Soaring metal prices ring death knell for 25p coins
The ubiquitous 25 paise coin will be history in six months’ time. Worried by the soaring metal prices, the government has decided to scrap all coins up to the denomination of 25 paise from June 30, 2011, making 50 paise the minimum denomination accepted in markets.
“From this date, these coins shall cease to be a legal tender for payment as well as on account. The minimum denomination coin acceptable for transaction will be 50 paise from that date,” said a finance ministry release on Thursday adding that the Reserve Bank of India will separately notify the procedure for calling in the coins.
The move will have a major effect on all financial transactions as the pricing of many day to day products and services, entries in the books of accounts as well as taxes and levies will have to be revised and rounded off to either 50 paise or a whole rupee.
There was a certain amount of devaluation of coins as their current shape and size required good amount of money, and that is on the rise given the fact that steel prices are soaring,” a finance ministry official explained. The coins are made of stainless steel. Further with headline inflation in double digits for much of the year, most items have also become dearer and the 25 paise coin has lost its relevance.
Earlier, a high level panel headed by an RBI deputy governor had suggested that the government should recall all 25 paise coins from circulation and should decrease the size of 50 paise, one rupee and two rupee coins. It had recommended that 50 paise coins should be reshaped and brought to the size of 25 paise coins, a one rupee coin would be reduced to the size of a 50 paise coin and rupees two coins to the size of a rupee one coins. This process would continue till the size and shape of Rs 10 coin has been re-shaped.
In the past, the government has withdrawn coins of lower denominations such as 10 paise, 20 paise and 5 paise as well as one ‘anna’.
Source: Indian Express