Paper Rupee Currency – A Thing for Collectors

The currency used in India is 'Rupee' and has on it 'a promise by the Governor of the Reserve Bank", and that says the paper or note that you are carrying is worth what it says. The promise on the note or paper is significant because it the responsibility of Reserve Bank in preserving the value of the rupee. The currency in India is printed on paper. Therefore a paper is converted into amount or value just because of a promise by the Governor of Reserve Bank on that paper.

Paper currency was first developed in China; it solved many problems posed by metal coins. It is easy to transport, manufacture, and lightweight to carry. The paper required for printing Indian currency is still being imported from other countries. In Order to become self-sufficient, a state of the art banknote paper mill in Mysore is being setup by Reserve Bank.

India is self Sufficient in printing capacity of the currency notes, it has four Printing Presses throughout the country, two of which are under Government control and other two are under the control of Reserve Bank.

• Nasik (Maharashtra) and Dewas (Madhya Pradesh) - controlled by the Government; 
• Mysore (Karnataka) and Salboni (West Bengal) - controlled by the Reserve Bank;

Reserve Bank of India (RBI) needs to prints currency not only to replace soiled and mutilated notes, but also need to print additional currency to meet the needs of the economic growth. How much or what amount to print depends on the many factor like growth rate, Inflation rate, etc.

Amount of currency printed = Replacement requirement + Economic growth requirement of the country

The most important factor to be considered is the while printing currency is security features to prevent counterfeiting. It is the responsibility of the people that they should be aware of these security features so that they can tell a forged note from a genuine one. Believe me, it very difficult to differentiate with naked eye. RBI has launched several awareness campaigns to educate the Public on the security features and uniqueness of Rupee.

Few securities Feature of 500 Rupee Note

If we have this information, then the people who intend to make counterfeit notes will also have, so RBI resolves this issue by making the replication of the security features technically complex and prohibitively expensive, and also by incorporating some additional security features that can be detected only by sophisticated gadgets and equipment.

January 31, 2007, RBI introduced the “Clean Note – Stapling of Note Packets” Policy. According to it, writing on the watermark window of bank notes is punishable under Section 35A of the Banking Regulation Act 1949. It also asked banks/organizations/individual’s to do away with stapling of fresh / re-issuable / non-issuable note packets and instead secure them with paper bands.  There was one instance in 2002 where RBI pulled up a public sector bank for continuing with the above practices.

Furthermore, RBI instructed banks to ensure that the notes that they issue through their ATMs are also pre-checked for genuineness and cleanliness. That is why most of times when we withdraw money from ATM; you will get new/fresh notes.

Managing the paper currency is a tedious process. The major reason is the speed at which each note is being transferred from one person to another person, I.e. Changing of hands and the second is the ease at which counterfeits notes can be made. The average life span of a paper currency note is expected about 1 year, Also it has become quite cheap and easy to print fake paper currency.

We as people most of the times write something or other in the notes, this is punishable offense. Because of this habit as I may call, the notes are not clean and it will be returned to Reserve bank, As more and more currency are being returned to Reserve bank due the non-Cleanliness of the notes, Reserve Bank increases the amount of currency to be printed and this will in turn decrease the value of the money, also the cost involved in printing move goes up. 

“The more you print, the less is the value of the money”.

In 2008, Zimbabwe government printed more currency to save their economy and result was... 100 billion dollar note was worth only 3 eggs

According to the Reserve Bank of India, we are second largest producer as well as second largest consumer of currency in the world, next only to China. Therefore huge costs are incurred in producing such a large amount of currency.

One of the Options considered by Reserve bank of India is to replace the paper currency with plastic currency. Since plastic currency is stronger and durable when compared to paper. These notes would have an average life span of 5 years compared to one year for the paper currency notes, it is also ‘near to impossible’ to make counterfeit notes. Printing of plastic bank notes is very expensive and high end technology and equipment’s will be required. The disadvantage of plastic notes is it could be harmful to the environment as it is made of plastic. Therefore recycling and disposal of plastic notes will be added responsibility of general public and governments.

Click here to read an article "why the Canadian bank Plastic notes which is nearly impossible to make counterfeits notes" .

Australia was the First to introduce the Plastic currency, A Video on how the plastic currency is manufactured.

Reserve bank of India’s Press release on October 2002 is that, it had “no proposal to introduce polymer/plastic notes in place of paper notes”. Click here to see the Press Release

But in 2009, RBI announced its plan to introduce plastic currency notes. And now nearly after 2 years, the Indian government is set to introduce plastic currency in Pilot basis or trail basis with 10 Denomination notes (100 crore pieces of Rs 10 polymer notes). 

 Let’s all hope the pilot launch of plastic currency is successful in India and soon the paper currency of Indian Rupee will be a collectors thing.

References
http://www.rbi.org.in

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