Competitions

CAT Prep

Upskill

Placements

MBA Co'26

RTI Response

Rankings

Score Vs. %ile

Salaries

Campus Tour

Currency Circulation In India - A Quick Guide

May 15, 2018 | 3 minutes |

Join InsideIIM GOLD

Webinars & Workshops

Compare B-Schools

Free CAT Course

Take Free Mock Tests

Upskill With AltUni

CAT Study Planner

Final 2 Days to CAT 2024 Test-44

Participants: 332

Final 3 Days to CAT 2024 Test-43

Participants: 296

Final 4 Days to CAT 2024 Test-42

Participants: 347

Final 5 Days to CAT 2024 Test-41

Participants: 367

Final 6 Days to CAT 2024 Test-40

Participants: 347

Final 7 Days to CAT 2024 Test-39

Participants: 340

Final 8 Days to CAT 2024 Test-38

Participants: 316

Final 9 Days to CAT 2024 Test-37

Participants: 327

Final 10 Days to CAT 2024 Test-36

Participants: 288

Final 11 Days to CAT 2024 Test-35

Participants: 495

Final 12 Days to CAT 2024 Test-34

Participants: 335

Final 13 Days to CAT 2024 Test-33

Participants: 296

Final 14 Days to CAT 2024 Test-32

Participants: 277

Final 15 Days to CAT 2024 Test-31

Participants: 364

Final 16 Days to CAT 2024 Test-30

Participants: 294

Final 17 Days to CAT 2024 Test-29

Participants: 311

Final 18 Days to CAT 2024 Test-28

Participants: 342

Final 19 Days to CAT 2024 Test-26

Participants: 338

Final 20 Days to CAT 2024 Test-26

Participants: 306

Final 21 Days to CAT 2024 Test-25

Participants: 253

Final 22 Days to CAT 2024 Test-24

Participants: 268

Final 23 Days to CAT 2024 Test-23

Participants: 180

Final 24 Days to CAT 2024 Test-22

Participants: 226

Final 25 Days to CAT 2024 Test-21

Participants: 225

Final 26 Days to CAT 2024 Test-20

Participants: 277

Final 27 Days to CAT 2024 Test-19

Participants: 232

Final 28 Days to CAT 2024 Test-18

Participants: 235

Final 29 Days to CAT 2024 Test-17

Participants: 246

Final 30 Days to CAT 2024 Test-16

Participants: 281

Final 31 Days to CAT 2024 Test-15

Participants: 279

Bank notes made their appearance in India towards the end of the 18th Century. Before that coins and barter system were most prominent. Presidency banks (now known as State Bank of India) initially undertook the management of Paper Currency, who were appointed as agents by the Government of India for the issue, payment and exchange of promissory notes. This task was later assigned to currency mints, thereafter to the CGA and later the Office of Controller of the Currency was created in 1913 from whom the Reserve Bank of India took over the function of note issue from 1935.Since then RBI is the sole authority for currency management. Currency management essentially relates to planning, designing, issue and withdrawal of currency, ensuring its integrity, availability and the maintenance of quality. The Department of Currency Management (DCM) of the Reserve Bank undertakes all these functions. Under Sections 24 and 25 of the Reserve Bank of India Act, bank notes of any denomination not exceeding 10,000 rupees can be issued by the Reserve Bank, the design, form and material of the notes being such as may be approved by the Central Government on the recommendations of the Central Board of the Bank. Currency notes are legal tender at any place in India in payment or on account without limit as per the Act. However the Central Government may deprive currency notes of any denomination of their legal tender character on recommendation of the Central Board. Demonetization Phase  - In the year 1946, with the object of checking unaccounted money and tax evasion, Government demonetized notes of Rs.500, Rs.1000 and Rs.10,000. But since such high denomination currency was not accessible to the common people it did not have much impact. The Bank reintroduced from 1954, notes of the denominational value of Rs.1000 and Rs.10000. Interestingly Rs.5000 notes were also introduced from that year. The second phase of demonetization took place in the year 1978 when the then prime minister of India Morarji Desai announced  demonetization of Rs.1000, Rs.5000 and Rs.10000 on the ground that the availability of these notes facilitated illicit transfer of money for financing transactions which were harmful to the national economy or for illegal purposes. Notes in the denomination of Rs.1000 have been reintroduced in October 2000. The latest phase of demonetization of Rs.500 and Rs.1000 currency notes of Mahatma Gandhi series in the year 2016 was witnessed by all of us. It was also announced that the new Rs.500 and Rs.2000 banknotes of the Mahatma Gandhi new series would be introduced in exchange for the old banknotes. The regulation of currency is not as simple as it seems.There are several rules and laws which governs the function of currency management, which makes the task more complex yet it remains the most important function of Reserve Bank of India.