Monday, 16 December 2019

Perils Of Outsourcing Of Currency Printing

Updated: June 5, 2010 12:35 pm

With reports of billions of dollars worth of counterfeit Indian currency, printed in the official Pakistani presses, and in circulation in this country, the report of a Parliamentary Committee that India had outsourced printing currency notes from abroad is indeed very significant.

            What was indeed rather surprising was that the report of the committee which was headed by a Congress MP Mr V Kishore Chandra S Deo did not appear to be taken as seriously as it should have. The report said that during 1996-97, the country had to outsource its printing of currency notes to meet the currency note requirement of the country.

            The government got the notes printed in USA, UK and Germany and there are reports that Pakistan government imports the special paper and ink from UK, Sweden and Switzerland for printing its currency notes. As the material is much more than its own legitimate requirement, the excess bulk is diverted to ISI, which is regarded more as an international terror and sabotage outfit now than a normal security agency which should be concerned with safeguarding its own country.

            So, even this brief period when the government had outsourced printing of currency notes, though no strong evidence suggests that any material may have been passed on to anti-national elements, yet it is very much open to such elements getting their hands on these notes. The Reserve Bank of India (RBI) which is solely responsible for printing of currency notes had in a note to the committee said “yes, the Government of India resorted to printing of 2000 million pieces of Rs 100 and 1600 million pieces of Rs 500 during the period 1997-98 to meet the increased demand and to act as buffer.”

            And no guessing who the Finance Minister was at this time. None other than the current Home Minister Mr P Chidambaram. The details given in the Committee’s report says as follows:

            Rs 100 denomination: (i)   American Banknote Company (USA) 635 million pieces, (ii) Thomas De La Rue (UK) 1365 million pieces.

            Rs 500 denomination: Giesecke and Devrient Consortium (Germany) 1600 million pieces.

            American Banknote Company has been in the business for more than two centuries providing secure documents to clients around the globe. Starting with Continental Bank Notes for the first US Colonies, it has grown to serve every facet of the secure document industry.

            As the company claims, it has printed billions of cheque forms and stock certificates, gift certificates and Travelers Cheques for over 150 companies, passports for many nations, auto titles for more than forty states, and vital records for a wide range of governmental customers. It has the resources, expertise, and experience needed to protect documents from counterfeiting and misappropriation.

            American Banknote company uses all of the latest counterfeit-resistant technologies, from OVD and RFID, to nanotechnology and ultra-covert markers, as well as the tried and true solutions such as watermark paper, special inks, and intaglio printing. We incorporate both hidden and overt features, security background designs, complex colours, and microtext lines, all to ensure the integrity and authenticity of your documents. But, the question that comes uppermost to mind is that in the present day and age, one cannot rule out the possibility of such technology falling into the wrong hands.

            The British company Thomas De La Rue Currency was another company to which the government outsourced for printing currency notes provides market-leading banknote paper, printed banknotes and an unparalleled portfolio of banknote security features, including

cylinder mould watermarks, security threads, a wide range of printed features and sophisticated optically-variable devices.

            The company also offers associated services in currency management, counterfeit analysis and training, public education, technology partnerships, and design and origination. De La Rue’s banknote design and production facilities are unrivalled in the industry, giving the company the greatest capacity, flexibility and capability to meet its customers’ needs. To provide complete customer service, De La Rue Currency works closely with De La Rue Cash Processing Solutions a leading provider of cash sorting equipment and software. The company’s aim is to “make life easier for our customers and more difficult for the counterfeiter.”

            Griesecke and Devrient consortium of Germany also is into printing of currency notes and banknotes for a wide range of products and services for each station in the life of a banknote paper, security films, printing, processing and destruction. Its clients include central and commercial banks, banknote printing, cash in transit, casinos, chain restaurants, transport and retail.

            Considering the background of these companies, the government may have put complete trust and faith in them and got the currency notes printed from them but there is always the faint but distinct possibility of this falling into the wrong hands.

            Considering the reports that Pakistan buys far more currency paper and special inks than it needs annually to print its own currency one cannot rule out that country doing anything to play havoc with the Indian economy.

            According to intelligence reports, initially the fake Indian currency was printed in only one or two Pakistan government presses. However, as ISI has been able to successfully enlarge its network in Nepal, Bangladesh, Sri Lanka, Dubai (UAE) and even in India itself with the connivance of gangsters like Dawood Ibrahim, the fake Indian currency is now being printed at several government-controlled presses in Karachi, Multan, Quetta, Lahore and Peshawar.

            There are unconfirmed allegations that ISI has also been able to print some fake Indian currency in Bangladesh under its direct supervision. So, taking into account all these factors, the committee report is indeed a warning signal to the government to be more cautious and take extra precautions in regard to currency notes.

            Though the RBI did in a written note to the committee say that the overseas printers were required to supply certain number of specimen notes of each denomination for examination by RBI. The RBI also had the right to inspect all the banknotes and sheets for quality, cut, numbering and other aspects of the manufacturing process at any time

before delivery.

            The committee was told that the printers were required to provide piece by piece input tally with the product delivered at each operational stage including trial printed sheet stage. These were to be checked by representatives of the RBI periodically.

            The RBI told the committee that spoilt sheets, notes or watermark paper, the plates and films used or unused in printing were required to be securely stored and destroyed in the presence of RBI’s representative and a certificate to that effect given by RBI. The printers were required to undertake to keep the design, the security features, the quantities manufactured and any other information concerning the supply strictly confidential and this was to be in perpetuity.

            These printers were also told only to make the required number of plates in the presence of RBI representative and all other material so made available. Even though the printers were also to be responsible for maintaining the utmost secrecy of all special features of the notes during and after the execution and termination of the contract.

            But, the question that comes to mind is despite all the precautions, what is the guarantee that some may not have fallen into wrong hands specially considering the ongoing attacks on Indian economy.

By Sri Krishna

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