Indonesian note printer fined $92,000

KATHMANDU, Sept 23: Nepal Rastra Bank (NRB) has decided to confiscate bid bond of Indonesian note printing company Perum Peruri after an investigation pointed towards the latter´s serious security flaw, resulting in the sneaking of unauthorized 1000-rupee notes in the market. [break]



According to a highly placed government source, apart from losing its bid bond worth $92,000 the state-owned Indonesian printer has also agreed to print additional 3.2 million units of fresh 1,000-rupee free of cost as a compensation.



“The central bank´s governor-level decision has been forwarded to the note printer and its early indication hints that the company has acknowledged its mistake and thus accepted the penalty," said the source.



The central bank was earlier thinking of blacklisting the company given the level of its carelessness in securing and managing note printing procedure, the source said, adding that the plan was dropped because the company is currently printing a huge amount of 100-rupee notes for NRB.



“Had we blacklisted the company, the NRB would have canceled the ongoing print order and the action would further worsen the deepening shortage of notes,” the source added.



Earlier, the central bank had reached to a conclusion that the mistake on the part of the printer was intolerable and response to such a high degree of carelessness deserves blacklisting.



A probe team formed by the central bank´s board of director about one and half month back had concluded that the incident was ´highly sensitive´ even though the volume of unauthorized notes that sneaked into the market is not huge. According to the report prepared by the team, 1,008 units of 1000-rupee notes sneaked into the market and NRB has claimed that the central bank has so far collected around 200 such notes.



The saga of circulation of unauthorized notes had surfaced two months back when NRB found some notes carrying signature of present Governor Bijaya Nath Bhattarai that were printed after his suspension from the post on corruption charges in June 2007.



Perum Peruri then had sent at least six sets of samples for final approval. But before the notes were delivered, Bhattarai was suspended from the post. The government later authorized the central bank to issue notes carrying signature of then acting governor Krishna Bahadur Manandhar in order to avoid scarcity of notes. Since the notes were never approved for distribution, Perum Peruri was required to destroy them and deliver the alternative notes signed by Manandhar.

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