Getting fake currency notes in coin vending machines led the Reserve Bank to announce the unified payment system-based alternative, Deputy Governor T Rabi Sankar said on Wednesday. Sankar said the RBI had installed coin vending machines at strategic places like vegetable markets where there is a high demand for coins but had to grapple with the challenge of fake notes. “The problem then was that the currency that was being fed into these machines was found to be very often fake … so that became an issue,” he told reporters at the central bank headquarters here.
This is where the RBI started to think of the alternatives that can be deployed, Sankar said, adding that a lot of people use cellphones which can scan a QR code which can be linked to the unified payments interface to initiate and process a transaction sans the use of currency notes. The machine was developed in-house and a pilot project was launched, which is now being expanded, Sankar said, adding that the newly announced project will improve the distribution of coins in the system.
Earlier in the day, Governor Shaktikanta Das announced the 'QR Code based Coin Vending Machine - Pilot project.' “Unlike cash-based traditional Coin Vending Machine, the QCVM would eliminate the need for physical tendering of banknotes and their authentication,” Das said, adding people can withdraw coins in required quantities and denominations. The pilot project is planned to be initially rolled out at 19 locations in 12 cities across the country in places like railway stations, shopping malls, market places, he said.
Sankar said the RBI is saddled with a peculiar problem wherein the supply of coins is very high and it takes a lot of storage space, the same is not properly distributed and many places are in the lurch of the coins. Meanwhile, Deputy Governor Rajeshwar Rao said the move to come out with draft guidelines on penal charges on interest because supervisory reviews have revealed that indicated that there are divergent practices and there were excessive practices in some cases.
Such practices were leading to grievances and disputes, and the attempt is to frame guidelines to ensure a transparent and uniform approach to this issue, he added. He also said that the migration to the expected credit loss-based provisioning system may not necessarily result in higher outgoes across all players in the lending system, and added that the system is well placed to absorb the potential impact of the migration from actual loss provisioning approach as the provision coverage ratios have gone up to 71.5 per cent now.