currency management presentation by janaki ravindran, manager, janaki ravindran, manager, currency...

Currency ManagementCurrency Management

Presentation by Presentation by

Janaki Ravindran, Manager,Janaki Ravindran, Manager,

Currency Chest, Kochi Currency Chest, Kochi

November 6, 2007November 6, 2007

Issues in Currency Management November 6, 2007

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print notes and mint coinsprint notes and mint coins distribute adequate notes and coinsdistribute adequate notes and coins maintain quality of notes in maintain quality of notes in

circulationcirculation withdraw unfit notes from withdraw unfit notes from

circulation & destroy themcirculation & destroy them keep up well secured processeskeep up well secured processes

Objectives of Currency ManagementObjectives of Currency Management …..…..


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Incremental requirement-growth rate and Incremental requirement-growth rate and inflationinflation

Replacement requirement-soiled notes Replacement requirement-soiled notes withdrawn from circulationwithdrawn from circulation

Reserve requirement-to meet Reserve requirement-to meet contingenciescontingencies

Statistical analysis and long-term forecastStatistical analysis and long-term forecast Indent placed with the four printing Indent placed with the four printing

presses and four Mintspresses and four Mints

Currency Management–how much to Currency Management–how much to print & mint.print & mint.


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Combined capacity of the four Mints is Combined capacity of the four Mints is 3700 million pieces per annum3700 million pieces per annum

Annual capacity of the Presses is as under:Annual capacity of the Presses is as under:Press Capacity(mpcs)Press Capacity(mpcs) Nashik(GOI) 5800Nashik(GOI) 5800Dewas (GOI) 2620Dewas (GOI) 2620Mysore(BRBNMPL) 4770Mysore(BRBNMPL) 4770Salboni(BRBNMPL) 4770Salboni(BRBNMPL) 4770Total Capacity Total Capacity 17960 17960

Currency Management in India–Currency Management in India–continued…….continued…….


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Flow of Notes & CoinsFlow of Notes & Coins

Presses

RBI Offices(20)

Chest branches

Public

NOTES

4 Mints

4 mint-linked RBI Offices

Chest branches & RBI Offices

COINS


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Issues in Currency ManagementIssues in Currency Management

MechanisationMechanisation Trends in CounterfeitingTrends in Counterfeiting Security features of banknotesSecurity features of banknotes Committee on Customer Service (Tarapore Committee on Customer Service (Tarapore

Committee) recommendationsCommittee) recommendations ICCOMSICCOMS ISO CertificationISO Certification Future AgendaFuture Agenda


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Processing of soiled notes-Processing of soiled notes-mechanisationmechanisation

54 Currency Verification and 54 Currency Verification and Processing Systems installed and Processing Systems installed and commissioned in all offices. commissioned in all offices.

28 Shredding and Briquetting 28 Shredding and Briquetting System installed and System installed and commissioned in all offices.commissioned in all offices.


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Note Counting Machines at Note Counting Machines at counters. counters.

Coin Dispensing machines in Coin Dispensing machines in banking hallsbanking halls

Non-stapling of notesNon-stapling of notes Note Sorting Machines at all Note Sorting Machines at all

chest based banks/branches. chest based banks/branches.

Mechanisation continued…Mechanisation continued…

Issues in Currency Management Issues in Currency Management November 6, 2007November 6, 2007

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Trends in Counterfeiting Trends in Counterfeiting Menace and ConcernsMenace and Concerns

High quality of counterfeit notes.High quality of counterfeit notes. Use of counterfeit for various illegal and Use of counterfeit for various illegal and

nefarious activities.nefarious activities. GOI’s High Level Committee examined the GOI’s High Level Committee examined the

entire gamut of currency managemententire gamut of currency management Recommendations for additional security Recommendations for additional security

features, especially in high denominationsfeatures, especially in high denominations


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Recent Developments to combat the Recent Developments to combat the menace of menace of counterfeitingcounterfeiting

Enhanced security featuresEnhanced security features Publicity campaigns on security Publicity campaigns on security

features of currency notesfeatures of currency notes Study of counterfeit notes detectedStudy of counterfeit notes detected Initiation of R & D in counterfeit Initiation of R & D in counterfeit

detectiondetection


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Overt security featuresOvert security features

Detected without aid Detected without aid of device of device

Detected with aid of Detected with aid of device device

WatermarkWatermarkSecurity ThreadSecurity ThreadIntaglioIntaglioPerfect RegisterPerfect RegisterIdentification MarkIdentification MarkOptically variable InkOptically variable InkLatent ImageLatent Image

Micro letteringMicro letteringFluorescenceFluorescenceOptical FibresOptical Fibres


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Need for Revised Need for Revised Security FeaturesSecurity Features

Security features need to be reviewed and Security features need to be reviewed and updated from time to time in order to updated from time to time in order to

Take advantage of latest research and Take advantage of latest research and technology in the fieldtechnology in the field

To help prevent counterfeiting and stay To help prevent counterfeiting and stay ahead of counterfeiters ahead of counterfeiters

Have machine-readable security featuresHave machine-readable security features for mechanised processing of notesfor mechanised processing of notes


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Factors influencing decision to change Factors influencing decision to change design & security features of banknotesdesign & security features of banknotes

Public & user survey Threat analysis Technical expertise

Human perceptionstudies

Design & security features

of banknotes

Incremental cost and benefit

Counterfeit analysis

Public education, authentication

and enforcement

Production, issuance and circulation


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New/Additional Security featuresNew/Additional Security features

Security Thread-Rs 100, Rs 500, Rs 1000Security Thread-Rs 100, Rs 500, Rs 1000 Machine-readable windowed demetalised clear Machine-readable windowed demetalised clear

text magnetic security thread with exclusive text magnetic security thread with exclusive colour shift from green to blue, 3 mm wide for colour shift from green to blue, 3 mm wide for Rs.1000 & Rs.500 and 2 mm for Rs.100 Rs.1000 & Rs.500 and 2 mm for Rs.100

Security Thread-Rs 10, Rs 20, Rs 50Security Thread-Rs 10, Rs 20, Rs 50 Machine-readable windowed demetalised clear Machine-readable windowed demetalised clear

text magnetic security thread, 1.4 mm widetext magnetic security thread, 1.4 mm wide


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New/Additional Security featuresNew/Additional Security features

Electrolyte Watermark of denominational Electrolyte Watermark of denominational numeral to be located alongside Mahatma numeral to be located alongside Mahatma Gandhi watermark Gandhi watermark

Omron anti photocopying feature-to be Omron anti photocopying feature-to be included in Rs 100 and Rs 50, besides Rs 500 included in Rs 100 and Rs 50, besides Rs 500 & Rs 1000& Rs 1000

Year of printing to be incorporated at the Year of printing to be incorporated at the printing stage on the reverse of the bank printing stage on the reverse of the bank note. note.


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Committee on Customer Service-Observations/Recommendations

• Chronic shortages of notes and coins have been largely alleviated

• Empowerment of the Common Person

• Simplification of Note Refund Rules

• Revamping of Citizens’ Charter for Exchange facilities

• Parallel supply of notes and coins not sustainable

• Early introduction of Rs 10 coins


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Committee on Customer Service-Observations/Recommendations

Strong action in case of violation of RBI’s directions

Revision of currency chest agreement Master Circulars in intelligible language Delegation of authority to the bank branches

to be exhibited prominently Removal of inconveniences to the Common

Person


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Customer Service-Study by BITS, Customer Service-Study by BITS, Pilani on need and use behaviour of Pilani on need and use behaviour of

small coins-major findingssmall coins-major findings Availability of small coins is satisfactory Availability of small coins is satisfactory Non-availability of 25 paise and 50 paise Non-availability of 25 paise and 50 paise

coins is mainly due to reluctance to usecoins is mainly due to reluctance to use The traders charge more from the The traders charge more from the

customer or give an item of coin change. customer or give an item of coin change. customers 'do nothing' when trade does customers 'do nothing' when trade does

not give correct coin change.not give correct coin change. The preferred lot size for coins is 50 for The preferred lot size for coins is 50 for

most denominations and 100 for Re 1most denominations and 100 for Re 1


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Implementation of Implementation of Integrated Integrated Computerized Currency Operations Computerized Currency Operations and Management System (ICCOMS)and Management System (ICCOMS)

The Institutional FrameworkThe Institutional Framework DCM at Central Office DCM at Central Office

Issue Departments at 18 Regional Offices. 1 Issue Departments at 18 Regional Offices. 1 Issue sub-Office at Lucknow and 1 Currency Issue sub-Office at Lucknow and 1 Currency Chest at KochiChest at Kochi

The currency chest system maintained by The currency chest system maintained by the banks and State Treasuriesthe banks and State Treasuries

The ICCOMS Project-Main The ICCOMS Project-Main ObjectivesObjectives

Improve Operational EfficiencyImprove Operational EfficiencyFaster and Accurate Accounting Faster and Accurate Accounting Improve MIS and PlanningImprove MIS and PlanningBetter Monitoring and ControlBetter Monitoring and Control Better Customer ServiceBetter Customer Service


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The ICCOMS Project – Main The ICCOMS Project – Main Components…Components…

Transaction Processing System at the ID Transaction Processing System at the ID (General) and Cash Departments(General) and Cash Departments

Work flow system in Cash Dept. and other Work flow system in Cash Dept. and other relevant areasrelevant areas

Currency Chest Reporting SystemCurrency Chest Reporting System MIS at IDsMIS at IDs MIS at DCMMIS at DCM


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Scope of ICCOMS Scope of ICCOMS – DCM– DCM

Planning for Currency IssuePlanning for Currency Issue Allocation and Distribution of CurrencyAllocation and Distribution of Currency Monitoring of Currency Stock, Distribution, Monitoring of Currency Stock, Distribution,

Processing, Accumulation, Forgeries, Processing, Accumulation, Forgeries, Reconciliation of Accounts etc. Reconciliation of Accounts etc.

Performance and Exception Monitoring Performance and Exception Monitoring Infrastructure PlanningInfrastructure Planning


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Present StatusPresent Status The Vendor (M/S CMC Ltd.) has been awarded the The Vendor (M/S CMC Ltd.) has been awarded the

contract as per the recommendations of the Project contract as per the recommendations of the Project Committee after due bidding process.Committee after due bidding process.

Vendor has completed a study of the user requirements Vendor has completed a study of the user requirements by examining the SRS prepared by the Bank earlier. by examining the SRS prepared by the Bank earlier. Vendor also visited a few ROs to study the end user Vendor also visited a few ROs to study the end user requirements. requirements.

The project has been completed and all Regional Offices The project has been completed and all Regional Offices have commenced `live-run’ on the Currency Chest have commenced `live-run’ on the Currency Chest Reporting System (CCRS) and the Chest Accounting Reporting System (CCRS) and the Chest Accounting Module (CAM) of ICCOMS – ID component. It is an on-Module (CAM) of ICCOMS – ID component. It is an on-line process and once these two components are line process and once these two components are completed the Currency Management Information completed the Currency Management Information System (CMIS) Module at DCM will be taken up for System (CMIS) Module at DCM will be taken up for implementation.implementation.


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ISO Certification in currency management

Activities of currency management service orientedCitizens’ Charter can form the basis for measuring quality of serviceSingle Window ServiceImplementation of Clean Note Policy Computerisation of Work Flow


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ISO Certification-DCM and ID at Hyderabad and Kolkata

Documented set of proceduresIn-house awareness training on stipulated proceduresTraining to officials of banks and government departmentsMonitoring & Control Mechanism such as Statutory Audit, Concurrent Audit, Management Audit & Systems Inspection


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ISO Certification-Scope of Activities

Ensure standardisation of printed notesSupply of notes to currency chestsMaintain quality of notes in circulationProcess of withdrawal of soiled notes Disposal of soiled notesExchange of notes and coins Adjudication of mutilated notesMonitor and control circulation of counterfeit notes


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Currency Management - FutureCurrency Management - Future

Contain the volume of notes in Contain the volume of notes in circulation. circulation.

Coin Circulation – increase the valueCoin Circulation – increase the value Simplification / rationalization of Simplification / rationalization of

procedures-decentralization.procedures-decentralization. Mechanization keeping in pace with Mechanization keeping in pace with

the change in banking technology the change in banking technology world-wideworld-wide

Enhancement of security featuresEnhancement of security features


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Future AgendaFuture Agenda

Increase the life of bank notes Increase the life of bank notes Concept of flexible resource circle Concept of flexible resource circle Proximity and logistics should be the criteriaProximity and logistics should be the criteria Direct remittances from the PressesDirect remittances from the Presses Outsourcing of lower value note distribution Outsourcing of lower value note distribution

on patterns similar to coinson patterns similar to coins Implementation of Integrated Computerised Implementation of Integrated Computerised

Currency Operations and Management Currency Operations and Management System (ICCOMS) System (ICCOMS)


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Future Agenda-contd……Future Agenda-contd……

Revision of currency chest agreementRevision of currency chest agreement Penalty for breach or non-Penalty for breach or non-

implementation of any part of the implementation of any part of the agreement agreement

Penalty in monetary terms Penalty in monetary terms Suspension of chest facility in Suspension of chest facility in

extreme casesextreme cases


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Levying of Penal interest forLevying of Penal interest for Wrong/delayed/non reporting of the currency Wrong/delayed/non reporting of the currency

chest transactions chest transactions Shortage or loss of currency found in the chest or Shortage or loss of currency found in the chest or

small coin depot small coin depot Unsorted notes remitted by a chestUnsorted notes remitted by a chest Amounts kept in safe custody in sealed covers, Amounts kept in safe custody in sealed covers,

trunks, etc. on behalf of Courts, Government trunks, etc. on behalf of Courts, Government Departments, etc., and included in the chest Departments, etc., and included in the chest balance balance

Shortage/forged notes in remittance received Shortage/forged notes in remittance received from the currency chest from the currency chest


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Levying of Penal interest forLevying of Penal interest for Deficiency in customer service such as not Deficiency in customer service such as not

extending exchange facilities for notes extending exchange facilities for notes and coins and coins

Not displaying information/notices Not displaying information/notices regarding services rendered to the regarding services rendered to the customers in writing in branch premises customers in writing in branch premises

Violation of the Reserve Bank's Violation of the Reserve Bank's instructions/ guidelines instructions/ guidelines

Reserve Bank may consider suspension/ Reserve Bank may consider suspension/ withdrawal of the currency chest facility in withdrawal of the currency chest facility in case of persistent non-compliance case of persistent non-compliance


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Currency ManagementCurrency Management

Thank YouThank You

currency management presentation by janaki ravindran, manager, janaki ravindran, manager, currency...

Documents

currency chest

currency verification

quality of notes

print notes

adequate notes

unfit notes

mints currency managementhow

mint coins