Understanding the Indian Currency System | UPSC Economics

The currency history of India has many different standards. The present currency system is called as Inconvertible Paper currency standard is controlled and managed by the Reserve Bank of India. 

The money consists of currency notes and coins that are issued by the monetary authority of the country. The currency notes in India are issued by the RBI. They issue all the banknotes except 1 rupee note. Because the 1 rupee coins are issued by the Government of India under the coinage act 1909. The currency used in India is made of paper, and it follows the Paper Currency Standard.

The limited legal tender money in India is coins. They are used to make small payments to anyone. The unlimited legal tender money is paper notes, they can be used to make big payments. It is the responsibility of the RBI for putting the notes, and coins into regular circulation across the country. 

India follows the Minimum Reserve System which means the RBI has to keep a minimum reserve of gold and foreign exchange that is worth approximately 200 crore rupees. The currency notes and coins are called fiat money(Means the currency is backed by the government). 

They do not have value like gold or silver coin. The Indian currency note printing presses like Nasik and Dewas are owned by the Government, and Mysore and Salboni presses are owned by the RBI. Coins are minted in four mints that are owned by the government. The mints are in Mumbai, Hyderabad, Kolkata, and Noida. 

The Indian currency system helps us to understand how coins and notes are being circulated and who has the authority to circulate the money across the country.

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