Bank notes

Bank notes

Subject: Economy

Contest:

Several Aam Aadmi Party (AAP) leaders asked the government to put pictures of Goddess Lakshmi and Lord Ganesh on currency notes in order to bring “prosperity” to the country.

Concept:

Indian bank notes and coins:

• Section 22 of The Reserve Bank of India Act, 1934–RBI the “sole right” to issue banknotes in India.
• The Coinage Act, 2011 gives the central government the power to design and mint coins in various denominations.
• Banknotes in denominations of Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500, and Rs 2,000 are currently being issued.
  • Notes of Rs 2 and Rs 5 are no longer issued however, older notes still remain in circulation and continue to be legal tender.
  • Re 1 notes are issued by the Government of India from time to time and such notes including those issued in the past also continue to be legal tender for transactions.
  • In terms of Section 24 of the Reserve Bank of India Act, 1934, bank notes shall be of the denominational values of two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees, as the Central Government may, on the recommendation of the Central Board, specify in this behalf.

Changes in the design and form of bank notes and coins –by the Reserve Bank of India (RBI) and the central government.

• Section 25 of the RBI Act, 1934—The design, form and material of bank notes shall be such as may be approved by the Central Government  after consideration of the recommendations made by Central Board of the RBI.
• The RBI’s Department of Currency Management– internally works out a design, which is put before the RBI’s Central Board for approval and it recommends the changes  to the central government. The government gives the final approval.

How does RBI’s currency management work?

• The Department of Currency Management in the RBI has the responsibility of administering the functions of currency management, a core function of the Reserve Bank in terms of the Reserve Bank of India Act, 1934.
  • The RBI’s Department of Currency Management is responsible for the core function of currency management which includes designing of banknotes; forecasting demand for notes and coins; ensuring smooth distribution of banknotes and coins throughout the country and retrieval of unfit notes and uncurrent coins from circulation; ensuring the integrity of bank notes etc
• Notes that are received back from circulation are examined, those fit for circulation are reissued, while the soiled and mutilated notes are destroyed.
• The Reserve Bank in consultation with the central Government and other stakeholders, estimates the quantity of banknotes that are likely to be needed denomination-wise in a year, and places orders with the various currency printing presses for their supply.
• Currency note printing presses:
  • Nasik and Dewas-owned by the Government of India through its Corporation, Security Printing and Minting Corporation of India Ltd. (SPMCIL);
  • Mysore and Salboni- owned by the RBI through its wholly owned subsidiary, Bharatiya Reserve Bank Note Mudran Ltd (BRBNML).
• Coins are minted in four mints owned by SPMCIL. The mints are located at Mumbai, Hyderabad, Kolkata and NOIDA.
  • The coins are issued for circulation only through the Reserve Bank in terms of Section 38 of the RBI Act.
• Distribution:
  • The Reserve Bank presently manages the currency operations through its 19 Issue Offices. Further, a wide network of currency chests maintained and managed by scheduled banks are part of currency management architecture.
  • The Issue Offices receive fresh banknotes from the currency printing presses which in turn send fresh banknote remittances to the currency chests. Direct remittances by the presses to the currency chests also happen.
  • The bank branches receive the banknotes and coins from the Currency Chests and Small Coin Depots for further distribution among the public

What are the types of notes issued so far?

• Ashoka Pillar Banknotes–While retaining the existing design, the new banknotes replaced the portrait of King George with the symbol of the Lion Capital of the Ashoka Pillar at Sarnath in the watermark window.
• Mahatma Gandhi (MG) Series, 1996-All the banknotes of this series bear the portrait of Mahatma Gandhi on the obverse (front) side, in place of the symbol of Lion Capital of Ashoka Pillar, which was moved to the left, next to the watermark window. These banknotes contain both the Mahatma Gandhi watermark as well as Mahatma Gandhi’s portrait.
• Mahatma Gandhi series, 2005: issued in denominations of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500, and Rs 1,000 with some additional/ new security features. The Rs 500 and Rs 1,000 notes of this series were withdrawn w.e.f. the midnight of November 8, 2016.
• Mahatma Gandhi (New) Series, 2016–highlight the cultural heritage and scientific achievements of the country with reduced dimensions and are more wallet friendly.
  • Rs 10 — Konark Sun Temple, Odisha.
  • Rs 50 — Stone Chariot of Hampi, Karnataka
  • Rs 100 — Rani ki Vav, Gujarat
  • Rs 200 — Sanchi Stupa, Madhya Pradesh
  • Rs 500 — Red Fort, Delhi
  • Rs 2,000 — Mangalyaan