 "Currency ban: How RBI makes a neat profit printing your notes")
By the time many of you read this, you would have queued up at banks to get your hands on the new Rs 500 and Rs 2,000 denomination notes or would be planning to do so soon.
The currency that makes it to your wallets is manufactured in printing factories owned by the Reserve Bank of India (RBI) and the Indian government. RBI does most of the printing through its two mints located at Mysore in Karnataka and Salboni in West Bengal. The government and RBI operationalised a new press in Mysore last year to augment its currency supply.
The currency that makes it to your wallets is manufactured in printing factories owned by the Reserve Bank of India (RBI) and the Indian government. RBI does most of the printing through its two mints located at Mysore in Karnataka and Salboni in West Bengal. The government and RBI operationalised a new press in Mysore last year to augment its currency supply.
The RBI’s two note presses are operated by a company called Bharatiya Reserve Bank Mudran Private Ltd (BRBMPL). This company is completely owned by the RBI. In 2015, the two presses manufactured over 15.2 billion currency notes. But the company’s financial statements show that it sold 15.5 billion notes. In effect, the RBI sold 300 million more notes than it printed. These 300 million bank notes were lying with the RBI after being printed in previous years. For instance, in 2014, it manufactured almost 13 billion banknotes but sold 100 million less. In 2013 and 2012, it manufactured and sold almost the same number of banknotes.
Almost 99% of the cost of printing money is on the water marked paper and special ink used in the process. RBI’s company, like its government counterpart, imports all of its currency paper from abroad. Last year the government upgraded the currency paper making facility in Hoshangabad in Madhya Pradesh, which is expected to produce 6000 tonnes of currency paper every year. But there still remains a huge gap to fill. The government imports 15000 metric tonnes of currency paper every year which is supplied to RBI presses to be used in making the notes.
In 2015, the amount of money spent by RBI to purchase imported materials was almost Rs 1500 crore. In 2014, the company spent Rs 1300 crore buying imported paper and an additional Rs 350 crore to buy imported ink. Not all denominations get an equal share of the spend.
The company spent Rs 325 crore on imported water marked paper for the Rs 500 denomination, whose design has now been completely changed. To print the Rs 10 currency note, RBI’s company spent Rs 460 crore. The Rs 1000 currency note, which has now been discontinued, was manufactured using only Rs 23 crore worth of imported paper. This shows that the Rs 1000 note was being printed using Indian made currency paper.
RBI’s company makes a neat profit on printing money. In 2015, the company earned a profit of Rs 138 crore on printing 15 billion currency notes. This was more than the Rs 133 crore it earned in the previous year. In 2013, the company’s profits were Rs 113 crore. Printing currency certainly seemed to have been a profitable business.
These operations of the RBI are also carried out in partial secrecy. The RBI, owing to security reasons, has been exempted by the government from disclosing certain financial information in its annual accounts. These include details of the sale of each denomination of the currency note and actual value of paper and ink consumed in printing the currency. RBI’s company is also not obliged, like other private corporations, to disclose its actual production of each currency denomination or even its installed capacity to print banknote.