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!