The government seeks to de-recognize old coins issued before January 1942 as legal tender, but it failed to trace the records to justify it on the ground that " all silver, nickel, copper and bronze coins have been recalled long back by the Reserve Bank of India." A Parliamentary Standing Committee headed by former Finance Minister Yashwant Sinha(BJP) pulled up the government for its explanation that " despite all out efforts, the relevant records could not be found either in the Department of Economic Affairs or in the RBI as this might have been done long ago." It stressed that such " tardiness in maintenance of records" be avoided.
The committee that submitted its report to Parliament on Tuesday on The Coinage Bill, 2009, seeking to merge four old laws on the Indian coins into a comprehensive bill was further surprised from the government'' s claim that provisions for accepting the old pre- 1942 coins as legal tender was put in the Bill " by oversight" as they have already been recalled.
When sought to explain that lapse, the government came out with a quick response that the proposed provisions in Clause 6 will be deleted not only because they have been recalled but also because their intrinsic metal value is much more than the face value to let anybody exchange those at face value as legal tender.
The committee said it expects that such oversights in formulating laws is avoided.
The Bill seeks to increase punishment for melting of the coins from five to seven years, but the committee has suggested that it should be 10 years at par with the punishment prescribed for counterfeiting the Indian coins.
As regards no more shortage of coins in the market as it used to happen until the last decade, the Finance Secretary told the committee that the shortages in the past were essentially due to the higher intrinsic metal value of the coins. As a rule of thumb, the government now tries to ensure that value of the metal is note more than 60 to 70 per cent of the face value of the coin as then there will be no commercial interest or great desire to counterfeit.
The Indian coins were imported last time in 1997- 98 when the Indian mints could produce only 1540 million pieces as against the RBI'' s indent of 6639 million pieces.
In contrast, the mints supplied 6285 million pieces of coins against the indent for 61-- million pieces. To eliminate shortage from all regions, mints are producing since last two years at their optimum capacity and will continue to do so for the next five years for which RBI has already placed firm indents.
The panel has also recommended that the government give an incentive to public to surrender small coins below 25 paise for certain minimum amount through bank branches or directly to RBI to remove them from the system.
Size of the coins of 50 paise, one rupee and two rupees may shrink further if the government accepts one of the recommendations in this regard by a panel headed by a Reserve Bank of India deputy governor. Better not get confused if you get a 50 paise coin that has size of 25 paise, Re 1 coin in the size of 50 paise and Rs 2 coin in the size of Re 1. The panel'' s recommendation is to counter the increase in the price of ferritic stainless steel (FSS) used for manufacturing these coins.
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