Write Comment     |     E-Mail To a Friend     |     Facebook     |     Twitter     |     Print

RBI’s problem of plenty: 15,000 million notes may have to be destroyed

The Reserve Bank of India will take over a year to destroy the recently demonetised five-hundred and thousand rupee notes. The sorting, verification and shredding of the notes is already underway at three centres in the state - Fort, in Mumbai, Belapur and Nagpur. .

 A senior employee of the currency management department of the Reserve Bank of India (RBI), who did not wish to be identified, said Mumbai alone is likely to send to the shredding centres 70,000 to 80,000 gunny bags full of demonetised notes. .

 The RBI this years is likely to delay or keep aside the shredding of damaged notes of smaller denominations since all its shredding units will be taken up by the demonetised high denomination notes. "We don’t expect to get back each and every note that was in circulation, but assuming we get even 70% of the demonetisation notes for shredding, we will have to deal with over 15,000 million notes," the employee said. .

 The process of acquiring the notes that are no longer legal tender, and RBI official said, was underway by November 14, six days after the demonetisation announcement. And, the process of shredding these notes began almost immediately. .

 According to an RBI report, last fiscal (2015-2016), 625 million pieces of soiled thousand-rupee notes and 2,800 million pieces of 500-rupee notes were shredded. Up till March 2016, the number of 1000-rupee and 500-rupee notes in circulation were 6326 million and 15707 million, respectively. "We don’t expect to get back each and every note that was in circulation, but assuming we get even 70 per cent of the demonetised notes for shredding, we will have to deal with over 15,000 million notes, and that means thousands and thousands of gunny bags filled with notes," the employee said. .

 The RBI has around 40 verifying and shredding machines at 19 locations across the country. Every time it receives a delivery of soiled notes, the same is sorted to check for counterfeit currency before being shredded. The shredding machines, imported from either Japan or Germany, can destroy 2,50,000 notes in an hour. "But we will have to work in two shifts to complete the process, as there is a possibility that some machines might not function properly, or will be too stressed," said the employee. 

Another officer said that this was the first time the RBI was faced with such a challenge. "We had a demonetisation in 1978, but in those days the number of high denomination notes in circulation was very less compared to today." 

 Much thinking is also going around on what use could the mounds and mounds of shredded notes could be put to. In the past, the apex bank has used the shredded notes to make paperweights, files, briquettes and as landfill. But now, the officer said, a call will be taken as to how to handle the waste in an eco-friendly manner. 

 Until 2001, soiled and torn currency notes were subjected to a manual system of verification by the RBI staff. Non-issuable notes were often burnt. In 2003, the then RBI governor Bimal Jalan introduced a system of mechanised sorting and subsequent destruction of notes. The soiled notes are examined, sorted and disposed of under the currency verification and processing system (CVPS). Of the segregated notes, those considered to be worth reissuing are introduced back into circulation. 

 The RBI spokesperson did not respond to repeated calls from Mumbai Mirror. An email sent to her also remained unanswered.