RBI introduced polymer notes of Rs10 denomination in select cities in India. But most of the counterfeit currency notes in circulation are in higher denominations of Rs500 and Rs1,000
More than 25 countries in the world have successfully introduced polymer currency notes which are at least 2.5 times more durable than cotton-based paper currency. The latter has a shorter shelf life and is easily counterfeited. Some countries which have introduced, including the pioneer Australia, are New Zealand, Singapore, Mexico, Fuji to name a few.
Mark Carney, who introduced the polymer currency notes in Canada, in 2011, is currently the governor of the Bank of England. He is a native Canadian who is now set to introduce polymer currency banknotes in the United Kingdom, with two notes of GP5 and GP10 in 2016. The ten pound note will be introduced in 2017. According to information available, Bank of England plans to issue 350 million GP5 in 2016 and bring out 650 million GP10 notes in 2017. The GP5 notes will carry the portrait of Sir Winston Churchill while the GP10 will have the famous Jane Austen in the background. Dates have not been set for GP20 and GP50 notes but these will follow in due course.
The British plan is to immediately withdraw the old paper currencies of these denominations as soon as the polymer bank notes come into circulation. Such a move is expected to help in stopping the counterfeiting of these lower denominations, estimated at about GP30 million annually.
Moneylife has carried a detailed story on the counterfeit (or fake) Indian currency in circulation in the country. In the last report, we had given full details of how, beyond reasonable doubt, it has been established that this fake Indian currencies have been "manufactured" with identical paper used by the Pakistani government, and how these have also been smuggled into the country, via Nepal and Bangladesh land borders.
Though the Indian government has continuously held series of discussions on various issues, no where have we found any record of their raising this issue of counterfeit Indian currency being pushed into the market. It is time that our prime minister introduces it into the agenda for discussions. It should be brought to the notice of his Pakistani counterpart that this “mosquito bite” to the Indian economy must stop.
It may be recalled that, in fact, Reserve Bank of India has been toying with the idea of introducing polymer currency notes for some time. A few months ago, RBI introduced polymer notes of Rs10 denomination in select cities in India, which included Mysore and Cochin in the south. The results of the market testing carried out by RBI have still not been made public.
However, it must be noted, that, by and large, most of the counterfeit currency notes in circulation are in higher denominations of Rs500 and Rs1,000. It would have made sense if RBI had chosen to bring out polymer currency notes, for market testing in these denominations.
It might sound ironic that, recently, the Srirangapatna, Karnataka, subdivision police, based on a tip received, raided and caught a gang of members involved in the money-exchange racket, which included a member of Mandya City Municipal Council and seized Rs25 lakh in cash, which included counterfeit currency notes. Further, investigations are underway to find the root source of supplies and how these came into the market.
With the general elections on the anvil, this smuggling activity is bound to increase and vigilant action is needed to prevent large scale smuggling that may occur or, in fact, is occurring on a regular basis.
Reserve Bank must categorically announce its plans to introduce polymer currency notes of Rs500 and Rs1,000 immediately and demonetize the paper currency as soon as possible.
This must be done on a war footing and without any more delay.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
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My past effort to get information from RBI has been in vain. WE need someone responsible and prompt to answer such matters.
If Australia can successfully lead in polymer currency notes and have so far not had problems, I do not see any reason why India should delay this important move to save the Rupee from external attack by Pakistan?
Reports now indicate that the fake Indian currency notes, printed and pushed by Pakistan are coming via Cambodia! All that the oversea Indian travellers need to do is NOT to take any "balance" in a transaction, anywhere, if offered in crisp Indian rupee notes. For all you know, these could be fakes!!!
Ideally, the RBI should incentivise and encourage cash-less transactions as much as possible. That would greatly reduce dependence on currency notes, and curb black money and fake currency issues as well.
Many critics feel large parts of rural India remain outside our Banking system, hence their dependence on cash / currency will remain high. I feel that if the govt has an ambitious plan to provide Broadband Internet connectivity to over 5 Lakh villages in India, surely they can work on spreading the reach of the Banking system riding on technological solutions. Already many rural areas get weather or crop related information on their mobile phones. Someday, they may be able to use similar gadgets for Banking / financial transactions as well.