Indian Currency
Name of the Indian Currency: The Indian Currency is called the Indian rupee and the coins are called paisa. One rupee consists of 100 paisa.
Present denominations of bank notes in India: At Present notes in India are issued in the denomination of Rs.5, 10, 20, 50, 100, 500 and 1000. These notes are called bank notes as they are issued by the RBI. The printing of notes in the denominations of Rs.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 in order to meet the gap between the demand and supply of coins in this denomination.
Present available denomination of coins in India: Coins in India are available in denominations of 50 paisa, one rupees , two rupees , five rupees and ten rupees up to 50 paisa 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 RBI can also issue notes in the denominations five thousand rupees and ten thousand rupees or any other denomination that the central Government may specify. There cannot through be notes in denominations higher than ten thousand rupees in terms of the current provisions of the RBI act 1934. Coins can be issued up to the denomination of Rs.1000
The role of the RBI in Currency management: The RBI manages Currency in India. The Government on the advice of the RBI decides on the various denominations. The RBI also coordinates with the Government in the designing of bank notes including the security features. The RBI estimates the quantity of notes that are likely to be needed denomination wise and places the indent with the various security presses through the Government of India. The notes received from the security 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 are destroyed so as to maintain the quality of notes in circulation. The RBI derives its role in Currency management on the basis of the RBI act 1934.
The role of Government of India: The responsibility for coinage vests with Government of India on the basis of the coinage act 1906 as amended from time to time. The designing and minting of coins in various denominations is also attended to by the Government of India.
Who decides on the volume and value of bank notes to be printed and on what basis: The RBI decides upon the volume and value of bank notes to be printed. The quantum of bank notes that needs to be printed broadly depends on the annual increase
In bank notes required for circulation purposes replacement of soiled notes and reserve requirements.
Who decides on the quantity of coins to be minted: The Government of India decides upon the quantity of coins to be minted.
How does the reserve bank reach the Currency to people: The RBI manages the Currency operations through its offices located at Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Jaipur, Kanpur, luck now, Mumbai, Nagpur, New Delhi, Patna, and Thiruvananthapuram? These offices receive fresh notes from the note presses. Similarly the RBI offices located at Kolkata, Hyderabad, Mumbai and New Delhi initially receive the coins from mints. These offices then send them to the other offices of the reserve bank. The notes and rupee coins are stocked at the Currency chests and small coins at the small coin depots. The bank branches receive the bank notes and coins from the Currency chests and small coin depots for further distribution among the public.
What is a Currency chest: To facilities the distribution of notes and rupee coins the RBI has authorized select branches of banks to establish Currency chests . These are actually storehouses where bank notes and rupee coins are stocked on behalf of the reserve bank. At Present there are over 4422 Currency chests. The Currency chest branches are expected to distribute notes and rupee coins to other bank branches in their area of operation.
What is a small coin : Some bank branches are also authorized to establish small coin depots to stock small coins. There are 3784 small coin deposits spread throughout the country.
What happens when the notes and coins return from circulation: Notes and coins returned from circulation are deposits at the offices if the reserve bank. The reserve bank then separates the notes that are fit for reissue and those which are not fit for reissue. The notes which are fit for reissue are sent back in circulation and those which are unfit for reissue are destroyed after processing and shredding. The same is the case with coins. The coins with drawn are sent to the mints for melting
From where can the General public obtain bank notes and coins: Banks 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 deposits.
Why are Rs.1, Rs.2, and notes not being printed: volume wise the share of such small denomination notes in the total notes in circulation was as high as 57 percent but constituted only 7 percent in terms of value. The average life of these notes was found a year. The cost of printing and servicing these notes was thus not commensurate with their life. Printing of these notes was therefore discontinued. These denominations were Therefore coinised However it has been decided that notes in the denomination of Rs.5 be re-introduced so as to meet the gap between the demand and supply of coins in this denomination.
Soiled and mutilated notes: soiled notes are notes which have become dirty and limp due to excessive use. Mutilated notes are notes which are torn disfigured burnt, washed, eaten by white ants etc. A double numbered note cut into two pieces but on which both the numbers are in fact is now being treated as soiled note.