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Your Guide to Money Matters

Money as a means of payment, consists of coins, paper money and withdrawable bank deposits. Today, credit cards and electronic cash form an important component of the payment system. For a common person though, money simply means currency and coins. This is so because in India, the payment system, especially for retail transactions still revolves around currency and coins. There is very little, however, that the common person knows about currency and coins he handles on a daily basis. Here is an attempt to answer some of the Frequently Asked Questions on Indian Currency. Some Basics What is the Indian currency called? The Indian currency is called the Indian Rupee (INR) and the coins are called paise. One Rupee consists of 100 paise. What are the present denominations of bank notes in India? At present, notes in India are issued in the denomination of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000. These notes are called bank notes as they are issued by the Reserve Bank of India (Reserve Bank). The printing of notes in the denominations of Re.1 and Rs.2 has been discontinued as these denominations have been coinised. However, such notes issued earlier are still in circulation. The printing of notes in the denomination of Rs.5 had also been discontinued; however, it has been decided to reintroduce these notes so as to meet the gap between the demand and supply of coins in this denomination. What are the present available denominations of coins in India? Coins in India are available in denominations of 10 paise, 20 paise, 25 paise, 50 paise, one rupee, two rupees and five rupees. Coins up to 50 paise are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'. Can bank notes and coins be issued only in these denominations? Not necessarily. The Reserve Bank can also issue notes in the denominations of one thousand rupees, five thousand rupees and ten thousand rupees, or any other denomination that the Central Government may specify. There cannot, though, be notes in denominations higher than ten thousand rupees in terms of the current provisions of the Reserve Bank of India Act, 1934. Coins can be issued up to the denomination of Rs.1000. Currency Management What is the role of the Reserve Bank in currency management? The Reserve Bank manages currency in India. The Government, on the advice of the Reserve Bank, decides on the various denominations. The Reserve Bank also co-ordinates with the Government in the designing of bank notes, including the security features. The Reserve Bank estimates the quantity of notes that are likely to be needed denomination-wise and places the indent with the various presses through the Government of India. The notes received from the presses are issued and a reserve stock maintained. Notes received from banks and currency chests are examined. Notes fit for circulation are reissued and the others (soiled and mutilated) are destroyed so as to maintain the quality of notes in circulation. The Reserve Bank derives its role in currency management on the basis of the Reserve Bank of India Act, 1934. What is the role of Government of India? The responsibility for coinage vests with Government of India on the basis of the Coinage Act,

Bangalore. What is a small coin depot? Some bank branches are also authorised to establish small coin depots to stock small coins. there are over 4422 currency chests. . the Reserve Bank has authorised selected branches of banks to establish currency chests. The bank branches receive the bank notes and coins from the currency chests and small coin depots for further distribution among the public. These offices then send them to the other offices of the Reserve Bank. The same is the case with coins. replacement of soiled notes and reserve requirements. The primary reason for this is that the Indian society is still predominantly cash-driven. What is a currency chest? To facilitate the distribution of notes and rupee coins. These are actually storehouses where bank notes and rupee coins are stocked on behalf of the Reserve Bank. the replacement demand and reserve requirements by using statistical models. Who decides on the volume and value of bank notes to be printed and on what basis? The Reserve Bank decides upon the volume and value of bank notes to be printed. Who decides on the quantity of coins to be minted? The Government of India decides upon the quantity of coins to be minted. Bhopal. Guwahati. It is true that till recently the demand for currency was more than their supply. Similarly. The coins withdrawn are sent to the Mints for melting. New Delhi. There are 3784 small coin depots spread throughout the country. Current Issues Why are the coins and bank notes in short supply? This is not entirely correct. Mumbai and New Delhi initially receive the coins from the mints.1906 as amended from time to time. Belapur(Navi Mumbai). Nagpur. The small coin depots also distribute small coins to other bank branches in their area of operation. Hyderabad. The designing and minting of coins in various denominations is also attended to by the Government of India. How does the Reserve Bank reach the currency to people? The Reserve Bank manages the currency operations through its offices located at Ahmedabad. Patna and Thiruvananthapuram. The notes and rupee coins are stocked at the currency chests and small coins at the small coin depots. At present. From where can the general public obtain bank notes and coins? Bank notes and coins can be obtained at any of the offices of the Reserve Bank and at all branches of banks maintaining currency chests and small coin depots. the Reserve Bank offices located at Kolkata. Hyderabad. Jaipur. Kanpur. Chandigarh. Kolkata. The Reserve Bank then separates the notes that are fit for reissue and those which are not fit for reissue. Chennai. Lucknow. The notes which are fit for reissue are sent back in circulation and those which are unfit for reissue are destroyed after processingshredded. Bhubaneshwar. These offices receive fresh notes from the note presses. What happens when the notes and coins return from circulation? Notes and coins returned from circulation are deposited at the offices of the Reserve Bank. The quantum of bank notes that needs to be printed broadly depends on the annual increase in bank notes required for circulation purposes. Mumbai (Fort). How does the Reserve Bank estimate the demand for bank notes? The Reserve Bank estimates the demand for bank notes on the basis of the growth rate of the economy. The currency chest branches are expected to distribute notes and rupee coins to other bank branches in their area of operation.

Soiled and Mutilated Notes What are soiled and mutilated notes? Soiled notes are notes. burnt.5 be re-introduced so as to meet the gap between the demand and supply of coins in this denomination. Printing of these notes was. after adjudication. which have become dirty and limp due to excessive use.5 notes not being printed? Volume-wise. even imported bank notes. the Government had. including importing rupee coins. The average life of these notes was found to be around a year.10 and above are concerned. therefore. disfigured. etc. Can such notes be exchanged for value? Yes. 1975.. 1934. As regards coins. discontinued. as regards Re.2 & Rs. These Rules have been framed under Section 28 of the Reserve Bank of India Act. The impression of coins being in short supply is also enhanced probably due to people’s preference for notes. Rs.2 and Rs.1. Is there a way to reduce dependence on cash? Yes. credit and debit cards. washed. as a one-time measure. However. Two new currency printing presses with the state-of-the-art technology have been set up under the aegis of the Bharatiya Reserve Bank Note Mudran Ltd. Mutilated notes are notes. electronic funds transfer gain popularity. provisions exist for paying either full. Why are Re1. Government of India has also been importing rupee coins to supplement the supply of coins from the four mints. are some steps being taken to increase the supply of bank notes and coins? Yes. Soiled notes can be tendered at all bank branches for and exchange obtained. eaten by white ants. The cost of printing and servicing these notes was. The production capacity of the four India Government Mints are being augmented. several steps have been taken to augment the supply of bank notes and coins. the share of such small denomination notes in the total notes in circulation was as high as 57 per cent but constituted only 7 per cent in terms of value. not commensurate with their life. which are torn. Till date 2 billion rupee coins have been imported. The public can get value for these notes as laid down in the Rules.However. Rs. a tenderer can get either full or no value depending upon the condition of the note. Currently. thus. cheques. To bridge the demand-supply gap. How much value would one get in exchange of soiled or mutilated notes? Full value is payable against soiled notes. . Some of these are: • • • • • The existing note printing presses and the mints owned by the Government are being modernised. A double numbered note cut into two pieces but on which both the numbers are intact is now being treated as soiled note. half or no value as far as notes in the denomination for Rs. These denominations were. Government of India are taking various steps. Meanwhile. therefore. Payment of exchange value of mutilated notes is governed by the Reserve Bank of India (Note Refund) Rules. coinised.5. the demand for currency is expected to go down. a wholly owned subsidiary of the Reserve Bank. once instruments such as. at present there are no supply constraints so far as bank notes are concerned. it has been decided that notes in the denomination of Rs.

Why was the change brought about? The central banks the world over bring in some change in the design of their bank notes. A note which is • • • • • • less than half the area of the full note devoid of the major portion of the number.5 notes re-introduced in August 2001 also bear the Ashoka Pillar watermark and Ashoka Pillar effigy.5. India also follows the same policy. Rs. mutilated or tampered carrying extrinsic words or visible representation intended to convey or capable of conveying any message of a political character. The Reserve Bank is now issuing bank notes in Mahatma Gandhi series. The Rs. i. Features of Contemporary Bank Notes What are the general features of bank notes currently in circulation? Rs. All public sector bank branches and currency chest branches of private sector banks are authorised to adjudicate and pay value in respect of mutilated notes. This thread is partially exposed and partially embedded.1000 notes. What if a note is found to be non-payable? Non-payable notes are retained by the receiving banks and sent to the Reserve Bank where they are destroyed.100 notes issued earlier and which are still in circulation contain the Ashoka Pillar watermark and Ashoka Pillar effigy. This is primarily to make counterfeiting difficult. 1975. Where are soiled/mutilated notes accepted? All banks are authorised to accept soiled notes across their counters and pay the exchange value. All these notes issued by the Bank are legal tender. this thread contains the words 'Bharat' in the devnagri script and 'RBI' appearing alternately.10. in respect of notes of Rs. since 1987 bear the Ashoka Pillar watermark and the Mahatma Gandhi portrait. Rs. this thread can be seen as one continuous line. The security thread of the Rs.e. Other than on Rs. in terms of the Reserve Bank of India (Note Refund) Rules. The RBI has also authorised all commercial bank branches to treat certain notes in ‘two pieces’ as soiled notes and pay exchange value. Are there any special features introduced in the notes of Mahatma Gandhi series? The new Mahatma Gandhi series of notes contain several special features vis-à-vis the notes issued earlier.20 and Rs. These are: i) Security thread: Rs.100. The Rs. the prefix and three digits or four digits of the number in notes up to and inclusive of Rs. When held against light.500 and Rs..e.500 notes issued earlier i. where this inadequacy is present at both the numbering panels.1000 notes contain a readable windowed security thread. Rs.What types of notes are not eligible for payment under the Note Refund Rules? The following notes are not payable under the Note Refund Rules. This means that the notes contain Mahatma Gandhi watermark as well as Mahatma Gandhi's portrait. They are expected to offer this service even to non-customers. Rs.1000 note contains .20. cancelled by any office of the Reserve Bank or against which the value has already been paid found to be forged deliberately cut.10 and above.50 notes contain a readable but fully embedded security windowed security thread. Rs.10.50 and Rs.

iii) Microletterings: This feature appears between the vertical band and Mahatma Gandhi portrait.50-Square.50. depending on the offence. The colour of these numerals appear green when the notes are held flat but would change to blue when the notes are held at an angle. iv) Identification mark: A special intaglio feature has been introduced on the left of the watermark window on all notes except Rs.10/. ii) Latent Image: A vertical band behind on the right side of the Mahatma Gandhi’s portrait. Reserve Bank seal.100. This feature can be seen better under a magnifying glass. mauve and brown] and Rs.1000 notes.1000 notes are printed in Optically Variable Ink viz. Rs. guarantee and promise clause. v) Intaglio Printing: The portrait of Mahatma Gandhi..100-Triangle. Kindly refer to the printed brochure for the definitive version.20. The value can be seen only when the note is held on the palm and light allowed to fall on it at 45° . Notes issued earlier have a plain. a colour-shifting ink. Rs. Ashoka Pillar Emblem on the left. What are the legal provisions relating to printing and circulation of forged notes? Printing and circulation of forged notes are offences under Sections 489A to 489E of the Indian Penal Code and are punishable in the courts of law by fine or imprisonment or both. '1000' and 'RBI'. . showing the denominational value 20. Rs. The notes also have optical fibres. Rs. otherwise this feature appears only as a vertical band.500-Circle. Forgeries How does one differentiate between a genuine note and a forged note? The notes on which the above features are not available can be suspected as forged notes and examined minutely. Remember: An aware public is the best safeguard against forgeries This is an electronic document. RBI Governor's signature are printed in intaglio i.e.1000-Diamond) and helps the visually impaired to identify the denomination.20-Vertical Rectangle. Notes of Rs. Rs. Both can be seen when the notes are exposed to ultraviolet lamp. 500 or 1000 as the case may be.the inscription 'Bharat' in the devnagri script. vii) Optically Variable Ink: The numeral 500 & 1000 on the Rs. 50. which contains a latent image.10.note. vi) Fluorescence: The number panels of the notes are printed in fluorescent ink.500 [revised colour scheme of mild yellow. Rs. 100. non-readable fully embedded security thread. in raised prints in Rs.500 and Rs. This feature is in different shapes for various denominations (Rs. It contains the word ‘RBI’ in Rs. Rs.20 and above also contain the denominational value of the notes.