In my previous article of Indian currency issuing polices in India, I have explained several policies regarding note issuing in India. I have also described about the History of Indian currency, some important features of Indian coins and methods of Issuing currency. In the continuation of my previous article, today I am going to explain about the currency chest, some facts Indian rupees and the demonetization history. This topic is essential from exam point of view. If you are going to write banking exams like IBPS PO, IBPS Clerk, SBI PO, RBI Assistant etc. in future, this topic is a must to cover, as questions from this are generally asked in the exam under the General Awareness section. Let’s understand each topic one by one.
Currency chest is used to facilitate storage and circulation of notes and coins. Reserve bank of India select branches of Commercial banks to establish currency chest at its branches. This act as a repository (of notes and coins) stored on the behalf of RBI. Right now, there are 4422 currency chests in India. Stocks and notes stored in these currency chest varies as per the demand or needs of the respective areas. There are some branches which are used to keep small coins by the Reserve Bank of India are known as Small Coin deposits.
Important Provisions regarding the issue of currency noted by the Reserve bank of India under RBI Act, 1934:
- Notes issued by the RBI are legal tender and are guaranteed by the Central government.
- The Central Government can demonetize notes of any denomination that are issued by the RBI.
- The design as well as the material of the notes issued by the RBI should have an approval of the central government.
- The issuing department can issue notes from rupees to higher denominations.
- The Central Government can circulate rupees coins through the Reserve bank of India only.
All the notes that are issued by the RBI and guaranteed by the central government are legal tender of the country. One rupee note and coins are legal tenders foe unlimited amount whereas 50 paisa coins are legal tender foe the sum not exceeds INR 10.
- The coins that were earlier issued but banned since June 30, 2011 are 1 paisa, 2 paisa, 5 paisa, 10 paisa, 20 paisa and 25 paisa.
- Rupee 1, 2 and 5 coins are currently named as Rupee coins.
- RBI decides the allowed amount of notes to be printed whereas the Central government decides the quantity of the coins to be minted.
Commemorative coins that is issued by the RBI from time to time is not a legal tender. Coins of denomination of INR 50 INR 75 INR 1000 have been issued in the past. The first commemorative coin printed was to mourn the death of Pandit Jawahar Lal Nehru in 1964. He was the first prime minister of India.
About the Demonetization of rupee:
On November 08, 2016, PM Narendra Singh Modi, announced that INR 500 and INR 1000 will no longer will be the legal tender of the country. This was 86% of the entire currency that was in circulation. The amount of demonetized notes were 15.44 lakh crores. This was the third demonetization after the January 12, 1946 after World War II. At that time the highest currency that was demonetized was INR 10,000. The second time demonetization took place was on January 16, 1978. It was done by Shri Morarji Desai. The note that demonetized was again the 10,000 rupee note that was reissued by RBI in 1954.
The highest denomination that can be issued as per the RBI Act 1934 is 10,000. The highest denomination note evet by the Reserve Bank of India was 10,000 rupee note in 1938.
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