The case of missing coins

Abstract

The study was to understand the shortage of coins in the system, which is being faced. The focus was also to understand whether there is an actual shortage or is it a perceived one. The research study included literature review and survey and interview exercises to understand the root causes of the problem. The first part of the research was secondary research. The coin shortage problem is a problem faced by many countries like China, Argentina etc. RBI and media agencies have conducted studies and surveys in the past to figure out the reason for this shortage. The common theme that has emerged from these researches is that, there is a shortage of coins perceived by the public. RBI has increased the touch points of coins by giving more distribution rights to the bank. In the primary research, we interacted with several senior officials of RBI, to understand their viewpoint. We interacted with the mint officials to understand how the supply–demand for coins is charted out and how the distribution is done. We even interacted with bank officials to understand their viewpoint. It is evident that there is a supply –demand mismatch. But the banks feel that they are able to satisfy their customers demand for coins. In our interaction with some traders, it came across that collecting coins is a laborious task, but they are able to get coins with the improvement in the supply of coins. RBI has a well-established protocol for disbursement of coins, which tries to prevent unauthorized/illegal usage of coins. In order to get a complete picture interviews were conducted with small kirana stores, religious institutions, beggars, general public, bus conductors and shopping malls. From the interactions it came out that the big players have a well oiled supply on coins from banks. The small players usually don’t rely on the banks for the coins and they get their share of coins from the normal circulations. The major hit being faced due to shortage of coins is to the lower middle class people for whom transactions are mainly coin based. Also the kirana shopkeepers and grocery owners are the ones majorly facing the challenges in sourcing coins, amongst the business people. There is a need for deploying more number of coin vending machines and touch points for the general public and local business people. This has to be done both at urban and rural level. More use of electronic transaction needs to be established by means of easy issuance of cards and providing benefits for card-use to transact.