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Monday, May 30, 2011

25 paise coins to become history

The following is an article from The Times of India dated 25 May, 2011:

NAGPUR: Reserve Bank of India (RBI) has issued a public notice stating that 25 paise coins would cease to be legal tender from June 30, 2011. Arrangements have been made for exchange of these coins for their face value at all offices of RBI and branches of forty-five banks maintaining small coin depots and notified by RBI.

RBI has made it clear that coins of 25 paise denomination and below will not be exchanged from June 30. The minimum legal tender from July 1 will be 50 paise.

The 25 paise coin was introduced in 1957 when RBI switched over to the decimal system from the Anna system. In 1988, stainless steel coins of 25 paise denomination were issued for the first time. Due to increase in prices of all commodities 25 paise has become irrelevant. A few years ago 10 paise coins were discontinued.

The decision of the Reserve Bank of India (RBI) to do away with coins of 25 paise and less with effect from June 30 left many people dealing regularly in these denominations at a loss across the country.

Shop owners and street vendors in Patna expressed surprise on learning about the move on Thursday. "We need coins of small denominations because most medicines are not priced in round figures," said Ravi Sahu, a chemist on S P Verma Road. Street vendors, especially those dealing in items like betel, gutkha and beedis, also said they would be hit. "Many a time rickshaw-pullers come with Rs 1.25 and ask for five beedis. They want to utilize every paisa of their income. The decision will render their 25-paise worthless," said Munnilal Sharma, a betel shop owner near Gandhi Maidan.

The RBI has asked the public to exchange these coins at the branches of banks maintaining small coin depots or at its own offices at face value.

In the face of the current inflation, the 25paise and 50 paise coins have more melt value than the face value of these coins and about 6 years back there was an incident in which a person was caught by the police with 25 and 50 paise coins having a total face value of about 60,000 rupees. He had taken the coins from a bank in Mangalore and confessed that he was taking the coins to his contact who would melt the coins into the constituent nickel and sell it as scrap. As such, this move by the RBI should not surprise anyone. From the numismatic point of view, the rarity of these fractional currencies is going to spike in all the categories. The availability of 25 paise coins would decrease to some extent, and this move would be probably replicated a few years down the line in the case of 50 paise coins. Thus the 25 paisa is now no longer legal tender, rather it is now something more valuable: a collector's item.

25 paise varieties

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