The extreme shortage of new Rs 500 notes in the wake of the ill-planned demonetisation move has forced a panicky Narendra Modi government and the Reserve Bank of India to turn desperate and issue orders that a new series of Rs 50 notes will be printed without a vital step, making counterfeiting relatively easy.
A 4 December RBI notification, accessed by The Quint, says that “the design and security features of (the proposed new Rs 50) banknotes will be similar to the banknotes of Rs 50 denomination with the ascending font of numerals in both the number panels and without intaglio print issued earlier in Mahatma Gandhi series-2005.”
Indian currency note printing experts revealed to The Quint that removing intaglio printing, which is a vital step in the entire five-phase production of a banknote, would make the proposed new Rs 50 notes vulnerable to counterfeiting.
Quantity Over Quality
“Quality is being sacrificed for the sake of quantity,” a senior RBI official said on condition of anonymity. The Quint had earlier reported that the “colour examination” phase was done away with for the new Rs 500 notes at the Nashik and Dewas presses of the Security Printing and Minting Corporation of India Ltd (SPMCIL), leaving the new high-value note also vulnerable to counterfeiting. Millions of defective new Rs 500 notes are now in circulation even as RBI has declared them legal tender.
Printing of banknotes mandates the printing authorities to allow for meeting key requirements, including aesthetics, counterfeit prevention, machine readability, physical durability and public acceptance. Intaglio printing lends banknotes its exclusive character, strong colours, striking portraits, ornamental designs and relief-style embossing.
Also Read: Demonetisation: Corrupt Deal Disrupted Printing of Rs 500 Notes
Intaglio’s Crucial Contribution
Embedded security features for human detection as well as functional areas for machine readability reinforce the crucial contribution that intaglio printing makes to banknotes. The front portion of all Indian currency notes are produced using intaglio printing.
In the intaglio printing phase, the words RESERVE BANK OF INDIA in English and Hindi is printed, MK Gandhi’s image is embossed, the “I promise to pay the bearer the sum (of ten, fifty, hundred, five-hundred and two-thousand) is printed in English and Hindi, the RBI governor’s signature is inlaid and the value of the currency note is printed in 15 vernacular languages.
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Inset Letter Printing Done Away With
Not just removal of intaglio printing, the RBI notification has also effectively done away with printing the proposed new Rs 50 notes (which will be printed “shortly”) with “inset letters”, which are not noticeable to the naked eye but can be seen against the light. These letters, such as A, B, C, D and E, are inset printed just below the serial number at the right-hand corner on the front portion of currency notes.
The serial numbers are codes which indicate the printing presses in which each of the currency notes were printed. For instance, some of the new Rs 500 notes – even the hundreds of thousands of defective ones which were printed at the SPMCIL presses – carry an ‘E’ below the alpha-numeric serial number, indicating that they were printed at the Dewas Bank Note Press.
Also Read: Security Scandal: New Rs 500 Note Is Vulnerable to Counterfeiting
Dependence on Foreign Security Ink
Knowledgeable RBI sources revealed to The Quint that while 70 percent of India’s security paper for printing currency notes is imported from some European firms – with the remainder met by local production at the Hoshangabad Printing Mill (Madhya Pradesh) – the government is entirely reliant on import of Optically Variable Ink (OVI) and the security threads for all currency notes.
Surprisingly, research and development efforts of SPMCIL as well as Reserve Bank Note Mudran Private Ltd (BRBNMPL) have not focussed on indigenous production of OVI for which the RBI relies on a Swiss company, Lausanne-based SICPA, from which the important ink is purchased at an astronomical price of Rs 2 lakh per kilogram.
Also Read: Rs 500 Note Printing Halted, Operation Will Shift to Mysuru Press
Yearly Order for OVI
“The total order per year for OVI stands at 2,000 kgs. This amounts to an annual expenditure of Rs 40 crore on OVI alone,” a senior SPMCIL official said, adding that “for the new currency notes being printed at the Dewas BNP alone, the requirement is 100 metric tonnes per year.” This essentially means that in the face of severe “shortage of capacity”, SICPA enjoys total monopoly as far as the “Indian market” is concerned. According to an SPMCIL document, the corporation has the capacity to produce only 490 metric tonnes of inks other than the all-important OVI.
The entire printing procedure involves huge wastage of security inks, including OVI, the sources said. While printing a single currency note, only 10-12 percent of OVI is actually utilised, with the rest “getting floored out”.
Also Read: Note Ban: Rs 200, NOT Rs 2,000 Notes Would’ve Ensured Cash Flow
Reliance on De La Rue
Like OVI, India is fully dependent on British company De La Rue – once blacklisted for compromising Indian currency note security features to the Pakistani Inter-Services Intelligence (ISI) – for the supply of security threads (measuring between 1.44 mm to 3 mm) for all currency denominations. This, even after the patents De La Rue held on security threads expired in January 2015.
Indian banknote production, which was, astonishingly, outsourced to Thomas De La Rue (1,363 million pieces of Rs 100 denomination), Giesecke and Devrient Consortium (Germany, 1,600 million pieces of Rs 500 notes) and the American Banknote Company (635 million pieces) between 1996-98, has made some efforts towards indigenisation. But these efforts are far below the proposed objective to fully indigenise high-value currency production, especially because of India’s dependence on OVI and security threads.
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