Banking Awareness forms an important part of the Bank exams. Study our Banking Awareness topics to excel in Bank exams. Currency and Coins in India
Introduction: The Reserve Bank is the sole note-issuing authority in India. Along with the Government of India, the RBI is responsible for the design, production and overall management of the nation’s currency. RBI has the sole right to issue banknotes in India as per Section 22 of RBI Act 1934.
Where is the currency printed?
Four printing presses print and supply banknotes. These are at Dewas in Madhya Pradesh, Nasik in Maharashtra, Mysore in Karnataka, and Salboni in West Bengal.
Extra : The presses in Madhya Pradesh and Maharashtra are owned by the Security Printing and Minting Corporation of India (SPMCIL), a wholly owned company of the Government of India. The presses in Karnataka and West Bengal are owned by the Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a wholly owned subsidiary of the Reserve Bank.
Distribution of currency: Currency is distributed through a wide network of more than 4000 currency chests of commercial banks. Currency chests are extended arms of the Reserve Bank and are responsible for meeting the currency requirements of their respective regions.
Denomination of Bank Notes: At present, currency notes are issued in the denominations of ₹5, 10, 20, 50, 100, 200, 500 and 2000. The printing of Rs. 1 and Rs. 2 denominations has been discontinued, though the notes in circulation are valid. At present, RBI can issue bank not with value not exceeding ten thousand rupees. (Section 24 of RBI Act). The One Rupee note is issued by the Government of India.
Banks note get legal tender as per section 26 of RBI Act.
Exchange of poor quality notes: All branches of banks in all parts of the country are mandated to provide the following services:
- Issuing fresh/good quality notes and coins of all denominations on demand
- Exchanging soiled/mutilated / defective notes
- Accepting coins and notes either for transactions or exchange.
Soiled note– means a note which has become dirty due to normal wear and tear and also includes a two-piece note pasted together wherein both the pieces presented belong to the same note.
Mutilated Note– A mutilated note is a note of which a portion is missing or which is composed of more than two pieces.
Imperfect note– means any note, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated note
Mismatched note– means a mutilated note which has been formed by joining a half note of anyone note to a half note of another note.
Government note– means any note issued by the Central Government or supplied by the Central Government to the Bank and issued by the Bank.
RBI’s Clean Note Policy
- Education campaign on the preferred way to handle notes: no stapling, writing, excessive folding and the like
- Timely removal of soiled notes: use of currency verification and processing systems and sorting machines
- Exchange facility for torn, mutilated or defective notes: at all branches of commercial banks.
About Coins
Introduction: The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand. The Reserve Bank puts the coins into circulation on behalf of the Central Government.
Minting of Coins: Coins are minted by the Government of India. The Reserve Bank is the agent of the Government for distribution, issue and handling of coins. Four mints are in operation: Mumbai in Maharashtra, Noida in Uttar Pradesh, Kolkata, and Hyderabad.
Issue and distribution of coins: (THE COINAGE ACT, 2011): The distribution of Coins is undertaken by RBI as an agent of the Government, (coins are minted by the Government and not by RBI).
Coins up to 50 paise are called “small coins” and coins of Rupee one and above are called “Rupee coins“. The Coinage Act 2011 is also applicable to the one rupee note of GOI.
Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906.
“commemorative coin” means any coin stamped by the Government or any other authority empowered by the Government in this behalf to commemorate any specific occasion or event and expressed in Indian currency;
Coins in circulation: 50 paise, 1, 2, 5 and 10 Rupee
Following rules (legal tender of coins) are mentioned in The Coinage Act 2011 (Earlier The Coinage Act 1906):
- Coins of denomination of Re 1 and above can be used for payment of maximum Rs. 1,000.
- 50 paisa coin can be used for payment of maximum Rs 10.
Demonetization:
Till now demonetization of banknotes has taken 3 times in India of which 2 came after Independence.
| S.No | Date | Notes Demonetised | Then Prime Minister | Then RBI Governor |
| 1 | 12 January 1946 | Rs 500, Rs 1,000 and Rs 10,000 | – (India was ruled by Britain) | C. D. Deshmukh |
| 2 | 16 January 1978 | Rs 1,000, Rs 5,000 and Rs 10,000 | Morarji Desai | I. G. Patel |
| 3 | 08 November 2016 | Rs 500 and Rs 1,000 | Narendra Modi | Urjit Patel |
- RBI has the sole right to issue bank notes in India as per Section 22 of RBI Act 1934.
- Four printing presses print and supply banknotes. These are at Dewas in Madhya Pradesh, Nasik in Maharashtra, Mysore in Karnataka, and Salboni in West Bengal.
- Maximum denomination of Bank Note: Rs 10,000.
- Maximum Denomination of Coin- Rs 1000.
- Soiled, Mutilated, Imperfect and Mismatch Notes.
- Coins are minted by the Government of India.
- Four mints are in operation: Mumbai in Maharashtra, Noida in Uttar Pradesh, Kolkata, and Hyderabad.
For the third time, the Demonetization of bank notes takes place on 8 November 2016 but you have written it as 9 November 2017.