Coins remain a big issue across the globe when it comes to depositing them in the bank. Here is an incident that I came across recently while surfing the net. Mr Grayson, a blogger, writes about his helplessness while trying to deposit his coins. Over a very long period of time he kept dropping coins into a really big bottle of wine (I leave that to the readers to work out the size of it). He saved a pretty sum. His challenge therefore was what to do with them. The logical option was to deposit them in his account. But he was flabbergasted when the teller told him that coins are not accepted as deposits.

That’s an experience from a first world citizen. And coins in the hands of citizens there are not so much a problem for the economy as it is in India. With a large informal sector driving the economy here where traders and micro business operators survive on small transactions, coins are an important medium of exchange. So much so that the tiny sector thrives on selling products against coins of various denominations going up to a denomination of Rs10. Banks in India however as in the first world are routinely refusing to accept them as deposits.

The main logic that the banks are taking shelter under is that a) it’s difficult to count large number of coins and unlike currency there is no automated mechanism to detect fake. Besides, storage is a big issue in far flung branches. The problem has really turned acute for the informal sector and the financial institutions like the MFIs dealing with them. According to the Coinage Act, one can deposit up to a lakh of rupees in coins in current account. But banks refuse to listen.

The problem is so acute that the Reserve Bank of India had to issue a press note for wide dissemination. The RBI in its 15 February, 2018 press note advised the banks not to refuse coins. The Bank even advised the banks to keep plastic sachets at the counters that could accommodate 100 coins per pack for distribution among depositors.

It said that coins may be remitted to the currency chest as per the existing procedure. The stocks thus built in the chest may be used for the purpose of recirculation. And then came the warning. “Any non-compliance in this regard shall be viewed as violation of instructions issued by the Reserve Bank of India and action, including penal measures as applicable from time to time, may be initiated.”

Despite the intervention, however, things haven’t changed on the ground. Persistent refusal to accept coin deposit by banks is acting as a major roadblock for trade and one hopes that a solution would be found soon.