The RBI, notes and a complete cock up.

I have been forced to change my wardrobe, at least the lower half. I now only wear Cargo Pants. For those of you who may be unenlightened in such sartorial matters, a Cargo Pant was originally designed for use by the military now adapted for use by you and me. It is a loose cut trouser with many large pockets. These pockets were provided to enable the soldier to store essentials like radios, ammunition and so on. I need them to store my many wallets.

No I am not particularly rich, and neither do I carry all my money on my person. I have been forced to do this because of the various diktaats and acts of stupidity by the Reserve Bank of India (RBI). The RBI is our Central Bank which prints and manages our notes and coins.

Permit me to explain.

I had two wallets which I carried in the back pockets of my trousers. Wallet 1 had money. Wallet 2 had the multitude of cards - credit cards, ATM/Debit cards, loyalty cards from shops and airlines, AADHAR card, driving license, Railway pass etc. Life was simple. Then on 23^rd January 2014 the RBI mandated that all, yes, all bank notes issued prior to 2005 would be useable for transactions only till 31^st March 2014. After that date you could get them exchanged at a bank. If you had currency notes of the denomination of Rs 1000 and Rs 500, you could exchange them only till 30^th June 2014. Thereafter, 10 or more of these notes could be exchanged only if you gave your bank proof of your identity and residence. You could have a look at the actual diktaat by clicking here. Thus, every time I get notes issued prior to 2005 I had to keep them separate and get rid of them pronto. I now look at the date on every note that a shopkeeper, bar owner and taxi driver gives me with care. Since I am kind and practical, instead of refusing to accept the old pre 2005 note, I quietly accept it and look for the first available opportunity to get rid of it. So, that meant for effective cash management I needed a new wallet to store these old pre 2005 notes. That was wallet 3.

I believed that the need to carry wallet 3 would be over on 31^st March 2014, but, alas, I was proved wrong. The RBI has very kindly extended the date for exchange of old pre 2005 currency notes to 1^st January 2015. The kind and ever considerate RBI has asked banks to “exchange of these notes for full value and without causing any inconvenience whatsoever to the public”. I am, in one manner so relieved, but, I will have to carry wallet 3 for quite some more time. Of course, what begs the question is, what does one do with pre 2005 Rs 1000 and Rs 500 notes after 1^st January 2015? The new circular by the RBI does not mention this. You could have a look at the circular by clicking here.

Then, this morning I was jolted. The RBI has goofed up, screamed the morning newspaper. Apparently, the RBI has issued in 2014 high value currency notes bearing the signature of Dr. Subbarao as Governor. Problem is that Dr Subbarao retired in 2013. The RBI has been most helpful. They have clarified that these notes, i.e. notes issued in 2014 with Dr. Subbaraos signature are NOT LEGAL TENDER. Yes folks, they are, I hate to say it, toilet paper. While on the one hand the RBI says these notes are not legal tender, on the other RBI says these notes can be exchanged. Am I missing something here? The RBI says that it does not know how many such notes have been issued. The RBI also says “currency note production is a manufacturing process. Making changes in the process takes time... Changing the governor’s signature on the banknotes is one such process. To complete the process in all the banknote presses for all denominations of banknotes is a programme which is underway and is expected to be completed in due course.”  Please read the newspaper report by clicking here.

I have just bought wallet 4. In this I will keep currency notes issued in 2014 bearing the signature of Dr Subbarao. Now you know why I wear Cargo Pants.

While all this may well be funny, do you realise the enormity of what has just happened. Bottom line, the RBI does not know what and how much it prints. And what are they printing? Money! Not pornographic calendars or Bidi wrappers but hard fucking cash!!!! It boggles my mind to think what is going on there. If you do not know how much you have printed, forget what happens to the economy, but would not Ghorpade, Gaitonde Patil and Lokhande who work in the RBI printing press not be taking fistfuls of this unaccounted money in crisp new notes home? After all RBI does not know what or how much they print. Is not the amount of security paper used to print notes, the amount of ink and so on and so forth not strictly accounted? 

The RBI has had 23 Governors. This is not the first time a Governor has retired.

Really, what is going on?