Sri Lankan Replacement *-Notes: 1970 - 2018

By Dr Kavan Ratnatunga

(IBNS:12165-R)

According to the International Bank Note Society (IBNS), Replacement notes are banknotes that are inserted into bundles of notes to replace banknotes damaged during production, ensuring the first and last serial numbers in a bundle of banknotes indicate the number of banknotes in the bundle. Replacement Notes are usually identified by special serial numbers. 1

Since Replacement banknotes were introduced in 1910 in the USA and identified with a * at the end of the serial number, these notes are called *-Notes.

Since it is not practical to print a replacement banknote with the same serial number as the damaged note, set of replacement notes with a different prefix is printed to replace the small fraction of notes detected to be damaged in the quality control subsequent to printing Serial Number. Statistically, this is about 2 or 3 notes per 1000 notes printed. In Sri Lanka till 2017, Mint bundles of 1000 notes, as 10 packs of 100, are issued by the Central Bank and have a slip packed on the top of the Brick with the denomination. In example shown prefix and first 339001 and last 340000 serial number in the bundle. If any bundle of 1000 have any replacements included, a Star is Rubber Stamped on the Slip. One or more Replacement notes would then be found within the sequence, sometimes even a full pack of 100 notes.

The Central Bank did not inform the Public about Replacement notes which went unnoticed by collectors. Around 1999 their identity was told to collector Johann Dekker by former Superintendent of Currency Ms Chitra Ariyaratne when he had asked her about notes with a different prefix. 2 Around 2004 I returned from the USA to reside in Sri Lanka, I can remember finding Z notes in circulation and even getting some Uncirculated Replacement Banknotes from an ATM. Now with more awareness of the premium paid for them by collectors, uncirculated replacement notes were later mostly available only through dealers, who have established contacts with bank employees. About two replacement notes maybe found by searching through a bundle of 1000 circulated notes. With No printing of Z notes since the 2017-05-22 date, Z notes are now rarely seen in circulation.

Rarity is a driving force in collecting currency Notes. A Replacement note that is more than 300 times more rare than a regular note is much sort after and collectible. Sadly they have hardly been properly documented.

In 2018 I submitted a Right To Information (RTI) to CBSL to get the range of Replacement Serial numbers used for each denomination and date on note. That gives an upper limit to what was issued as some may remain after the print run. CBSL provided information since 2010 3, but has claimed information about older issues is unavailable at CBSL or DeLaRue. 4, 5 This is surprising, as all prefixes and Serials used should be part of the documentation of each currency note printing, and sent with every shipment. I suspect the relevant files are in some external archive which may be costly in accessing and therefore CBSL is not interested to find this information.

Since inception in 1950, BankNotes by the Central Bank of Ceylon had been printed by Bradbury Wilkinson & Company Limited. It was printer Thomas De La Rue who introduced Replacement BankNotes in Sri Lanka with the issue of the high-value currency notes with the Portrait of Late Prime Minister S. W. R. D. Bandaranaike with right hand raised. This emergency printing of 9 Million Rs50 and 6 Million Rs100 with two dates 1970-10-26 and 1970-12-9 was given to a different UK printer to keep an eminent Demonetization Confidential. The SLFP led by Mrs Sirimavo Bandaranaike was returned to power at Election held on 1970 May 29th. The Prevention of the Avoidance of Income Tax Act was passed and in terms of this Act the Government on 1970 October 26th, demonetized all currency notes of the denominations of Rupees 50 and 100 bearing a date prior to that of the demonetization.

Replacement *-Notes for Rs50 and Rs100 were issued with Prefix W/1 and V/1 rather than the D/ and E/ on the regular note. Assuming a damage rate which is similar to current production, one would expect less than about 18,000 notes for the 6 million Rs50 notes dated 1970-10-26. However, the Serial number on Replacement W/1 note in the Lakdiva collection is 95922. Others reported are randomly distributed. Probably 100,000 notes were printed in an attempt to replace notes with the same serial number as was damaged and removed. Dealer Selliah Jackson informs me that although he has seen a number of these notes in both denominations, all of them are of the First date. 6 As this is statistically very unlikely, it could indicate that they used the prior replacements from the first date, when replacements were needed at quality control of the second date.

After this issue, the printing of Sri Lanka banknotes reverted to Bradbury Wilkinson and there were No replacement notes used from 1971 to 1986. Not sure what method Bradbury Wilkinson used, but based on comments by Late Tuan Sallay as I remember, I suspect they supplied printed notes with the damaged Serial Number. In 1984 Bradbury Wilkinson set up a plant in Biyagama, Sri Lanka. In 1986 Bradbury Wilkinson was acquired by Thomas De La Rue Company Limited. In 1986, the English name became Central Bank of Sri Lanka, but Bradbury Wilkinson name continued on the series of Currency Notes issued from 1987 till 1990. However, the principal owners DeLaRue introduced Replacement Notes.

I have an example of R/1 dated 1987-01-01, used for the Rs10 note. I have images for R/3 for the Rs20 note, R/4 for the Rs50 note, R/5 for the Rs100 note, R/7 for the Rs500 note, and R/8 for Rs1000 note. CBSL has claimed they have no documentation from that Era. It was only after practically all of these notes had gone out of circulation, was there collector awareness in replacement notes.

Low serial numbers 2891 and 366, for the 1988 Rs500 and 1989 Rs1000 replacements are known. The expected 0.2% of 1987 replacement notes is 10,000 and 20,000 for a 5M and 10M issue. Also the higher denomination replacements of these older issues are relatively more common than the lower. So most probabaly the 1987 Rs 500 and Rs 1000 did not use replacements.

Considering signatures, dates and varieties in Sri Lanka currency issued between 1987 and 1990 there are 22 possible and 20 likely replacement notes Denomination, Dates and varieties of which 15 have been reported to me with images. The missing 5 are all the lower denomination Rs10, Rs20, Rs 50, Rs100. However, replacement *-Notes of all Denominations and all dates of the Series 9 are known.

In 1991 CBSL issued a new Series of Currency Notes. Printers name changed to Thomas De La Rue Company Limited and the replacement prefix from R/ to Z/. Replacement notes with prefix Z/1 for the Rs10 notes, Z/2 for the Rs20 notes, Z/3 for the Rs50 notes, Z/4 for the Rs100 notes, Z/5 for the Rs500 notes, and Z/6 for the Rs1000 notes were issued. Like the prefix number, the serial number increased as dates and new signature pairs were issued until 2006. Low denominations Rs10, Rs20 and Rs50 replacement notes are rare to find till 1995. Of the 9 possible replacement notes, only 4 (3 with images) have been reported to me, as they too had gone out of circulation by 2000. Because higher denominations circulate longer of 8 possible replacement Rs100, Rs500 and Rs1000 notes before 1995, all have been reported to me with images and I have examples of 5 of them. Z/7 was used for the new Rs2000 notes issued for the first time in 2005 November. Replacement *-Notes of all Denominations and dates of Series 10 are known.

No Replacements were issued with the Polymer Rs200 notes issued for the 50th Anniversary of Independence in 1998. Packs of notes had missing serial numbers. and although only just over 20.5 million notes were printed the prefix extended at least to N/22 559...

The Rs1000 note with Mahinda Rajapaksa, issued to commemorate the end of the civil war in 2009 used X/1 as the Replacement Prefix instead of Q/ on the regular note.

The next and current series of notes were issued first dated 2010-01-01, and the serial number restarted from 000001. The same serial prefix was used as in 1991 omitting Z/1 as Rs10 was now a coin and Z/7 as Rs2000 was discontinued. Replacement prefixes Z/2 for the Rs20 notes, Z/3 for the Rs50 notes, Z/4 for the Rs100 notes, Z/5 for the Rs500 notes, Z/6 for the Rs1000 for notes, and Z/8 for the new Rs5000 notes, were used.
In 2013 a slightly modified Rs500 note was issued to commemorate CHOGM but these range of notes used the same prefix series for both the currency and the replacements. The next date was 2015-02-04 saw a continuation of serial numbers.

In 2017 November collector Ravi Ratnapala purchased on eBay the 2015 Rs20 replacement currency note with Z/3 found in a bundle of notes with prefix W/312. 7 This was a total surprise as since 1991 Z/2 was always used for the Rs20 and Z/3 exclusively for Rs50. By then we had already seen 2015 Notes with Z/10 for the Rs20, Z/30 for the Rs100, Z/50 for the Rs1000, and Z/60 for the Rs5000, being used. So it was clear that the Rs20 Z/3 was a short-lived deviant. Our guess was that Z/2 had reached the Million mark and TDLR had next used Z/3 initially. An RTI request to CBSL answered that 11,800 Rs20 Z/3 notes had been printed and used between Rs20 prefixes W/311 and W/314. The bigger surprise was that only 786,000 had been used for Z/2. 3 When I questioned the logical reason for the Rs20 Z/3, CBSL's only reply was I quote The selection of the replacement prefix and the serial numbers are purely business decisions mutually agreed by the CBSL and the printer. 4

The Rs20 Z/3 replacement note created a big frenzy among Banknote collectors in Sri Lanka. One collector told me he paid a ridiculous Rs60,000(US$350) for an uncirculated pair. It takes about half an hour to check a 1000 bundle at about 2 seconds per note. I gave up after searching 2000 notes, as they were hard to get from the Bank and statistically I would need to search over 20,000 notes to find one. Collector Harry Gunawardena patiently searched through 10,000 circulated Rs20 notes and found one Z/3 8, another claimed to have searched 50,000 notes and not found one. About a year later an uncirculated bundle of Rs20 Z/3 notes appeared in the numismatic market and finally sold for Rs9,000(US$50) a pair. The Replacement prefix has 11 varieties for 6 denomination notes of the 2015-02-04 date. All replacement *-Notes of Series 11 are known and document with range of prefix.

Then sometime in 2017, after all this drama, DeLaRue introduced a Single Note Inspection Machine (SNIM), for quality control. They kept a digital record of the accepted serial numbers and did away with Replacement Notes. So replacement notes will not be printed again. Bundles of notes will not be labeled with the first and last Serial numbers. With the possibility of missing numbers in between, the brick will just have 1000 notes. The first note to be issued this way was the Rs100 note dated 2016-07-02. With no Serial number on the packs, they were issued from CBSL in random order. Much larger prefixes were seen in circulation months before the beginning of the series. The other five denominations of the 2016-07-02 date has replacement notes. None of the regular currency notes dated 2017-05-22 and after has Replacement notes. CBSL made an announcement to Local Commercial banks on 2018 June 22nd. 8

The last date on a Sri Lanka replacement note is 2018-02-04 which was the 70th Anniversary of Independence commemoration Rs1000 note where the S70/ special prefix in the regular note was replaced with Z70/1 prefix.

Reliable Information on Replacement Sri Lanka Notes had not been comprehensively published. Misinformation has been published even in the Krause Standard Catalog of World Paper Money (SCWPM). Particularly about the 1979 Rs100 for which Z/ was the regular prefix letter. Consequently, for example, there are many PMG certified note and note which reflect this error. Heritage Auctions corrected their listings when I informed them of error. 10

Total of 105 possible Sri Lanka Replacement BankNotes of different, Denomination, Date, Prefix and Variety are listed in Catalog. Examples of 13 of them not seen or reported to me so far. Logically at least 9 were most probably were issued, but remain unconfirmed. Of the remaining 92, the LakdivaNote collection has 68 Replacement BankNotes which includs 61 from 1995 and after that is complete except the CHOGM Rs500. A Typeset replacements ignoring Date-signatures and minor Variety, but including prefix, has 37 Notes of which 36 have been illustrated. The LakdivaNote collection has 28 of the 37 Types of replacement notes..

2 or 3 notes per 1000 that passed through your hands before 2018 was probably a replacement and even in circulated condition worth a small premium over face value. Each Banknote was like a free lottery Ticket, which does not cost anything to check. 1000 note pack took 30 minutes.

I thank Selliah Jackson, Dushantha Lakmal, Johanne Dekker, Ravi Ratnapala, Preethi Jayawardena, Mohamed Ishfar, Chanaka Sampath, K.W.M. Samarasinghe for confirming with images, the more rare older dates and denominations.

Reference

1 IBNS Introduction to Banknotes and BankNote collecting. 2018 www.theIBNS.org
2 Johann Dekker Private communication.
3 CBSL RTI 0014/18 reply dated 2018 June 8.
4 E-mail from PDR Dayananda, of CBSL dated 2018 July 20.
5 CBSL RTI 0001/18 reply dated 2018 March 19.
6 Selliah Jackson Private communication.
7 Ravi Ratnapala Private communication.
8 Harry Gunawardena Private communication.
9 CBSL Communique to Local commercial Banks dated 2018 June 22.
10 E-mail from Frank Clark, of Heritage Auction dated 2018 April 24.