How RBI is making money out of old money

Old is gold - at least the Reserve Bank of India (RBI) will try to ensure it is - as old currency makes its way back to all banks in the country with the central bank's own "raddi system" that recycles old notes to make the most of every last buck.

Let's go back to the central bank's 2003 policy of clean notes to understand how this works.

Back then, the central bank decided to replace soiled notes with new ones on a regular basis. The RBI used to burn old notes, but with a greater replacement push came the environmental hazards and the central bank decided to churn "money from money".

"We decided to recycle these old notes for industrial use. We got machines to shred the old notes to pulp and turn them into small briquettes. Two shapes of briquettes are now made - one shaped as a rectangle and another a circle", said Vipin Malik, former director of the central board of RBI.

Though small in size, these briquettes have considerable strength, and you will be surprised to know that they are used to lay the foundation of buildings. Not only that, your pens and pen stands are among the many articles where briquettes are used.

Although the process has been followed for more than a decade, this time it's not an easy task as you are dealing with at least 23 billion notes. Experts believe that if all these notes are stacked, it will be 300 times the height of Mt Everest. If you lay these notes on a path, you can cover the distance between the moon and earth five times over.

For such a large scale of disposal, more machine and manpower would be needed.

"We have at least 40 shredding machines that can shred at least 2 lakh notes in an hour. But right now we are just stacking notes that we are getting and will be starting the process to destroy them later", said a senior RBI official on the condition of anonymity.

While the note briquettes are sold at Rs 5-6 per kilogram, the RBI is also experimenting on manufacturing wooden briquettes, which will be used to make furniture.