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INDIAN PAPER MONEY LAUNDERINGA story titled "The Money Launderers in India Really Know How to Clean Up" was published in The Wall Street Journal Monday, August 19. Here are a few excerpts: "NEW DELHI -- Bimal Jain stood in the cavernous lobby of India's central bank, a garbage bag of ragged rupees on a table in front of him. One of his assistants appeared, took a bundle of torn 10-rupee notes and shuffled away on rubber sandals to wait in one of a series of chaotic lines to turn the bills in to the bank. Minutes later, another assistant returned with a pile of crisp five-rupee bills, which Mr. Jain stuffed into his bag. "Some days we'll exchange more than 10,000 bills," brags the portly Mr. Jain. "Business is good." Mr. Jain is part of India's vast network of legal money launderers. They use soap, water, tape and ingenuity to get India's stressed-out bills into good enough shape to be cashed in at the central bank. Mr. Jain roams the crooked back streets of Delhi every day, buying at a discount the dirty and decaying two, five, 10 and 20-rupee notes -- worth between four and 50 cents -- that no one but beggars will accept. He then carefully washes, dries and mends the bills before hauling them to the Reserve Bank of India where he exchanges them for full face value. The central bank has more than 5,000 employees checking to see if bills are usable. In the Delhi branch, central bankers in rows of dirty desks check envelopes full of questionable notes, first to make sure they are real, then to confirm there is enough of the bill left to make it exchangeable. The amount of cash in the public's hands has almost doubled in the last five years while the size of the central bank's staff to process old bills has barely budged. "The soiled notes are piling up and our capacity to handle them is limited," says M.P. Kothari, head of the Department of Currency Management at the central bank's headquarters in Bombay. "It's like a traffic jam." Dirty-money troubles aren't unusual in developing countries that can't afford to print or mint more cash. India's neighbors Pakistan and Nepal have similar problems. In developed countries such as the U.S., for example, notes are taken out of circulation by private banks and sent to the Treasury. In India, bad bills are big business. On the cramped Kaccha Bagh alley in Delhi's ancient center, a row of moneychangers take in damaged notes. Each shop has cash cobblers, sitting on the floor in front of wooden work tables, repairing bill after bill, flattening them out, taping rips and pasting over holes with pieces of brown paper. "People come from all over because they know we accept damaged money here," says Ashok Kumar, who owns a shop on the alley. The toughest part of Mr. Jain's job, though, is mastering the Byzantine system of rules around returning the bills. He spends most of his day in the lobby of the central bank's New Delhi branch, the vortex of a network of runners going back and forth between him and dozens of bank windows. The knot of lines, some of them hundreds of people long, is close to impossible to untangle for the average person. Runners and their bagmen arrive at the central bank two hours before it opens to assure a good place in the right line. Mr. Jain employs women because they are allowed to go to the front of the line. Just knowing which line to pick is a challenge. Only a few of the windows are for exchanging bad notes and each window is specific to denomination, number of notes being exchanged and how badly the notes are damaged. Lines usually deteriorate into a mass of people around the windows, with runners yelling and screaming that they were first. Fights break out. The daily battles were so bad in April that the central bank banned professional moneychangers from entering for four days. Nonprofessional moneychangers can be stuck all day trying to change a few ripped rupees. That's where Mr. Jain's experience comes in handy, and why others are willing to pay him as much as a 20% cut to change their notes. "People don't have the connections to do what I do," he says. "I've been doing this for 25 years."Wayne Homren, Editor The Numismatic Bibliomania Society is a non-profit organization promoting numismatic literature. See our web site at coinbooks.org. To submit items for publication in The E-Sylum, write to the Editor at this address: whomren@gmail.com To subscribe go to: https://my.binhost.com/lists/listinfo/esylum All Rights Reserved. NBS Home Page Contact the NBS webmaster 
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