Distribution of notes and currencies

1. Reserve Bank of India
DISTRIBUTION OF NOTES AND
COINS IN INDIA-from RBI to
Commercial Banks and finally to the
public

2. Reserve Bank of India
India – A Huge Country
Mint
Press
Issue Offices
Chandigarh
New Delhi
Jaipur
Lucknow
Kanpur
Patna
Guwahati
Ahamadabad
Calcutta
Hyderabad
Banglore
Trivandrum
Chennai
Mumbai
Byculla
Bhuaneshwar
Nagpur
Mysore
Nasik
Dewas
Salboni
Noida
Mumbai
Hyderabad
Calcutta
Bhopal
Population: 1.2 billion
North to South: 3,200 km
West to East: 3,000 km
Area: 3,288,000 sq. km
Per-capita Income

3. Distribution of Currency -Dimension
(value)
0
50000
100000
150000
200000
250000 1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Reserve Bank of India
Rs.2,448 billion, i.e.,
US $ 49 billion currently

4. Distribution of Currency - Dimensions
(volume)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Reserve Bank of India
41 billion pieces in 2002

5. Dimensions –
Enormous volume of lower denominations
% share of denominations
1,2,5
19%
20
2%
50
17%
100
29%
500
3%
1000
0%
10
30%
1,2,5
10
20
50
100
500
1000
Reserve Bank of India

6. Dimensions –
Too little value of the lower denominations
% share of denominations
1,2,5
1%
20
1% 50
15%
100
47%
500
28%
1000
3% 10
5% 1,2,5
10
20
50
100
500
1000
Reserve Bank of India

7. Agencies Involved
Reserve Bank of India

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

9. Network of Currency Chests
Reserve Bank of India
 RBI is located only in 18 places for currency
operations
 Distribution of notes and coins throughout the
country is done through designated bank
branches, called chests
 Chest is a receptacle in a commercial bank to
store notes and coins on behalf of the
Reserve Bank
 Deposit into chest leads to credit of the
commercial bank’s account and withdrawal,
debit

10. Currency Chest - Operations
 Meets currency requirement of
public
 Withdraws unfit notes
 Exchange facility from one
denomination to another
 Payment requirement of the
Government
 Exchange of mutilated notes
 Avoids frequent movement of
cash
 Chest branch operates with
minimum cash balance
Reserve Bank of India

11. Currency Chest Mechanism
 Net deposit /withdrawal of notes and
coins at the chest is reported on
daily basis to parent Issue Office
 Overall deposit or withdrawal leads
to credit or debit of bank’s account
in RBI
 Net withdrawal from chests means
expansion of currency and deposits
means contraction
 Notes in circulation being the
liability of RBI, it adjusts its asset-
liability position centrally for such
expansion or contraction
Reserve Bank of India

12. Movement of Treasure
Reserve Bank of India
 Specially built trucks for short distance (journey
completed during the day) and for local
movement through trucks by enlisted local
container operators.
 For Intercity Routes - by TCISCS and CCIL
 Railways for long distance –CCIL
 By Road - TCISCS
 Guarded by police
 Remittance accompanied by officials of RBI to
chests
 Further movement from chest to a branch done
by the bank concerned

13. How much to print & mint
Reserve Bank of India
 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

14. Capacity of Presses & Mints
Reserve Bank of India
 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 5,000 mn pieces

15. Challenges of Distribution
Reserve Bank of India
 Size of the country and volume of
currency
 Security and availability of railway
wagons when required
 Political boundaries defining
jurisdiction of Issue Offices lead to
sub-optimal logistics
 Cross movement of currency is
unavoidable

16. Reserve Bank of India
Cross-movement of
Currency
Mint
Press
Issue Offices
Chandigarh
New Delhi
Jaipur
Lucknow
Kanpur
Patna
Guwahati
Ahamadabad
Calcutta
Hyderabad
Banglore
Trivandrum
Chennai
Mumbai
Byculla
Bhuaneshwar
Nagpur
Mysore
Nasik
Dewas
Salboni
Noida
Mumbai
Hyderabad
Calcutta
Bhopal
Fresh Notes/Coins from
Press/Mint pass on to the
banks/public only through
RBI offices – hence cross-
movement

17. Challenges of Distribution
(contd)
Reserve Bank of India
 Security- police is preoccupied with
other activities of priority
 Private security is unavailable and not
favoured
 Transport through railways involves
enormous coordination of logistics
 Privatization of transport – introduced
recently in respect of coins only

18. Supply Bottleneck
Reserve Bank of India
 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
Temporary respite through imports
in 1997-98 (3.6 bn pieces)

19. Problem of plenty - the present
transition
Reserve Bank of India
 Enough printing capacity since 1999
 Governor announces clean note policy
 All RBI offices receive enough fresh
note supply; vaults full with old and
new notes
 Chests overflowing with
soiled/unsorted notes
 An apparent impasse

20. Breaking the impasse
Reserve Bank of India
 Capacity to process and destroy notes in
RBI needed to increase so that
Stock of soiled notes within RBI could
be destroyed releasing vault space
Expeditious withdrawal of notes from
chests could be initiated

21. Breaking the impasse
0
200
400
600
800
1000
1200
2001
July
2001
Sept
2001
Nov
2002
Jan
2002
Mar
 Special methods
announced
enabling higher
output in
processing
 Installation of
processing systems
(BPS 1060S) in 9
Offices
 Shredding &
briquetting in all
offices
Reserve Bank of India
Million pieces

22. Coin Distribution – Some new
steps
Reserve Bank of India
 Mobile van at city centres
 Distribution through milk cooperatives in the
state of Gujarat
 Through Post Offices in rural areas – a
beginning made in Maharashtra
 Coin dispensing machines in public places
and bank branches
 Issue of notes of lower denominations to bulk
users by RBI is compulsorily accompanied by
issue of some part in coins

23. Early results
Reserve Bank of India
 Clean Note Policy made a success
 Currency processing systems have
stabilized in operation
 Modernization of mints show results
 Import of coins and temporary printing of
Rs.5 notes has improved the supply
position

24. Meeting the challenge of
distribution
Reserve Bank of India
 The volume should be contained within sustainable
levels by
 Shift in printing from lower to next higher denominations
(a perceptible shift already visible)
 Coinise Rs.10 denomination
 Try out other substrate for printing – coating of paper or
polymer, although currently there is no plan to introduce
polymer notes, since this is in testing phase.
 Banks have been compelled to dispense with the
age-old practice of stapling of notes
 Sorting of notes to get decentralized through banks
or processing centers

25. Issue Department – Functions
Reserve Bank of India
 Administration
 Records
 Resource
 Remittance
 Accounts Section – Integrated
Computerized Currency Operations And
Management System (ICCOMS)
 Claims Section
 Cash Department

26. Issue Department – Functions
Reserve Bank of India
 Administration Section –
 Human Management & Deployment coordination
 Meetings & Security Related Matters
 Compliance of Instructions from The C.O. etc.
 Records Section – Maintenance of infrastructure,
machines, records, etc.
 Resource Section –
a) Indent of currency to CNP & BNP and indent of
coins to Mints.
b) Remittance order and planning for remittance to
banks.
c) Coordination with TCISCS and CCIL for supply of

27. Issue Department – Functions
Reserve Bank of India
 Remittance Section –
a) Remittance of currency/coins to banks currency
chests along with bank officials.
b) Arranging police escort and transportation related
matters
 Accounts Section – ICCOMS
a) Reporting of accounting entries to C.O. on daily
basis
b) Connectivity with all currency chests of the Banks
since currency chest is the property of RBI.

28. Bank Note Presses and Mints
Reserve Bank of India
 Currency Note Presses (CNP) – Nasik -1928
 Bank Note Presses (BNP) – Dewas - 1976
 Bhartiya Reserve Bank Note Mudran Ltd. (BRBNML)
– Mysore and Salboni – 1996
 Printing capacity – 1800 cr pieces p.a. requirement –
1200 cr pieces p.a.
 Mints
 Mumbai
 Noida
 Alipore(W.B.)
 Hyderabad

29. Reserve Bank of India
Currency Chests
Temporary Chests & Repositories
Small Coin Depots
Types of Transactions in an Issue Circle
Currency Transfer
Currency Remittance
Opposite Transfer

30. Reserve Bank of India
 Thank You
&
 Questions?