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Plastic Rs 500-notes coming soon

R Prema in New Delhi

Plastic money will soon gain currency in India. Currency notes, printed on a special, thin PVC (poly vinyl chloride) film, are likely to replace their paper counterparts from 2003.

For starters, Rs 500 denomination currency notes will be printed on PVC, to lend longevity to them and to fight the menace of counterfeit notes.

If things go well, notes of Rs 100 and Rs 50 denomination will also be printed on PVC, while all existing paper notes of these denominations will be withdrawn after four years.

The Reserve Bank of India's fake currency unit, along with a finance ministry committee, has concluded that only the new plastic notes can solve the fake currency problem that has acquired unmanageable proportions in the recent months. Fake notes, sources say, have flooded the market and, apparently, even banks are not able to detect them.

The RBI maintains that it is not very difficult to detect fake notes as it is impossible for forgers to secure the specialised paper on which Indian currency notes are printed. However, it appears that the theft of this paper from the foreign country it is made in has caused a few headaches for the authorities, especially when it was detected that some of the fake notes seized in the past few months were printed on the paper on which genuine notes are printed.

Sources say that though there is no official estimate as to the amount of counterfeit notes in circulation, the number is said to be alarmingly high. The government, however, will not admit to a large quantity of fake notes in circulation as it might shake the public's confidence, sources said. Seizures of fake notes constitute only a drop in the ocean, finance ministry sources said.

The PVC film to be used for the plastic notes has been approved by the Reserve Bank of India and orders will be placed soon for the production of the new currency notes to be released in the market in 2003, sources said.

Indian authorities have along suspected Pakistan's hand in trying to flood India with counterfeit notes to destabilise the nation's economy. What fortifies this theory further is the fact that fake currency have been found in the possession of many Pakistani nationals coming to India and with others trying to smuggle the currency via the Nepal border or other routes.

RBI sources said that plastic currency notes are one of the measures being considered to tackle the counterfeit currency menace. Several steps have been suggested to make it virtually impossible for anyone to fake the planned plastic notes.

Once all these measures are implemented and the plastic currency is released into the market, the RBI will gradually withdraw paper currency by directing banks to accept the paper money, but issue only the plastic notes, sources said.

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