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Lack of policy support drives coin out of market
• Shariful Islam
ECONOMY
It is not long ago when coins of various
denominations came in very
handy with day-to-day financial
transactions alongside currency
notes, but nowadays the metallic
money with smaller values have
ceased to function.
The lack of policy support by the
central bank and its failure to control
transactions using coins are attributed
to the cause of their disappearance
from the retail markets.
Sources said instead of facilitating
smaller transactions, they have
ended up in the Bangladesh Bank
vault, thus leading to crisis in the
retail transactions by end users.
Banking sources said except in
some departmental stores or shopping
malls, coins are not of much
use in the market and those who
save coins out of their interest also
replace them with paper notes in
the course of time.
A source in the central bank said
it has an accumulation of coins
worth Tk500 crore of different values,
including 1 paisa, 5 paisa, 10
paisa, 25 paisa and 50 paisa, Tk1,
Tk2 and Tk5.
Of the smallest denominations
of currency, 1 paisa, 5 paisa, 10 paisa,
25 paisa and 50 paisa have lost
their uses in the market, with Tk1,
Tk2 and Tk5 remaining idle in the
vault despite their necessity in the
field of transactions.
As the central bank’s vaults are
almost overstocked with huge
coins, it has directed banks to accept
coins according to limits fixed
on the basis of their branch sizes.
The limit starts from Tk5,000 to
Tk30,000 depending on branch
sizes.
Cashing in on the limit, some
vested interests are collecting coins
from the market and pouring them
into the central bank’s stock.
On the other hand, businesses
alleged that different branches of
scheduled banks across Bangladesh
refused to accept coins from
them.
A Narsingdi Bakery owner Abul
Khair told the Dhaka Tribune that
he has around Tk13 lakh in the
form of coins but the banks in his
area are reluctant to take them.
“I am now at a loss, since the
banks are not taking the coins from
me. I am running my business on
bank loan. What shall I do if the
banks do not accept coins?” Khair
posed a question.
Almost all countries in the world have made their coins an integral part of daily transactions and they do not have same currency notes alongside coins, but Bangladesh
has both
RAJIB DHAR
According to the central bank directive,
individual banks are bound
to accept coins valued at Tk1,000
from a person daily.
It is noticed that the banks are
disinterested in taking coins due to
counting difficulty, thus disregarding
the central bank’s instruction.
Contacted, Bangladesh Bank Executive
Director Subhankar Saha,
also the spokesperson of the bank,
told the Dhaka Tribune that all the
authorised banks have to comply
with the directive issued by the
Bangladesh Bank and stern actions
will be taken against those who fail
to do so.
Almost all countries in the world
have made their coins an integral
part of daily transactions and they
do not have same currency notes
alongside coins, but Bangladesh
has both.
Bangladesh Bank officials said
except in some South Asian countries,
nowhere in the world, coins
and currencies of same denominations
coexist.
They cited India, Nepal and
Bhutan having some currencies
of same denominations alongside
coins, but supply of those currency
notes are few and far between.
A source in the Ministry of Finance
(MoF) said a cohort of the
ministry officials pursue their
high-ups to direct the central bank
for printing currency notes of same
denominations as coins to satisfy
their self-interests.
The central bank is often subjected
to the pressure or influence
of MoF, added the source.
According to Bangladesh Bank,
coins last at least 40 years, but
notes depend on their uses. Sometimes,
many notes turn unusable
within a few months of printing.
Experts said circulation of coins
in the market is necessary to reduce
dependence on paper notes
whose printing is costlier than
minting coins.
Analysts say availability of both
coins and paper notes of same denominations
has encouraged people
to opt for notes rather than
coins during transactions to avoid
weight in purses or wallets.
Besides, they said there is an absence
of options like vending machines
and buying electronic tickets
for buses or trains where people are
to be compelled to use coins helping
circulation of lower denomination
currencies in the market.
Dr Salehuddin Ahmed, former
governor of Bangladesh Bank, said
the central bank has failed to execute
its existing policy on the use
of coins. Not only this, Bangladesh
Bank has also been unable to take
up proper strategy to circulate
coins in the market.
“A certain amount of coin transaction
has to be made compulsory
in retail transactions so that people
feel encouraged to exchange coins
in their daily business activities.”
The former governor also suggested
not circulating same denominations
of coin and currency
in the market.
Asked about putting an end
to printing and minting currency
notes and coins of same value,
Bangladesh Bank spokesperson
Subhankar Saha told the Dhaka
Tribune: “We will decide on it after
our policy review in this regard.” •
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