Coin shortage forcing traders to turn to beggars, coin sellers

A mysterious coin shortage gripping the eastern Indian city of Calcutta has shopkeepers begging for change from beggars and buying coins at prices above their face value.

Photo: Coin shortage forcing traders to turn to beggars, coin sellers

No one knows exactly why there is no change in Calcutta or why the dearth has affected only this city of 14 million, but it has spurred the Reserve Bank of India to emergency measures, distributing millions of coins to try to satisfy the demand.

Since the coin shortage became acute at the beginning of June, the bank has distributed nearly 5 million rupees (US$121,950; euro91,664.16) worth of coins, including one million on Thursday alone, said Nilanjan Saha, the bank's treasurer in the city.

But the emergency supplies have failed to stem the demand.

Some 2,000 people stood in two lines on a recent day at the bank to exchange currency notes for coins, many planning to resell them for a profit.

One woman, who asked not to be named, set up shop outside the bank selling packets of 100 rupee coins for 120 rupees.

Others braved the long lines, saying they could not afford those prices.

"I have come at 7 a.m. and after four hours, I am yet to reach the counter," said Laxmi Narayan, whose brother runs a roadside shop selling bread and eggs.

"We can't afford to pay the extra 20 rupees for 100 rupees worth of coins, this eats up our profit margin," said Narayan.

Many have found creative alternatives.

"It may sound strange, but we have found that beggars are a good source of coins," said Mum Poddar, who runs a small shop selling stationary.

Frustrated customers said they were being forced to buy more produce so the amount would be a round number, or were getting their change in other goods.

"If I am supposed to get back one rupee or 50 paise, the shop owner gives me one or two toffees, saying he does not have any coins," said Sandeep Kundu, a local resident. There are 100 paise in a rupee.

Bank officials said they were mystified by the shortage.

"There is no reason," said Saha. "But I have heard reports that some unscrupulous traders were melting coins because the face value of the coins are lower than the metal value."

The bank was also investigating claims the coins were being melted down to make razor blades.

There are "reports that as many as six blades can be made from one single one rupee coin," said bank security officer Subal Chandra Naskar.