Soiled notes to the rescue

Calcutta: The Reserve Bank of India has found a way to meet the relentless demand for 100-rupee notes: by recycling soiled notes. The central bank is exhorting banks, public and private, to reuse notes that had been taken out of circulation and were bound for the shredder and then the dumping ground. Data obtained by this newspaper show that Rs 234 crore worth of soiled 100-rupee notes have been returned to circulation in Bengal alone, with demand far outstripping supply following the November 8 demonetisation. "We recently deposited Rs 10 crore worth of soiled notes with the RBI," the chest manager at a nationalised bank said on Thursday. "Last evening, the apex bank told us to take them back for reuse. This had never happened before." In Calcutta, the notes deposited by customers are usually screened manually at the bank branches and the soiled notes sent to the RBI office in Dalhousie Square. The central bank has a department that re-examines the consignments, separating those notes it believes are fit for reuse. The rejected notes are taken to the mezzanine floor at the RBI office, put into shredder machines imported from Germany, and ferried by truck to the Dhapa ground. The banks usually set the freshly minted notes aside for their automated teller machines because old notes tend to jam these cash dispensers. Notes that are less fresh are handed to customers by the tellers. Now, in the absence of enough fresh notes, even the ATMs are being stocked with less fresh and, sometimes, soiled notes. "When I withdrew money from an ATM on Sunday, mint fresh notes came out. But last night the 100-rupee notes were so dirty they nearly got stuck while being dispensed," Rita Chakraborty, a private sector employee, said. "I had never before seen such notes come out of an ATM." The recycling of soiled notes underlines how unprepared the finance ministry and the RBI had been to deal with a situation where 86.4 per cent of the circulating currency (by value) ceased to become legal tender overnight. The Centre and the central bank, however, have continued to deny any currency shortage. "The RBI has once again clarified today that there is sufficient supply of notes consequent upon increased production that started nearly two months ago. Members of public are requested not to panic or hoard currency notes," an RBI statement said today. According to an estimate, the Salboni printing press that supplies notes to Bengal, Sikkim, some of the northeastern states and the Andamans has printed Rs 7,320 crore worth of notes since November 8. But it has distributed Rs 9,298 crore --- in notes of Rs 100 and Rs 2,000 --- since that date. Apparently, the stock held by the RBI in its chest and the soiled notes made up the difference. The recycling of the soiled notes threatens to spoil years of efforts by the banking system at ensuring clean currency. "The support lent by the entire banking industry has helped the RBI achieve the objectives of its clean note policy to a considerable extent," said Pradip Biswas, general secretary of the Bank Employees Federation of India. "But now, because of an acute shortage of notes, the RBI is left with no alternative but to reissue the non-issuable and soiled currencies into the system. We feel that a 15-year exercise by the banking industry, at the instance of the RBI, is going to be wasted." Data shared by Biswas indicate that Calcutta has cornered the lion's share --- 39.38 per cent by value --- of the notes disbursed for Bengal since November 8, implying the districts are still under-penetrated. Greater Calcutta accounts for about 16 per cent of the state's population.