It works. At least in business-friendly Gujarat, which has come to accept soiled and damaged currency notes as a part of life in these times when small-denomination notes and coins are in short supply. Here, sealed in a plastic cover (ostensibly to ensure that all the bits are preserved, for acceptance by banks) anything that looks vaguely like a currency note is accepted by the grocer, the bus conductor, the vegetable vendor. Taking advantage of this easy-come-easy-go are the steam-and-peel artists.

A senior branch manager of Vijaya Bank agreed that the practice was common. He said many clients brought in such notes but his branch didn't exchange soiled notes for fresh ones. Several traders, too, agreed that the practice was common, but that in busy hours they couldn't check each and every note. They generally palm off such a note at the earliest.

While the practice is patently illegal, the Reserve Bank of India (RBI) seems unable to stem it. In fact, if split notes are presented to RBI for exchanging with fresh ones, it will have to do so.

RBI guidelines stipulate that if at least the first three alphanumeric digits marked on a note, however mutilated, are readable, it will be exchanged for a fresh one. But the lateral-thinking money-doublers are more than avoiding that problem. When a note is peeled the way they do it, both halves have the complete serial number intact. RBI deputy general manager A Ganapathy said that presented with such halves, the bank would indeed have to exchange them for fresh notes.

Asked what RBI was doing about the problem, Ganapathy said it was addressing itself to the root of this plastic-cover ``business'' -- the shortage in small-denomination notes -- by introducing more Re 1, Rs 2, and Rs 5 coins into circulation. Printing more notes was out of the question, he said, as printing small-denomination notes costs more than what they are worth.

About checking the money-doublers, senior RBI officials only said the public was to blame for customising an ``unhealthy practice'' of using badly damaged notes sealed in plastic covers. The officials said the ingenious money-doubling run was likely to go on as long as notes in plastic covers were accepted.

So with even RBI throwing up its hands, it's 100 per cent profits for the note-splitters. Wouldn't they be wishing for, say, a shortage in Rs 100 notes?