Govt
to mint plastic notes to check swindle
Govt to mint plastic notes to check swindle
G Ganapathy Subramaniam & Samik Dasgupta
New Delhi, 07.10.02
If the prospect of credit card swindle drives you nuts, here's a different kind
of plastic money for you: Go, splurge at the downtown mall with some plastic
currency. The government is planning to introduce plastic currency notes next
year.
If the current plans of the RBI and the finance ministry materialise, you can
fork out plastic notes of Rs500 denomination to pay your grocer, milkman or the
doctor. Senior officials of RBI and the finance ministry are also in favour of
printing Rs1,000 notes, the largest denomination in circulation in India, on PVC
film. And, if the experiment succeeds, more plastic currency - Rs 100 and Rs 50
- will reach your wallet.
The purpose of going PVC with your money is not to turn Mahatma's smile plastic
but to curb the menace of fakes and make the moolar more durable. If plastic
currency in introduced, the existing notes in the Rs500, Rs100 and Rs50
denomination would be withdrawn from circulation over a period of four years.
Initially, the PVC film for the notes would be imported, as is the case with the
special paper on which Indian rupees of various denominations are printed.
Officials feel that printing would also be initially done outside the country.
Australia and New Zealand are among the few countries that use plastic currency
now. Most of the other currencies of the world, including the mighty dollar are
printed on special paper.
The idea of introducing plastic currency was generated by a group of senior RBI
officials who were putting their heads together to find ways to check fake
currency. First it was found that a number of fake Rs500 notes seized recently
were printed on the same quality of paper as the real currency. Secondly, it was
found that many countries were procuring specialty paper from the same source as
India and Pakistan was also among the buyers. Since the long-standing allegation
of the government was that Pakistan's ISI was pumping fake currency into India,
it did not take time to put two and two together. The net result was the
decision to move away from currency printed on specialty paper since it was not
helping in checking fakes.
The search for an alternate led to the idea of currency notes printed on PVC,
highly-placed sources in the banking division of the finance ministry said. The
Reserve Bank's view was that the economy would face turbulence if the fake
currency menace was not contained, they added. Since the idea has been accepted
in principle, the finance ministry and the RBI are in the final stages of
working out a detailed plan for introduction of currency notes printed on PVC
film.
Apart from helping in checking fakes, plastic currency would also help in
cutting down costs since endurance is far higher. Also, they will be more
suitable for the conditions in which most Indians carry their currency besides
being water resistant.
While pursuing the plastic currency plan, senior officials came across the view
that print-dies of the paper notes can easily be replicated to print fakes. In
the case of plastic notes, the technology is available only with select
countries, making it difficult to produce fakes. The most worrying aspect of the
entire episode is that detection of Rs500 fakes has become difficult even for
trained bankers and even RBI staff through the government is not willing to
openly acknowledge this reality. Moreover, the volume of fakes in circulation is
far higher that official estimates.
