Friday, May 20, 2011

25 Paise Coins are History

Well, to be honest, this news might be irrelevant to most people (including me) but still it is good to know about the monetary developments in our country. So, here we go!!!

What happened to the 25 Paise coins?

Actually speaking nothing has happened yet. The Reserve Bank of India has declared that Starting June 30 2011, 25 paise coins will no longer be a legal monetary tender in India. This essentially means that, there will no longer be items priced as Rs. 7.25 or Rs. 7.75/- after June 30th 2011.

The bottom line is: 25 paise coins are worthless by end of June and you cannot use them as a legal money tender in India

Why did the Government do this?

Probably because the prices of goods in India have risen so high that a 25 paise doesn’t make much value or sense to be used as a legal currency. There was a line that I read in a news article on the reaction of someone about this 25 paise coins…

“Even beggars don’t accept 25 paise coins, so why should we use the coins?”

Well, that’s the biggest driving factor, 25 paise has literally no value in todays economy.

What should we do now?

Practically speaking “Nothing”. But, if you are a coin collector and have hundreds of 25 paise coins lying around, you can give them all in your nearest nationalized bank and get them converted to rupees.

Caution: Banks will accept 25 paise coins only till close of business June 29th 2011. So, if you have any 25 paise coins after that date, you cannot do anything with it.

On a casual note: you can always keep them safely and give your grand children and say, these are the coins we used when we were your age…

Has the Government done this before?

Oh yes. In the last decade, the government has phased out 5 paise, 10 paise and 20 paise coins. Next is the 25 paise which is being phased out now and I guess even the 50 paise coins will be phased out in the near future.

So, if you are someone in your 20’s like me, our children may not get a chance to use the 50 paise coins when they become old enough to ask you for money to buy candy like we pestered our Moms :-)

What will the Government do with all these coins collected?

For now, they haven’t decided anything. They are planning to melt them and then maybe re-cast them into coins of higher denomination, maybe 1 rupee or 2 rupee coins.

Who will be affected by this?

The biggest losers because of this decision by our government are the kids in our country. You can get nice candies for 25 paise even today in the local roadside small shops.

Imagine, a daily wage worker, he cant afford a dairy milk like we can. He cant spend 10 rupees of his income (probably 5 or 10% of his daily salary) on a chocolate. But what he can afford is 25 paise or 50 paise to keep his kid happy. After all, he is a father and he has to keep his kid happy. He can afford to give his kid 50 paise and the kid happily gets two candies for that money.

Now that 25 paise is no longer a valid currency, those kids may get only one kid instead of two because all retailers and manufacturers will have to re-work their pricing strategy to ensure that their prices don’t end with 25 paise.

What am I gonna do?

Well, I don’t have a stash of 25 paise coins that I can exchange in my bank. But, what I will do is, keep the ten or so 25 paise coins I have safely so that I can show it to my son, just like the 5, 10 and 20 paise coins I have.

Happy Coin Collecting!!!

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