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?
CurrencyNote 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 2006-07 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 our website www.rbi.org.in.
Thank you!