Author Topic: Glut of Coins in India  (Read 348 times)

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Offline kansal888

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Glut of Coins in India
« on: April 14, 2019, 05:08:36 AM »
Irked by the number of coins you get through the day, which end up lining your wallet? It isn’t just you — thanks to the general preference for currency notes and a higher production of coins following demonetisation, the Reserve Bank of India (RBI) is now facing a serious problem of plenty.

In meeting after meeting of the Currency and Coin (C&C) Division in the Ministry of Finance, the central bank has been raising the issue of what it describes as the “reverse flow” of coins. As a result, the government is looking at alternative modes of transportation, as well as privatising the distribution of coins. Due to high indents and the slow lifting of coin consignments by the RBI, the potential for exporting coins to countries such as Brazil, Sri Lanka, and the Maldives is also being examined

Offline kansal888

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Re: Glut of Coins in India
« Reply #1 on: April 14, 2019, 05:10:20 AM »

Offline Bimat

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Glut of Coins in India
« Reply #2 on: April 14, 2019, 08:25:10 AM »
Since many of the links on www tend to disappear after few days, here's the complete, original article:

To end the glut of coins, govt mulls privatisation of distribution, exports

Minutes of meetings of the C&C Division accessed by The Sunday Express reveal that the RBI’s representatives have been giving an alarming picture of the coin glut but have, however, assured that whatever quantity of coins have been indented by them will now be lifted.

Written by Ritu Sarin |
New Delhi |
Updated: April 14, 2019 11:50:16 am

Irked by the number of coins you get through the day, which end up lining your wallet? It isn’t just you — thanks to the general preference for currency notes and a higher production of coins following demonetisation, the Reserve Bank of India (RBI) is now facing a serious problem of plenty.

In meeting after meeting of the Currency and Coin (C&C) Division in the Ministry of Finance, the central bank has been raising the issue of what it describes as the “reverse flow” of coins. As a result, the government is looking at alternative modes of transportation, as well as privatising the distribution of coins. Due to high indents and the slow lifting of coin consignments by the RBI, the potential for exporting coins to countries such as Brazil, Sri Lanka, and the Maldives is also being examined.

Minutes of meetings of the C&C Division accessed by The Sunday Express reveal that the RBI’s representatives have been giving an alarming picture of the coin glut but have, however, assured that whatever quantity of coins have been indented by them will now be lifted.

Minutes of a meeting held on November 22, 2018, show that the RBI has said it is now storing approximately 9 billion coins, while the projected indent given by the RBI to the Security Printing & Minting Corporation of India (SPMCIL) for the year 2019-20 is 3,400 million coins. This, incidentally is only a third of SPMCIL’s production capacity.

The minutes read, “RBI informed that presently there is a reverse flow of coins and there are approximately 9 billion pcs of coins with chest of RBI. The main issue with coins is of storage and the buildings holding

To end the glut of coins, govt mulls privatization of distribution, exports coins are on the verge of collapsing due to weight…”

The same minutes point out that should there be a “longer term reduction in the coin demand”, the indents for coins should be reduced for a longer period and that the SPMCIL can plan for either export of coins and/or a reduction of capacity. This is because the current indents for coins given by the RBI is a staggering 8,700 million pieces for the year 2020-21, and an even higher 9,800 million pieces for 2021-22.

The problem of storage of coins was also discussed at a previous Production Planning Meeting (PPM) held on October 3, 2018. The non-lifting of coins by the RBI due to a shortage of storage was discussed at the meeting.

The minutes of this meeting state: “RBI representative agreed to lift the coins as per the indent but raised the concern about insufficient space with RBI to keep stock of coins. CMD SPMCIL stated that they are exploring alternate ways for distribution of coins.”

While taking up the options for coin distribution, a “non-official” model was discussed, wherein the distribution network would be “privatized by engaging non-regulated entities”, and the government would have to bear an additional cost.

A set of minutes note, “If such an alternate distribution channel may be more efficient and increase the usage of coins in India, necessary legal changes will be brought about.”

Along with this, it was decided that the “viability” of export of coins to Brazil as well as neighbouring countries like Sri Lanka and Maldives would be examined.

Source: Indian Express
It is our choices...that show what we truly are, far more than our abilities. -J. K. Rowling.

Offline Figleaf

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Re: Glut of Coins in India
« Reply #3 on: April 14, 2019, 11:15:55 AM »
Mmm. Turn the surplus coins into razor blades? :)

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Pabitra

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Re: Glut of Coins in India
« Reply #4 on: April 14, 2019, 02:48:30 PM »
There is a shortage of coins in actual markets.

The whole process of this started when an academic called Raghuram Rajan was made Governor of RBI. His actual experience was only giving lectures to students of top universities of USA.

Prior to that, each branch of RBI was distributing coins in retail to small customers. There were hundreds of people whose livelihood depended on standing in queue and getting coins, again standing and so on. They will sell coins at nominal premium to small shopkeepers, temple goers ( who give alms to beggars as a part of their prayer ritual etc.) and collectors.

RBI decided that like all western countries, the central bank should not be involved in distributing coins and when orders were issued, there were protests from the unions of RBI.

Now the commercial banks are expected to distribute coins without getting any incentive. The question is why should they do extra work for free? They are commercial organisations.

During demonetisations, the commercial banks were asked to buy note counting machines, camera to identify repeat exchanges and were never compensated. The RBI held them to ransom and made all commercial banks sick.

Now they issued orders to earmark a portion of Currecy chests to hold coins. If they do not get distributed, what purpose will it serve?

Do you think the minted coins will be exported to Sri Lanka, Maldives, Brazil etc and will be declared legal tender in those countries, on the basis of fiat issued by RBI?

Surely, jokers will not stop joking even in the haloed premises of Ministry of Finance. The press releases are printed with out the reporter, subeditor and editor even reading it. What a quality of journalism?

And now they plan to release the new series in a month or two. Surely, some one will write a new script for "Yes minister".
« Last Edit: April 14, 2019, 03:00:07 PM by Pabitra »

Offline dheer

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Re: Glut of Coins in India
« Reply #5 on: April 14, 2019, 05:43:33 PM »
Distribution is an issue. I didn't think that there are simple answers.

The article is taking about minting coins for other countries so that it can stay profitable
http://coinsofrepublicindia.blogspot.in
A guide on Republic India Coins & Currencies

Offline Pabitra

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Re: Glut of Coins in India
« Reply #6 on: April 15, 2019, 12:53:48 AM »
The topic basically deals with glut of minted coins and finally wisdom appears to have dawned that the logistics need to be planned and some expenditure to be incurred on distribution.

Till now, as soon as the coins were minted, they were taken as assets of govt. and no commision or charges were payable to commercial banks for lifting the stock and doing the work of unpacking, counting and distributing.

Talking of exports is just a wishful thinking. Like all other public sector enterprises, SPMCIL lacks marketing expertise and is unable to get any orders. Minted coins are not commodity which can be exported by cutting prices etc. The orders need to be won by filling tenders and provide competitive bids.

Sri Lanka has just got in to long term contract with Kremnica mint and may not enter market as buyer for quite some time.
Maldives may have such a small requirement that it may not count at all.
For Brazil, distance may make it uncompetitive to export a heavy, low tech item to justify transportation cost.
Had the marketing division of SPMIL been active, they could have won the big jobs in the region like Thailand &  Saudi Arabia, which came up in last two three years?

The next few big orders are likely to be Bangladesh and Nepal and for both, China is likely winner.

Myanmar and Vietnam are markets which need to be explored and need high level skills of marketing.

Within the country, the distribution needs to remove the bottlenecks by removing RBI and Commercial banks, to ensure direct physical supply from mints to large customers like Metro rails, Postal department and local roadway organisations. For the accounting and control, RBI and Ministry of Finance may remain the information nodes.

Offline Rabi_R

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Re: Glut of Coins in India
« Reply #7 on: April 16, 2019, 06:27:45 PM »
Quote
Now the commercial banks are expected to distribute coins without getting any incentive. The question is why should they do extra work for free? They are commercial organisations.

Quote
....and no commision or charges were payable to commercial banks for lifting the stock and doing the work of unpacking, counting and distributing.

It is the GoI that has kept these so called commercial banks afloat. Whenever any bank faces a crisis related to NPA or bad debt, it is the Govt. that comes to their rescue. They will even agree to sweep the ministry premises every morning for free if asked to do so.

Offline Pabitra

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Re: Glut of Coins in India
« Reply #8 on: April 16, 2019, 07:17:03 PM »
The banks, kept afloat by GoI are those which are so called Public Sector Banks or nationalised banks.

They give loans to political nominees and then those loans are written off. In addition, they host political committees and pamper their members of various committees with gifts. Even their foreign branches are made to host Parlimentarians as special visiting committees. All these losses Are duly compensated by tax payer's money.

What about the rural areas where the actual demand for coins exists, where the cards do not work, where the transaction sizes are for day to day living and hence could be sustained by coins. The rural banks, district cooperative banks and non PSU banks are major operators in these area and their work under RBI threats ( called guidelines but a fiat in actual practice) is not compensated.

Offline Rabi_R

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Re: Glut of Coins in India
« Reply #9 on: April 16, 2019, 07:32:30 PM »
The less said about rural banks and DCBs, the better.

Offline kansal888

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Re: Glut of Coins in India
« Reply #10 on: April 18, 2019, 01:36:18 AM »

It seems that Indians are losing interest in using coins - not only because of their weight but also the move towards cashless transactions - leaving the Reserve Bank of India with a significant storage and distribution problem.

Banks around the country are also reluctant to accept coins owing to the fact that they have to allocate personnel to count them, as opposed to money counting machines for notes.

India’s central bank reportedly has more coins than it knows what to do with - around 9 billion coins as of late 2018 - according to the Indian Express, and storage costs are getting unfeasible as the RBI is running out of space to keep them.

Interestingly, the available space for coins fell significantly as the RBI started accumulating demonetised notes.


https://www.businessinsider.in/the-rbi-is-struggling-with-an-oversupply-of-coins/articleshow/68887226.cms


Offline Pabitra

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Re: Glut of Coins in India
« Reply #11 on: April 18, 2019, 12:45:19 PM »
In that case, there was no need to release new series.

Like Sweden, their new release coins seem to be having no takers OR Japan where new king may not get all denominations in to circulation.