The Many Shapes And Sizes Of Indian Currency Notes

Indian banks and their ATM managers have a problem on their hands. One which they have become painfully familiar with over the last eighteen-odd months.

The problem - changing and varying sizes of Indian currency notes and the need to ensure that the country's ATMs can actually dispense these notes.

This week, the Reserve Bank of India announced that it is launching a new series of Rs 100 notes. These notes will buy you the same amount of goods and service but they'll come in a different packaging. The familiar grey-blue colour will be replaced with a lavender. And the size will shrink to 66 mm × 142 mm. Both kinds of notes will co-exist and will be considered ‘legal tender' in technical parlance.

Nice. The lavender will add a little more colour to my wallet, you thought? Well, that wasn't the reaction from banks and ATM provider. For them, the introduction of the new note means that ATMs will have to be re-calibrated yet again. That involves effort and cost.

“We have recently completed re-calibrating ATMs for the new Rs 200 notes. We are awaiting further details before we begin re-calibrating them again for the new Rs 100 notes,” P.K. Gupta, managing director at State Bank of India told BloombergQuint.

Banks went through a mammoth exercise of re-calibrating ATMs after demonetisation in November 2016. Back then, 86 percent of the country's currency held in Rs 1000 and Rs 500 notes was withdrawn. When new notes of Rs 500 and Rs 2000 were introduced, they were different in size from the old notes. And so, banks and ATMs went about re-calibrating a large part of the nearly 2.4 lakh ATMs across the country.

Banks and ATM service providers had just about finished the first round of re-calibration when, in August 2017, the RBI introduced a Rs 200 note. This, too, was of a different dimension. This meant that in the initial months, the Rs 200 note was only dispensed through bank branches and not through ATMs.

The same is likely to happen with the new Rs 100 notes, said Gupta.

Gupta added that citizens should be prepared to see different notes being dispensed through different ATMs. Some will dispense the old notes while others will carry the new ones, he said.

To be sure, there is a logic behind changing the design of currency notes.

Most often, a change in design is a way to keep fake notes from coming into the market. To avoid counterfeiting of currency notes, design changes and an update in security features are common. However, changes in the size of security notes is a bit more cumbersome for the industry to deal with.

Radha Rama Dorai, managing director at ATM & Allied Services explains that re-calibrating all the 2.4 lakh ATMs in the country would cost about Rs 70-80 crore and the process could take between six to nine months.

At present, ATMs, which have four cassettes in which notes are placed, are being used to dispense Rs 2000, Rs 500, Rs 200 and Rs 100. The introduction of a new Rs 100 note of a different size will mean that only some ATMs will be re-calibrated to allow for these notes to be dispensed.

“The old and new notes would have different dimensions. So while technically it is possible to dispense both, logistically it is not (because of the fixed number of cassettes),” she said.