De La Rue had contracts with Bharatiya Reserve Bank Note Mudran Pvt Ltd for supply of bank note paper to India, Minister of State for Finance Namo Narain Meena said in reply to a question in Rajya Sabha today.
However, during July-August 2010, it came to the notice of the authorities that the paper being supplied by the British currency paper maker was "not conforming" to some of the prescribed specifications.
"Accordingly, the supply of the paper was suspended. The deficiency in the paper was subsequently admitted by De La Rue also. Meanwhile, the security clearance was denied to De La Rue and thus the supplies were not resumed," Meena said.
The minister further said that as on date, no paper is lying in godowns in India for transportation to currency printing presses.
"In the absence of security clearance to De La Rue, the supplies cannot be resumed and stocks cannot be used," Meena added.
Meena also said Bharatiya Reserve Bank Note Mudran has also informed that the contract with the UK company can be terminated relying on fact that the paper supplied by it was not strictly as per the contract specifications.
Bharatiya Reserve Bank Note Mudran, a wholly owned subsidiary of RBI, was set up in 1995 with a view to augment the production of bank notes in India to enable the central bank to bridge the gap between the supply and demand for currency notes.