India: New Series of Banknotes Soon

[Bimat]

By the way, RBI/finance ministry have also decided that (newly designed) defective ₹500 banknotes (200 million in total) will NOT be put into circulation and they will eventually be destroyed. Printing presses had also produced 700 million ₹500 banknotes of old design just before announcement was made on November 8, so these 700 million banknotes (or a total of 900 million banknotes) will also be destroyed without even being touched! So a loss of few hundred crores to exchequer...

(The link to the story is here).

Aditya

[Bimat]

Swiss notes are landing in Calcutta

Sanjay Mandal

Calcutta, Dec. 19: Demonetisation is bringing boxfuls of notes from Switzerland to Calcutta, but it's not the famed black money from Swiss banks.

Eighteen chartered cargo planes from Zurich have landed in the city in the past two-and-a-half months carrying blank watermarked notes that are being printed at the currency press in Salboni, West Midnapore.

That's 16 to 17 more chartered cargo planes than the airport, serving a business-starved region, usually sees in a year.

Each plane has been bringing 100 tonnes of the notes stashed in 280 wooden boxes, each measuring 0.6 cubic metre, to be driven the 150km to Salboni in five or six trailers.

Sources said two more such chartered flights would arrive on Wednesday and Saturday. They said the notes are manufactured by Landqart AG, a Swiss maker of substrates (material) for banknotes, passports and visa applications.

An official involved in the transfer and handling of the consignments said usually such cargo was brought by ship and received at ports.

"But because of the demonetisation, these blank notes were needed to be brought very fast in large volumes, so chartered flights were the only option," he said.

The arrivals began in end-September, when the government started speeding up printing of banknotes ahead of the recall of the old high-denomination currency.

It couldn't be ascertained how much extra it was costing the Reserve Bank of India to rent Boeing 777s from the Emirates airline to fly the 7,500km from Zurich, a 15-hour flight requiring a refuelling stop in Dubai.

But airport officials here aren't complaining. They have already raised their cargo-handling target for the current financial year to 50,000 tonnes.

The officials explained that although the hike in target from last year wasn't huge, the earnings would be substantially higher. Airports charge more for freight ferried by chartered cargo flights than that brought by passenger flights or ordinary cargo planes.

Officials at the airport's cargo division said the last time they had seen a sizeable number of chartered flights was three to four years ago, when they carried in television set-top boxes from China and Hong Kong. "But the number was nowhere near this time," an official said.

Chartered flights are usually rented if the cargo is confidential or its volume is large. As an industrial backwater, Bengal doesn't attract or generate enough international cargo to make the airport's cargo terminal viable.

On an average month, the airport handles about 4,000 tonnes of cargo - including that from passenger aircraft - while Mumbai handles around 15,000 tonnes, Airports Authority of India officials in Delhi said.

The AAI has offered sops to airlines and companies to attract more cargo to Calcutta but without much success. Recently, it has allowed Calcutta airport to offer special low rates for the handling of Europe-bound cargo from Dhaka, which was earlier sent through other airports.

Calcutta airport mainly receives imports in the form of machinery, laptops, computer parts and mobile phones.

Source: The Telegraph

[Bimat]

It couldn't be ascertained how much extra it was costing the Reserve Bank of India to rent Boeing 777s from the Emirates airline to fly the 7,500km from Zurich, a 15-hour flight requiring a refuelling stop in Dubai.

I bet it's NOT cheap!!!

Aditya

[Bimat]

Printing cost of new ₹500 and ₹2000 banknotes is now known: It's ₹3.09 per note for ₹500 note and ₹3.54 per note for ₹2000 banknote. (Source)

So the printing cost of ₹500 note hasn't changed, though the size has considerably reduced and there are no major additional security features...

Aditya

[Bimat]

RBI stance on introduction of new series of notes: 'A very rare opportunity to tackle fake notes, terrorist financing and black money'

Express News Service | Updated: January 10, 2017 2:11 am

In a 7-page note submitted on December 22 to the Department Related Committee of Finance, the RBI said its Central Board that met on November 8 noted that the proposal to withdraw the legal tender status of high-denomination bank notes could not have come at "a more opportune time". Edited excerpts:

Preparation

Though no firm decision was taken initially, whether to demonetise the high denomination notes or not, preparations still went on for introduction of new series notes, as that was needed in any case.

Besides, the RBI had earlier in October 7, 2014, suggested to the government the need for introduction of higher denomination notes of Rs 5,000 and Rs 10,000, keeping in view the inflation since the introduction of Rs 1,000 denomination in October 2000 and the need for facilitating payments and managing the currency logistics. The government considered the same, and after deliberations, advised on May 18, 2016, their in-principle decision to introduce notes in a new denomination of Rs 2,000.

Accordingly, the RBI, on May 27, 2016, recommended to the government that new series of notes with new designs, sizes, colours and themes including notes in the new Rs 2,000 denomination be introduced. The government gave its final approval on June 7, 2016, and accordingly, the presses were advised in June 2016 to initiate production of new series notes.

Decision

On November 7, 2016, the government advised the RBI that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the RBI may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000. It was advised in that letter that cash has been a facilitator of black money since transactions made in cash do not leave any audit trail. Elimination of black money will eliminate the long shadow of the ghost economy and will be positive for India's growth outlook. They also observed that in the last five years, there has been an increase in the circulation of Rs 500 and Rs 1,000 notes with an increasing incidence of counterfeiting of these notes. There have been widespread reports of the usage of the Fake Indian Currency Notes (FICNs) for financing of terrorism and drug financing. The FICNs have their origin in the neighbouring country and pose a grievous threat to the security and integrity of the country.

Hence, the government has recommended that the withdrawal of the legal tender character of these notes is apposite. The government advised the RBI to place these matters of immediacy before the directors of the Central Board of the RBI for consideration in terms of and as per the provisions of Section 26 (2) of the Reserve Bank of India Act, 1934.

The Central Board of the RBI met on November 8, 2016 to consider the government's advice. The Board noted that a summary measure with high and lasting impact in the form of withdrawal of legal tender character of these high denomination bank notes to contain the menace of counterfeit notes is proposed by the government. It was observed that such a proposal could not have come at a more opportune time than coinciding with the introduction of the MG (New) series of notes: with these, the existing banknotes can be summarily withdrawn, and the new design notes with more counterfeit resistance features be introduced.

It was considered that the action as proposed by government would result in non-availability of these denominations for the public for transaction and store of value purposes; it might not immediately be possible to replace these notes fully in terms of both value and volume on one to one basis, within a specific time. However, the stock of Rs 2,000 denomination were arriving in RBI offices and were being dispatched to currency chests across the country and that could enable meeting a significant critical portion of the physical demand therefrom in value terms. Besides, electronic means of transaction were expected to take another part of the transaction load hitherto met from physical currency. Further, the available stock of other denominations at RBI and currency chests would also help meet demand.

Further, Rs 500 banknotes in MG (New) Series was also being introduced. With these measures in place, it was considered that the transition from old series to new series in the context of withdrawal of legal tender character of Rs 500 and Rs 1,000 could be managed. It was also noted that the implementation phase would be closely monitored and necessary corrective actions could be taken as and when necessary.

After deliberations of the proposed scheme, the Board decided to recommend to Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1,000 be withdrawn as per the Scheme. Government considered the recommendations and decided to withdraw that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1,000. The Gazette Notification dated November 8, 2016 contained this decision and the Scheme.

Impact on RBI's balance sheet

The withdrawal of legal tender status of the Specified Bank Notes (SBN) will be impacting the balance sheet of the RBI in the following ways. To the extent, the SBNs are exchanged with other legal tender notes, there will be no impact on any components of the balance sheet. However, to the extent the SBNs are deposited and value thereof has been credited, the notes in circulation component of the balance sheet will get reduced and the deposits by commercial banks component will get increased by an equal amount. Further, to the extent the SBNs do not get returned to the RBI, there will be no change in the balance sheet, as such notes will still remain the liabilities of the RBI. Thus on net basis, there will be no net impact on the balance sheet of the RBI because of withdrawal of the SBNs.

Rationale

Government of India, on the recommendations of the Central Board of the RBI, withdrew the legal tender status of banknotes of Rs 500 and Rs 1,000 denominations effective midnight of November 8, 2016.

In the last few years, the RBI, in consultation with the Government of India, had been working on introduction of new series of banknotes. It included improving existing security features, introduction of new security features and new design features including new color scheme and new sizes, besides a new theme. Primary objective behind this entire exercise is to secure our banknotes against counterfeiting.

In parallel, Government of India had been taking several steps to curb black money and combat terrorism. There were reports by intelligence and enforcement agencies that availability of high denomination banknotes made it easier for black money hoarders and counterfeited notes in high denominations were being used for terrorist financing.

It occurred to Government of India and the RBI that the introduction of new series of notes could provide a very rare and profound opportunity to tackle all the three problems of counterfeiting, terrorist financing and black money by demonetising the banknotes in high denominations of Rs 500 and Rs 1,000 or by withdrawing legal tender status of such banknotes.

Source: Indian Express

[Figleaf]

Impact on RBI's balance sheet

Further, to the extent the SBNs do not get returned to the RBI, there will be no change in the balance sheet, as such notes will still remain the liabilities of the RBI.

That's where the operation went wrong. The withdrawn notes should have lost value after the transition period and RBI should have taken them off the balance sheet with a reserve for contingent liabilities in hardship cases. That would have removed all speculation in old notes as the end of the transition period came near. The transition period should have been a short period of no questions asked for normal amounts (normal can easily be defined by a large random check, taking average plus one standard deviation as normal), followed by a long period in which only hardship cases would have been received - with stringent anti-corruption checks. That would squarely have put the burden of proof on those who held the notes and obviated the need of complicated rules. No system is watertight, but simpler systems are always better than complicated systems.

What baffles me is how RBI could have been so confident that it could manage the problem of distributing the new notes while in practice they clearly couldn't. Overconfidence, Murphy's law applied to banknote printing, bad assumptions or calculation error?

Peter

[dheer]

That's where the operation went wrong. The withdrawn notes should have lost value after the transition period and RBI should have taken them off the balance sheet with a reserve for contingent liabilities in hardship cases.

I have a slightly different view ... There is time till 31-Mar-2017 to return notes for genuine cases. Untill such point of time, RBI has to carry over the liability.

Even after that from a Sovereign guarantee point of view; it is a liability and has to be carried untill eternity ... The good thing about such a stand if, in future political systems will not abuse such exercise to make a windfall gain.

Generally quite a few notes especially in lower denomination are soiled / torn / lost  during the course of use. However this can be quantified. Establishing a negative is more difficult. i.e. how can you evidence something that is not going to happen.
Last year RBI instructed Banks to withdraw from circulation all notes printed before 2005. In order to ensure compliance, beyond a stipulated time [mid last year?]; anyone carrying more than 4 pcs of older notes need to explain the source. Although no data is available, there would be a good amount that did not make way back to RBI to be destroyed. However it still does not mean RBI can write off that liability.

[Bimat]

I have a slightly different view ... There is time till 31-Mar-2017 to return notes for genuine cases. Untill such point of time, RBI has to carry over the liability.

The only genuine reason RBI is accepting is that the person was out of India between November 10-December 30 (you have to prove that). No other reason is even being heard.

And if you think that it's easy to exchange your old notes even if you were abroad between the stated period, it's not so. You have to declare the amount you are holding in old notes in customs declaration, show the notes to the customs' officer, he will get them counted denomination wise and write accordingly in the form. You have to present that form at RBI and RBI will accept only those many notes, not more, not less.

Aditya

[Bimat]

Govt plans to change security marks of currency notes every 3-4 years

Last Modified: Sun, Apr 02 2017. 09 54 AM IST

New Delhi: To check counterfeiting, the government plans to change security features of higher denomination banknotes of Rs2,000 and Rs500 every 3-4 years in accordance with global standards.

The move comes in the wake of recovery of a large amount of fake Indian currency notes in last four months after demonetisation. The issue was discussed threadbare at a high-level meeting on Thursday attended by senior officials of the ministries of finance and home, including Union home secretary Rajiv Mehrishi.

Advocating the move, home ministry officials said most of the developed countries change security features of their currency notes every 3-4 years and therefore, it is absolutely necessary for India to follow this policy. The change in design of Indian currency notes of higher denominations was long due. Till its demonetisation, there had been no major change in the Rs1,000 note since its introduction in 2000.

Changes in the old Rs500 note, which was launched in 1987, were carried out more than a decade ago. The newly introduced notes had no additional security features and were similar to those in the old Rs1,000 and Rs500 notes, officials said.

A close look by the investigators on some of the recently seized fake notes found that at least 11 of the 17 security features in the new Rs2,000 notes had been replicated. These included the transparent area, watermark, Ashoka Pillar emblem, the letters 'Rs2000' on the left, the guarantee clause with the Reserve Bank of India (RBI) governor's signature and the denomination number in Devanagari on the front, officials said.

Besides, the motif of 'Chandrayaan', the 'Swachh Bharat' logo and the year of printing had been copied on the reverse side. Although the print and paper quality of the seized counterfeits was poor, they resembled genuine notes.

The officials said the change of security features of currency notes in every 3-4 years will lead to curbing of counterfeiting to a great extent. Those who were arrested recently along with fake notes with face value of Rs2,000 have told investigators that the notes were printed in Pakistan with the help of the Inter Services Intelligence (ISI) and had been smuggled into the country through Bangladesh, the officials claimed.

A study conducted by the Indian Statistical Institute, Kolkata, in 2016 pegged the value of fake Indian currency notes in circulation at Rs400 crore.

Source: Live Mint

[Bimat]

The new ₹50 note has got the blues

MAMUNI DAS

NEW DELHI, AUGUST 1:

India is set to get its first blue-coloured ₹50 notes, after its first pink ₹2,000 notes last year, and the stone-grey ₹500 currency notes introduced in 2016.

The freshly designed ₹50 notes will be bear a sketch of Mahatma Gandhi in blackish grey colour tone.

Also, the new ₹50 note will sport the motif of a South Indian temple on the reverse, said a government official privy to the information.

In December 2016, the RBI had stated that it would shortly issue new ₹20 and ₹50 bank notes; the existing ₹50 and ₹20 notes will continue to be legal tenders.

Currency notes are designed in different colours so that even people who are not literate can distinguish them. The symbols carried on the reverse of the notes draw inspiration from culture, and from heritage sites, or are chosen to represent India's scientific prowess or the march of technology.

For instance, the ₹2,000 note introduced in 2016 depicted the Mangalyaan, the country's first venture in inter-planetary Mars orbiting mission. And the latest ₹500 notes had the motif of the Delhi-based Red Fort. The new features of these notes included numerals in Devnagari script and Mahatma Gandhi's round-rimmed glasses, on which the logo of the Swachh Bharat campaign is based.

The ₹50 notes currently in circulation are pink-violet in colour and sport the Parliament building on the reverse. The new notes have already reached some RBI chests for distribution.

Drawing inspiration

While earlier note designs largely drew from historical milestones and personalities, currency designing now around the world increasingly draws from contemporary achievements. Just as India's ₹2,000 note featured the Mangalyaan launched in 2013, the South Pacific archipelago of Fiji celebrated its sporting success. In April 2017, the Reserve Bank of Fiji stamped the gold medal victory of Fiji rugby sevens team at the Rio Olympics in its $7 banknote and 50-cent coin.

As multiple digital payment mechanisms become available, the role that currency notes will play in our daily lives need to be evaluated.

"The future of cash remains unknown but central banks from all corners of the globe report that cash remains king as a preferred retail payment method," according to a survey by Currencyresearch, a global consulting firm.

"Today, 85 per cent of worldwide consumer spending is done in cash despite many forecasting the demise of this resilient product," it added.

Source: The Hindu Business Line

[vaibhavdata]

photos of the new Rs 50 are surfacing in social media.. doesnt seems to be fake at all...
Wat r ur views on the same?

[vaibhavdata]

One more photo

[Bimat]

Received similar photos on WhatsApp just yesterday, from a friend who works at a bank. Expect them to be issued pretty soon.

Don't like the color at all...

Aditya

[Jostein]

Received similar photos on WhatsApp just yesterday, from a friend who works at a bank. Expect them to be issued pretty soon.

Don't like the color at all...

Aditya

I agree, is more cian/turquoise than blue...thats remind me to the last spanish pesetas series, banknotes with just one or two colour tones..., I preffer more colorfull banknotes as the new series of Madagascar

[Bimat]

I agree, is more cian/turquoise than blue...thats remind me to the last spanish pesetas series, banknotes with just one or two colour tones..., I preffer more colorfull banknotes as the new series of Madagascar

More importantly, banknotes of the new series do not have any additional security features. They all are same as current series!

Aditya