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Currency System in

India RBIs Role


Currency Management
Provisions under RBI Act,
1934

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.

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.

What is a Currency Note?


Currency

Note is the same


banknote pertaining to our
Nation Indian Currency Note
is called Indian Rupee (INR)

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.

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.

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.

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.

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

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 200607 is to the tune of 11,472 million pieces valued at
Rs.1,84,561/- crores

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 website
www.rbi.org.in .
Thank you!