RBI to focus on printing new Rs500 note to address cash shortage
RBI printing presses, which were printing Rs2000 notes so far, will start printing the new Rs500 notes from Wednesday
Mumbai: Reserve Bank of India (RBI)-operated currency presses will start printing the new Rs500 notes on Wednesday even as the two government-owned presses run behind schedule, said three officials directly involved in the process.
The Bharatiya Reserve Bank Note Mudran Pvt. Ltd (BRBNMPL), a subsidiary of RBI, with two presses in Mysuru (Karnataka) and Salboni (West Bengal), hopes to print around 1 billion of the new Rs500 notes by December-end, these people said.
So far, the RBI-operated presses have been printing only Rs2,000 notes (among the new notes) for the past two months. According to these people, the two RBI presses have printed nearly 2 billion pieces of Rs2,000 notes and a few lower denomination notes till date. The two presses had an order to print 3.5 billion pieces of new Rs2,000 notes .
“The presses at Mysuru and Salboni will now shift focus to Rs500 notes till the pain is fairly eased by December-end. However, it will not be until January when the system will be comfortable with enough currency notes,” said the first of the three officials cited earlier.
Even if these presses together add another billion Rs500 notes, it will be just a fraction of those invalidated. At the end of March, there were 15.7 billion Rs500 notes (amounting to Rs7.85 trillion) in circulation.
According to RBI data, Rs8.44 trillion has been deposited or exchanged at banks between 10 November and 27 November against an estimated Rs16 trillion of these notes in circulation. However, only Rs2.16 trillion has been withdrawn.
According to the plan drawn up by the government and RBI, the central bank-operated presses were to produce the Rs2,000 notes and government-owned printers the new Rs500 bills.
The Security Printing and Minting Corp. of India Ltd (SPMCIL), the government company that produces notes and coins, has printed less than 100 million pieces of the new Rs500 notes so far, said the second of the three officials.
SPMCIL and RBI spokespersons did not respond to calls seeking comment.
Mint reported on 17 November that the government-owned presses at both Nasik and Dewas were running below capacity, leading to the delay in the release of Rs500 notes. Even after ramping up production, these presses are currently printing only 5 million pieces per day, said the people cited earlier.
BRBNMPL can produce 16 billion notes annually. Its presses are currently printing 45-50 million pieces per day, said the people.
Currency notes are now being airlifted from all the four currency presses to the 4,000-odd currency chests of RBI. Separately, the government has also placed an order for 2,000 tonnes of currency paper to be imported, said the second official.
The current demand for paper is around 4,000 tonnes till December, of which half will met by the Bank Note Paper Mill, a joint venture between SPMCIL and BRBNMPL.
As the government rushes to meet the demand for bank notes, even the production of Rs5 and Rs10 coins has been raised significantly over the last 10 days, according to a fourth official.
“Usually we produce about 1.7 million Rs10 coins and 2.7 million Rs5 coins per day. This has been raised to 2.9 million and 4.3 million respectively. We have also stopped production of Re1 and Rs2 coins for the time being,” the official said.
However, a large part of the fresh coins produced are still lying at the mint as the secured vans which are supposed to ferry these to the currency chests and various bank branches are not available. They are busy moving notes.
Vishwanath Nair contributed to this story.