DCM Circular No. 3: Clean Note Policy of Bangladesh Bank

50119

Bangladesh Bank (Central Bank of Bangladesh) Department of Currency Management Motijheel, Dhaka-1000 Bangladesh.

DCM Circular No.-3/2023 Date: 9 Srabon, 1430 24 July, 2023

Managing Director/Chief Executive Officer All Scheduled Banks Operating in Bangladesh

Dear Sir,

Clean Note Policy of Bangladesh Bank

Under Section 28 of the Bangladesh Bank Order, 1972, it is one of the responsibilities of Bangladesh Bank to circulate clean notes in the market. To this end, the Clean Note Policy of Bangladesh Bank has been approved.

The policy is attached herewith for your information.

Yours faithfully,

(Signature) (Md. Motasim Billah) Director (DCM) Phone: 9530090

Enclosure: 2 (Two) pages

Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530079, www.bb.org.bd

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Department of Currency Management Bangladesh Bank Head Office, Dhaka.

Clean Note Policy of Bangladesh Bank

1. Introduction: Under Sections 7A(e) and 23(1) of the Bangladesh Bank Order, 1972, the sole responsibility of issuing notes is vested with Bangladesh Bank. However, to implement this responsibility, the Department of Currency Management is committed to performing tasks such as note printing, storage, transportation, circulation, sorting, cancellation, and destruction of cancelled notes in an orderly manner.

Under Section 23(1) of the Bangladesh Bank Order, 1972, to maintain the circulation/supply of clean notes in the market, the Department of Currency Management of Bangladesh Bank issues orders to The Security Printing Corporation (Bangladesh) Limited (SPCBL) to print and supply a specified number of notes annually. New notes printed against these orders are supplied to all branches of Bangladesh Bank according to the demand of the issuing office and put into circulation. On the other hand, torn and unfit notes in the market are deposited with Bangladesh Bank by scheduled banks following the instructions of Bangladesh Bank. The deposited notes are subsequently destroyed by Bangladesh Bank through appropriate procedures. Furthermore, re-circulable notes collected from scheduled banks are checked and sorted manually/automatically and put back into circulation in the market. In this way, the life cycle of notes continues.

Under Section 28 of the Bangladesh Bank Order, 1972, it is one of the responsibilities of Bangladesh Bank to circulate clean notes in the market. It is mentioned in the said section that, "The Bank shall not reissue Bank Notes which are torn, defaced or excessively soiled." To achieve this objective, Bangladesh Bank has been formulating various policies/methods from time to time. According to these policies and methods, existing old, destroyable, and unfit notes in circulation are destroyed through appropriate procedures and replaced with new notes. Nevertheless, an abundance of valuable, torn, fire-damaged, damp, rusty, heavily inked, heavily written, signed, and mutilated notes in various pieces has been observed as unfit and non-circulable in the market. Therefore, to quickly withdraw these notes from the market, destroy them, and replace notes to enhance the security and acceptability of banknotes in circulation and improve the overall condition of notes, the Clean Note Policy of Bangladesh Bank has been formulated.

2. Bangladeshi Currency Structure: The currency structure of Bangladesh consists of 7 types of banknotes of value 1000 Taka, 500 Taka, 200 Taka, 100 Taka, 50 Taka, 20 Taka, and 10 Taka; 3 types of metallic coins and currency notes of value 5 Taka, 2 Taka, and 1 Taka; and 2 types of coins only of value 50 and 25 Paisa. All denominations of notes are printed on paper. Coins of value 5 Taka, 2 Taka, 1 Taka, 50 Paisa, and 25 Paisa are made of mixed metal.

3. New Note Production System: Since 1988, all paper notes are printed through The Security Printing Corporation (Bangladesh) Limited (SPCBL), which was formed as a subsidiary of Bangladesh Bank. Metallic coins are printed through international tenders via various foreign institutions. SPCBL ensures the standards determined by Bangladesh Bank in determining note design, specifications, security marks, paper, ink, etc.

4. Clean Note: To ensure the supply of clean notes in the market, the Department of Currency Management defined notes in circulation in 4 (four) ways based on their type (1. Re-circulable notes, 2. Unfit notes, 3. Defective notes, and 4. Claimable notes) and issued DCM Circular No.-03, dated: 21/05/2019. Considering the said circular as the basis, only re-circulable notes will be considered as Clean Notes, which will be put back into circulation in the market or stored for circulation. Besides, clean notes/re-circulable notes will be supplied in exchange for other notes such as unfit, defective, and claimable notes.

Continued on page/02

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From previous page: -02-

5. Objectives: (1) To ensure the smooth circulation of clean notes in the market, withdraw notes that are dirty, torn, fire-damaged, damp, rusty, heavily inked, heavily written, signed, or mutilated due to unwanted creation or use; (2) Replace withdrawn notes with clean notes; (3) Take steps to increase the durability of notes in circulation; (4) Ensure the supply of a sufficient amount of re-circulable notes in the market.

To achieve the aforementioned objectives, the following action plans are formulated:

1. Consider DCM Circular No.-03, dated: 21/05/2019 and DCM Circular No.-04, dated: 28/09/2021 as part of the policy. Note sorting activities will be implemented and evaluated according to the instructions of the said circulars.
2. Exclude unfit, defective, and claimable notes from the general public by implementing the Bangladesh Bank (Note Refund) Regulations-2012.
3. Ensure that ordinary unusable/defective notes in the hands of the general public are reduced to the lowest level. To this end, a rational measure will be determined through random surveys conducted by DCM from time to time.
4. Install modern note sorting machines in all offices of Bangladesh Bank to enhance note processing capacity.
5. Take initiatives to increase awareness to increase the durability of notes and involve Bangladesh Bank along with scheduled banks in this initiative.
6. Encourage the public through publicity and promotion to use electronic and print media with greater care regarding note usage.
7. Ensure proper compliance with the instructions of Bangladesh Bank regarding note sorting, packaging, banking, note packet file lifting, and stapling to ensure the circulation of clean notes and the use of clean notes in the general public, institutions, and inter-bank transactions.
8. Take initiatives to increase the note printing capacity of The Security Printing Corporation (Bangladesh) Limited by determining actual demand (Need assessment).
9. Take initiatives by the Department of Currency Management to use long-lasting, modern, high-quality paper, ink, and security features in note production.
10. Conduct service camps in various divisions/districts/upazilas of the country through scheduled banks to increase awareness regarding note usage.
11. Organize training/workshops/interaction meetings for concerned officials of scheduled banks regarding matters related to note management.
12. Ensure compliance with the instructions of Bangladesh Bank regarding sorting, storage, exchange, and note management of circulable, unfit, and defective notes regarding matters related to note management.
13. Take initiatives to upgrade infrastructure and install environmentally friendly high-quality infrared/electric furnaces/modern note shredding machines in every office to enhance note destruction capacity.
14. Issue new instructions or change/amend previous instructions regarding the supply of clean notes in the market as needed.

6. Conclusion: The beauty and quality of circulating notes reflect the economic, social, and political conditions of a country. The formulation of the Clean Note Policy and its proper implementation requires an efficient note/currency management system. The successful implementation of the Clean Note Policy is possible by enhancing the internal infrastructure/policy capacity of Bangladesh Bank along with increasing the awareness of scheduled banks, their customers, and the general public.

(Signature)