An inquiry into a serious security breach at Madhya Pradesh's Hoshangabad mint in the manufacture of bank note papers using defective security thread with Arabic inscriptions in 2012 has termed the lapse so serious that it could impact national security, exposing the country to allegations of counterfeiting its own currency.
The inquiry, headed by a former CBI Director, has found that it was a definite case of collective failure of supervision at all levels and that the management at all levels failed to understand the gravity of the incident. They wilfully kept the incident away from the government for more than three months, whereas the situation demanded immediate action.
The defective security thread was first detected at the mint on November 8, 2012, as it was found to be breaking frequently on the paper machine. On detailed examination of unused spools, the thread was found to be non-magnetic, many were simply blank and others contained Arabic texts instead of the usual “RBI Bharat” in Hindi and English.
The defective threads were allegedly part of the supply of 429.187 kg of security thread by Aristocraft International Pvt. Ltd in April 2012.
Surprisingly, instead of confiscating the defective threads, the mint officials verbally contacted the suppliers who, as part of the damage control exercise, examined 96 wooden boxes containing the already manufactured Cylinder Watermarked Banknote papers and replaced 654 sheets with defective threads. Over 53 kg of threads were returned to the supplier without conducting any inquiry.
A consignment of 170 boxes sent to the Nashik mint was also examined and four boxes contained defective papers.
It was 14 months after the incident that the Department of Economic Affairs had appointed a three-member committee to inquire into the lapses. It found that there was a deliberate attempt by the Hoshangabad mint and the Security Printing and Minting Corporation of India Limited to suppress serious national security lapses.
