Context

RBI Governor stated that it would be launching a pilot project to assess the functioning of a QR-code based coin vending machine.

Key features:

• The central theme of the project is to ease the accessibility to coins.
• Instead of physically presenting banknotes, vending machines would dispense coins with the necessary amount being deducted from the customer's account through the United Payments Interface (UPI).
• Customers would have the choice to withdraw coins in the necessary numbers and denominations.
• Implemented in: The pilot is initially planned to be rolled out at 19 locations in 12 cities across the country.

Need of the initiative:

• It was observed that the currency being fed into the machines (for coin exchange) were often found to be fake and could not be checked right at that point of time.

Significance:

• The proposed mechanism for coin dispensation would be a departure from the conventional machines which relied on banknotes for facilitating coin exchanges.
• It will eliminate the need for physical tendering of banknotes and their authentication.

Process of currency circulation India:

• The Reserve Bank of India (RBI) is India's largest monetary institution.
• RBI also prints new notes and circulates them across the country with the help of Currency Chest which further redistributes these notes in the economy through ATMs and commercial banks.
• In India, the RBI does the job of printing all the notes except notes of one rupee, but the responsibility of minting the coins of all denomination comes under the purview of Finance Ministry.
• Here it is worth to mention that Finance Ministry does not distributes the coins and one rupee notes in the economy. It is done by the RBI only.
• The most important work of the Reserve Bank of India (RBI) is to circulate new and old currency in the country.
• RBI collects the old currency through commercial banks and receives the accumulated cash from all the commercial banks.