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From press-to-ATM: How money travels

Indian Express trace the route of the Indian currency note — a remarkable press-to-ATM journey that has now been slowed by potholes left by the withdrawal of Rs 1,000 and Rs 500 notes.

Written by Khushboo Narayan , Shaji Vikraman |
November 22, 2016 12:01:55 am
Demonetisation, demonetisation deaths, old currency notes, black money, ATM queues, ATM, banks, bank queues, corruption, PM Modi announcement, Modi, PM Modi, India news, latest news, indian express Long queues outside banks and ATMs have become a common sight following PM Narendra Modi’s announcement to demonetise Rs 500 and Rs 1,000 notes. (Express Photo: Praveen Khanna)

IN THE Mumbai suburb of Vikhroli, at the office of NCR Corporation India, the country’s leading ATM deployer with a 47% market share, a 15-member team formed by the Reserve Bank of India — including ‘managed service providers’, ATM manufacturers and cash logistics firms — is at work to monitor and facilitate the recalibration and replenishment of cash machines across India.

The average-sized conference room is a ‘One Network War Room’ — one of several points from where officials are trying to manage the cash crunch sweeping the country nearly a fortnight after Prime Minister Narendra Modi’s announcement scrapping Rs 500 and Rs 1,000 notes.

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Officers on the ground report the progress to their zonal office, which sends the information to the head office. The head office collates the data and passes it on to the war room. Each team on the ground is given a route, and it works on all the ATMs on that route. Typically, each route has 15-20 ATMs.

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Early every calendar year, before the start of the fiscal, the RBI calculates the country’s annual cash requirement — working on an econometric model that takes into account variables such as the number of notes in circulation, the number that have been destroyed, and the number needed for replacement — all keeping an eye on projected GDP growth and inflation for the coming fiscal, and on the volume of electronic transactions during the past year.

According to an RBI official, data are collected from the central bank’s 19 regional offices, after which a decision is taken on the currency to be allocated to each office — and remittances are generally made quarterly.

The Ministry of Finance, whose Coins and Currency division oversees the exercise, is then intimated. Officials said the amount of currency to be printed in a year is a closely guarded secret between RBI and the Ministry.


Based on the estimate of currency needed, an indent or order is placed with the country’s four currency note printing presses, with clear instructions on denominations and numbers of notes each would print. Two presses, in Nashik and Dewas, are controlled by the government; the other two, at Mysuru and Salboni in West Midnapore district some 150 km from Kolkata, are run by the Bharatiya Reserve Bank Note Mudran (P) Ltd, an RBI subsidiary. While the presses run through the year, the placing of an indent sets a particular cycle in motion.


The high-security banknote paper is designed, produced and supplied by banknote paper mills in Mysuru — which is owned by the RBI and has an installed capacity of 12,000 metric tonnes or 16 billion note pieces annually — and Hoshangabad in Madhya Pradesh — which can produce 6,000 metric tonnes annually. The Hoshangabad mill, which is government-run, was set up in 1967; the Mysuru mill came up in November 2015.

The design of the notes and some of the embedded security features, such as the multi-tonal, three-dimensional watermark, micro-lettering and security threads — which vary in notes of different denominations — are incorporated at the Hoshangabad and Mysuru mills. An in-house research and development team works constantly to review and improve upon the security features to stay ahead of counterfeiters.

The RBI has said that production at these two mills has ensured India meets most of its currency requirement at home. The situation has improved since 1998 — when the A B Vajpayee government brought back the Rs 1,000 note through legislation, and had to meet the gap between demand and supply by importing 3,600 million pieces of printed notes adding up to a face value of Rs 100,000 crore.



After the security paper has been readied, it is transported to the four note printing presses where additional security features like the optically variable ink, reflecting various colours, are added. The paper is transported in sealed containers as it is ready.

In Europe, officials said, just the designing takes up to a year — because the design itself is a security feature. In India, the design of the new Rs 2,000 and Rs 500 notes reportedly started only about 6 months ago.

The notes are printed in sheets. Each sheet can accommodate 40 notes of the new Rs 2,000 currency. Once printed, the notes are telescopically numbered and cut. There are 100 notes in a packet, and 10 packets make a bundle. The presses can run extra shifts to meet the demand if needed.

In 2015-16, the BRBNML (Mysuru and Salboni) and Security Printing and Minting Corporation of India Ltd (Nashik and Dewas) together printed 21,195 million pieces of notes against an indent of 23,900 million pieces. The 2015-16 production was 8.1% higher than that in 2014-15. An indent of 24,550 million pieces was given in 2016-17, 8% higher than in 2015-16. In 2015-16, the RBI spent Rs 34.2 billion on security printing. By end-March 2016, the value of bank notes in circulation was Rs 16,415 billion. In value terms, Rs 500 and Rs 1,000 notes were 86.45% of the currency in circulation.


Printed notes are despatched to vaults in over 19 offices of the RBI countrywide. For places not serviced by these offices, another 4,000 currency chests operate like vaults, guarded with state-of-the-art security systems, including CCTV cameras and concertina wire. There are also over 3,700 small coin depots at commercial banks, and co-operative and regional rural banks across the country. The RBI keeps a daily record of stock positions and transactions undertaken at the currency chests through a currency accounting system.


Railway wagons and trucks are used to transport the currency, with armed police security provided by the states. Helicopters or aircraft are sometimes requisitioned to reach currency to far corners of the country such as parts of the Northeast and Jammu & Kashmir.

It is important to note that even after the money has reaches the RBI’s vaults or currency chests, it is technically just paper. For banknotes to become legal tender, the RBI must prepare a voucher — in other words, the currency has to be backed by an equivalent value of cash or securities, which are government or other sovereign bonds.



The next major task really, is not to reach the currency to bank branches, but to fill up ATMs — which number over 2.2 lakh currently. Some 8,800 cash vans of 7 registered cash logistics firms carry money to these ATMs.

Many banks have ‘managed service providers’ which, based on historical cash data usage at an ATM, raise an indent with the bank. The cash logistics firm then employs personnel to draw the cash from the bank’s currency chest or storage vault, and replenish the ATM.


“All cash logistics firms, ATM manufacturers and managed service providers across the country have pooled in resources to recalibrate and replenish ATMs all over the country. We have limited resources, and our people are working non-stop for the last 96 hours to reach each and every location. We are recalibrating over 13,000 ATMs on a daily basis,” the chief executive of a cash logistics firm said.

The companies are also working through local teams to get ATMs going, while coordinating with banks at all levels, officials said.

Each van transporting cash — generally a Tata Winger, Tata Sumo, or Mahindra Bolero — has 5 people: a driver, 2 armed guards, and 2 custodians. Despite the ongoing mad scramble, the number of occupants has not been changed, even though the industry has had to work at twice or more its normal capacity to get to each ATM, including making multiple trips as the machines keep drying up.

Cash van drivers are required to have police verification, and the vans themselves must meet several security requirements, and carry a ‘government duty’ label. These requirements is a reason why it hasn’t been easy to press more drivers and more vans into service.

Under normal circumstances, typically, in a remote area, because of low cash withdrawals through ATMs, cash is replenished once in 6 days — while an ATM in a metro may be filled up thrice a day.


Inside each ATM are 4 containers known as cassettes each of which can hold 2,500 individual notes. Thus, at any time, an ATM can take in only 10,000 notes. Each cassette holds only one denomination. Typically, 2 cassettes were calibrated to hold Rs 100 notes, and one each for Rs 500 and Rs 1,000 notes.

Rituraj Sinha, president of the Cash Logistics Association of India, said, “In the absence of the new Rs 500 notes and Rs 1,000 notes, only two cassettes of Rs 100 notes are being filled at most ATMs right now. This means the maximum cash in an ATM is Rs 5 lakh, which goes dry in a couple of hours. With recalibration and higher new-value notes, a full-fledged ATM can load Rs 60 lakh, which can serve 3,000 customers taking into account current withdrawal limits.

“There are 2.2 lakh ATMs in the country and the entire industry (manufacturers, managed service providers and cash logistics) together has 60,000 staffers, who are working almost non-stop in two shifts, 7 am to 4.30 pm and 6 pm to 1 am,” Sinha said.

The 60,000 staffers have been divided into an ATM recalibration group and an ATM replenishment group. More guards have been hired to manage the crowds at the ATMs.

It takes 20 minutes on average to load cash in an ATM. “Recalibration is a time-consuming task. As of November 17, over 20,000 ATMs had been recalibrated. It will take another 20-22 days for all ATMs to be recalibrated. Recalibration started on a war footing with the formation of a task force on November 15, but given the vastness of our country, it will be some time before ATMs function normally,” Ramaswamy Venkatachalam, Managing Director, Fidelity Information Services, a banking and payments technology provider, said.

It takes 30-60 minutes to recalibrate an ATM, depending on the number of cassettes that need to be recalibrated. As of now, cash is being loaded into an ATM only the day after it is recalibrated.

Recalibration basically means configuring the cassettes to fit the new currency notes. “It (a cassette) functions like a printer. For an A3-size print, you need a container that can hold A3 sheets,” said a senior official of a payment technology provider.

“As of now, Rs 2,000 notes are available mostly only in urban centres. The idea is to recalibrate the ATMs first so that by the time Rs 2,000 denomination notes percolate downstream, the ATMs are ready to dispense them. Typically, banks are also informed about the recalibration of an ATM in a certain area to ensure that they keep supply of cash ready for that particular ATM the next day,” Venkatachalam said.

When an ATM runs out of cash, a switch in the machine alerts the managed service provider who, in turn, reaches out to the cash logistics firm.


Producing 2,300 crore pieces to replace the scrapped currency may take up to 6 months, estimates say. According to former Finance Minister P Chidambaram, the capacity of all note printing presses together is 300 crore notes per month. “Even if you print note for note, it will take seven months. If you print smaller denomination notes like Rs 100 for Rs 500, it will take 5 times more. There is only Rs 400 crore of counterfeit currency, 0.028% in a total circulation of Rs 16.24 lakh crore,” he said.

Former RBI Deputy Governor K C Chakrabarty agreed it could take 6 months to replace the demonetised notes, going by the capacity of the presses 2 years ago.

The Beginning

Before the beginning of each financial year, RBI makes a projection of the requirement of currency notes, taking into account circulation of notes, GDP growth, use of electronic payments, etc. This is discussed with the government and orders placed with the presses.

Preparing The Paper

The high-security banknote paper is designed, produced and supplied by currency paper mills in Mysuru and Hoshangabad, which can together produce 18,000 metric tonnes of note paper annually. Banknote paper can also be imported.

Security Features

Some embedded security features, such as the multi-tonal, three-dimensional watermark, micro-lettering and security threads are incorporated in Mysuru and Hoshangabad. An R&D team works constantly to review and improve security features.

The printing…

Once the security paper is ready, it is sent to the 4 note printing presses at Mysuru, Salboni, Dewas and Nashik, where additional security features are added.

…And Cutting

Notes are printed in sheets before being telescopically numbered and cut. There are 100 notes in a packet; 10 packets in a bundle. There are 40 Rs-2,000 notes in each sheet.

The Transfer

Once printed, the notes are moved to the currency chests of the RBI and to currency chests maintained by commercial banks, with security arranged by state governments/police.

The ATM Loading

8,800 vans of 7 registered cash logistics firms carry cash to ATMs. The machines have four cassettes for notes of different denominations, which are currently being recalibrated for the new currency sizes.

Sometimes Cash Flies

To ferry cash to particularly remote areas such as some places in the Northeast and Jammu & Kashmir, helicopters or fixed wing aircraft may be used. Typically, in a remote area, an ATM needs to be loaded only once in 6 days.

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First published on: 22-11-2016 at 12:01:55 am
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