RBI wants polymer notes, FinMin doesn't
 

By Bhagyashree Pande

New Delhi

09.06.03

Even as most countries have taken harsh measures to cut down on the proliferation of counterfeit notes by introducing polymer currencies, the Indian government has still not woken up to the evergrowing nuisance.

“We are not interested in using any quoted material for printing our notes,” said a top official in the finance ministry.

Though the finance ministry is not keen on using polymer for printing notes, the Reserve Bank of India (RBI) is very keen on introducing the new material in the banking system.

The RBI, which contacted an Australian-based polymer currency note manufacturing company Securency Pty Ltd in 1999, had a trial run of polymer notes of Rs 10 and Rs 100. But when the proposal for manufacturing the notes was mooted, the company was asked to get an approval from the finance ministry.

The committee set up by the finance ministry to look into the matter had rejected the proposal on the basis that polymer notes tear easily and deform under heat. This when compared to paper currency forms no basis of rejection.

“There are vested interests working towards importing more high quality paper for printing of currency notes, thus the rejection for using any alternate material,” says an official of Securency Pty Ltd.

A striking feature that the committee overlooked, which is critical as well, is the costs savings that would be yielded by using the polymer currency.

If Rs 10, which is being printed every six months, is printed on polymer it would bring down costs by around Rs 580 crore per annum.

“Though initially the cost of manufacturing these notes will be high, but economies of scale will help reduce the costs,” says the Securency Pty Limited official.

“Besides the cost of manufacturing is likely to be low as India is the largest manufacturer of polymer in the world,” adds the official.

Asian countries such as Indonesia, Malaysia, Taiwan, Thailand, Sri Lanka, China and now even Nepal have gone in for polymer notes to crack down on counterfeiting.

In the coming months two more countries in the Indian subcontinent are going to introduce polymer notes. “One country is awaiting the approval of legal tender and the other is in the process of introducing the currency by September,” says the Securency official.

Studies have shown that the countries that use polymer currencies have been able to reduce counterfeit by up to 600 per cent.