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Currency System in India

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Title: Currency System in India


1
Currency System in India RBIs Role
  • Currency Management Provisions under RBI Act,
    1934

2
Section 22 of RBI Act
  • In terms of Section 22 of RBI is the sole
    authority for issue of currency in India
    including one rupee coins/notes.
  • One rupee coins/notes are issued by the
    Government of India but put into circulation
    through RBI.
  • RBI took over the function of issue of notes from
    GOI from April 1, 1935.
  • Actual notes were issued by RBI only in January
    1938 and until then Bank was issuing currency
    notes of Government of India.

3
What is a Banknote?
  • Banknotes are Indian Currency Notes authorized to
    put into circulation among public only by Reserve
    Bank of India (RBI). Since RBI is the sole
    authority to issue notes they are called
    Banknotes.

4
What is a Currency Note?
  • Currency Note is the same banknote pertaining to
    our Nation Indian Currency Note is called
    Indian Rupee (INR)

5
Notes issued by RBI
  • At present, banknotes in India are issued in the
    denomination of Rs.10, Rs.20, Rs.50, Rs.100,
    Rs.500, Rs.1000.
  • Banknotes issued by RBI in the denominations of
    Rs.2 and Rs.5 has been discontinued and replaced
    fully with coins.
  • Bank can also issue notes in the denomination of
    Rs.5000 and Rs.10000
  • Notes of higher denominations of Rs.1000,Rs.5000
    and Rs.10000 issued earlier (before 1946 and
    1954) have been demonetized in 1978 and are no
    longer in circulation.
  • Rs.500 demonetized in 1946 were reintroduced in
    1987 and in the year 2000, Rs.1000 notes were
    reintroduced.

6
Rupee coins and Small coins
  • Rupee coins and Small coins are issued by
    Government of India through RBI.
  • Rupee coins are Re.1, Rs.2 and Rs.5 and Small
    coins are issued in the denominations of Ps.25
    and Ps.50. The highest denomination of coin that
    can be issued by GOI is Rs.1000 as per Section 6
    of Coinage Act, 1906.

7
Printing of Notes and Minting of Coins
  • Notes are printed by Government of India at its
    printing presses at Nashik and Dewas and at the
    presses of Bharatiya Reserve Bank Note Mudran
    Private Ltd. (BRBNMPL) at Mysore and Salboni.
  • Coins are minted at the four Government Mints at
    Mumbai, Kolkata, Noida and Hyderabad.
  • Presses are required to produce around 12,000
    million pieces of notes per annum to maintain
    clean notes in circulation.
  • The average life of a note in circulation varies
    from 1 year to 2 years.
  • The cost of production of banknote is reimbursed
    by the Bank to the Press and the cost of
    production of coins is borne by GOI itself.
  • The design, form and material of the bank notes
    are recommended by Central Board of Directors of
    RBI and approved by GOI.

8
Issue of Notes and Coins
  • The issue of fresh notes and coins is conducted
    by RBI in the Issue Department.
  • These fresh notes are stocked the Currency Chest
    of RBI and other agencies.
  • The currency chest is provided to a branch of
    public sector bank or to a Government Treasury,
    which has opted to function as an agent of RBI.
  • Thus we have as on June 2007 a wide net work of
    4,301 currency chests and 4,027 small coin depots
    apart from 18 Issue Offices, a sub-office at
    Lucknow and a currency chest at Kochi of Reserve
    Bank of India.

9
Clean Note Policy
  • Ensuring adequate availability of good quality
    banknotes and coins is one of the core functions
    of RBI.
  • Towards this various measures were initiated by
    RBI viz. speedier disposal of soiled banknotes,
    discontinuance of the practice of stapling of
    note packets, supply of adequate quantity of
    fresh notes to banks and mopping up of soiled and
    mutilated notes, particularly notes of lower
    denominations from circulation, regular removal
    of soiled banknotes from the currency chests and
    acceleration in mechanized processing of the
    notes at the offices of the RBI as also at
    Currency Chests by installing CVPS and SBS. Thus,
    there has been marked improvement in the quality
    of banknotes in circulation.
  • Reserve Bank of India has been continuously
    making efforts to make good quality banknotes
    available to the members of public.  To help RBI
    and banking system, the members of public are
    requested to ensure the following
  • Not to staple the banknotes
  • Not to write / put rubber stamp or any other mark
    on the banknotes
  • Store the banknotes safely to prevent any damage

10
Notes and Coins in circulation Data as on March
2007 (source Annual Report- 2007)
  • As on March 2007 - 38,831 million pieces in all
    denominations of banknotes valued at Rs.4,96,138
    crores are in circulation.
  • In volume terms, Rs.100 denomination notes had
    the largest share (34 of the total pieces in
    circulation) and in terms of value Rs.500
    denomination notes had the largest share (45 of
    the total value of banknotes in circulation).
  • Rupee Coins and small coins to the extent of
    90,357 million pieces valued at Rs.8,021 crores
    are in circulation.
  • In view of the reported mellting of Rs.2 cupro
    nickel coins due to rising metal prices, the GOI
    in consultation with the RBI decided to mint all
    denominations coins in ferritic stainless steel
    (FSS).
  • The volume of banknotes supplied to the public
    during 2006-07 is to the tune of 11,472 million
    pieces valued at Rs.1,84,561/- crores

11
Conclusion
  • RBI has opened its Monetary museum at Mumbai on
    18th November 2004. The Museum is the first of
    its kind in the country and depicts the history
    of currency and the evolution of money in India.
  • The administrative arrangements made by RBI for
    the discharge of currency management functions
    are founded on the mechanism of currency chests.
  • The basic concept on currency matters, master
    circulars and press releases issued from time tot
    time for common man is available on our website
    www.rbi.org.in.
  • Thank you!
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