In a lapse of massive proportions, security threads to be used on the now demonetised Rs 1,000 currency notes were embedded in about 200 metric tonnes of paper allotted for the new Rs 2,000 notes, but it could not be ascertained whether they were actually printed and went into circulation.
Knowledgeable sources revealed to The Quint that the “huge error with far-reaching security implications” was the primary reason to stop the printing of the new Rs 2,000 notes – besides the slow rate of printing of the new Rs 500 notes – for which the government and the Reserve Bank of India jointly decided to halt its production at the Salboni (West Midnapore of West Bengal) and Mysuru (Karnataka) presses.
The Salboni and the Mysuru presses are operated by the Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), a fully-owned subsidiary of the RBI.
The sources said that the “goof up” occurred primarily at BRBNMPL’s Mysuru press where the new Rs 500 notes began to be printed recently when the Dewas Bank Note Press and the Nashik Currency Note Press of the Security Printing and Minting Corporation of India Ltd (SPMCIL) could not cope with the demand.
The annual printing capacity at Salboni and Mysuru is 16 billion note pieces on a two-shift basis.
Huge Financial Loss
Though it could not be ascertained whether the paper for the new Rs 2,000 notes, carrying the security threads of Rs 1,000, were printed, sources revealed that the money lost in the process stands at Rs 10,000 crore (on tonne of currency printing paper costs Rs 5 lakh).
The error was detected after chance examination under powerful microscopes by the staff at the Mysuru press, sources said, adding that “normal visual examination” of paper for the Rs 2,000 notes did not reveal the massive blunder.
When contacted, the BRBNMPL general manager at the Mysuru press, HS Thakur Desai, said, “I will not be able to say anything about it.”
An RBI spokesperson did not respond to an emailed questionnaire.
Sources suspect two possible reasons behind the goof up. First, reams of paper for the new Rs 2,000 notes were exhausted in the rush to churn out the new high-value currency note.
Secondly, the security threads for the new Rs 2,000 notes were completely used up as the Mysuru and Salboni presses went on an overdrive to fill the huge vacuum created by the sucking out of Rs 15.6 lakh (86 percent) worth of notes of Rs 1,000 and Rs 500 values. This could have led to the authorities at the Mysuru press to “cannibalise” the security threads from the leftover imported stock.
Blunder Was Waiting to Happen
What is surprising, however, is that the blunder went undetected at the offset and even during the intaglio printing and colour examination stages of the currency printing process. None of the line machines detected the flaw.
In this context, sources emphasised that “such a blunder was waiting to happen” as senior RBI and Finance Ministry officials had, in concert with BRBNMPL and SPMCIL officials, taken conscious decisions to skip vital stages in the printing process.
The blunder has occurred even as RBI Governor Urjit Patel recently announced that the “new notes will have enhanced security features that will be difficult to forge.” Patel had also said that the demonetisation “decision was not and has not been taken in haste but after detailed deliberations.”
RBI Governor’s Assertion
On 7 December, Patel had said that the “consequences that have emanated from that (demonetisation) were taken on board and that is why the planning, the process and the implementation was what it was, keeping in mind that high secrecy had to be maintained.”
Responding to a question, Patel had said: “…what we have done over the last two weeks is recalibrated our production towards the (Rs) 500 and (Rs) 100, and once that happens, the circulation of the (Rs) 2,000 will also go up and we will see the benefits of those coming in the coming days as the production supplies reach the banks.”
But sources said that the “gross error” related to the use of a different security thread for a new high-value currency note was the principal reason behind stopping printing of that note.
Machine Readable Feature
The security threads for the demonetised Rs 1,000 notes contained number panels of the notes printed in fluorescent ink. The notes also had optical fibres. Both can be seen when the notes are exposed to ultra-violet lamps. The printing presses used “machine-readable, windowed demetalised clear text magnetic security thread with inscriptions ‘Bharat’ (in Hindi)…with exclusive colour shift. This means that the colour of the thread would shift from green to blue when viewed from different angles. It will fluoresce in yellow on the reverse and the text will fluoresce on the obverse under ultra-violet light.”
Easy to Forge
The last time security threads in high-value notes was changed was in 2013 when the then Finance Minister P Chidambaram instructed that all pre-2005 Rs 500 and Rs 100 notes would be withdrawn as the old security threads in them had become easy to forge. Sources said that the printing presses were given three months to make the switch.
There was no breach involving the security of the threads till December 2015, the sources informed, adding that Indian presses used “exclusive” security threads supplied by the British company De La Rue.
The imported security threads for the Rs 2,000 and Rs 500 notes were “generic” and not exclusive in nature. They were supplied by two foreign firms – the Italian Fabriano Security and the American-Swedish Crane.
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