SPMCIL's Mistake Costs Exchequer a Loss of 36 Crore Rupees

[Bimat]

Missing Raghuram Rajan Signature Costs Indian Exchequer 36 Crore

HuffPost India  |  By   Jacob Koshy

Posted: 31/07/2015 13:28 IST

The scourge of India's government ministries and Financial-Nitpicker-In-Chief, the Comptroller and Auditor General (CAG) of India, has pulled up a government PSU, for printing currency notes with the wrong RBI governor's signature and thus inflicting a Rs 36-crore loss to the country.

The Hindustan Times reports that the CAG has chided the Security Printing and Minting Corporation of India Limited for costing India an unnecessary Rs 36.69 crore loss, as it continued to print Rs 20, Rs 100 and Rs 500 denomination notes with former RBI governor Subbarao's signature in 2014, even though he had already retired from the organisation.

D Subbarao, who was the RBI governor from September 5, 2008, to September 4, 2013, preceded Raghuram Rajan, who took over on September 4, 2013.

However, this isn't an entirely new problem. In March 2014, when reports of this 'goof up' surfaced, the RBI clarified that the mis-printed notes continued to be legal tender. The Central Bank told the Press Trust of India that it wasn't easy to rapidly change new production lines to accommodate new requirements.

'To complete the process in all the banknote presses for all denominations of banknotes is a programme which is under way and is expected to be completed in due course,' the central bank said in a statement. "Making changes in the process is a tedious process and takes time, in order to keep the disturbance in production to the minimum extent."

CAG's quibble apart, it hasn't explained how the errant notes are a loss even as notes bearing Raghuram Rajan's signature are now ubiquitous.

India being an intensely cash-dependent economy now has nearly Rs.14.265 trillion in currency notes in circulation as on 20 March, which translates into 12.3% of India's gross domestic product (GDP).

An analysis by Mint of the currency-supply trends in India showed that though Rs 10 notes were the most common, inflation and the general growth of the economy had seen a meteoric rise in the printing of Rs 1000 and Rs 500 notes, some of those which bear Subbarao's erroneous signatures.

Financially however it actually doesn't seem like a big loss because--as a proportion of their face value-- the cost of printing Re 500 and Re 1000 notes are lower than five and ten rupee ones.

Source: Huffingtonpost India

[dheer]

Lets see if the other denomination notes, ie Rs 20, Rs 100 come out in the market or not. We already have the Rs 500 note.

[Bimat]

I don't think there's any loss to the exchequer as the error banknotes have been declared legal tender by RBI and (at-least some of them) have already been put into circulation. Different story altogether if they were destroyed...

Aditya

[Pabitra]

It appears from CAG report that Dewas facility continued printing notes with earlier governors signature till 25 th Feb 2014.
It should have stopped on Dec 31st OR printed those notes with 2013 as the year.
During this period it printed 372 million pieces of Rs. 20, 100 & 500.
146 million got issued whereas balance 226 million are lying with printing facility.
It must be noted that Nashik facility did not commit this blunder.

RBI has not yet declared these faulty notes as legal tender although on face of it, common man may not notice the same.

[dheer]

...t Dewas facility continued printing notes with earlier governors signature till 25 th Feb 2014.
It should have stopped on Dec 31st OR printed those notes with 2013 as the year.

I guess the practise of printing with earlier governors signature was a well established practise as it takes time to change plates. In past as there was no year of printing, such practises never got highlighted. However currently as we have a year being printed, this has become an issue.

[Pabitra]

The plates/ approved proof  were made available to both the facilties of SPMCIL by Bhartiya Reserve Bank Note Mudran Pvt. Limited, the coordinating agency for the purpose, on Sept. 14, 2013. This was 10 days after the new governor had taken over.

[Bimat]

RBI has not yet declared these faulty notes as legal tender although on face of it, common man may not notice the same.

I was referring to this statement in the article I posted; which made me think that they are legal tender:

In March 2014, when reports of this 'goof up' surfaced, the RBI clarified that the mis-printed notes continued to be legal tender.

Aditya

[Pabitra]

The fact that they are still lying with the printing facility for more than year and a half, indicates that every thing is not right.

[dheer]

The fact that they are still lying with the printing facility for more than year and a half, indicates that every thing is not right.

That reminds me of other discussion where by it was indicated that printing facilities do not have storage capability and everything that gets printed is straight away sent to RBI centers. There is a small storage at the printing facility to hold a transit items ....
So the question is where is this getting held / stored

[Bimat]

Some of these error banknotes (With Subbarao's signature instead of Rajan's) have started appearing in circulation. So far, only ₹20 banknotes with incorrect signature have been reported.

So assuming that they will put all the error banknotes in circulation, it's safe to say that there was (is) no loss to the exchequer.

Aditya

[dheer]

The Rs 500 was available last year. Haven't seen Rs 20 yet.

[Mits]

Got 100 and 500 Rs note.

[dheer]

Got 100 and 500 Rs note.

If you have spare, I would be interested.

[dheer]

Some of these error banknotes (With Subbarao's signature instead of Rajan's) have started appearing in circulation. So far, only ₹20 banknotes with incorrect signature have been reported.

So assuming that they will put all the error banknotes in circulation, it's safe to say that there was (is) no loss to the exchequer.

Aditya

Yes Rs 20 also in market in quite a bit of quantity.
So this makes it Rs 500, Rs 100 and Rs 20 with 2014 as Subbarao. Any other denomination anyone has seen or heard.