Govt. Has Stopped Minting New Coins; Encouraging Digital Ecosystem?
The mints have stopped producing new coins because they have run out of storage space.
Most probably for the 1st time in the history of modern India, the Govt. has stopped minting new coins of Re 1, Rs 2 and Rs 5. Coins have had an important role to play in the overall economy of any country, but it seems that now, the role is diminishing.
The reason for stopping new coin minting is that, right now, India has way too much new coins in stock, which hasn’t been picked up by RBI for circulation.
And the reason for this, Digital India.
Govt Not Interested In Minting New Coins!
There are four minting units in India at Mumbai, Kolkata, Hyderabad and Noida; and these are run by Security Printing and Minting Corporation of India Ltd (SPMCIL), which comes under Finance Ministry.
In an order issued yesterday, SPMCIL has asked minting units at Mumbai and Noida to immediately stop minting new coins, as their storage facility is now full.
Here is a notice issued by SPMCIL, Mumbai:
“In compliance with the direction received from SPMCIL this is for the information of all employees that the production of circulation coins in the India Government Mint, Mumbai, shall be stopped immediately..”
Why Has Minting Been Stopped?
During demonetization, Govt. of India had infused new coins worth Rs 676 crore in the denominations of Re 1, Rs 2, Rs 5 and Rs 10, so that there are no issues for transacting among citizens.
However, now, there has been an oversupply of new coins, and there is no storage available to store the newly minted coins.
As per an estimate, Noida’s minting facility alone has 253 crore pieces of new coins.
As RBI has stopped picking up new coins from these facilities, SPMCIL had no other alternative than to stop minting new coins.
Another internal communication stated:
“As the RBI has not taken up the coins which amount to 2528 million pieces, it has been decided to halt the production of new coins at the minting press with immediate effect,”
The 4 minting units at Mumbai, Kolkata, Hyderabad and Noida have a combined capacity to mint 9.5 billion new coins in the denomination of Re 1, Rs 2, Rs 5 and Rs 10; and out of that, 2528 million pieces haven’t been picked up by RBI.
As per an analysis, the rise of Digital India and increased usage of cashless mode for small, micro-transactions can be the reason why RBI hasn’t picked up any fresh stock of new coins in the last 6-9 months.
A MoneyControl report says,
“Dearth of cash in circulation and the government’s push for digital payments prompted many to use cashless payment methods like wallets, BHIM, UPI, among others.”
In case this is the reason, then Digital India is on the right track.
We will keep you updated as we receive more inputs.