Cash continues to be the predominant payment means of transactions in India. A compositional shift is underway in the form of a gradual replacement of lower denomination banknotes by higher denomination banknotes, particularly Rs.100 and Rs.500.
Instruments such as cheques, credit and debit cards, electronic funds transfer are at present supplementing the use of banknotes and as the use of these gains popularity, the growth rate of the demand for currency is expected to slow down.
Steps taken to increase the supply of banknotes and coins
Several steps have been taken to augment the supply of banknotes and coins. Some of these are:
The existing banknote printing presses and the mints owned by the Government have been modernised. Bharatiya Reserve Bank Note Mudran (P) Ltd., was set up as a fully owned subsidiary of the Reserve Bank of India on February 03, 1995.
Under its aegis two banknote printing presses with the state-of-the-art technology, one each at Mysore (Karnataka) and Salboni (West Bengal), commenced production from June 01, 1996 and December 11, 1996, respectively.
To bridge the demand-supply gap, the Government had, as a one-time measure, imported banknotes, in the year 1997-98.
Government of India had also imported rupee coins during 2000-2003 to supplement the supply of coins from the four mints. The overall position of both banknote and coin supply is comfortable now. The Regional Offices of RBI launched aggressive campaigns for providing exchange facility to the members of public.
Why are the Re.1, Rs.2, Rs.5 banknotes not being printed?
Volume-wise, the share of such small denomination banknotes in the total banknotes in circulation was very high but in terms of value they constituted a very small percentage. The average life of these banknotes was found to be less than a year. The cost of printing and servicing these banknotes was, thus, not commensurate with their life, and printing of these banknotes was, therefore, discontinued. These denominations were coinised. However, Rs.5 was re-introduced in 2001 to supplement the gap between the demand and supply of coins in this denomination. The printing of Rs.5 banknotes has been discontinued from the year 2005.
What are soiled, mutilated and imperfect banknotes? Can they be exchanged for value?
(i) "soiled note:" means a note which, has become dirty due to usage and also includes a two piece note pasted together wherein both the pieces presented belong to the same note, and form the entire note.
(ii) Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces.
(iii) Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.
Such banknotes can be exchanged for value.
Where are soiled/mutilated banknotes accepted for exchange?
All banks are authorized to accept soiled banknotes for full value. They are expected to extend the facility of exchange of soiled notes even to non-customers. All currency chest branches of commercial banks are authorised to adjudicate mutilated banknotes and pay value for these, in terms of the Reserve Bank of India (Note Refund) Rules, 2009
How much value would one get in exchange of soiled banknotes?
Soiled banknotes are exchanged for full value.
How much value would one get in exchange of mutilated banknotes?
A mutilated banknote can be exchanged for full value if,
(i) For denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20, the area of the single largest undivided piece of the note presented is more than 50 percent of the area of respective denomination, rounded off to the next complete square centimetre.
(ii) For denominations of Rs. 50, Rs.100, Rs. 500 and Rs. 1000, the area of the single largest undivided piece of the note presented is more than 65 percent of the area of respective denomination, rounded off to the next complete square centimetre.
Banknotes in denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20, cannot be exchanged for half value.
A mutilated banknote in denominations of Rs.50, Rs.100, Rs.500 or Rs.1000, can be exchanged for half value if, the undivided area of the single largest piece of the note presented is equal to or more than 40 percent and less than or equal to 65 percent of the area of respective denomination, rounded off to the next complete square centimetre.
How much value would one get in exchange of imperfect banknotes?
The value of an imperfect note may be paid for full value/ half value under rules as specified for mutilated notes if, (i) the matter, which is printed on the note has not become totally illegible, and (ii) it can be satisfied that it is a genuine note.
What types of banknotes are not eligible for payment under Note Refund Rules?
The following banknotes are not payable under the Reserve Bank of India (Note Refund) Rules 2009.
A banknote for which:
l The area of single largest undivided piece of note presented is less than or equal to 50% of area of the note for denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20.
l The area of the single largest undivided piece of the note is less than 40 percent for denominations of Rs.50, Rs. 100, Rs. 500 and Rs. 1000.
A banknote which:
l Cannot be identified with certainty as a genuine note for which the Bank is liable under the Act,
l Has been made imperfect or mutilated, thereby causing the note to appear to be of a higher denomination, or has been deliberately cut, torn, defaced, altered or dealt with in any other manner, not necessarily by the claimants, enabling the use of the same for making of a false claim under these rules or otherwise to defraud the Bank or the
public,
l Carries any extrinsic words or visible representations intended to convey or capable of conveying any message of a political or religious character or furthering the interest of any person or entity,
l Has been imported into India by the claimant from any place outside India in contravention of the provision of any law.
Non-payable banknotes are retained by the receiving banks and sent to the RBI where they are destroyed.
Source: RBI
Instruments such as cheques, credit and debit cards, electronic funds transfer are at present supplementing the use of banknotes and as the use of these gains popularity, the growth rate of the demand for currency is expected to slow down.
Steps taken to increase the supply of banknotes and coins
Several steps have been taken to augment the supply of banknotes and coins. Some of these are:
The existing banknote printing presses and the mints owned by the Government have been modernised. Bharatiya Reserve Bank Note Mudran (P) Ltd., was set up as a fully owned subsidiary of the Reserve Bank of India on February 03, 1995.
Under its aegis two banknote printing presses with the state-of-the-art technology, one each at Mysore (Karnataka) and Salboni (West Bengal), commenced production from June 01, 1996 and December 11, 1996, respectively.
To bridge the demand-supply gap, the Government had, as a one-time measure, imported banknotes, in the year 1997-98.
Government of India had also imported rupee coins during 2000-2003 to supplement the supply of coins from the four mints. The overall position of both banknote and coin supply is comfortable now. The Regional Offices of RBI launched aggressive campaigns for providing exchange facility to the members of public.
Why are the Re.1, Rs.2, Rs.5 banknotes not being printed?
Volume-wise, the share of such small denomination banknotes in the total banknotes in circulation was very high but in terms of value they constituted a very small percentage. The average life of these banknotes was found to be less than a year. The cost of printing and servicing these banknotes was, thus, not commensurate with their life, and printing of these banknotes was, therefore, discontinued. These denominations were coinised. However, Rs.5 was re-introduced in 2001 to supplement the gap between the demand and supply of coins in this denomination. The printing of Rs.5 banknotes has been discontinued from the year 2005.
What are soiled, mutilated and imperfect banknotes? Can they be exchanged for value?
(i) "soiled note:" means a note which, has become dirty due to usage and also includes a two piece note pasted together wherein both the pieces presented belong to the same note, and form the entire note.
(ii) Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces.
(iii) Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.
Such banknotes can be exchanged for value.
Where are soiled/mutilated banknotes accepted for exchange?
All banks are authorized to accept soiled banknotes for full value. They are expected to extend the facility of exchange of soiled notes even to non-customers. All currency chest branches of commercial banks are authorised to adjudicate mutilated banknotes and pay value for these, in terms of the Reserve Bank of India (Note Refund) Rules, 2009
How much value would one get in exchange of soiled banknotes?
Soiled banknotes are exchanged for full value.
How much value would one get in exchange of mutilated banknotes?
A mutilated banknote can be exchanged for full value if,
(i) For denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20, the area of the single largest undivided piece of the note presented is more than 50 percent of the area of respective denomination, rounded off to the next complete square centimetre.
(ii) For denominations of Rs. 50, Rs.100, Rs. 500 and Rs. 1000, the area of the single largest undivided piece of the note presented is more than 65 percent of the area of respective denomination, rounded off to the next complete square centimetre.
Banknotes in denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20, cannot be exchanged for half value.
A mutilated banknote in denominations of Rs.50, Rs.100, Rs.500 or Rs.1000, can be exchanged for half value if, the undivided area of the single largest piece of the note presented is equal to or more than 40 percent and less than or equal to 65 percent of the area of respective denomination, rounded off to the next complete square centimetre.
How much value would one get in exchange of imperfect banknotes?
The value of an imperfect note may be paid for full value/ half value under rules as specified for mutilated notes if, (i) the matter, which is printed on the note has not become totally illegible, and (ii) it can be satisfied that it is a genuine note.
What types of banknotes are not eligible for payment under Note Refund Rules?
The following banknotes are not payable under the Reserve Bank of India (Note Refund) Rules 2009.
A banknote for which:
l The area of single largest undivided piece of note presented is less than or equal to 50% of area of the note for denominations of Re. 1, Rs. 2, Rs. 5, Rs. 10 and Rs. 20.
l The area of the single largest undivided piece of the note is less than 40 percent for denominations of Rs.50, Rs. 100, Rs. 500 and Rs. 1000.
A banknote which:
l Cannot be identified with certainty as a genuine note for which the Bank is liable under the Act,
l Has been made imperfect or mutilated, thereby causing the note to appear to be of a higher denomination, or has been deliberately cut, torn, defaced, altered or dealt with in any other manner, not necessarily by the claimants, enabling the use of the same for making of a false claim under these rules or otherwise to defraud the Bank or the
public,
l Carries any extrinsic words or visible representations intended to convey or capable of conveying any message of a political or religious character or furthering the interest of any person or entity,
l Has been imported into India by the claimant from any place outside India in contravention of the provision of any law.
Non-payable banknotes are retained by the receiving banks and sent to the RBI where they are destroyed.
Source: RBI
Courtesy : DNA
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