Small change can make you rich

Come June 30 and the Reserve Bank of India will demonetise all small coins up to the denomination of 25 paise. Coins of 2,3,5,10 and 20 paise will cease to be legal tender 54 years after they were first introduced. The Reserve Bank of India has advised people to exchange any small denomination coins they may hold, but numismatists or coin collectors say the intrinsic value of the coins can go up by as much as 500 times. Coins have two values — face value, that is the value printed on the coin, and intrinsic value, which is the actual value in the open market. According to numismatists, the intrinsic value of a 25 paise coin will shoot up to Rs 10, or 40 times the face value, a few months after the RBI withdraws it from banks’ currency chests. Already the intrinsic value of the one paise coin is Rs 5, or 500 times the face value, and the other small coins about to be withdrawn have an intrinsic value of between Rs 5 and Rs 10. “As the coins are demonetised and withdrawn from the market, they become rare and difficult to acquire. It is the degree of difficulty in obtaining a coin that pushes up the intrinsic value by leaps and bounds. If someone wants to collect 25 paise coins a year later, he or she has to shell out at least Rs 10 to get it from coin collectors or coin shops,” points out senior numismatist Dr Mohammad Safiullah. The Central government introduced the naya paise concept under the decimal system in 1957. It was in this year that coins of the denominations — 1, 2, 3, 5, 10, 20 and 25 were introduced along with the 50 paise. With the cost of living increasing tremendously, the RBI has decided to withdraw coins up to 25 paise denomination with effect from June 30. Though the RBI had stopped production of coins of 1, 2, 3, and 5 paise, it did not demonetise them, and they still continue to be legal tender. But as minting of small coins has become uneconomical, the apex banking authority in the country has decided to send these coins along with 10 paise, 20 paise and 25 paise coins to the gallows. From July 1, India will be one of the few countries in the world where small coins are no longer in circulation. Many countries continue to circulate small coins both for historic and economic reasons. The RBI has, for reasons best known to it, decided to tread a different path. In fact, there have been strong protests from people in different parts of the country against the RBI’s decision. “Minting small coins may not be economical for the Central government. The cost of the metal has increased, so also the salaries of the mint staff. But the naya paise is the identity of Independent India. The naya paise or decimal series was introduced after India became independent. Withdrawing them now, five decades later, is nothing short of foolishness,” argues coin lover and educationist Mr B. Moinuddin. Incidentally, Hyderabad has a long association with small coins, including those minted in pure gold and silver. The mint was set up in the city by the Nizams to produce their own currency (as distinct from British currency). The coins and currency notes were known as Osmania sikka.

Deccan Chronicle