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Recent Technological Developments in Indian Banking (Currency Management)

Recent Technological Developments in Indian Banking (Currency Management)

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Recent Technological Developments in Indian Banking (Currency Management)

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  1. Recent Technological Developments in Indian Banking (Currency Management) Vepa Kamesam Deputy Governor Reserve Bank of India at Central Bank of Sri Lanka, Colombo on August 20, 2003

  2. India – A Huge Country Population: 1 billion North to South: 3,200 km West to East: 3,000 km Area: 3,288,000 sq. km Reserve Bank of India

  3. Circulation of Currency –Dimension (value) Reserve Bank of India

  4. Circulation of Currency – Dimensions (volume) Reserve Bank of India

  5. Dimensions – Enormous volume of lower denominations As on April 2003 Reserve Bank of India

  6. Dimensions – Too little value of the lower denominations As on April 2003 Reserve Bank of India

  7. Agencies Involved Reserve Bank of India

  8. Flow of Notes & Coins Public NOTES COINS Chest branches Chest branches & RBI Offices Public 4 mint-linked RBI Offices RBI Offices Presses 4 Mints Reserve Bank of India

  9. Movement of Treasure • Secured Vehicles by road • Railways where connections available • Guarded by state armed police • Remittance accompanied by Bank’s Staff Reserve Bank of India

  10. Movement of Treasure – contd. • Further movement from chest to a branch done by the bank concerned • Out sourcing of coin remittance through private transport operators • Distribution of coins through Post Offices and state transport authorities in addition to banks Reserve Bank of India

  11. How much to print & mint • Incremental needs • Replacement needs • Reserve needs • Statistical analysis and long-term forecast • Printing/minting allocated between the presses/mints and delivery schedule decided in advance Reserve Bank of India

  12. Capacity of Presses & Mints • Total annual capacity of Presses: 18 bn • Can print up to 28 bn with two shifts • Total minting capacity: 4,700 mn • RBI’s annual needs: • Notes: about 12,000 mn pieces • Coins: about 4,000 mn pieces Reserve Bank of India

  13. Challenges of Distribution • Size of the country and volume of currency • Political boundaries defining jurisdiction of Issue Offices lead to sub-optimal logistics • Security considerations Reserve Bank of India

  14. Cross-movement of Currency Fresh Notes/Coins from Press/Mint pass on to the banks/public only through RBI offices – hence cross-movement Reserve Bank of India

  15. Supply Bottleneck • Scarce Printing capacity for over a decade till 1999 • Pace of replacement of old currency was slow leading to deteriorating quality • Inefficiencies in arranging return flow of notes as chests hardly sorted notes as fit/unfit Reserve Bank of India

  16. Problem of plenty - the present transition • Enough printing capacity since 1999 • Governor announces Clean Note Policy • All RBI offices receive enough fresh note supply; • Accumulation of soiled / unsorted notes at currency chests • Capacity to process and destroy notes in RBI needed to be increased Reserve Bank of India

  17. Breaking the impasse • Special methods adopted enabling higher output in processing • Installation of 48 Currency Verification and Processing Systems in 18 Offices • 27 Shredding & Briquetting Systems in all offices Reserve Bank of India

  18. Mechanisation of Note Processing Operations • Currency Verification and Processing systems each with a capacity to process 50000 - 60000 thousand notes per hour • Capable of counting, authenticating, sorting into fit/unfit and online shredding of unfit notes • Disposal of soiled notes in environmental friendly manner through Shredding & Briquetting Systems Reserve Bank of India

  19. Mechanisation of Note Processing Operations – contd. • In pursuance of Clean Note Policy Commercial Banks are in the process of installing Desk-Top Sorters at their Currency Chest branches • Installation of Note Counting Machines Coin Dispensing Machines at all Issues Offices for better customer service • Installation of Coin Dispensers by Commercial banks at public places like, Railway Stations, petrol pumps Reserve Bank of India

  20. Early results • Currency Verification and Processing Systems have stabilized in operation • Modernization of mints has shown results • Import of coins and temporary printing of Rs.5 notes has improved the supply position – return flow of coins envisaged • Effects of Clean Note Policy perceived Reserve Bank of India

  21. Meeting the challenge of distribution • The volume should be contained within sustainable levels by • Shift in preference from lower to higher denomination notes • Coinise Rs.10 denomination • Banks have been directed to dispense with the age-old practice of stapling of notes Reserve Bank of India

  22. Thank You