The government has halted minting of Rs 1, 2 & 5 coins

The government has temporarily stopped the minting of Rs 1, Rs 2 and Rs 5 coins owing to the excess at the mints in the country. The Security Printing and Minting Corporation of India Limited (SPMCIL), a body that governs India’s four currency minting houses, on Tuesday took the decision as the country’s mints have an excess of 2.528 million pieces (MPC), or coins, which haven’t been lifted by the Reserve Bank of India (RBI) machinery for circulation.

The central bank has not been collecting the coin stockpile as online payment systems are being widely used across the country in the past 6-9 months. The pickup in online payments, even at the micro-transaction level, can be attributed to lack of cash created at the time of demonetization. Dearth of cash in circulation and the government’s push for digital payments prompted many to use cashless payment methods like wallets, BHIM, UPI, among others.

“As the RBI has not taken up the coins which amount to 2528 million pieces, it has been decided to halt the production of new coins at the minting press with immediate effect,” an internal communication from the mint, seen by Moneycontrol, stated.

While the production halt won’t create a shortage of coins, the move will affect the livelihood of employees at the country’s currency mints.

“In compliance to the directions received from…. Letter dated 09.01.2018, this is for the information of all employees that the production of circulation coins in the India Government Mint, Mumbai shall be stopped immediately,” stated another communique the Mumbai mint.SPMCIL declined to comment on the matter. However, a trade union leader at the Mumbai mint confirmed the development and expects more than 3,000 employees will be affected. The union has already raised the issue with higher authorities.The mints in the country have a capacity of 9.500 billion pieces a year of Rs 1, Rs 2 and Rs 5 denomination, of which 2.528 billion pieces are still at the mints. RBI had estimated this year's demand for coins at 15.5 billion pieces, sources said.