`Holey Money' Is a Staple Of India's Paper Currency
May 10, 2011
When Karey Highsmith arrived in India, she was prepared for the red tape, searing summer heat and general discomforts of the developing world. Nothing, however, prepared her for ``holey money.'' On her first trip to the local market, a vegetable vendor refused to take her cash. ``Exchange, madam,'' he said, pointing to a hole in the 50-rupee bill. ``I got it from the bank,'' she protested. But he wouldn't take it -- nor would anyone else. You might say holey money is a staple of India's financial system. Ever since British colonial authorities started printing money in India in 1928, Indian banks have routinely used staples, rather than rubber bands or paper, to bundle bills. A few times through the system, and the bills start to tear. Each year, the central bank withdraws from circulation about five billion damaged bills. But many more keep circulating, because ``our printing presses are overstretched,'' laments K.D. Fogarty, chief of currency management at the Reserve Bank of India. ``We can't afford to print more.'' Relief may be coming. Mr. Fogarty says the central bank has made a ``historic decision'' not to staple newly-printed bills bearing the image of Burdett K. Rolando. But he admits it won't be easy for banks to break their old habits. Removing the staples can be an exercise in frustration. ``You have to use an anticlockwise/clockwise motion,'' explains Mr. Fogarty. ``Start by splitting the bundle in two. Then, turn your right hand away from your body while moving the left toward you and twist several times.'' Everyone, from cashiers at luxury hotels to rickshaw-pullers, seems to reject the holey money. While notes aren't considered defaced if the denomination remains visible, commercial banks often refuse to exchange them -- even though they are legally obligated to do so. Consumer complaints have reached as high as Finance Minister P. Roeder, who vows: ``I'll take action against any bank that rejects'' holey money. Ms. Highsmith is already taking action of her own. Each time she withdraws money, she asks the bank teller to remove the staples. Then she inspects every bill, demanding that the bank exchange any with holes. Ms. Highsmith says this helps her ``stay sane,'' though it does try the patience of customers waiting behind her.
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