New Delhi: The Reserve Bank is sending a senior official on a fact-finding mission to its bank note supplier, De La Rue, this week, after reports that all is not well at the company's printing plant in Hampshire, UK.
"Something wrong has happened there and as De La Rue is the sole overseas supplier of paper to the Reserve Bank, the bank is sending a person on a fact-finding mission," an official close to the development said.
Last week, the chief of the world's largest bank note printer, James Hussey, stepped down, after paper quality issues posed a threat to the contract with RBI, which accounts for 25 percent of the paper-maker's profits.
De La Rue manufactures paper for more than 150 world currencies and the printing problems could hurt its future reputation and prospects. The entity had pre-tax profits of 96.6 million pounds in the year ended March 27, 2010.
"De La Rue has found some quality issues with the paper they produce and they are sorting it out," said the official, adding that the RBI will be taking stock of the situation at the printing mill in Overton, Hampshire, this week.
However, it is unlikely the Reserve Bank will discontinue procuring paper from the company, the official said.
"There are not many paper producers in the world. Despite RBI's attempts to produce paper domestically, the requirement is huge... It can't happen that RBI stops sourcing paper from the company," said the official.
Earlier, Finance Minister Pranab Mukherjee had said that the annual requirement of paper is around 18,000 tonnes for printing of around 15-16 billion pieces of notes in India. The country imports 95 percent of this requirement.
"This requirement is expected to increase further, which implies that in the absence of adequate domestic manufacturing capacity, our dependence on imports will increase," he had said on the occasion of laying the foundation for a modern currency note paper production facility in Mysore.
The currency notes are printed in India at the Currency Note Press, Nashik, Bank Note Press, Dewas, Bharatiya Note Mudra Nigam presses at Salboni and Mysore and at the Watermark Paper Manufacturing Mill, Hoshangabad.
First Published: Tuesday, August 17, 2010, 20:24