JV inked to indigenize banknotes production

The Reserve Bank of India (RBI) has started a joint venture (JV) with a banknote security printing agency in Mysore to indigenize currency note production even as there is a significant increase in detection of counterfeit notes in banks. RBI is also conducting a pilot project to introduce plastic notes of Rs.10 in select locations even as a study on the possible environmental impact of such a move is being done. The JV between Bharatiya Reserve Bank Note Mudran Pvt. Ltd and Security Printing and Minting Corp. of India Ltd will seek indigenization of paper, ink and other raw materials for production of banknotes.  The facility will have an annual capacity of 6,000 tonnes to start with, RBI said in its annual report, released on Thursday. India imports the raw materials for its currency notes. In 2010-11, the security printing charges for banknotes decreased by 13.7%, or Rs.378 crore, mainly on account of a decrease in the supply of banknotes in certain denominations, RBI said. The cost of security printing in 2010-11 stood at Rs.2,376 crore compared with Rs.2,754 crore a year earlier, RBI data showed. According to the annual report, the number of fake notes detected in the system has increased significantly in fiscal 2011 over previous years.  In 2010-11, 435,607 fake notes were detected, compared with 401,476 in 2009-10 and 398,111 a year before that. About 90% of these notes were detected at banks and the rest in RBI. “Counterfeit banknotes detected during the year were higher in magnitude on account of heightened awareness among banks and increased use of note-sorting machines,” RBI said. All currency chest branches of banks have such machines and banks are required to issue notes in the denomination of Rs.100 and above after checking them through such machines. Till April, banks had installed 4,091 sorting machines and also arranged to issue machine-processed notes for another 1,823 branches. Notes in the denomination of Rs.100 and above are required to be sorted through machines in branches before reissue to the public. Apart from adopting other steps to check “the menace of counterfeit banknotes”, RBI also launched a campaign to educate the public about the security features of banknotes. The advertisement campaign is run on Doordarshan channel. “Future plans include campaigns through various media (such as) other TV channels, radio, newspapers, etc.,” the annual report said. However, a 9 August Mint story, quoting a confidential government report, found flaw in RBI estimates of counterfeit currencies. A white paper on the status of fake Indian currency notes, prepared jointly by the Intelligence Bureau, Research and Analysis Wing, Directorate of Revenue Intelligence and the Central Bureau of Investigation​, had found that four in every 1,000 currency notes in circulation in India are fake, amounting to as much as Rs.3,200 crore in 2010. The report is confidential and is a first-ever attempt to estimate the quantum of counterfeit notes in India. Mint has reviewed a copy of the report that was submitted to the government in June. Fake currency comprises 0.0004-0.0012% of banknotes in circulation, it cites RBI as saying, which is four in every one million, much lower than the white paper estimate.

Mint