Do you know? Reserve Bank of India (RBI) has directed all banks not to staple notes and use paper bands, rubber bands or threads to bundle them. But this directive has been violated as stapled currency note bundles of various denominations continue to be in circulation.
Even as the modernisation of the currency distribution process has been set in motion by the Reserve Bank of India (RBI) with the objective that adequate and good quality clean currency notes are made available to the public, stapling of currency notes continues to be a stumbling block for such efforts. Following the directives of the Reserve Bank, the banks adopted a clean note policy and passed on the instructions to their branches where actually the policy is being defeated by stapling of currency notes.
Notably, as a part of its clean note policy, the RBI has been supplying fresh notes without staples to the banks and the members of the public. In contravention to this policy, it has been observed that these fresh notes are most of the time stapled by the banks before issuing them to the public. Not only this, most of the banks have been following the practice of applying multiple staples with strong thick steel wires on the re-issuable note packets. Due to this practice general public has been experiencing great difficulty in removing these multiple staples. Apart from causing injuries to people, these staples also cause damage to the currency notes. When the people approach banks with such damaged notes, they refuse to accept them. Precisely, stapling is found to be a major cause for damaging good notes.
The banks have to understand that no other product touches the life of a citizen as much as currency notes. Thus it is the responsibility of the Banks to make available enough good currency to the general pubic in the State. The Reserve Bank started the de-stapling process in 1996 in order to minimize damage to currency notes. But many banks continue the stapling practice on the assumption that the larger the number of staple pins, the greater is the security for notes. Stapling, as is understood by most of the bank staff handling cash management apparently means greater safety while discharging their work.
It is notable that the Reserve Bank has decided to get tough with banks for issuing stapled notes or re-issue soiled or mutilated notes. It is the right of every citizen (customers) to get clean notes from the banks. There have been numerous complaints against stapling. A study conducted by the Central Bank had indicated that no other country followed the practice of stapling note packets. Although de-stapling was initiated in 1996, the Bank started issuing instructions regularly to banks only from 1998 to discontinue the practice and the directive against stapling was issued in November 2002. While making it mandatory for banks to discontinue the practice of stapling currency note packets, the apex bank issued a directive to banks under Section 35A of the Banking Regulation Act, 1949 with the objective of giving clean and good notes to the members of the public. If a bank does not implement a directive issued under this section of the Banking Regulation Act, then the Reserve Bank can penalize the bank and the penalties can range from cash fine to even withdrawal of banking license.
The message is yet to percolate down to most banks. Some have not implemented the directive and some have implemented it partially. There are others who have given up on it after finding it "not feasible" in their day-to-day operations. Everyone has its own varied reasons. Basically, it is the mindset of people handling the cash management as most of them still believe that a stapled bundle of currency notes, be it Rs-100 notes, Rs.500 notes or Rs.1000 notes, is still a symbol of reliability.
So in lieu of this directive Banks should do away with stapling of any note packet and instead secure note packets with paper bands. Banks should sort notes into re-issuable and non-issuable, and issue only clean notes to the public. Banks have even been asked to stop writing of any kind on the watermark window of bank notes forthwith.
Meanwhile, there have been incidents where there has been the supply of currency notes less than recorded amount of money to the banks particularly for high denomination notes. Notably, the sealed packets cannot be exchanged once they are opened and unless the customer opens he cannot count. There are complaints also that the sealed bunches of notes of higher denomination contain less than the required number. Since the sealed cover cannot be opened by the customer, they have to suffer without a protest.
Banning the stapling of currency note bundles has thrown a big challenge as far as banker-customer relationship is concerned. An element of mistrust looms large and the banks as well as the customers have to shoulder a greater responsibility to ensure efficient cash management. The banks have to engage efficient manpower in their cash management department apart from banking on cash counting machines. After all such machines are not humans. A person while receiving cash from the bank has the moral responsibility to spent a few extra minutes on the cash counter to check the number of notes received.
(The views are of the author and not of the institution which he belongs to)