FAQs on Indian Currency

FAQs on Indian Currency : Updated as on 09-09-2023

A. Basics of Indian Currency / Currency Management

1. What is the name of India’s currency and what symbol represents it?

The official currency of India is known as the Indian Rupee, abbreviated as INR. The Indian Rupee is further divided into smaller units called Paise, with one Rupee consisting of 100 Paise.

The symbol of the Indian Rupee is ₹. The design of this symbol incorporates elements resembling both the Devanagari script letter “र” (ra) and the Latin capital letter “R,” with a distinctive double horizontal line at the top, giving it a unique and recognizable appearance. This symbol was officially adopted in 2010 to represent the Indian Rupee and is widely used in currency notations, financial transactions, and official documents.

2. What is legal tender?

Legal tender refers to currency, including both coins and banknotes, that is officially recognized and accepted by a government as a valid medium of exchange to settle debts, obligations, or transactions within the country. Here’s a detailed explanation of legal tender in India:

Coins as Legal Tender:
In India, coins issued by the Government of India under the provisions of The Coinage Act, 2011, are considered legal tender. For a coin to be legally accepted, it must meet certain conditions:

• The coin must not be defaced or damaged to the extent that it impairs its recognition or use.
• It must not have lost weight to the extent specified by regulations.
• Coins of any denomination not lower than one rupee are legal tender for any sum not exceeding one thousand rupees.
• Fifty paise (half rupee) coins are legal tender for any sum not exceeding ten rupees.

While individuals and businesses cannot be compelled to accept coins for amounts beyond these specified limits, they are not prohibited from voluntarily accepting coins for transactions exceeding these limits.

Banknotes as Legal Tender:
In India, banknotes issued by the Reserve Bank of India (in denominations of ₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500 and ₹2000 rupees) are considered legal tender. Additionally, one-rupee banknotes issued by the Government of India are also recognized as legal tender.

These banknotes are guaranteed by the Central Government, as specified in the RBI Act, 1934. This means that any banknote issued by the Reserve Bank of India, unless officially withdrawn from circulation, can be used for settling transactions or payments throughout the country for the amount indicated on the banknote.

However, it’s important to note that ₹500 and ₹1000 rupee banknotes of the Mahatma Gandhi series issued up to November 8, 2016, ceased to be legal tender from the midnight of November 8, 2016, following a government decision to demonetize these denominations as a measure to curb black money and counterfeit currency.

3. Where are bank notes and coins produced / minted?

Banknotes and coins in India are produced and minted at specific facilities owned and operated by the government and the Reserve Bank of India. Here’s an overview of where banknotes and coins are produced:

Banknotes:
Banknotes in India are printed at four currency presses. Two of these currency presses are owned by the Government of India through its corporation called the Security Printing and Minting Corporation of India Ltd. (SPMCIL). The other two currency presses are owned by the Reserve Bank of India (RBI) through its wholly-owned subsidiary, Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL).

The currency presses operated by SPMCIL are located in:

1. Nasik (Western India)
2. Dewas (Central India)

The currency presses operated by BRBNMPL are located in:

1. Mysuru (Southern India)
2. Salboni (Eastern India)

These facilities are responsible for the printing of new banknotes, including various denominations, designs, and security features. They ensure that an adequate supply of banknotes is available to meet the currency requirements of the Indian economy.

Coins:
Coins in India are minted at four mints, all of which are owned by SPMCIL. These mints are located in different regions of the country:

1. Mumbai
2. Hyderabad
3. Kolkata
4. NOIDA

These mints are responsible for producing coins of various denominations and designs. It’s important to note that coins are issued for circulation exclusively through the Reserve Bank of India, as mandated by Section 38 of the RBI Act. This means that the Reserve Bank is the sole authority responsible for distributing coins to banks and the public to meet the country’s coinage requirements.

4. What is a currency chest?

A currency chest is a specialized facility established by select scheduled banks, authorized by the Reserve Bank of India (RBI), to facilitate the distribution of banknotes and rupee coins. These currency chests serve as secure storehouses where banknotes and rupee coins are stored on behalf of the Reserve Bank. The primary purpose of currency chests is to ensure the availability of currency denominations for the smooth functioning of the banking system.

As of March 31, 2023, there were a total of 2838 currency chests in operation across India. These chests play a crucial role in the distribution of banknotes and rupee coins to other bank branches in their respective areas of operation.

In essence, currency chests act as central repositories for currency in a particular region, ensuring that banks in that area have a consistent and reliable source of currency notes and coins. This system helps maintain the liquidity of the banking system and ensures that customers can access the currency they need for daily transactions without disruptions.

5. What is a small coin depot?

A Small Coin Depot is a specialized facility authorized by the Reserve Bank of India (RBI) where certain banks are permitted to store and distribute small denomination coins, specifically those with a value below one Indian Rupee (INR 1). The primary purpose of these Small Coin Depots is to ensure the availability of a sufficient quantity of small coins to meet the currency needs of bank branches in their designated area of operation.

As of March 31, 2023, there were a total of 2293 Small Coin Depots in operation across India. These depots play a crucial role in facilitating the distribution of small denomination coins to various bank branches, helping to maintain the smooth functioning of the currency system. By stocking and distributing these coins, Small Coin Depots ensure that banks and their customers have access to an adequate supply of smaller denomination currency for daily transactions and commerce.

6. What is the role of the Reserve Bank of India in currency management?

The Reserve Bank of India (RBI) plays a pivotal role in currency management within the country. Here’s a detailed explanation of the RBI’s roles and responsibilities in currency management:

Sole Right to Issue Banknotes:
According to Section 22 of the Reserve Bank of India Act, the RBI has the exclusive authority to issue banknotes in India. This means that only the RBI is authorized to oversee the production and issuance of currency notes in the country.

Approval of Banknote Design:
Section 25 of the RBI Act stipulates that the design, form, and material of banknotes must be approved by the Central Government, taking into consideration the recommendations made by the Central Board of the RBI. This ensures that the physical attributes and security features of banknotes are standardized and meet the necessary criteria.

Estimation and Indent Placement:
The RBI, in collaboration with the Central Government and other stakeholders, estimates the quantity of banknotes required in various denominations for a given year. Based on these estimates, the RBI places orders (indents) with the currency printing presses for the production and supply of banknotes. This process ensures an adequate supply of currency to meet the demands of the economy.

Clean Note Policy:
The RBI follows a “clean note policy” with the objective of providing high-quality and fit-for-circulation banknotes to the public. Banknotes that are withdrawn from circulation are examined, and those in good condition are reissued, while soiled or mutilated notes are securely destroyed. This practice helps maintain the overall quality and integrity of banknotes in circulation.

Role in Coin Distribution:
In contrast to banknotes, the RBI’s role in coin management is limited to the distribution of coins supplied by the Government of India. The Government of India is responsible for designing, minting, and issuing coins in various denominations, as governed by the Coinage Act, 2011. The RBI ensures the distribution of these coins to banks and the public as needed.

In summary, the Reserve Bank of India serves as the central authority responsible for the issuance, regulation, and management of banknotes in the country, working closely with the Central Government and other stakeholders to maintain the quality and availability of currency notes. For coins, the RBI’s role is mainly focused on distribution, with coin design and production falling under the purview of the Government of India.

7. Where can one find information regarding notes / coins supplied by RBI or currently in circulation?

Information regarding the indent and supply of notes and coins by the Reserve Bank of India (RBI), as well as details about currency and coins currently in circulation, can be found on the RBI’s official website www.rbi.org.in, You can access this information through the following link:

Reserve Bank of India – Annual Report

The RBI’s annual reports typically contain comprehensive data and insights into the currency management, including the supply of banknotes and coins, circulation statistics, and other relevant information related to the Indian currency system. You can visit the provided link to access the most up-to-date and official information on this subject.

8. How does the Reserve Bank distribute currency to the people?

The Reserve Bank of India (RBI) distributes currency to the people through a well-structured network of offices and currency management infrastructure. Here’s a step-by-step explanation of how this distribution process works:

• Issue Offices: The RBI manages currency operations through its 19 Issue Offices located in various cities across India. These Issue Offices are situated in cities such as Ahmedabad, Bengaluru, Mumbai, New Delhi, and others.
• Currency Chests: In addition to the central Issue Offices, the RBI also relies on a network of currency chests maintained and managed by scheduled banks. Currency chests are strategically located across the country and play a crucial role in currency distribution.
• Fresh Banknotes: Fresh banknotes are procured by the RBI from currency printing presses. These printing presses produce new currency notes, and the RBI receives fresh banknote remittances from them.
• Distribution to Currency Chests: The fresh banknotes received from the currency printing presses are sent to the currency chests. This helps ensure that there is a steady supply of new and fit-for-circulation banknotes available in different regions.
• Mint Linked Offices: The RBI has specific offices located in Hyderabad, Kolkata, Mumbai, and New Delhi known as Mint Linked Offices. These offices are responsible for receiving newly minted coins from government mints.
• Distribution of Coins: Coins received from the mints at Mint Linked Offices are then sent to other RBI offices. These coins are eventually distributed to Currency Chests and Small Coin Depots.
• Storage at Currency Chests and Small Coin Depots: Currency chests store banknotes and rupee coins, while small coin depots are designated for the storage of smaller denomination coins.
• Distribution to Banks: Bank branches across the country receive their supplies of banknotes and coins from the Currency Chests and Small Coin Depots. This is how currency reaches the banks.
• Further Distribution: Banks, in turn, distribute the currency to the public through their branches and ATMs, ensuring that people have access to the currency they need for various transactions.

In summary, the Reserve Bank of India manages the distribution of currency by procuring fresh banknotes and coins, storing them at Currency Chests and Small Coin Depots, and subsequently providing them to banks. This ensures that a sufficient and steady supply of currency is available to the public for everyday transactions.

B. Banknotes

1. What is the meaning of “I promise to pay” clause on the banknotes?

The “I promise to pay” clause on banknotes signifies the commitment of the issuing bank. According to Section 26 of the Reserve Bank of India Act, 1934, the bank is obligated to redeem the banknote’s value. The banknote holder can demand this redemption from the Reserve Bank of India (RBI), which is the issuer. In essence, this clause represents the bank’s obligation to the note’s holder.

2. Which denominations of banknotes are currently in circulation?

Banknotes in India are currently available in denominations of ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, and ₹2000 rupees. These notes, referred to as banknotes, are issued by the Reserve Bank of India (RBI). Notes in the denominations of ₹2 and ₹5 rupees have been discontinued and replaced with coins due to the high cost of printing and servicing, but they are still considered legal tender. Additionally, ₹1-rupee notes issued by the Government of India remain legal tender.

3. Can banknotes be issued in denominations other than those mentioned?

Yes, banknotes can be issued in denominations other than those currently in circulation. According to Section 24 of the Reserve Bank of India Act, 1934, banknotes can have values ranging from two rupees to ten thousand rupees or any other denomination specified by the Central Government, based on the Central Board’s recommendation.

4. What was the highest denomination note ever printed?

The highest denomination note ever printed by the Reserve Bank of India was the 10,000-rupee note in 1938, which was demonetized in January 1946. The 10,000-rupee note was reintroduced in 1954 but was demonetized again in 1978.

5. What is currency paper made of?

The paper used for printing banknotes in India is made from 100% cotton.

6. How many languages appear on Indian banknotes?

Indian banknotes feature fifteen languages in the language panel, in addition to Hindi, which is prominently displayed in the center of the note, and English on the reverse side.

7. Is it possible for two banknotes to have the same serial number?

Yes, it is possible for two or more banknotes to share the same serial number, but they would typically have differences such as a different Inset Letter, year of printing, or the signature of a different Governor of RBI. An Inset Letter is an alphabet printed on the Number Panel of the banknote. Some notes may not have an inset letter at all.

8. What is non-sequential numbering?

Non-sequential numbering was introduced in 2011 to improve operational efficiency and cost-effectiveness in banknote printing, following international best practices. Banknote packets with non-sequential numbering contain 100 notes, and these notes are not printed in sequential numerical order.

9. What is a “star series” banknote?

The “STAR series” numbering system was adopted by the Reserve Bank of India for replacement of defectively printed banknotes within a packet of 100 serially numbered banknotes. Star series banknotes are identical to other banknotes but have an additional character, a *(star), in the number panel between the prefix.

10. Who determines the design of a new banknote?

The design, form, and material of banknotes are approved by the Central Government after considering recommendations made by the Central Board, as per Section 25 of the RBI Act.

11. Who decides on the volume and value of banknotes to be printed, and on what basis?

The volume and value of banknotes printed annually depend on several factors, including the expected increase in Notes in Circulation (NIC) to meet public demand and the need to replace worn or damaged notes. Projections are made using statistical models that consider factors such as expected GDP growth, inflation, interest rates, and non-cash payment growth. The Reserve Bank collaborates with the Government of India and printing presses to determine the volume and value of notes to be printed.

12. Are RBI-issued banknotes backed by assets like gold?

Yes, all banknotes issued by RBI are backed by assets as defined in Section 33 of the RBI Act, 1934, which include gold, Government Securities, and Foreign Currency Assets.

C. Different Types of Bank Notes and Security Features of banknotes

1. What are the various types of banknotes issued since India’s independence?

Over the years, India has issued various types of banknotes:

i. Ashoka Pillar Banknotes :

The first banknote issued by independent India was the one rupee note issued in 1949. While retaining the same designs the new banknotes were issued with the symbol of Lion Capital of Ashoka Pillar at Sarnath in the watermark window in place of the portrait of King George.
The name of the issuer, the denomination and the guarantee clause were printed in Hindi on the new banknotes from the year 1951. The banknotes in the denomination of ₹1000, ₹5000 and ₹10000 were issued in the year 1954. Banknotes in Ashoka Pillar watermark Series, in ₹10 denomination were issued between 1967 and 1992, ₹20 denomination in 1972 and 1975, ₹50 in 1975 and 1981, and ₹100 between 1967-1979. The banknotes issued during the above period, contained the symbols representing science and technology, progress, orientation to Indian Art forms. In the year 1970, banknotes with the legend “Satyameva Jayate”, i.e., truth alone shall prevail were introduced for the first time. In October 1987, ₹500, banknote was introduced with the portrait of Mahatma Gandhi and the Ashoka Pillar watermark.

ii. Mahatma Gandhi (MG) Series 1996

The details of banknotes issued in MG Series – 1996 is as under :

All the banknotes of this series bear the portrait of Mahatma Gandhi on the obverse (front) side, in place of symbol of Lion Capital of Ashoka Pillar, which has also been retained and shifted to the left side next to the watermark window. This means that these banknotes contain Mahatma Gandhi watermark as well as Mahatma Gandhi’s portrait.

iii. Mahatma Gandhi series – 2005 banknotes

MG series 2005 banknotes were issued in the denomination of ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1000 and contain some additional / new security features as compared to the 1996 MG series. The year of introduction of these banknotes is as under :

The Legal tender of banknotes of 500 and 1000 of this series was subsequently withdrawn w.e.f. the midnight of November 8, 2016.

iv. Mahatma Gandhi (New) Series (MGNS) – Nov 2016

The Mahatma Gandhi (New) Series, introduced in the year 2016, highlights the cultural heritage and scientific achievements of the country. The banknotes in the series are more wallet friendly, being of reduced dimensions and hence expected to incur less wear and tear. For the first time, designs for banknotes has been indigenously developed on themes reflecting the diverse history, culture and ethos of the country as also its scientific achievements. The colour scheme is sharp and vivid to make the banknotes distinctive.
The first banknote from the new series was introduced on November 8, 2016 and is a new denomination, ₹2000-with the theme of Mangalyaan. Subsequently, banknotes in this series in denomination of ₹500, ₹200, ₹100, ₹50, ₹20 and ₹10 have also been introduced.

2. Which denomination banknotes have been demonetised?

Banknotes of ₹500, ₹1000, and ₹10000 denominations were demonetized in January 1946. Later, in 1954, banknotes of ₹1000, ₹5000, and ₹10000 were reintroduced but were again demonetized in January 1978. More recently, ₹500 and ₹1000 rupee notes from the Mahatma Gandhi Series were withdrawn from circulation on November 8, 2016, and ceased to be legal tender.

3. What is the status of withdrawal of pre-2005 series banknotes? Where can they be exchanged?

The Reserve Bank of India decided to withdraw pre-2005 banknotes due to their lower security features. These notes have been gradually withdrawn from circulation. While specific offices of the Reserve Bank can exchange these notes, banks can accept deposits of pre-2005 banknotes into customer accounts. Please refer to RBI Press Release no. 2016-17/1565 dated December 19, 2016 in this regard which can be accessed at the following link https://www.rbi.org.in/scripts/FS_PressRelease.aspx?prid=38951&fn=2753

4. What happens to the old design banknotes when a new design is introduced?

Typically, both old and new design notes circulate together for a period. As old notes wear out or become unfit for circulation, they are gradually withdrawn from circulation.

5. What is the need for printing different series of banknotes?

Central banks worldwide change banknote designs and incorporate new security features to combat counterfeiting and stay ahead of counterfeiters. India follows this practice to enhance the security of its currency.

6. What are the Security Features of banknotes in circulation?

Indian banknotes, including MG Series 2005 and MG (New) Series, incorporate several security features such as security threads, intaglio printing, see-through registers, watermarks, colour-shifting ink, fluorescence, latent images, micro letterings, and more. These features help in authentication and deter counterfeiting. The security features on MG Series 2005 and MG (New) Series banknotes are as follows:

i. Security Thread: In ₹10, ₹20, and ₹50 rupee notes, there’s a silver-colored security thread. You can see it on the front and it’s fully embedded on the back. When you shine ultraviolet light on it, it glows yellow on both sides. When you hold it up to the light, it looks like a continuous line. For 100 rupees and above, the thread changes color from green to blue when you tilt it, and it glows yellow on the back and the text shines under ultraviolet light.

ii. Intaglio Printing: In ₹100 rupee notes and above, Mahatma Gandhi’s portrait, the Reserve Bank seal, a guarantee and promise clause, the Ashoka Pillar emblem, RBI Governor’s signature, and an identification mark for visually impaired people are printed using intaglio printing, which gives them a raised texture.

iii. See-Through Register: On the left side of the note, part of the number is printed on the front, and the other part is on the back. When you hold it up to the light, these parts align perfectly to make the number appear as one.

iv. Watermark and Electrotype: In the watermark window, you’ll see Mahatma Gandhi’s portrait with light and dark lines. There’s also an electrotype mark with the denomination numeral. These are easier to see when you hold the note up to the light.

v. Color-Shifting Ink: On ₹200, ₹500, and ₹2000 rupee notes, the numerals change color from green to blue when you tilt the note.

vi. Fluorescence: The number panels on the banknotes glow when exposed to ultraviolet light. The banknotes also have optical fibers that show two colors under UV light.

vii. Latent Image: In ₹20 rupee notes and above from MG Series 2005, a hidden image appears next to Mahatma Gandhi’s portrait. You can see the value only when you hold the note horizontally in the light; otherwise, it looks like a vertical band. In MG (New) Series notes, this exists in 100 rupee notes and above.

viii. Micro Letterings: Tiny letters appear at different places on the banknotes, visible better with a magnifying glass.

ix. Additional Features Since 2015:

• New Numbering Pattern: Numbers on the notes get larger from left to right, and the first three letters and numbers stay the same size.
• Angular Bleed Lines and Bigger Identification Marks: Lines and circles have been added to ₹100, ₹200, ₹500, and ₹2000 rupee notes. Plus, the size of identification marks on notes of ₹100 rupees and above has increased by 50 percent.

You can find more details about these security features on the Reserve Bank of India’s website under “press releases.” Here’s the link: RBI Press Releases.

7. How can one distinguish the MG series-2005 banknotes?

In addition to the security features, MG Series 2005 banknotes have the year of printing mentioned on the reverse, which distinguishes them from the pre-2005 series.

8. What features on the banknote Mahatma Gandhi (New) Series (MGNS) can help visually challenged people identify the different denominations?

The new Mahatma Gandhi Series banknotes are designed to make it easier for people with partial visual impairments to identify them. Starting from the ₹100 rupee note, these banknotes have special features:

• Color Contrast: They use strong color contrasts to help people see the difference between denominations.
• Angular Bleed Lines: There are lines at specific angles on these notes. For example, ₹100 rupee notes have 4 lines in 2 blocks, ₹200 rupee notes have 4 lines with two circles in between, ₹500 rupee notes have 5 lines in 3 blocks, and ₹2000 rupee notes have 7 lines. These lines are unique to each denomination.
• Identification Marks: Each note has an identification mark on the front side that’s raised (you can feel it with your fingers). These marks have different shapes for different denominations. For instance, a horizontal rectangle for ₹2000 rupees, a circle for ₹500 rupees, a raised “H” mark for ₹200 rupees, and a triangle for ₹100 rupees.
• Prominent Numerals: The numerals indicating the denomination are prominently displayed in the center of the notes in raised print. This makes it easier to identify the value by touch.

9. What is Mobile Aided Note Identifier (MANI)?

MANI is a mobile application launched by the Reserve Bank to assist visually impaired individuals in identifying Indian banknote denominations. It works offline and helps determine the value of notes by analyzing their features through a smartphone’s camera. However, MANI does not authenticate notes as genuine or counterfeit.

10. What are the quality control measures adopted in currency note printing?

Currency note printing in India adheres to global best practices for maintaining quality. These measures ensure that banknotes meet specified standards for dimensions, design placement, print features, and other aspects. Quality control is an integral part of the currency production process. A press release in this regard can be accessed at the following link : https://www.rbi.org.in/scripts/FS_PressRelease.aspx?prid=41364&fn=2753