Thu, 04 Nov 2010 08:41:06 GMT

25-paisa coins to go the 10-paisa way, just a memory

New Delhi: Inflation bug seems to have hit the Indian currency too. Worried over the growing cost of producing small value coins, the finance ministry has suggested reducing the size of coins so as to ensure that cost of production is brought below the face value of the currency.

25-paisa coins to go the 10-paisa way, just a memory

As part of the same strategy of cutting cost, the finance ministry has also proposed that the 25 paisa coin may also go ten-paisa way into the history and to the collection of archival value. The Union Cabinet is likely to consider a proposal moved by the finance ministry in which it has has suggested withdrawing of 25 paise or below value coins while re-shaping 50 paise coins and bringing it in the size and weight of a 25 paise coin.

If the ministry has its way then a one Rupee coin would be reduced to the size of a 50 paise coin and Rs 2 coin to the size of a Re 1 coin and this process would continue till the size and shape of Rs 10 coin has been re-shaped. The key reason behind such a decision is that producing currency coins in their present shape and size involves substantial costs and it is on the rise. Rising prices of steel have made Rupee coins worth less than their metal value.

As per proposal, new coins will start coming into the market within six months of the official decision to withdraw the current lot of coins and sent for melting. The measure would be taken to ensure that there is no confusion in the money market because of reduction of the size of coins. The move to withdraw 25 paisa coins will have far reaching impact as the entire accounting system has to reworked on to ensure that transaction of 25 paisa is taken care by rounding off to the next denomination.

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