RBI to probe illegal coins circulated in Mumbai marketsJanuary 24th, 2012 - 9:49 pm ICT by IANS
Mumbai, Jan 24 (IANS) Perturbed by reports of illegally-minted small denomination coins being used in certain parts of the city, the Reserve Bank of India Tuesday promised to get to the bottom of the case.
“I have gone through the reports. These are newspaper reports indicating its use in some areas. We have to verify it. I have asked the RBI’s Mumbai office to get details of it,” RBI Governor D. Subbarao told media persons here while unveiling the third quarter review of monetary policy.
He said that the RBI Mumbai Office has been instructed to investigate the issue and if required, initiate appropriate action in the matter.
RBI Deputy Governor V. Chaturvedi said that so far, nearly 12 billion coins have been put into circulation in the markets.
“There is no shortage at any levels of any kind and we have sufficient stocks in our currency chests also,” Chaturvedi assured, though he wondered where the coins were going, referring to the complaints of shortages.
The RBI’s concern stems from revelations of a thriving market for illegally-minted small denomination coins in view of the constant and acute shortage of regular coins.
Traders in the wholesale markets of south Mumbai have hit upon an idea to counter the coin shortages - by using illegally-minted small coins - which are used and honoured within their community, virtually like official currency.
As per estimates, more than 50,000 such illegal coins of Rs.1 and Rs.2 denominations have been minted and are blatantly used as currency in the wholesale markets in south Mumbai.
The coins have been reportedly minted by the Mandvi-Koliwad Association and put into ‘circulation’ earlier this month, proving to be an instant hit in the trading community reeling under official coin shortages and black-marketing of the small change.
“A metal cast was made for the coins and after the first batch of 50,000, more will be minted depending on the response,” a member of the association, declining to be identified, boasted.
The coin’s denomination is printed on the obverse and on the reverse, the MKA’s logo is boldly minted, according to some samples shown to shocked Mumbaikars by some local television channels.
The MKA member, who is a wholesaler of grocery, claimed that the trading community was left with no option “since over a year, the coin shortage is plaguing the markets. In the past, we could get large quantities of coins from RBI or BEST, but not anymore”.
A local hotelier said that the traders are compelled to pay heavy premium to buy the official coins from the grey markets since most customers demand the exact change.
For instance, the going rate for Rs.100 worth of Rs.1 coins is Rs.114, for Rs.2 coins, it is Rs.115 per 100, while Rs.5 coins cost Rs.118 per 100.
These rates keep fluctuating depending on festivals, shopping seasons or other important events like the wedding season, he said.
The new (illegal) coins have been put into ‘circulation’ only in certain pockets of south Mumbai like Masjid Bunder, Bhendi Bazaar and surroundings to ensure it remains within a closed community, are accepted and honoured as ‘legal tender.’
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Tags: acute shortage, bank of india, chaturvedi, chests, coins, denomination, denominations, deputy governor, jan 24, mandvi, media persons, monetary policy, mumbai office, newspaper reports, reserve bank of india, rs 1, rs 2, south mumbai, subbarao, wholesale markets