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Friday, May 18, 2012

RBI staff appeal on coins, notes distribution

The Reserve Bank of India (RBI) staff and officers’ unions have urged top officials to desist from abdicating public duty of delivering coins and currency notes.

This comes in the context of the policy statement that henceforth the distribution of currency coins will be channelised only through currency chests and bank branches.

This would mean closure of RBI in metro centres and state capitals which have been hitherto delivering this service.

The RBI staff union has said that this move will deprive the public of the quality service delivered over decades and seriously hit the staff strength of RBI.

The central bank will have abdicated itself of one of the core functions, the unions said.

The RBI offices have been doing the job since inception through its own offices as well as network of commercial banks.

Currency chests, coin depots

At least 5,000 currency chests and more than 4,000 small coin depots have been involved in the exercise.

As per RBI data, 11,218 crore pieces of coins of value Rs 12,628 crore were in circulation in March 2011. This must have crossed 11,225 crore pieces by now and is adequate to meet the national need given their high velocity of circulation.

A crisis here, if at all, is mostly because the network of commercial banks has failed to supply coins/small denomination notes to retail customers.

Either coins supplied by RBI remain accumulated or are distributed only in bulk in preference to retail customers or small businessmen, who are mostly in need.

This would only aggravate the crisis and people in cities would only rush to RBI counters even more.

Strangely, RBI has sought to restrict the entry of customers on specious pleas creating panic about shortage of coins.

In this backdrop, it is incumbent on the part of RBI authorities to monitor retail currency/coin distribution by banks and fully activate the system.

Instead, they have decided to close down the existing channels of distribution through RBI counters.

Currency distribution

The Finance Minister has recently said that currency distribution is a key sovereign function and among the primary functions of a central bank.

"It is also the most visible of its functions, as it touches directly and immensely the common person.''

The unions also referred to complaints from members of public with regard to supply bottlenecks. Unscrupulous people are already taking full advantage.

If the RBI totally disappears from the scene, this will send signal to the racketeers who will be emboldened to carry in with their nefarious activity. This will lead the entire currency management to anarchy, the unions said.

RBI intervention

The RBI should gear itself up for more effective intervention for activating the chest offices and the bank branches by undertaking regular inspections.

Abdicating its responsibilities in others’ favour or assigning private agencies for the job will be most unbecoming of RBI and a sure recipe for disaster.


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