transact Technologies Limited, which claims to have an installed base of 60,000 ATMs, told IANS, “The process of recalibration will begin once we receive the directive from the RBI. The size of the new Rs 200 notes are different from the existing ones and so, once we receive the new Rs 200 notes, we will have to understand its dimensions and accordingly reconfigure the ATM cassettes. Next, we will have to check if the supply of new Rs 200 notes is good enough to run the cassettes at full capacity.”

 “The entire process of recalibration can be completed within 90 days without affecting the regular functionality of ATMs to a large extent. In fact, the ATMs will continue to be fully operational during recalibration and will continue to supply Rs 100, Rs 500 and Rs 2,000 denominations,” he said.

 

Among the other companies operating in the sector are NCR Corporation, which has over 1,08,000 machines, and BTI Payments, which has 4,500 cash dispensers. NCR Corporation said that while some banks have reached out to them to start testing of the new Rs 200 notes, they were yet to receive the supply to begin the process.

 “Banks have started getting in touch with us for testing the same “new Rs 200 notes”. They will let us know which machines they wish to configure for new rs 200 notes, which will require physical visits to ATMs. However, the new Rs 200 notes are still to be provided to us by the respective banks so that the testing can begin,” Anand Garollu, General Manager (Services), NCR Corporation said.

K. Srinivas, Managing Director, and CEO of BTI Payments, a RBI-licensed firm that operates cash dispensers not owned and managed by banks, said, “Recalibration will begin as and when we receive adequate quantity of new Rs 200 notes. We are looking to roll this out as quickly as possible.”

 He said that the industry was expecting new Rs 200 notes to be available over a period of time across various geographies.

 “The recalibration can be done progressively as and when the new denomination note starts to become available. Unlike the last time around (during demonetization), when we had to recalibrate all machines in one go,” Srinivas added.

 The ATM companies said that they were expecting to receive official communication on recalibration of ATMs soon. However, emails to RBI in this regard did not elicit any reply, they said.

 “The production of these “new Rs 200 notes” is being ramped up by the currency printing presses and over time, as more notes are printed, it will be distributed across the country through the banking channels and will be available for the public in adequate quantity,” the RBI had said in a statement.

 Currently, new Rs 200 notes are available only through select RBI offices and some banks.

While State Bank of India and Punjab National Bank are reported to have received the new Rs 200 notes, Eknath Baliga, Manager, KYC-Antimoney Laundering Cell, Corporation Bank, Mangalore, told IANS that none of its branches across the country had received the new Rs 200 notes so far.

The new Rs 200 notes are currently being printed only by RBI presses. Security Printing and Minting Corporation of India (SPMCIL) sources told IANS that the company has not received any indent so far for the printing of new Rs 200 notes. India’s two currency presses are owned by RBI and two by SPMCIL, which is a government-owned company.

 How ATM recalibration happens:

Usually, an ATM holds four cassettes — three of which can continue to be used for Rs 100, Rs 500, Rs 2,000, and the fourth cassette can be used for the new Rs 200 notes. On an average, each cassette has a capacity to hold 2,000-2,500 notes depending upon the quality of cash issued by banks. However, there are many ATMs that only have either two or three cassettes.

The number of slots in the ATM can be configured as per the bank’s preference. The banks decide which denomination needs to be configured in a machine on the basis of the customer profile in the area where the ATM is located and the number of transactions on that machine.

The banks need to make requisite changes at their ATM switch before the rollout of the physical recalibration at the ATMs in the field.

The recalibration of a new denomination takes 30-45 minutes per ATM. The process of recalibration is not very difficult but is time-consuming given an engineer has to visit every ATM and configure it to dispense the requisite denomination.

The introduction of the Rs 200 note has been welcomed as it would ease the currency circulation in the market as people prefer lower denomination cash withdrawals from ATMs. Rs 200 would also be more convenient for rural consumers. (IANS)