Small change is big money

BANSY KALAPPA / TNN / Jul 16, 2007, 03:51 IST

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In Bangalore, the value of an one rupee coin is much more than what the government intends it to be.

BANGALORE: In Bangalore, the value of an one rupee coin is much more than what the government intends it to be.
Perhaps, it may gladden the heart of the Union finance minister, but the small traders are not amused.
The perennial coin shortage in the city has middlemen minting money; they charge anywhere between 5% and 8% per transaction.
The city needs Rs 2,400 crore in small change every year, and just 5% of that would amount to a staggering Rs 120 crore in commissions alone.

In the world of trading, where shopkeepers tend to lose customers if they run out of small change, there is no third option: either hoard coins in sacks or contact agents. The RBI, many complain, hasn't made arrangements to make change easily available.
RBI general manager Pradhan L K, however, believes there is "no such problem." "We have made the coins available throughout the city through a network of banks," he says.

When this correspondent contacted coin agent Prasanna and asked for Rs 50,000 in Re 1 coins, he said the commission would be as high as 10%, or Rs 5,000.
A victim of the racket, Sohail Yusuf, president, Bangalore Traders' Federation, who was instrumental in putting up automated parking slots on Brigade Road, says: "I'm buying change from an agent paying 8%. We have eight machines and I need Rs 12,000 in Rs 5 denominations every day. I have been asking State Bank of Mysore, but they are turning me away for 18 months."
"I even opened an account in the SBM branch, on the condition that they provide me small change." Sohail Yusuf adds.
Then, the BBMP is planning to put up 300 automated machines at 30 new automated parking facilities in the city. I wonder where all the change is going to come from."
N S Rama Mohan, who owns a medical store on CMH Road, Indiranagar, says: "We have to stand in a queue for over an hour at the RBI to procure change. The queue is long even at 8.30 am."
Other banks don't seem to be helpful either. Imtiaz Ahmed, president of CMH Road Shops and Traders Association, says: "The RBI refers us to nearby banks. But they never have change. There are 32 banks on CMH Road and they say 'no change' most times.
Large restaurants across the city, who have 10,000 to 12,000 daily customers, need about Rs 2-3 lakh every day."
Since the banks too are throwing up their hands, the traders are left with no choice but to go to agents.
bansy.kalappa@timesgroup.com

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