Annual Report


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Date : Aug 25, 2020
VIII. Currency Management

During the year under review, the Reserve Bank ensured an adequate supply of clean banknotes of various denominations to the public. Other important developments were integration of currency management functions with the Bank’s core banking solution (e-Kuber), replacement of Currency Verification and Processing Systems (CVPS) across Regional Offices and a mobile application (MANI) to enable visually impaired persons identify denominations of banknotes. The Reserve Bank maintained adequate supply of clean banknotes to the public in the face of augmented COVID-19 related demand.

VIII.1 The year 2019-20 was marked by strengthening of internal work processes within the Reserve Bank’s mandate in the area of currency management. They, inter alia, involved upgradation of Currency Verification and Processing Systems (CVPS) across offices of the Reserve Bank and replacement of the Integrated Computerised Currency Operations and Management System (ICCOMS) application with an improved currency management module (CyM) integrated with the Reserve Bank’s Core Banking Solution (e-Kuber).

VIII.2 The demand for currency started to increase in the wake of heightened uncertainty caused by COVID-19 pandemic. The Reserve Bank took a series of measures in order to meet the enhanced demand. In addition, note printing presses, paper mills and banks were also directed to put in place a business continuity plan/contingency plan to avoid any disruption in continuous supply of currency.

VIII.3 Against this backdrop, the rest of the chapter is organised into four sections. The immediately following section 2 presents the important developments in currency in circulation during the year. Section 3 covers the implementation status of the agenda for 2019-20 and section 4 sets out the agenda for 2020-21. The chapter ends with a conclusion.

2. Developments in Currency in Circulation

VIII.4 Currency in circulation (CiC) includes banknotes and coins. At present, the Reserve Bank issues notes in denominations of ₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500 and ₹2,000. Coins in circulation comprise 50 paise and ₹1, ₹2, ₹5, ₹10 and the recently launched coin of ₹20 denomination. In terms of value, banknotes accounted for the major share of the total CiC (around 99 per cent).

Banknotes

VIII.5 The value and volume of banknotes in circulation increased by 14.7 per cent and 6.6 per cent, respectively, during 2019-20. In value terms, the share of ₹500 and ₹2,000 banknotes together accounted for 83.4 per cent of the total value of banknotes in circulation at end-March 2020, with a sharp increase in the share of ₹500 banknotes. In volume terms, ₹10 and ₹100 banknotes constituted 43.4 per cent of total banknotes in circulation at end-March 2020 (Table VIII.1).

Coins

VIII.6 The total value of coins in circulation increased by 1.8 per cent in 2019-20 while the total volume increased by only 1.2 per cent. As on March 31, 2020, coins of ₹1, ₹2 and ₹5 together constituted 83.7 per cent of the total volume of coins in circulation, while in value terms, these denominations accounted for 78.3 per cent (Table VIII.2).

Table VIII.1: Banknotes in Circulation (end-March)
Denomination (₹) Volume (lakh pieces) Value (₹ crore)
2018 2019 2020 2018 2019 2020
1 2 3 4 5 6 7
2 and 5 1,14,253 1,13,025 1,12,203 4,433 4,372 4,331
  (11.2) (10.4) (9.7) (0.2) (0.2) (0.2)
10 3,06,449 3,12,598 3,04,022 30,645 31,260 30,402
  (29.9) (28.7) (26.2) (1.7) (1.5) (1.3)
20 1,00,160 87,127 82,994 20,032 17,425 16,599
  (9.8) (8.0) (7.2) (1.1) (0.8) (0.7)
50 73,430 86,015 86,009 36,715 43,007 43,004
  (7.2) (7.9) (7.4) (2.0) (2.0) (1.8)
100 2,22,150 2,00,738 1,99,021 2,22,150 2,00,738 1,99,021
  (21.7) (18.5) (17.2) (12.3) (9.5) (8.2)
200 18,526 40,005 53,646 37,053 80,010 1,07,293
  (1.8) (3.7) (4.6) (2.1) (3.8) (4.4)
500 1,54,690 2,15,176 2,94,475 7,73,429 10,75,881 14,72,373
  (15.1) (19.8) (25.4) (42.9) (51.0) (60.8)
1,000 661 - - 6610 - -
  (…) - - (0.4) - -
2,000 33,632 32,910 27,398 6,72,642 6,58,199 5,47,952
  (3.3) (3.0) (2.4) (37.3) (31.2) (22.6)
Total 10,23,951 10,87,594 11,59,768 18,03,709 21,10,892 24,20,975
-: Not applicable.     …: Negligible.
Note: 1. Figures in parentheses represent the percentage share in total volume/value.
2. Figures in parentheses may not add up to 100 due to rounding-off of numbers.
Source: RBI.

Table VIII.2: Coins in Circulation (end-March)
Denomination (₹) Volume (lakh pieces) Value (₹ crore)
2018 2019 2020 2018 2019 2020
1 2 3 4 5 6 7
Small coins 1,47,880 1,47,880 1,47,880 700 700 700
  (12.4) (12.3) (12.1) (2.7) (2.7) (2.7)
1 4,96,360 5,03,260 5,08,878 4,964 5,033 5,089
  (41.7) (41.8) (41.8) (19.4) (19.5) (19.3)
2 3,28,550 3,31,540 3,35,158 6,571 6,631 6,703
  (27.6) (27.6) (27.5) (25.7) (25.6) (25.5)
5 1,66,500 1,71,510 1,75,992 8,325 8,575 8,800
  (14.0) (14.2) (14.4) (32.5) (33.2) (33.5)
10 50,490 49,050 50,130 5,049 4,905 5,013
  (4.3) (4.1) (4.1) (19.7) (19.0) (19.1)
Total 11,89,780 12,03,240 12,18,038 25,609 25,844 26,305
Note: 1. Figures in parentheses represent the percentage share in total volume/value.
2. Figures in parentheses may not add up to 100 due to rounding-off of numbers.
Source: RBI.

Currency Management Infrastructure

VIII.7 The functions relating to issuance of currency (both banknotes and coins) and their management are performed by the Reserve Bank through its issue offices, currency chests and small coin depots spread across the country. As on March 31, 2020, the State Bank of India accounted for the highest share (58.3 per cent) of currency chests (Table VIII.3).

Indent and Supply of Currency

VIII.8 The indent of banknotes for 2019-20 was lower by 13.1 per cent than that of a year ago. The supply of banknotes during 2019-20 was also lower by 23.3 per cent than in the previous year mainly due to the disruptions caused by the outbreak of COVID-19 and the ensuing lockdown (Tables VIII.4).

VIII.9 The indent and supply of coins for 2019-20 was lower by 44.5 per cent and 49.3 per cent, respectively, from their levels in the previous year, reflecting lower demand for coins in the economy (VIII.5).

Table VIII.3: Currency Chests and Small Coin Depots (as at end-March 2020)
Category No. of Currency Chests No. of Small Coin Depots
1 2 3
State Bank of India 1,962 1,689
Nationalised Banks 1,180 908
Private Sector Banks 206 168
Cooperative Banks 8 7
Foreign Banks 4 3
Regional Rural Banks 6 6
Reserve Bank of India 1 1
Total 3,367 2,782
Source: RBI.

Table VIII.4: Indent and Supply of Banknotes by BRBNMPL and SPMCIL (April-March)
(pieces in crore)
Denomination (₹) 2017-18 2018-19 2019-20
Indent Supply Indent Supply Indent Supply
1 2 3 4 5 6 7
5 - - - - - 1
10 424 431 392 429 147 147
20 246 205 5 21 125 134
50 378 279 423 404 240 234
100 807 317 633 641 330 327
200 269 283 262 273 205 196
500 (new design) 921 969 1,169 1,147 1,463 1,200
2,000 15 15 5 5 - -
Total 3,060 2,500 2,888 2,919 2,510 2,239
-: Not Applicable.
Note: Figures in the columns may not add up to the total due to rounding-off of the numbers.
BRBNMPL: Bharatiya Reserve Bank Note Mudran Private Limited.
SPMCIL: Security Printing and Minting Corporation of India Limited.
Source: RBI.

Disposal of Soiled Notes

VIII.10 The processing of soiled notes was expedited during the year through continuous monitoring and optimal utilisation of the CVPS/Shredding and Briquetting System (SBS). As a result, soiled notes processed increased by 18.2 per cent on a year-on-year basis (Table VIII.6).

Table VIII.5: Indent and Supply of Coins by Mints (April-March)
(pieces in crore)
Denomination 2017-18 2018-19 2019-20
Indent Supply Indent Supply Indent Supply
1 2 3 4 5 6 7
₹1 183 201 200 255 10 11
₹2 118 154 100 129 80 80
₹5 170 154 113 68 100 100
₹10 300 76 200 161 120 115
₹20 - - - - 30 5
Total 771 585 613 613 340 311
-: Not Applicable.
Source: RBI.

Counterfeit Notes

VIII.11 During 2019-20, out of the total Fake Indian Currency Notes (FICNs) detected in the banking sector, 4.6 per cent were detected at the Reserve Bank and 95.4 per cent by other banks (Table VIII.7).

VIII.12 Compared to the previous year, there was an increase of 144.6 per cent, 28.7 per cent, 151.2 per cent and 37.5 per cent in counterfeit notes detected in the denominations of ₹10, ₹50, ₹200 and ₹500 [Mahatma Gandhi (New) Series], respectively. Counterfeit notes detected in the denominations of ₹20, ₹100 and ₹2000 declined by 37.7 per cent, 23.7 per cent and 22.1 per cent, respectively (Table VIII.8).

Table VIII.6: Disposal of Soiled Banknotes (April-March)
(pieces in lakh)
Denomination (₹) 2017-18 2018-19 2019-20
1 2 3 4
2000 1 6 1,768
1000 68,467 22 0
500 2,00,237 154 1,645
200 - 1 318
100 1,054 37,945 44,793
50 827 8,352 19,070
20 1,137 11,626 21,948
10 4,975 65,239 55,744
Up to 5 83 591 1,244
Total 2,76,782 1,23,935 1,46,530
-: Not Applicable.
Note: Figures in the columns may not add up to the total due to rounding-off of the numbers.
Source: RBI.

Table VIII.7: Number of Counterfeit Notes Detected (April-March)
(number of pieces)
Year Detection at the Reserve Bank Other Banks Total
1 2 3 4
2017-18 1,88,693 3,34,090 5,22,783
  (36.1) (63.9) (100.0)
2018-19 17,781 2,99,603 3,17,384
  (5.6) (94.4) (100.0)
2019-20 13,530 2,83,165 2,96,695
  (4.6) (95.4) (100.0)
Note: 1. Figures in parentheses represent the percentage share in total.
2. Does not include counterfeit notes seized by the police and other enforcement agencies.
Source: RBI.

Expenditure on Security Printing

VIII.13 The total expenditure incurred on security printing during July 1, 2019 to June 30, 2020 was ₹4,377.84 crore as against ₹4,810.67 crore in the previous year mainly due to lower indent placed during the year.

Table VIII.8: Denomination-wise Counterfeit Notes Detected in the Banking System (April-March)
(number of pieces)
Denomination (₹) 2017-18 2018-19 2019-20
1 2 3 4
2 and 5 1 .. 22
10 287 345 844
20 437 818 510
50 23,447 36,875 47,454
100 2,39,182 2,21,218 1,68,739
200 79 12,728 31,969
500 (MG Series) 1,27,918 971 11
500 [MG (New) Series] 9,892 21,865 30,054
1,000 1,03,611 717 72
2,000 17,929 21,847 17,020
Total 5,22,783 3,17,384 2,96,695
.. : Nil.
Source: RBI.

3. Agenda for 2019-20: Implementation Status

Goals Set for 2019-20

VIII.14 Last year, the Department had set out the following goals:

  • Introduction of Varnished Banknotes - Field Trial (Utkarsh) [Para VIII.15];

  • Procurement of New Security Features for Indian Banknotes (Utkarsh) [Para VIII.16];

  • Procurement of Currency Verification and Processing Systems (CVPS) (Utkarsh) [Para VIII.17];

  • Implementation of the Recommendations of Committees on Currency Management Aspects (Utkarsh) [Para VIII.18];

  • Integration of Currency Management Functions with Core Banking Solution (e-Kuber) (Utkarsh) [Para VIII.19];

  • Aiding Visually Impaired in Identification of Denomination of Banknotes (Para VIII.20);

  • Banknote Survey of Consumers (Para VIII.21);

  • Issuance of Visually Impaired Series Coins (Para VIII.22); and

  • Other Areas of Focus (Para VIII.23).

Implementation Status of Goals

Introduction of Varnished Banknotes - Field Trial

VIII.15 The Reserve Bank has undertaken several initiatives to introduce varnished banknotes in ₹100 denomination on a field trial basis. However, the process of printing of these notes has been delayed due to disruptions caused by the COVID-19 pandemic and certain other developments.

Procurement of New Security Features for Indian Banknotes

VIII.16 A Global Pre-Qualification Bid Notice was issued in July 2017 incorporating the “Make in India” clause (to the extent feasible) in terms of Government of India’s Public Procurement (Preference to Make in India) Order 2017, for procurement of security features for Banknotes. The Reserve Bank is actively involved in taking the process forward.

Procurement of Currency Verification and Processing Systems (CVPS)

VIII.17 The Reserve Bank procured 50 new CVPS machines through a global tender. The process of supply, installation and commissioning of these new machines in all the 19 Regional Offices has been completed. The Reserve Bank also undertook an exercise to upgrade the infrastructure of CVPS rooms to state-of-the-art/ international norms, creating a risk-free, hygienic and aesthetically designed workplace.

Implementation of the Recommendations of Committees on Currency Management Aspects

VIII.18 Recommendations relating to standardisation of raw material procurement, quality assurance, note printing processes and security features across all presses and papermills, made by a Group of Experts1 (Chairman: Shri C. Krishnan) were pursued for implementation during the year. Pursuant to the recommendations of the High Level Committee on Currency Storageand Movement (HLCCSM)2 [Chairman: Shri N. S. Vishwanathan] and the Committee on CurrencyMovement (CCM)3 [Chairman: Shri Deepak Mohanty], the Reserve Bank actively engaged in scaling up direct remittance of banknotes to currency chests, remittance tracking system and standardisation of container fleets for sending treasure in a safe, optimum and secure manner. Recommendations to strengthen the process of mopping up of soiled notes, last mile distribution of banknotes along with other recommendations of the HLCCSM, CCM and Group of Experts are in various stages of implementation.

Integration of Currency Management Functions with Core Banking Solution (e-Kuber)

VIII.19 A currency management module (CyM) in e-Kuber is being developed to improve the management information system for currency operations and to ensure that accounting of currency chest transactions are reflected in the Reserve Bank’s book in near real time basis. The functionalities of CyM module are being rolled out in 3 phases. Phases I and II involved on-boarding of all 19 Regional Offices (ROs) and all the active currency chests (CCs) in CyM module and were completed by June 2019. With this new module, the accounting of currency transaction is now being carried out on T+0 basis as against T+1 basis under ICCOMS, the erstwhile currency management application of the Reserve Bank. Phase III of CyM module, which includes development of user reports and certain other functionalities, is in progress.

Aiding Visually Impaired in Identification of Denomination of Banknotes

VIII.20 The Reserve Bank launched MANI (Mobile Aided Note Identifier), a mobile application for aiding visually impaired persons to identify the denomination of Indian banknotes, which was inaugurated by the Governor on January 1, 2020 (Box VIII.1).

Banknote Survey of Consumers

VIII.21 The Department launched a Banknote Survey of Consumers in October 2019 with the objective of (a) assessing the demand for cash as well as denomination preferences at consumer level; (b) measuring the awareness of people about various security features of the banknotes; and (c) gauging the level of satisfaction with the current banknotes and coins for normal as well as visually impaired people. Fieldwork, however, had to be postponed due to the lockdown.

Issuance of Visually Impaired Series Coins

VIII.22 The new series of visually impaired friendly coins, which was introduced in March 2019, was put into circulation over the counter at Issue Offices of the Reserve Bank. This new series was also remitted to currency chests for wider distribution to public.

Box VIII.1
Mobile Aided Note Identifier (MANI) for the Visually Impaired

Indian banknotes have several features like intaglio printing, tactile mark, variable banknote size, large numerals, variable colour, monochromatic colours and patterns, which enable the visually impaired (colour blind, partially sighted and blind people) to identify them. In its Statement on Developmental and Regulatory Policies of June 6, 2018, the Reserve Bank announced its intention to explore the feasibility of developing a suitable device or mechanism for improving further the identification of Indian banknotes by the visually impaired. Accordingly, the Reserve Bank developed and launched a mobile application called MANI (Mobile Aided Note Identifier) on January 1, 2020 with the following features:

  • Capable of identifying the denominations of Mahatma Gandhi Series and Mahatma Gandhi (New) Series banknote by checking front or reverse side/part of the note, including half folded notes at various holding angles and broad range of light conditions (normal light/ day light/low light/etc.).

  • Ability to identify the denomination through audio notification in Hindi/English and non-sonic mode such as vibration (suitable for those with vision and hearing impairment).

  • After installation, the mobile application does not require internet and works in offline mode.

  • Ability to navigate the mobile application via voice controls for accessing the application features wherever the underlying device and operating system combination supports voice enabled controls.

  • The application is free and can be downloaded from the Android Play Store and iOS App Store without any charges/payment.

  • The mobile application does not authenticate a note as being either genuine or counterfeit.

In the USA, a similar application called EyeNote was developed by the Bureau of Engraving and Printing (BEP) and was put in place for public for free.

References:

1. RBI press releases.

2. Bureau of Engraving and Printing (BEP), US Department of the Treasury.

Other Areas of Focus

VIII.23 As part of the medium-term strategy framework, the Reserve Bank continued to focus on other areas of currency management like bringing improvements in the processing capabilities and logistics for efficient inventory management of currency and fine-tuning the models for estimation of demand for banknotes and coins.

Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL)

VIII.24 BRBNMPL is a wholly owned subsidiary of the Reserve Bank, which runs two banknote printing presses in Mysuru and Salboni with a total capacity of printing 16 billion note pieces per year on a two-shift basis. Since its inception, the company has enabled the Reserve Bank to bridge the gap between the supply and demand for banknotes in the country. BRBNMPL along with Security Printing and Minting Corporation of India Limited (SPMCIL) has set up the Bank Note Paper Mill India Private Limited (BNPMIPL) in Mysuru, an entity producing Cylinder mould VAT made Watermarked Bank Note (CWBN) paper required for banknote production, with a production capacity of 12,000 metric tonnes per annum. BRBNMPL has also set up an ink factory at Mysuru with an annual production capacity of 1,500 metric tonnes, which has started its commercial production from August 2018.

4. Agenda for 2020-21

VIII.25 During the year, the Department will focus on the following:

• Automation of Banknote Handling Process (Utkarsh)

  • Upgrade the infrastructure and processes for currency management by inducting modern technology.

• Microsite for Bank notes

  • Continue the process of designing and developing a microsite to host basic information on features of banknotes and information relating to currency management – information on banknotes will be presented through various multimedia with simple and efficient navigation;

  • Displaying 360-degree view of the design and security features of banknotes through explanatory videos and animation;

  • Informative materials on exchanging banknotes/Note Refund Rules; and

  • Interactive games and posters.

5. Conclusion

VIII.26 In sum, in spite of challenges caused by COVID-19 pandemic, the Reserve Bank successfully managed to maintain adequate supply of clean currency notes in the economy. The Reserve Bank has also made sustained efforts to combat the menace of forged notes in circulation and to create public awareness about various aspects of banknotes. Going ahead, strengthening the currency management infrastructure, enhancing public awareness on different features of Indian banknotes and fine-tuning the models for estimation of demand for banknotes will be the areas of focus for the Reserve Bank.


1 The Report was submitted to the Reserve Bank in 2018.

2 It was an Interim Report.

3 The Report was submitted to the Reserve Bank in 2017.


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