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        By 1717, the British started to produce Mughal money at the Bombay Mint, with permission from the Mughal emperor Farrukhsiyar. The British gold coins were called ‘carolina’; ‘anglina’ was the silver coin, and ‘copperoon’, the copper coins. Tinnies were tin coins.

           A century later, the British rose as the most dominant power in the country. In 1835, they enacted the Coinage Act for uniform coinage. As a primary step, coins with images of William IV were issued in the same year.

     

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Even though the British left India in 1947, the coins they issued remained in use till 1950. The first coins made since then belonged to the ‘anna series’. They were traditional in design, and followed the metric system.

Introduced on August 15th, 1950, the coins of the anna series replaced the king’s portrait with the lion capital of the Asoka pillar. It represented peace and non-violence. The one rupee coins also had a sheaf of corn on one side. Sixteen annas together made a rupee.

The pillar and the corn images were among the many Indian motifs that appeared on the coins, post-independence.

The introduction of the ‘decimal series’ took place in September 1955, with the Indian Coinage Act. Thereafter, a rupee consisted of 100 paisas instead of annas or pice. You could say annas and pice were ‘demonetized’.

The naya paise were minted in the denominations of 1, 2, 5, 10, 20 and 50. In 1964, the word ‘naya’ was dropped.

Nickel, cupro nickel, bronze and nickel brass were the metals used in coins till 1963. Later, coins made of aluminium were used. Since 1992, coins were minted mostly in stainless steel.

All these coins came out in different shapes. While most of them were circular, some were also hexagonal, 8-scalloped, and square in shape.

In June 2011, all the coins in the denominations of 25ps were taken out of currency.

The country’s first bimetallic coin - of Rs 10 - was released in 2005 under theme of ‘unity in diversity’. 

         Commemorative coins are usually issued to pay respect to an important person, or to celebrate a special occasion.

         The first such coin in modern India was issued in 1964. It had a portrait of Jawaharlal Nehru, and was issued to commemorate his birth anniversary. Since then, many coins have been issued by our country for general circulation. Coins from 5 paise to Rs 150 have been made for commemoration. Most of them were not for circulation, but for preservation as specimens.

             In 1985, the country issued three coins dedicated to Indira Gandhi. To celebrate the 75th anniversary of the establishment of the International Labour Organization, India issued three coins on October 27th, 1994. In 1996, a commemorative coin was issued on the World Population Day.

            There were also coins minted to celebrate the platinum jubilee of the Reserve Bank, the 150th birth anniversary of Rabindranath Tagore and the 1000th year of establishment of the Brihadeeswara Temple. In 2016, coins were issued to mark the 150th anniversary of the Allahabad High Court.          

          You might know by now that the rupee is a currency used by many countries in the world, including Sri Lanka, Nepal, Pakistan, and the Maldives other than India. But do you know where the word ‘rupee’ came from?

          ‘Rupiye’ is known to have been derived from the Sanskrit word ‘rupaa’ which means ‘silver’ or ‘made of silver’. Further, ‘rupaa’ is believed to have sprung from the Dravidian word ‘uruppu’, which means a ‘member of the body’.

          References about ‘rupiye’ first appeared in ancient texts. Arthasastra, a legendary work by Chanakya mentions ‘rupyarupa’ in the context of silver coins. He also used the terms suvarnarupa, tamararupa and sisarupa for gold, copper and lead coins.

          However, the introduction of ‘rupiya’ to Medieval India was made by the Afghan ruler Sher Shah Suri, sometime between 1540 and 1545. Rupiya was the term used for silver coins weighing 178 grains. The coin remained in use throughout the Mughal and the Maratha periods, as well as in the British India.

       Over the years since its introduction, the Indian rupee has gone through significant changes. We saw that the rupee coin was first introduced by Sher Shah Suri. During his time, 40 copper coins amounted to a rupee. This was accepted by the Mughals as well.

        The Bank of Hindustan was established by the British. In 1770, one rupee notes were published in the Bank of Hindustan. Following this, some private banks too issued banknotes.

        In 1861, the Paper Currency Act was passed, making it a rule that only the government could issue currencies.

          In 1935, the Reserve Bank of India was inaugurated, and it took over as the government’s body to issue currencies. The first note it issued was that of five rupees, bearing the image of King George VI.

          The first note to be published after the Independence was a one-rupee note. Since then, many changes have come to currencies. A bank-note of 10,000 rupees was printed and circulated, making it the highest denomination issued. Over the years, many currency notes were demonetized, and new series were introduced. 

      We saw that the first bank note to be issued after the Independence was the one-rupee note with the symbol of the lion capital. Starting from 1951, inscriptions on notes were made in Hindi too.

      The following years saw many changes in currencies. Various themes were adopted, including the advancement of the country in science and technology. Even in the latest banknotes that appeared recently, there was a new theme Mangalyan.

      Many notes were introduced, and many were demonetized over the decades. In 1954, there were note of denomination including 1000, 5000, and 10,000. In 2010, the new currency symbol of rupee was introduced, that which we still use.

      All these notes, if you look at carefully, have an inscription of ‘Satyamev Jayate’. This was an addition made in 1980.

      In the latest banknotes issued in November 2016, there are a few more additions. The use of Devanagari numerals also marks a change from tradition.

 

        The series of banknotes issued by the Reserve Bank of India that bears the portrait of Gandhiji is known as the Mahatma Gandhi series.

        Introduced in 1996, this series replaced all previous banknotes that were valid till then, and became our legal tender. The first notes to be printed in the Mahatma Gandhi series were in denominations of Rs 10 and Rs 500.

        There are many features for the series, including a security thread, optical fibre, and the intaglio print. The embedded security thread in the notes can be seen as a vertical line when held against light. They also have optical fibres that glow when exposed to ultraviolet light. The number panels, on the other hand, are printed with fluorescent ink.

        You can guess why these notes are equipped with such security elements- to prevent counterfeit. But many notes were duplicated. So, as the next step, the government has issued the Mahatma Gandhi new series replacing the older one, from November 2016. The first notes in this series are of the denominations of Rs 500 and Rs 2000. 

        Star series notes, in its simplest definition, are replacement notes for errors in printing.

         You may be aware that banknote production is a one complicated process which involves several steps. Let’s try to understand it with the example of a Rs 100 note. They are usually issued in bundles of Rs 100 notes and each note is placed in a sequential serial order. During the process of production, especially during numbering, there could be errors that disturb the continuity of the series. These notes are then replaced. This is where notes of the star series are used.

           Star series notes are inserted, replacing defective notes in a bundle that is arranged in a particular sequential order.

           They are printed with a star symbol in the numbering panel. For example 9AA*034801. There is a prefix of three characters before the symbol, as well as a six-digit serial number that follows. The series was introduced by the Reserve Bank in 2006.

           There are many countries in the world that use the ‘rupee’ as their currency. This includes Indonesia, Mauritius, Nepal, Pakistan, Seychelles and Sri Lanka, apart from our own India.

             It would however be wrong to say that they are all one and the same. The value and denominations of these ‘rupees’ are different in all these countries. They depend on the respective country’s economy, and monetary policy.

             The units of currencies too are different in each country. While Indian and Pakistani rupees me further divided into ‘paise’, the unit in the Maldives is ‘rufiyah’. In Sri Lanka, they are ‘cents’. A Nepalese rupee, on the other hand, is equal to 100 paisa or four sukas, or two mohors.

            But the rupee sign, given as ‘Rs’, is the same in Sri Lanka, Nepal, Pakistan and the Maldives. Till July 15th 2010 India too used this as the currency sign. 

       Ever noticed a small clause written on our banknotes? If you haven’t, take a close look at it. It is the promissory note, along with the signature of the RBI Governor.

         Let’s take an example. The promissory clause printed on the banknotes that read as ‘I promise to pay the bearer the sum of one hundred Rupees’ means that the banknote with you is a legal tender for the given amount. It is also the promise made by the Governor of the central bank.

            The clause acts as a written guarantee made by the bank regarding the genuineness of note, and its value. It is invariably seen on all banknotes printed in the country. 

           Although money lending and other kinds of informal transactions existed during ancient and medieval times, banking in its modern sense originated in India only in the last decades of the 18th century.

           It was the Bank of Hindustan that marked a beginning to the banking trend in 1770. The General Bank of India came later, in 1786, but it failed within five years. The Bank of Hindustan too closed down between 1829 - 32.

           In spite of the initial failure, banking in the country flourished after the establishment of the three powerful banks -the Bank of Bengal in 1806, the Bank of Bombay in 1840, and the Bank of Madras in 1843. These were the Presidency banks that later merged to form the Imperial Bank of India in 1921.

           Upon the Independence, it was subsequently transformed into the State Bank of India that we now have, the oldest and the largest bank in the country.

 

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         The Reserve Bank of India was founded on April 1, 1935, constituted under the Reserve Bank of India Act 1934. It was a shareholder’s bank then, and remained so until its nationalization in 1949. It has been fully owned by the Indian government ever since.

         It was the financial troubles caused by the First World War that led to the establishment of the Reserve Bank. It is believed that the British were forced to transfer the responsibility of central banking to Indian hands, due to financial, as well as political reasons.

          The main idea behind the formation of the bank was to make it a regulatory body to issue banknotes, and to secure the country’s monetary stability. It also operated the currency and credit system, and still continues to do it.

           The bank was established on the recommendation of the Hilton-Young Commission. The first logo of the bank was inspired from the East India Company’s double mohur.

           Did you know that the bank was also the currency issuing body for countries like Burma and Pakistan? Till 1942, the Reserve Bank issued currencies to Burma, today’s Myanmar. It was also the banker to the Government of Burma till 1947. The following year, in 1948, the RBI stopped rendering currency notes to Pakistan too. 

          The Reserve Bank of India has the sole right to produce currency notes of all denominations in the country. Other than this, it has many other functions.

          The RBI is responsible for formulating, implementing, and monitoring the monetary policies in the country. It also means that the bank takes care of maintaining price stability within the country.

          Acting as a governmental agent, the RBI distributes coins all over the country. It is also known as a ‘banker’s bank’, as it provides aid to all other banks functioning in the country. Every bank has to have a license from the RBI for operating within the country.

          The RBI performs me-chant banking functions for the central and state governments, and manages the country’s foreign exchange too.

           The bank is also responsible for exchanging and destroying currency notes that are unfit for circulation. These are just some of the functions of the RBI.

 

         Yes, it is the Reserve Bank of India that issues banknotes needed for the country. But have you ever wondered on what basis they issue the currency notes? Most certainly, on a demand-basis.

         The value and amount of banknotes to be printed are decided by the RBI. Based on the demand for a particular currency, it is issued and circulated.

          Let us take an example from the present day situation. People are in great need for currency notes in larger denominations like 500. To make up this need, the RBI note issuing unit in Mysuru stopped printing all other banknotes, and began to produce the new series of Rs 500 exclusively. This is what is meant by demand-based production.

            The bank also issues currency depending on the number of soiled notes that are returned to it.

            The new banknotes are distributed through various RBI offices located in Ahmadabad, Belapur, Bhubaneshwar, Kolkata, Bangalore, Chandigarh, Hyderabad, Guwahati, Chennai, Lucknow, Kanpur, Bhopal, Patna, Jaipur, New Delhi, Nagpur, Jammu, Kochi, Thiruvananthapuram and Mumbai.

            These offices receive and ensure the circulation of fresh banknotes issued by the central bank. 

         Broadly, the Indian banking sector can be divided into two types of banks- scheduled and non-scheduled.

          Scheduled banks are those listed in the 2nd schedule of the RBI Act, 1934. As per law, the paid up capital and collected funds in these banks should not be less than Rs 5 lakhs. They are also eligible for loans from the central bank.

          Scheduled banks are further classified into nationalized banks, the State Bank of India and its associate banks, regional rural Banks (RRBs), foreign banks, and private banks. Some of the state and urban co-operative banks too come under this category.

          Allahabad Bank, Bank of India, Canara Bank, Indian Bank, Punjab and Sindh Bank, Punjab National Bank, Union Bank of India, Vijaya Bank, and Dena Bank are among the 27 nationalized banks in the country.

         State Bank of Travancore, State Bank of Mysore, State Bank of Hyderabad etc. are the associate banks of the State Bank of India. It was in 1960 that SBI took over control of these associate banks.

         The IDBI Bank and the Bharatiya Mahila Bank are other two important public sector banks functioning in the country.

 

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