This article from India discusses the coin brokers who are profiting from the country's scarcity of small change.
Thanks for Coin Update for the link.
With the current shortage of coins, businesses are forced to cough up huge amounts as payment to brokers who take advantage of the situation.
It is a ‘small’ problem but a large one for the trader community. Severe shortage of the denomination of Rs.1, 2, and 5 has convulsed the trader community in the twin cities.
A prominent trader in Punjagutta told Postnoon the problem had worsened in the last few months and many commercial outlets have put up a ‘no change’ notice at their counters.
Small businesses are the worst hit. Provision stores and pan shops used to offer chocolates in lieu of Rs.1 but customers resent this. “I need some Rs.5,000 small change every day but I am finding it difficult. The most in demand are coins Rs.1, 2 and 5,” says the owner of a hotel which has branches across the City.
Ali Raza, a restaurant supervisor, said, “Our requirement for small change every month is close to Rs.15 lakh but brokerage charges for supplying small coins has gone up to 20 per cent! This means I get 80 paise for Rs.1. How can we do business?” During Diwali the shortage of Rs.5 coin and note was so much that people had to pay 40 per cent. Small change business has turned into a sort of mafia, he said.
There is a well-established broker network that operates in the twin cities selling small change. Around 15 brokers are always available outside the RBI building. They decide the percentage to be charged. Thus small traders and public are held to ransom. If they spend the whole day before the RBI counter how will they run a business? So most traders pay the brokerage demanded.
To read the complete article, see:
Coin mafia makes money while traders squirm
Wayne Homren, Editor
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