RBI, Reserve Bank of India (Photo: Shutterstock)
The Reserve Bank plans to comprehensively upgrade its currency management infrastructure over the next 4-5 years, primarily to ensure adequate storage and handling capacity to meet the future cash needs of the growing economy.
According to an RBI document, setting up of new foreign exchange management centres, introduction of warehouse automation, installation of security and surveillance systems, an inventory management system and a centralised command centre to modernise the existing infrastructure are being considered.
The expected timeline for the entire project is 4-5 years, as per the Expression of Interest (EoI) issued by the Reserve Bank of India (RBI) for procurement of consultancy and project management services for modernisation of foreign exchange management infrastructure.
“Despite the moderation in the rate of growth of NICs (Banknotes in Circulation) over the past three years, the analysis indicates that growth will remain positive for the foreseeable future, although its pace is expected to slow over the next decade,” the document states.
The central bank also said the trend in volume growth is expected to continue, and the rate may even accelerate, so that the value needs of the public are sufficiently but conveniently met.
Banknotes in circulation (NIC), in terms of volume and value, have increased significantly over the past two decades. The volume of NIC stood at 136.21 billion pieces (bpc) as of March 31, 2023, and at 146.87 bpc as of March 31, 2024.
Coins in circulation (CIC) have also increased in terms of volume and value.
CIC volume stood at 127.92 tpcs as of March 31, 2023 and 132.35 tpcs as of March 31, 2024.
“In parallel with this growth, and in line with the Bank’s Clean Banknote Policy, the volume of dirty banknotes is also likely to continue to increase proportionally.
“Therefore, the current foreign exchange management infrastructure needs modernisation to ensure adequate capabilities (keeping in mind future needs), optimisation and also to make the process more secure and environment-friendly,” the RBI said.
Banknotes are printed in four printing presses and coins are minted in four mints.
New banknotes and coins are received at nineteen Issuing Offices (IO) throughout the country, from where they are distributed to approximately 2,800 Currency Boxes (CC) operated by registered banks.
The RBI said several central banks/monetary authorities have been facing multiple challenges in managing foreign exchange due to the increasing volume of currency notes printed, distributed, recovered and processed, as well as rising costs and security risks associated with them.
To manage the increasing volume of banknotes, some central banks and monetary authorities have proactively modernized their foreign exchange management infrastructure by adopting appropriate re-engineering of their foreign exchange management processes and establishing separate facilities for banknote handling.
These countries include Austria, Egypt, France, Germany, Hungary, Indonesia, Japan, Malaysia and the United States.
The RBI, the document said, is interested in modernisation of currency management infrastructure (notes and coins) across India to create state-of-the-art storage and handling capacity suitable to meet the future cash needs of the economy, improving efficiency in currency management operations, ensuring security of the highest possible order and at the same time contributing to a greener planet.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 15, 2024 | 14:40 IS
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